3 kinds of ICOs — Protect yourself

[jlp]

There are 3 kinds of ICOs:

1)  SCAMS

There have always been a lot of scammers, hackers and thieves in the crypto space since day one. Think of Mount Gox. According to Business Insider:

“…one out of every 16-17 Bitcoins belongs to someone who stole it”

If you don’t think that these thieves are trying to steal money through ICOs or from ICOs, you are kidding yourself. You just need to see the Bitcointalk forum dedicated to scams, or to participate in a Slack channel and you will see the never-ending phishing e-mails trying to lure you to their sites, in order to empty your wallet.

In addition to thieves and scammers, there are those who lie or exaggerate. Many users on Bitcointalk are pump and dumpers.

2)  CRAP

Everyone is desperate to host an ICO to make money. Therefore, they are throwing anything and everything onto the blockchain, including the kitchen sink. They may not be intentionally trying to scam, but they think that they have a good enough idea for an ICO. But these will fail because the blockchain will not solve anything for them. Examples include ICOs that want to put 3D data (which would equate to hundreds of Terabytes of data) or 153 exabytes of medical data on a blockchain. This shows that they are clueless about the blockchain and have never run Bitcoin’s full node. Bitcoin’s blockchain is 120 GB and Ethereum’s blockhain is 200 GB and they are both having scaling problems.

Even though crypto veterans and fans would like it to be, the blockchain is NOT the panacea to every problem in the world.

ICOs are also throwing any kind of business problem that they can make up, into the ICO. If they cannot make up the business problem, they will exaggerate about it. They will fail because the business problem doesn’t really exist, isn’t significant enough, cannot be solved by a blockchain or they do not really have the solution, though they try to make it sound like they do with lots of technical jargon.

Swarm Fund cites this business problem:

“You need large amounts of money to buy real estate and your money is tied down for an indefinite amount of time.”

This is a lie and not a business problem. You can buy one share of a REIT, and there are thousands of REITs to choose from, and you can sell it one minute later. If they start off their pitch with a lie, what else are they lying about?

Energi cites this business problem:

“A small number of large energy companies supply millions of customers who are price takers.”

Therefore, the solution is to create more energy suppliers, especially nuclear power plants, which is the cheapest source of electricity. But the project does not propose this. They propose to enable consumers to sell their solar self-generated electricity directly to other consumers.

To do this, consumers should have BOTH solar panels and batteries. This is a TINY market. Though solar panels are growing, it is still a tiny percent of the market and solar generated electricity is still much more expensive than nuclear generated.

Consumers with solar panels do not have that much surplus electricity to sell anyways. They use most of what they generate. Tesla and Enphase hyped up their batteries for solar panel owners to store their surplus electricity. These batteries are NOT selling. Enphase spent over $100 million to develop their battery and partly because of the lack of battery sales, their stock has plummeted approximately 85%.

Of course, the project’s pitch looks impressive at first glance.

3)  LEGITIMATE

There are only a few applications that make a lot of sense for the blockchain: transfer of value (currency), store of value, remittances (disrupt Western Union and bank wire transfers), smart contracts, gaming and gambling. These applications will disrupt their respective industries, because the blockchain will provide a lot of cost-savings or time-savings to the users. There might be other applications that make sense that I missed, but applications proposed by many ICOs do not make sense. Jesus Coin is an extreme example, but there are applications that fall across the spectrum from Jesus Coin to Bitcoin.


YOU CAN REDUCE THE RISK AND THE NUMBER OF ICOS TO REVIEW, BY USING 3 FILTERS

1)  The project’s idea should make sense, but do not base your investment decision purely on the idea. Watch:

“Ideas are like assholes - everyone has one, no one cares”
https://www.youtube.com/watch?v=PhJgrEackis

Entrepreneurs typically try to hide their ideas because they think they are the only ones that came up with the ideas. Venture Capitalists tell them to scream their ideas to the public and they’ll see that nobody will steal them. Ideas are a dime a dozen. There are probably 10 other people with the same idea that you have or that the ICO has. The most important factor to success is the ability to execute. This is why Venture Capitalists refuse to sign non-disclosure agreements and rarely invest in startups which haven’t built a prototype or product.

HAS THE ICO TEAM BUILT ANYTHING THAT WE CAN USE TODAY?

If not, take a pass. This is the best evidence that the team can execute. It takes way more skill, time, work and money to build an app than to create a one-page website and video. It shows:

• The team has proven that they can develop.
• It is less likely that the team will invest so much and not follow through.

Everything else is useless. Don’t be fooled by big teams, fancy pretentious titles, references, roadmap, video, fancy animations, escrow, blogs, Slack, Telegram, Twitter, Facebook, Reddit and white paper.

One project stacked their team with a dozen people and then lied about them. One member had the title of “Blockchain Expert”, but he worked in Inside Sales until 1.5 months prior. One member had the title “Blockchain Developer”, but he never developed a blockchain before.

Here is an example of a project team using fake photos and fake names: https://bitcointalk.org/index.php?topic=1949528.msg19485217#msg19485217

Don't rely on Github unless you can verify that they didn't copy the code from someone else and you can run it.

Several high profile projects, with big teams, nice videos, lots of social media activity and hype, raised millions of dollars and still have not produced an app. This number will grow and become more evident in the coming years.

Gnosis raised $12.5 million and their website says:

“The Hunch Game is nearly ready and can be launched in the first half of 2017 as an example Gnosis app.”

No app yet.

Qtum raised $15.6 million. I don't see anything produced on Qtum's website.

After raising $50 million, Cosmos's website is still pitching its white paper. Come on. What have they produced with that $50 million?

Augur had Vitalik Buterin on their team. After Satoshi Nakamoto, Vitalik is the most desirable person in the universe to have on an ICO team. After raising multiple millions and after two and a half years, all they’ve released is a simple beta that is barely usable.

Don’t be suckered by animations and videos. Satoshi didn’t have any of this and his coin was the most successful. Besides, the animations aren’t that impressive anymore, as I’m beginning to see the same animation on multiple websites. Some of these teams must be using the same graphic designer.

There is no guarantee that any business will not fail. But, when the ICO team has a prototype/product, they have proven that they can develop. That significantly reduces your risk. With many ICOs, you have no idea if they can build anything. You cannot trust the information on the profile of many ICOs. Just because they can hire somebody to make a video, it does not mean they can write thousands of lines of complicated code. It's like you giving money to someone to fix your car, simply because his video says he can fix cars, but he has never fixed one before.

