1. Trust your instinct:If something appears too good to be true, it probably is too good to be true.
If it doesn't feel right, it probably isn't right.
2. Never believe the hype, do your own research and do not rely on the opinions of others:Most people have a vested interest of some description.
Either driven by investment, greed, bounties and site traffic.
3. Use real-world standards of due diligence:If someone knocked on your door and said I have a great business plan, Bill Gates loves it, here's a photo of the highly qualified team and here's a bloke called Dave who thinks it's a great investment and this time next year we'll be millionaires - you wouldn't hand over a month's salary, would you!?
Specifically, things like:
(a) Support, partnerships and contracts with well-known brands:If someone claims to have support, a partnership or contract with a well-known brand ask for verified proof: a contract, announcement from the brand or an article from a trusted news source.
Every time I have challenged these claims they turn out to be untrue or tenuous at best. e.g. Hero Token claimed to have the support of Alibaba
It turns out that Pawn Hero, an already established business, received start-up funding from an investment arm of Alibaba. Alibaba was not funding or endorsing the Pawn Hero ICO.
(b)Can you verify the team:Do they exist, are their credentials correct and are they really connected to the project?
For me, they need to be on LinkedIn (or similar), possibly media profile, linked to an institution, publication or other online profile and I need to have made contact / spoken to the team directly.
Wagerr is a good example of a team that is legitimate. The CEO checked out and engaged with me on day one. To be fair, so did the CEO of Pawn Hero.
Scam teams should be easy to spot.
I once emailed a highly qualified Chinese lawyer - he knew nothing about the project and was livid to see his photo on the ICO website.
CEOs of legitimate businesses engage with their shareholders.4. Do the team give the impression that it can deliver?What is the team's track-record?
Do they have a working product or any sign of progress?
5. Do the team provide regular updates and meet their milestones?Credibility is really important.
Sometimes, particularly when a project is a first, things will slip. A good team will keep you posted and have a good reason for a delay.
6. Does the project look professional?Does the ICO, website, white paper, engagement and communication give the impression of a team that can deliver?
We are talking about ground-breaking projects with the potential to change the world.
If they can't design a decent website or run a well though ICO...
7. Who controls the tokens and is the project centralised or decentralised?If the team control the majority of token or the project is centralised the market can easier be manipulated - against investors and in favour of the team.
8. What is the team's attitude?I only do business with people I like and can trust.
SALT threatened to boot me from their telegram because they had a rule that investors were not allowed to speculate about the post-ICO token price!
I'm not saying that SALT is a scam, but really! Needless to say, not a team for me.
9. Major rewards for the team should e held in escrowIf the team become millionaires overnight at ICO, where is the motivation to succeed?
A team should have their operating costs calculated pre-ICO and only need enough, initially, to make its milestone.
Additional rewards should be linked to success/completion of milestones.
10. Only trust reliable sources of informationFake news is easy to create (and can look quite convincing) and some sources will literally publish anything.
Is this source reliable? Don't be afraid to contact the journalist or company.
11. How does the team respond to challenging but sensible questions?A genuine team will engage and do their best to answer.
A scam team will avoid answering the question or most probably ban you from the forum.
12. When you find a good team and credible project, be patienceGood projects will take time to deliver.
Scams often want you to believe that you can get rich quick e.g. +550% in 4 weeks (with no working project of evidence of work). It's hype and will fail relatively quickly. That said, even if it is a scam, it is possible to make a few quid in the short-term. However, morally, I couldn't invest in a scam.
The best rewards will come to those who wait, most probably 2-5 years time.
Happy investing
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