Y Combinator is one of the biggest startup incubators in the world. They provide a small amount of funding (approx. $25k to 50k) to startups, which usually consists of 2 founders each. Then they build prototypes or products. Then the startups give pitches to angel investors or Venture Capitalists. If prototypes or products are unnecessary, then why do they waste so much time and money before pitching to angels and VCs?

Almost all incubators have startups that consist of usually only 2 founders, that are building prototypes and products. ICOs are stacking their team with a dozen people and they still cannot build anything. With 12 people, they should've built 6 prototypes/products by now. This shows that they are simply stacking their teams with useless people, in order to impress you or sucker you in.

2)  IS THE TEAM FROM A CORRUPT COUNTRY?

Check Transparency International's ranking.

If so, take a pass.

The number of ICOs from corrupt countries, especially those that were famous for sending out phishing scams for years, have exploded.

Yes, there are scams from countries that are not corrupt and successful projects from corrupt countries. What is important is the probability and if you are willing to take the extra risk.

In non-corrupt countries, people grow up with lots of regulations and enforcement. Though there are exceptions, the people feel that the way to get ahead is based largely on merit. In corrupt countries, there is less regulation, less enforcement and more people trying to find ways to get ahead by working around the system. In fact, they see that the most successful people in their country, usually in their government, are those who get ahead by lying, cheating or working around the system, instead of based on merit. If you do not think this is a risk, then we will agree to disagree.

Law enforcement is a big deterrent. Hurricanes prove this. After hurricanes Katrina and Irma, there were widespread lootings. Why? Because police are not on the streets and criminals feel immune from punishment.

Law enforcement through extradition is a deterrent. If an Australian defrauds investors in Germany, Germany can extradite the Australian and punish him. This makes the Australian think twice before he defrauds Germans. However, there are many countries without extradition agreements. This provides immunity to ICO teams. Therefore, they can lie, defraud and cheat investors from other countries, and there will be little to no recourse from the other countries. This can bring out the looting mentality.

There are many ICOs enticing investors, by claiming that their token or coin will go up in value or that token holders will get dividends, profits or ownership in other assets. Some tell buyers that they are “investing”. This means that they are selling securities and are breaking security laws.

I watched a video of a conference. ConsenSys was warning about the repercussions of selling securities. Waves’ CEO, who is from a country without extradition agreements with Europe or U.S., debated this, downplayed the concern and shrugged it off. Why should he care? No European or American government is going to be able to punish him if he broke security laws. Even if Europe cannot punish him, if Europe bans his coin, will you suffer?

Without law enforcement, ICOs can lie and get away with it. One project claimed that they will make 400+% return per year for the investor. In countries that enforce securities laws, if you make this claim and do not deliver, investors can sue you. In countries with advertising laws, the police can punish you for false advertising. In countries that are immune from these laws, ICOs can make any claim they want. One of the most egregious claims is when an ICO tells you that you will be a part owner of a physical company. Good luck in getting a judge in their country to force the company to give you equity because you own some ERC-20 tokens. Good luck to you and your multiple flights to that country.

Few corrupt countries have extradition agreements. For those that do, can you rely on their corrupt governments to fulfill their obligations?

3)  “NEVER INVEST IN A BUSINESS THAT YOU DO NOT UNDERSTAND”

This is a quote from Warren Buffett. It is very applicable because many ICO teams try to impress the audience with technical jargon. Many investors are not tech savvy and are baffled or confused, but they invest because they think that the project team must have come up with a technological break-through.

Last word:

You need to be able to verify that the business problem exists, that the market size is truly as big as the ICO claims and that the solution is possible. Quite often, they exaggerate on most of these. You need to verify that a blockchain or a cryptocurrency actually is needed for the solution. Quite often, they’re not.

Do not rely solely on ICO listing or rating sites. They likely do not know about all of the ICOs. Not all ICOs are willing to pay to be listed. They have methodologies that you may not agree with. Some claim to be experts, but you are likely more of an expert in your own field, whether that is medical, law, engineering or finance, than they are. They will likely have biases, especially for ICOs originating from their country or region. Putin wants to increase the crypto industry in Russia. Is this why there has been an explosion of ICOs from Russia? Even Putin’s Advisor ran an ICO. If Russia took out Facebook ads to disrupt U.S. and European politics, who is to say that they will not pay off ICO listing and ratings sites to favor Russian ICOs?

[1715260586]

1715260586

[RussaX]

nice thread. Investing into something without understanding it based on someone else suggestion is like gambling in casino.

[Wyre08]

Thanks for putting this together. It's well written and everyone should follow something similar to this before investing. I'm adding this as a favorite because I like your link.

[Phalo]

90% of ICOs are scams

[jack1111]

I think blockchain applications are not (a few), there are a lot of applications for blockchain, however, it is better to say that there are a few legitimate ICOs. From other side, most of people invest to make fast profit, even though an ICO is a CRAP, it might get huge investments with some hype and big names backing it.

[XbladeX]

90% of ICOs are scams

Maybe not even scams but it end as fail like average startups does.
In REAL LIVFE:
1 of 10 startups survives 1st year
and then
1 of 10 startups survive next 5 years.
 so you have 1/100 chance to survive with ICO ...

this is nature of startups you won't win with it.

[feelideb]

Good and very insightful write up! I love the way you critic the primary intension and motivation of creating the ICO in the first place. Vast majority of ICO founder fall in to this category. The  other part of your writing  addressed the visible and workable project! In summary You have done a good Job. I will implore that you keep giving us food for thought on regular basis  concerning happening in crypto space!

[fredforthewin]

really nice thread. It is possible to beat the scammers at there own game if you are not greedy so let the scams go on.

[XbladeX]

There are 3 kinds of ICOs:

****

And they is 4 type of ICO money grabers.
There is a lot of ICOs in space that will rapie you.
Have you heard of PRESALE .. own yea.
Now imagine sand ico and regular price was like 1.5$ per token but...
insider got deal like 0.25$ per token. Those gy got so cheap token becouse those groups will promote an shill for that ICO.
With such shit you can essy and with bag of shit.

There is always option that ICO creator will self invest in own ICO making it price looking much better tht it is in reality.
This is crypto here all shit moves are possible guys.

[denetci]

wonderful thread. ico101 for dummies:) i strongly recommend this suggestions to newbies, and non experienced users.

[Morguk]

I would say about 85% of all ICO's fall into category 1 and 2. Quite hard to find a legit ICO. What's funny is how even the bad ones still pump once they hit the exchanges!

[jlp]

Somebody asked me to comment on Polkadot.

The white paper is written by Gavin Wood, founder of Ethereum & Parity. This is obviously a credible developer. It passes my first filter with flying colors. It also passes my second filter.

However, I don’t know if it passes my third filter. It is filled with technical features and functions, but little explanation of the benefits. It wants to connect (bridge) different blockchains, which will enable scaling, which is a good thing. However, to do so would be an incredibly difficult task and I question if Polkadot will be able to pull it off. Hopefully, they’ll prove me wrong.

There is another project that is trying to connect different blockchains together, as well, but I forget the name.

If Polkadot wanted people, other than blockchain developers to understand their project, they should’ve done a better job of explaining the problem(s) that they are trying to solve and the benefits of solving those problems to non-technical people. But, do they need to? I don’t see any info about ICO or token sale. Maybe they have enough money from their ETH holdings that they don’t need funding.

One interesting excerpt from the white paper is this:

Is Polkadot designed to replace (insert crypto-currency here): No. Polkadot tokens are neither intended nor designed to be used as a currency. They would make a bad currency: most will remain illiquid in the staking system and those that are liquid will face substantial fees for transfer of ownership. Rather, the purpose of Polkadot tokens is to be a direct representation of stake in the Polkadot network.

I’m not quite sure how the Polkadot tokens will go up in value. For any token or coin to go up in value, the usage or demand must go up. Bitcoin is going up because people are throwing money into it to store value. Ethereum is going up because people are throwing money into it, in order to buy tokens at ICOs. What will be the fuel for Polkadot?

If it is indeed Gavin Wood running this project, then it is obviously not a scam or crap. It’s just hard to quantify the benefits of holding Polkadot tokens.

Though, there is one minor stain on Gavin. Someone hacked $32 million from Parity. Who hacked it? Was it an inside job?

[jlp]

Airtoken is lying or sounds like a pipe dream. In order to pay the users for advertising, Airtoken will need to get advertisers and earn advertising revenue. Then it needs complicated processes to show the ads where the advertisers want, to charge properly and to share the revenue with users. This incurs significant costs and is a huge undertaking, which requires much more than just creating an Ethereum token. They need to show how they will be able to do these numerous processes much more cheaply than the existing companies, in order to be able to share some of the advertising revenue with users. Have they ever done anything similar to this before? Probably not. They have 6 reviews of their AirFox Browser on Google Play, probably by people who saw their ICO.

Airtoken’s website states: “Publishers will have higher monetization, new user reach, and a better user experience.” But its white paper does not explain how. Is this blowing smoke?

There is another major problem with Airtoken. They want to provide micro-loans. This is a complicated, costly and money-losing business. Google “micro loan failure” and you’ll see articles like:

“The microfinance delusion”
“Tragic failure of microcredit”
“Microfinance Has Been A Huge Disappointment Around The World”
“Micro loans Don’t Solve Poverty”
“Perils of Microfinance”

Micro loans was concocted by emotional socialists who think with their hearts instead of their brains, which always makes a country poorer.

The Airtoken team only needs to do 5 minutes of research on micro-loans and would have found the above. This means that they are dishonest. If they did not do the research, then they are incompetent.

[jlp]

Ambrosus doesn’t make sense.  Why do we need a new altcoin to record the history of products?  Even if you record the history of products on the blockchain, how do you know the data is accurate?  How can you trust the inputters of data?  How do you know it isn’t put in by the manufacturers, who will exaggerate or lie?  This sounds like another project trying to put the kitchen sink onto the blockchain.

[VeeTeaSee]

thanks you for clearing it up
i really dont understand how people choose their investments sometimes
and its sad when you see a shitty ico makes millions when real coins dont get enough attention

[luckyneil]

Or you have ones like this one below?  Great tech and good team.  They even have a BIP.  However they are pathetic on the marketing, etc. 

https://bitcointalk.org/index.php?topic=2190748.0

[GreatOrchid]

There are a lot of scammy icos, and i agree with your tips list in there, but there are legit projects, maybe it doesnt seem like there are honest people in bitcoin world, but it happens sometimes, only that those "legit projects" are asking to raise for about $10 million dollars to make a simple idea that doesnt need more than $100k.
So it is a 50/50, they are legit, but they want a lot of money..

[Kyraishi]

Your tips are excellent and i'd say all on point.

The fact is that there are so many ICOs out there trying to rip you off these days. Especially the big ICOs that do an ICO without having any sort of product even done after a year of ICOing, that really really sucks.

However, there are some ICOs that are worth a buy, even if they don't fulfill your criteria. But it's sort of a gamble, nobody knows for sure.

[Bummers]

Fantastic thread! Would you mind reviewing every single ICO so I don't have to do any work?

[deepcryptomine]

Thanks for this detailed write up. Extremely useful as well. It was getting hard to chose which ICO was legitimate so just decided not to go with it lately. However it seems Airdrop is all the rage nowadays.

[Mr.Nc.Guy]

Thank you for the insights  .

[Hueristic]

3)  “NEVER INVEST IN A BUSINESS THAT YOU DO NOT UNDERSTAND”

This is funny as most of these ICO have nothing to understand! Nice list By the Way.

[silent17]

Thanks a lot for an informative discussion regarding ICO. To be honest i'm not really good in identifying what is legit or not. But this thread help alot

[AiloveYouks21]

There are 3 kinds of ICOs:

1)  SCAMS

There have always been a lot of scammers, hackers and thieves in the crypto space since day one. Think of Mount Gox. According to Business Insider:

“…one out of every 16-17 Bitcoins belongs to someone who stole it”

If you don’t think that these thieves are trying to steal money through ICOs or from ICOs, you are kidding yourself. You just need to see the Bitcointalk forum dedicated to scams, or to participate in a Slack channel and you will see the never-ending phishing e-mails trying to lure you to their sites, in order to empty your wallet.

In addition to thieves and scammers, there are those who lie or exaggerate. Many users on Bitcointalk are pump and dumpers.

2)  CRAP

Everyone is desperate to host an ICO to make money. Therefore, they are throwing anything and everything onto the blockchain, including the kitchen sink. They may not be intentionally trying to scam, but they think that they have a good enough idea for an ICO. But these will fail because the blockchain will not solve anything for them. Examples include ICOs that want to put 3D data (which would equate to hundreds of Terabytes of data) or 153 exabytes of medical data on a blockchain. This shows that they are clueless about the blockchain and have never run Bitcoin’s full node. Bitcoin’s blockchain is 120 GB and Ethereum’s blockhain is 200 GB and they are both having scaling problems.

They are also throwing any kind of business problem that they can make up, into the ICO. If they cannot make up the business problem, they will exaggerate about it. They will fail because the business problem doesn’t really exist, isn’t significant enough, cannot be solved by a blockchain or they do not really have the solution, though they try to make it sound like they do with lots of technical jargon.

One project cites this business problem:

“You need large amounts of money to buy real estate and your money is tied down for an indefinite amount of time.”

This is a lie and not a business problem. You can buy one share of a REIT, and there are thousands of REITs to choose from, and you can sell it one minute later. If they start off their pitch with a lie, what else are they lying about?

Another project cites this business problem:

“A small number of large energy companies supply millions of customers who are price takers.”

Therefore, the solution is to create more energy suppliers, especially nuclear power plants, which is the cheapest source of electricity. But the project does not propose this. They propose to enable consumers to sell their solar self-generated electricity directly to other consumers.

To do this, consumers should have BOTH solar panels and batteries. This is a TINY market. Though solar panels are growing, it is still a tiny percent of the market and solar generated electricity is still much more expensive than nuclear generated.

Consumers with solar panels do not have that much surplus electricity to sell anyways. They use most of what they generate. Tesla and Enphase hyped up their batteries for solar panel owners to store their surplus electricity. These batteries are NOT selling. Enphase spent over $100 million to develop their battery and partly because of the lack of battery sales, their stock has plummeted approximately 85%.

Of course, the project’s pitch looks impressive at first glance.

3)  LEGITIMATE

There are only a few applications that make a lot of sense for the blockchain: transfer of value (currency), store of value, remittances (disrupt Western Union and bank wire transfers), smart contracts, gaming and gambling. These applications will disrupt their respective industries, because the blockchain will provide a lot of cost-savings or time-savings to the users. There might be other applications that make sense that I missed, but applications proposed by many ICOs do not make sense. Jesus Coin is an extreme example, but there are applications that fall across the spectrum from Jesus Coin to Bitcoin.


YOU CAN REDUCE THE RISK BY USING 3 FILTERS

1)  The project’s idea should make sense, but do not base your investment decision purely on the idea. Watch:

“Ideas are like assholes - everyone has one, no one cares”
https://www.youtube.com/watch?v=PhJgrEackis

Entrepreneurs typically try to hide their ideas because they think they are the only ones that came up with the ideas. Venture Capitalists tell them to scream their ideas to the public and they’ll see that nobody will steal them. Ideas are a dime a dozen. There are probably 10 other people with the same idea that you have or that the ICO has. The most important factor to success is the ability to execute. This is why Venture Capitalists refuse to sign non-disclosure agreements and rarely invest in startups which haven’t built a prototype or product.

HAS THE ICO TEAM BUILT ANYTHING THAT WE CAN USE TODAY?

If not, take a pass. This is the best evidence that the team can execute. It takes way more skill, time, work and money to build an app than to create a one-page website and video. It shows:

• The team has proven that they can develop.
• It is less likely that the team will invest so much and not follow through.

Everything else is useless. Don’t be fooled by big teams, fancy pretentious titles, references, roadmap, video, fancy animations, escrow, blogs, Slack, Telegram, Twitter, Facebook, Reddit and white paper.

One project stacked their team with a dozen people and then lied about them. One member had the title of “Blockchain Expert”, but he worked in Inside Sales until 1.5 months prior. One member had the title “Blockchain Developer”, but he never developed a blockchain before.

Here is an example of a project team using fake photos and fake names: https://bitcointalk.org/index.php?topic=1949528.msg19485217#msg19485217

Don't rely on Github unless you can verify that they didn't copy the code from someone else and you can run it.

Several high profile projects raised millions of dollars and still have not produced an app. This number will grow and become more evident in the coming years.

Gnosis raised $12.5 million and their website says:

“The Hunch Game is nearly ready and can be launched in the first half of 2017 as an example Gnosis app.”

No app yet.

Qtum raised $15.6 million. I don't see anything produced on Qtum's website.

After raising $50 million, Cosmos's website is still pitching its white paper. Come on. What have they produced with that $50 million?

Augur had Vitalik Buterin on their team. After Satoshi Nakamoto, Vitalik is the most desirable person in the universe to have on an ICO team. After raising multiple millions and after two and a half years, all they’ve released is a simple beta that is barely usable.

Don’t be suckered by animations and videos. Satoshi didn’t have any of this and his coin was the most successful. Besides, the animations aren’t that impressive anymore, as I’m beginning to see the same animation on multiple websites. Some of these teams must be using the same graphic designer.

2)  IS THE TEAM FROM A CORRUPT COUNTRY?

Check Transparency International's ranking.

If so, take a pass.

The number of ICOs from corrupt countries, especially those that were famous for sending out phishing scams for years, have exploded.

Yes, there are scams from countries that are not corrupt and successful projects from corrupt countries. What is important is the probability and if you are willing to take the extra risk.

3)  “NEVER INVEST IN A BUSINESS THAT YOU DO NOT UNDERSTAND”

This is a quote from Warren Buffett. It is very applicable because many ICO teams try to impress the audience with technical jargon. Many investors are not tech savvy and are baffled or confused, but they invest because they think that the project team must have come up with a technological break-through.

Last word:

You need to be able to verify that the business problem exists, that the market size is truly as big as the ICO claims and that the solution is possible. Quite often, they exaggerate on most of these. You need to verify that a blockchain or a cryptocurrency actually is needed for the solution. Quite often, they’re not.

Do not rely solely on ICO listing or rating sites. They likely do not know about all of the ICOs. Not all ICOs are willing to pay to be listed. They have methodologies that you may not agree with. Some claim to be experts, but you are likely more of an expert in your own field, whether that is medical, law, engineering or finance, than they are. They will likely have biases, especially for ICOs originating from their country or region. Putin wants to increase the crypto industry in Russia. Is this why there has been an explosion of ICOs from Russia? Even Putin’s Advisor ran an ICO. If Russia took out Facebook ads to disrupt U.S. and European politics, who is to say that they will not pay off ICO listing and ratings sites to favor Russian ICOs?

oh god I finally found a nice thread in this selection which is useful to answer the newbie who ask "how to choose a good ICO how?"

[blockchainmarketus]

Fantastic thread! Would you mind reviewing every single ICO so I don't have to do any work?

ICOs project are not real except few of them. What is BAT,  Adex network, They left the project after they can raise million dollar funds. That ;s sucker developers who suck money from investors. Most ICO with unrealistic project give high promise but in fact they are selling garbage and shit.

[Slowhand26]

This worth to read as my research goes and I've been reading some articles, most ICO's are legit and has a good purpose, however, the real issue here is the post coin offering, will it be worth on the market? Will the community adapt it or the project will just go to garbage because community doesn't need it.

[faceoff97]

This is so true, I cant agree more. I remember when I got engaged on a scam, Im new on investing with ICO that time and Im just so excited to join one. Little did I know, I found my self engaging with a fake team and a fake project. That time, I was encouraged to join because of the pleasing apperance of their website. Then I only learned that not all ICOs are credible, I realize that I should have a knowledge about the projecct. Since then Im always doing a background check with the team and also avoiding projects which I have no idea. So far, Im now learning more and engaged to a well known ICO which has a bright future.

[kryptqnick]

There are 3 kinds of ICOs:

1)  SCAMS

2)  CRAP

3)  LEGITIMATE

YOU CAN REDUCE THE RISK BY USING 3 FILTERS

1)  The project’s idea should make sense, but do not base your investment decision purely on the idea. Watch:

There are probably 10 other people with the same idea that you have or that the ICO has. The most important factor to success is the ability to execute.
HAS THE ICO TEAM BUILT ANYTHING THAT WE CAN USE TODAY?

If not, take a pass. This is the best evidence that the team can execute. It takes way more skill, time, work and money to build an app than to create a one-page website and video. It shows:

• The team has proven that they can develop.
• It is less likely that the team will invest so much and not follow through.

Everything else is useless. Don’t be fooled by big teams, fancy pretentious titles, references, roadmap, video, fancy animations, escrow, blogs, Slack, Telegram, Twitter, Facebook, Reddit and white paper.

One project stacked their team with a dozen people and then lied about them. One member had the title of “Blockchain Expert”, but he worked in Inside Sales until 1.5 months prior. One member had the title “Blockchain Developer”, but he never developed a blockchain before.

Here is an example of a project team using fake photos and fake names: https://bitcointalk.org/index.php?topic=1949528.msg19485217#msg19485217

Don't rely on Github unless you can verify that they didn't copy the code from someone else and you can run it.

Several high profile projects raised millions of dollars and still have not produced an app. This number will grow and become more evident in the coming years.

Gnosis raised $12.5 million and their website says:

“The Hunch Game is nearly ready and can be launched in the first half of 2017 as an example Gnosis app.”

No app yet.

Qtum raised $15.6 million. I don't see anything produced on Qtum's website.

After raising $50 million, Cosmos's website is still pitching its white paper. Come on. What have they produced with that $50 million?

Augur had Vitalik Buterin on their team. After Satoshi Nakamoto, Vitalik is the most desirable person in the universe to have on an ICO team. After raising multiple millions and after two and a half years, all they’ve released is a simple beta that is barely usable.

Don’t be suckered by animations and videos. Satoshi didn’t have any of this and his coin was the most successful. Besides, the animations aren’t that impressive anymore, as I’m beginning to see the same animation on multiple websites. Some of these teams must be using the same graphic designer.

2)  IS THE TEAM FROM A CORRUPT COUNTRY?

If so, take a pass.

The number of ICOs from corrupt countries, especially those that were famous for sending out phishing scams for years, have exploded.

3)  “NEVER INVEST IN A BUSINESS THAT YOU DO NOT UNDERSTAND”

Last word:

You need to be able to verify that the business problem exists, that the market size is truly as big as the ICO claims and that the solution is possible.

I'm sorry I deleted a lot of info in my quotation, it was done solely to make it shorter and main points visible at first glance. Your kinds of icos seem to be fine, it's hard to think of other major kinds at least. However, an ico might be a legit one and yet fail due to some unexpected reasons, nobody is ever protected from that. What should also be mentioned is that perfect icos don't really exist, I guess they all have their downs. And yet it doesn't create an obstacle for one to earn a lot of money by investing into it.
What's more, I disagree with your advice not to invest in an ICO whose team is from a country with high level of corruption. People are different in any country and projects developers might actually be good and it's unfair that good people from a bad country don't get a chance to succeed.

[coingrow]

So here are the golden rules that I always follow if I am thinking of investing in any ICO. No 1 is, what is the problem that the ICO intends to solve. If there is no real life usage, I do not even look into the ICO. 2nd is, who are the people behind the ICO. Do they even have the capability and capacity to complete the project - I dont want to give my money to some kids with cool idea but have no experience in execution. Lastly, if I do not understand the ICO in layman terms and can't explain it to my grand mother, I would not touch it.

[kubricktrader]

Everyone congratulating the OP for a great post. Lol


Sorry to burst the bubble but you know all ICOs will soon very very likely be banned globally. They all breach basic securities law. You cannot advertise the sale of a security. It's on the books in international law. Dump all the tokens you have they are soon to become worthless.

[jlp]

Everyone congratulating the OP for a great post. Lol


Sorry to burst the bubble but you know all ICOs will soon very very likely be banned globally. They all breach basic securities law. You cannot advertise the sale of a security. It's on the books in international law. Dump all the tokens you have they are soon to become worthless.

This is a very good point.  Avoid any ICO that tells you that you are making an "investment" or that you will make money, a "return" or "dividend" or that the value of the token/coin will go up.  These ICOs will be on top of the list for regulators, if they decide to come after them.

It's questionable if the new token will be deemed a security if the team sufficiently warns the buyer that the token has no value and that the buyer can lose all of his/her money.

[Latrix]

thanks for the infomation mate. well detailed and will take your points into consideration. thanks again!

[infinity33]

so helpful information for me that never tried to invest so for now atleast i have read it now and then i will apply what i have read with the information you provided.

[carriebee]

This is very helpful for those who are interested to join and to invest in ICO's. These days there are many ICO's that has been spreading posting more information about their project like the roadmap, team marketing strategy and a lot more. Yes the team should proves that they can develop the project very well to attract more investors.

[jlp]

Change Bank wants to issue a debit card, which Monaco, TenX and Centra are doing as well.

There might be enough of a market for multiple debit cards. However, the number of people who will put their coins in a bank or any centralized place, is questionable. According to this poll, the majority of people do not agree with the idea "Bitcoin bank":

https://bitcointalk.org/index.php?topic=1652815.2160

Andreas Antonopoulos recommended that you should never leave your coins at an exchange, because you are creating a honey-pot for hackers or employees to steal. By putting your coins in a bank, you are creating a honey-pot.

Also, Change Bank lies about their team. Their “Blockchain Expert” worked as an Inside Sales Rep until 1.5 months prior. Their “Blockchain Developer” never developed anything related to blockchain before.

Also, banking and insurance are very complicated businesses. None of the people on Change-Bank's team have experience in banking or insurance, with the exception of their administration person who did administrative work at a bank.

[yusuf98]

this topic can provide good insight and knowledge about prevention of the negative effects of ICO. this can minimize losses for investors and others.

[hdtqisg]

Thanks your hard work for all member here! I had join somes ICO coin! Some of that coin have price after ICO  lower ICO times and some off it have long time waiting exchange ( example: MNX coin) . So i ithink member need carefull when joint ICO program!

[OriginalBankster]

@jlp thanks for your work.
I always enjoy reading your posts. you clearly know what you are talking about.

[jlp]

Kyber brags that one of its benefits is that it doesn’t hold the users’ tokens. Therefore, the tokens won’t get hacked or stolen. They are implying that if they hold tokens, the tokens can get hacked or stolen.

Then they say that they guarantee high liquidity by “holding reserves of all tokens in the network” that users may want. They would need to hold TONS of tokens to guarantee high liquidity. By holding tokens, these tokens can get hacked or stolen, according to Kyber.

Their business model is completely flawed.

In regards to CombiCoin, their pitch is that you reduce risk by diversifying. However, they increase risk for you because they have your money and you have to believe that it’s backed by other coins. Tether is doing this already, except they back up Tether with USD.  There is already talk that Tether is not backing up their coin with sufficient USD. You’ll never know for sure that CombiCoin’s TRIA is backed up by sufficient coins. Instead, if you went out and bought the other coins on your own, you’ll never need to believe anyone’s claims.

[jlp]

Swarm Fund is lying. They say that you need large amounts of money to buy real estate and your money is tied down for an indefinite amount of time. This is false. You can buy one share of a REIT, and there are thousands of REITs to choose from, and you can sell it one minute later.  If they start off their pitch with a lie, what else are they lying about?

There is another flaw with Swarm, which is similar to the flaw with CombiCoin. You will have to trust that the coin is backed up LEGALLY by the land title of the real estate. Who is the owner of the real estate? John Doe? Who is to say John Doe will uphold any agreement that the real estate, that has his name in the municipal records as the owner, will be ascribed to the coin holders? Is there a legal contract that you can take to a court to uphold the agreement?

Atlant and HomeToken have the same problems as Swarm. In addition to that, they both have the same problem as coin banks, exchanges and investment funds. The money is centralized into a honey pot, which makes it attractive to hackers and employees to steal.

Take many of the recommendations on Bitcointalk with a grain of salt. Many of them are pump and dumpers.

[Orsenise]

another addition:

Make sure to always check the social media of the websites, especially chat applications! Most of the projects have Telegram/Slack groups and you can easily make contact with the founders on these platforms, and ask any question that comes to your head. Chances of getting scammed after asking the right questions and pushing for specific info are greatly reduced that way

[OriginalBankster]

Kyber brags that one of its benefits is that it doesn’t hold the users’ tokens. Therefore, the tokens won’t get hacked or stolen. They are implying that if they hold tokens, the tokens can get hacked or stolen.

Then they say that they guarantee high liquidity by “holding reserves of all tokens in the network” that users may want. They would need to hold TONS of tokens to guarantee high liquidity. By holding tokens, these tokens can get hacked or stolen, according to Kyber.

Their business model is completely flawed.

In regards to CombiCoin, their pitch is that you reduce risk by diversifying. However, they increase risk for you because they have your money and you have to believe that it’s backed by other coins. Tether is doing this already, except they back up Tether with USD.  There is already talk that Tether is not backing up their coin with sufficient USD. You’ll never know for sure that CombiCoin’s TRIA is backed up by sufficient coins. Instead, if you went out and bought the other coins on your own, you’ll never need to believe anyone’s claims.

Agreed on Swarm and Combicoin.
But, with Kyber it is a different story. As far as i understood, they don't hold tokens. They have reserve managers (anyone with specified credentials can be one) and Reserve Contributors (could be you or me). The reserve contributors hold the tokens and supply the Reserve Managers. These Reserve Managers trade on the Kyber Network Platform and are paying a fee in KNC to Kyber, which will get burned.
So, if my understanding is right, Kyber told the truth. They don't hold the tokens and they can provide the liquidity.

[jlp]

CarTaxi got a 2.9 out of 10 rating:  https://hacked.com/ico-analysis-cartaxi/  ...which I agree with. I’m still scratching my head trying to figure out why a blockchain is needed to tow cars.

How often do you need to tow your car? Every day? Or, once every 10 years? Are you going to go through the hassle of downloading the CARTAXI app/wallet and buying CARTAXI coins just in case you need a tow in 10 years?

If you do not, and when the time comes that you are standing at the side of the highway beside your stalled car or flat tire, are you going to spend the extra 20-60 minutes to figure out how to download the CARTAXI app/wallet and buy CARTAXI coins, while you are running late to your appointment and freezing in winter or sweltering in summer because your car engine is not running?

One Bitcointalk user claimed that CARTAXI wants to be the Uber of car towing and the problem with Uber is that they don’t print receipts when paying with cash and that paying with crypto will solve this problem.

Whether the driver or Uber issues an receipt has nothing to do with the method of payment. Just because the method of payment is cash instead of a crypto, it doesn't mean that Uber cannot issue a receipt, eventually if not now.

The reason Uber drivers do not print receipts when they receive cash is because they do not want to declare that income, to avoid taxes. Tow truck drivers probably do the same thing. Do you think Tow truck drivers will want to use CARTAXI so customers will force them to issue receipts, which will make the drivers pay more income tax?

CARTAXI has a very stupid business model.

[vlad06]

There are 3 kinds of ICOs:

1)  SCAMS

There have always been a lot of scammers, hackers and thieves in the crypto space since day one. Think of Mount Gox. According to Business Insider:

“…one out of every 16-17 Bitcoins belongs to someone who stole it”

If you don’t think that these thieves are trying to steal money through ICOs or from ICOs, you are kidding yourself. You just need to see the Bitcointalk forum dedicated to scams, or to participate in a Slack channel and you will see the never-ending phishing e-mails trying to lure you to their sites, in order to empty your wallet.

In addition to thieves and scammers, there are those who lie or exaggerate. Many users on Bitcointalk are pump and dumpers.

2)  CRAP

Everyone is desperate to host an ICO to make money. Therefore, they are throwing anything and everything onto the blockchain, including the kitchen sink. They may not be intentionally trying to scam, but they think that they have a good enough idea for an ICO. But these will fail because the blockchain will not solve anything for them. Examples include ICOs that want to put 3D data (which would equate to hundreds of Terabytes of data) or 153 exabytes of medical data on a blockchain. This shows that they are clueless about the blockchain and have never run Bitcoin’s full node. Bitcoin’s blockchain is 120 GB and Ethereum’s blockhain is 200 GB and they are both having scaling problems.

They are also throwing any kind of business problem that they can make up, into the ICO. If they cannot make up the business problem, they will exaggerate about it. They will fail because the business problem doesn’t really exist, isn’t significant enough, cannot be solved by a blockchain or they do not really have the solution, though they try to make it sound like they do with lots of technical jargon.

One project cites this business problem:

“You need large amounts of money to buy real estate and your money is tied down for an indefinite amount of time.”

This is a lie and not a business problem. You can buy one share of a REIT, and there are thousands of REITs to choose from, and you can sell it one minute later. If they start off their pitch with a lie, what else are they lying about?

Another project cites this business problem:

“A small number of large energy companies supply millions of customers who are price takers.”

Therefore, the solution is to create more energy suppliers, especially nuclear power plants, which is the cheapest source of electricity. But the project does not propose this. They propose to enable consumers to sell their solar self-generated electricity directly to other consumers.

To do this, consumers should have BOTH solar panels and batteries. This is a TINY market. Though solar panels are growing, it is still a tiny percent of the market and solar generated electricity is still much more expensive than nuclear generated.

Consumers with solar panels do not have that much surplus electricity to sell anyways. They use most of what they generate. Tesla and Enphase hyped up their batteries for solar panel owners to store their surplus electricity. These batteries are NOT selling. Enphase spent over $100 million to develop their battery and partly because of the lack of battery sales, their stock has plummeted approximately 85%.

Of course, the project’s pitch looks impressive at first glance.

3)  LEGITIMATE

There are only a few applications that make a lot of sense for the blockchain: transfer of value (currency), store of value, remittances (disrupt Western Union and bank wire transfers), smart contracts, gaming and gambling. These applications will disrupt their respective industries, because the blockchain will provide a lot of cost-savings or time-savings to the users. There might be other applications that make sense that I missed, but applications proposed by many ICOs do not make sense. Jesus Coin is an extreme example, but there are applications that fall across the spectrum from Jesus Coin to Bitcoin.


YOU CAN REDUCE THE RISK BY USING 3 FILTERS

1)  The project’s idea should make sense, but do not base your investment decision purely on the idea. Watch:

“Ideas are like assholes - everyone has one, no one cares”
https://www.youtube.com/watch?v=PhJgrEackis

Entrepreneurs typically try to hide their ideas because they think they are the only ones that came up with the ideas. Venture Capitalists tell them to scream their ideas to the public and they’ll see that nobody will steal them. Ideas are a dime a dozen. There are probably 10 other people with the same idea that you have or that the ICO has. The most important factor to success is the ability to execute. This is why Venture Capitalists refuse to sign non-disclosure agreements and rarely invest in startups which haven’t built a prototype or product.

HAS THE ICO TEAM BUILT ANYTHING THAT WE CAN USE TODAY?

If not, take a pass. This is the best evidence that the team can execute. It takes way more skill, time, work and money to build an app than to create a one-page website and video. It shows:

• The team has proven that they can develop.
• It is less likely that the team will invest so much and not follow through.

Everything else is useless. Don’t be fooled by big teams, fancy pretentious titles, references, roadmap, video, fancy animations, escrow, blogs, Slack, Telegram, Twitter, Facebook, Reddit and white paper.

One project stacked their team with a dozen people and then lied about them. One member had the title of “Blockchain Expert”, but he worked in Inside Sales until 1.5 months prior. One member had the title “Blockchain Developer”, but he never developed a blockchain before.

Here is an example of a project team using fake photos and fake names: https://bitcointalk.org/index.php?topic=1949528.msg19485217#msg19485217

Don't rely on Github unless you can verify that they didn't copy the code from someone else and you can run it.

Several high profile projects raised millions of dollars and still have not produced an app. This number will grow and become more evident in the coming years.

Gnosis raised $12.5 million and their website says:

“The Hunch Game is nearly ready and can be launched in the first half of 2017 as an example Gnosis app.”

No app yet.

Qtum raised $15.6 million. I don't see anything produced on Qtum's website.

After raising $50 million, Cosmos's website is still pitching its white paper. Come on. What have they produced with that $50 million?

Augur had Vitalik Buterin on their team. After Satoshi Nakamoto, Vitalik is the most desirable person in the universe to have on an ICO team. After raising multiple millions and after two and a half years, all they’ve released is a simple beta that is barely usable.

Don’t be suckered by animations and videos. Satoshi didn’t have any of this and his coin was the most successful. Besides, the animations aren’t that impressive anymore, as I’m beginning to see the same animation on multiple websites. Some of these teams must be using the same graphic designer.

2)  IS THE TEAM FROM A CORRUPT COUNTRY?

Check Transparency International's ranking.

If so, take a pass.

The number of ICOs from corrupt countries, especially those that were famous for sending out phishing scams for years, have exploded.

Yes, there are scams from countries that are not corrupt and successful projects from corrupt countries. What is important is the probability and if you are willing to take the extra risk.

3)  “NEVER INVEST IN A BUSINESS THAT YOU DO NOT UNDERSTAND”

This is a quote from Warren Buffett. It is very applicable because many ICO teams try to impress the audience with technical jargon. Many investors are not tech savvy and are baffled or confused, but they invest because they think that the project team must have come up with a technological break-through.

Last word:

You need to be able to verify that the business problem exists, that the market size is truly as big as the ICO claims and that the solution is possible. Quite often, they exaggerate on most of these. You need to verify that a blockchain or a cryptocurrency actually is needed for the solution. Quite often, they’re not.

Do not rely solely on ICO listing or rating sites. They likely do not know about all of the ICOs. Not all ICOs are willing to pay to be listed. They have methodologies that you may not agree with. Some claim to be experts, but you are likely more of an expert in your own field, whether that is medical, law, engineering or finance, than they are. They will likely have biases, especially for ICOs originating from their country or region. Putin wants to increase the crypto industry in Russia. Is this why there has been an explosion of ICOs from Russia? Even Putin’s Advisor ran an ICO. If Russia took out Facebook ads to disrupt U.S. and European politics, who is to say that they will not pay off ICO listing and ratings sites to favor Russian ICOs?

A fucking fantastic thread. I have bookmarked it.

Thanks a lot man!

[zlo_prase]

excellent guide and must-read for all new investors (including myself). many thanks, jlp!

[jlp]

DomRaider has a fancy commercial running everywhere. It even played ahead of a Youtube video that I wanted to watch.

DomRaider is all marketing and no meat. They are probably liars as well. Their industry, dropcatching, is tiny. If it was as big as DomRaider makes it seem, then Godaddy would be making billions from it. But none of Godaddy’s revenue is attributed to dropcatching on their Income Statement. Godaddy never even mentions dropcatching anywhere in their annual filing to the SEC. Read it:

https://www.sec.gov/Archives/edgar/data/1609711/000160971117000042/gddy-12312016x10k.htm

Read this guy's blog on why he is giving up on domain drop catching. He gives multiple reasons, such as "getting more competitive", "opportunity cost is not just financial", "each successive drop catch makes less incremental improvement to our overall portfolio", "there may be better things to do with the money":

http://www.webmastering.co.uk/domain-names/why-im-giving-up-on-domain-drop-catching/

After reading the first sentence in Earth Token’s announcement, I stopped. “environmentally sustainability software”??? Is this another example of somebody trying to put the kitchen sink onto the blockchain?

[Love me tender]

That's so nice, thanks for a good advice!

[pitiflin]

To sum things up in short:
1. Either icos will act as if they are very sincere and honest and scam you and run away with your money.
2. Icos won't scam you they will promise you stuff that they will never do about their products and just list their coin in some exchange.
3. They will keep their word and continue even after they get listed on an exchange.

[jlp]

TokenStars has no explanation of why the current currency (EUR, GBP, etc.) needs to be replaced by a token. Their site says "you support a promising 14-16 year old player [athlete] - player spends money".  This means the player will sell the token to get EUR to pay for rent and food. What good is the token? Also, who is to say that the player or anyone else will honor any agreement to repay the supporters 2-6 years later? If you're a token holder, are you going to wait that long, only to hope that the player repay token holders?

PeerGuess is one of those ICOs using the same star constellation animation that I've seen on other sites. Are they using the same graphic designer, or is PeerGuess another ICO put out by the same group of scammers? Even if PeerGuess is not a scam, it is TOO LATE and TOO LITTLE.

TOO LATE: Gnosis, Augur and Stox already had ICOs to get into prediction markets, though Gnosis and Stox still haven't built anything yet and Augur built a beta that is barely usable. This shows that execution is much harder than anything they've done before, including an ICO.

TOO LATE and TOO LITTLE: Stockbet already has built software that lets people bet on crypto currencies (and stocks). PeerGuess has a sales pitch.

This shows that ICOs with large teams mean nothing. With 12 members, PeerGuess should have been able to build something. Startups at Y Combinator consists of 2 founders each and they're building prototypes and products. Since PeerGuess hasn't built anything, it probably means that most members add little to no value (assuming that they are real people), but they included them to make you think that they add value.

[FutureC0in]

I have 2 ICOs that potentially a scam
- Face coin : no more update after ICO finished but website and Twitter account still alive.
- Tracor network : 1 day after ICO date finished the website and twitter account also deleted.... phew in fact this is the worst ICO that I joined.
Lesson learned.... please do your own assessment, there are many people in the forum promoting the ICO for their own benefit.

I bookmarked this page so that I can reminded all the time of these factors to note to assess ICO.
Thanks you so much the the OP.

[xenolith]

Thank you for writing this, this is amazing information for newbies into the crypto game, and perhaps even veterans. I'm going to refer this thread to people whenever they make bold claims about crypto!

[nymphelav]

Very good points that everyone who wants to invest in Cryptocurrency or ICOs should know. Everyday, the market is flooded with new people hearing about the new digital money and want to jump on the train, but it's not that simple. Always invest only what you can afford to lose!

[hua_hui]

There are 3 kinds of ICOs:

1)  SCAMS

There have always been a lot of scammers, hackers and thieves in the crypto space since day one. Think of Mount Gox. According to Business Insider:

“…one out of every 16-17 Bitcoins belongs to someone who stole it”

If you don’t think that these thieves are trying to steal money through ICOs or from ICOs, you are kidding yourself. You just need to see the Bitcointalk forum dedicated to scams, or to participate in a Slack channel and you will see the never-ending phishing e-mails trying to lure you to their sites, in order to empty your wallet.

In addition to thieves and scammers, there are those who lie or exaggerate. Many users on Bitcointalk are pump and dumpers.

2)  CRAP

Everyone is desperate to host an ICO to make money. Therefore, they are throwing anything and everything onto the blockchain, including the kitchen sink. They may not be intentionally trying to scam, but they think that they have a good enough idea for an ICO. But these will fail because the blockchain will not solve anything for them. Examples include ICOs that want to put 3D data (which would equate to hundreds of Terabytes of data) or 153 exabytes of medical data on a blockchain. This shows that they are clueless about the blockchain and have never run Bitcoin’s full node. Bitcoin’s blockchain is 120 GB and Ethereum’s blockhain is 200 GB and they are both having scaling problems.

They are also throwing any kind of business problem that they can make up, into the ICO. If they cannot make up the business problem, they will exaggerate about it. They will fail because the business problem doesn’t really exist, isn’t significant enough, cannot be solved by a blockchain or they do not really have the solution, though they try to make it sound like they do with lots of technical jargon.

One project cites this business problem:

“You need large amounts of money to buy real estate and your money is tied down for an indefinite amount of time.”

This is a lie and not a business problem. You can buy one share of a REIT, and there are thousands of REITs to choose from, and you can sell it one minute later. If they start off their pitch with a lie, what else are they lying about?

Another project cites this business problem:

“A small number of large energy companies supply millions of customers who are price takers.”

Therefore, the solution is to create more energy suppliers, especially nuclear power plants, which is the cheapest source of electricity. But the project does not propose this. They propose to enable consumers to sell their solar self-generated electricity directly to other consumers.

To do this, consumers should have BOTH solar panels and batteries. This is a TINY market. Though solar panels are growing, it is still a tiny percent of the market and solar generated electricity is still much more expensive than nuclear generated.

Consumers with solar panels do not have that much surplus electricity to sell anyways. They use most of what they generate. Tesla and Enphase hyped up their batteries for solar panel owners to store their surplus electricity. These batteries are NOT selling. Enphase spent over $100 million to develop their battery and partly because of the lack of battery sales, their stock has plummeted approximately 85%.

Of course, the project’s pitch looks impressive at first glance.

3)  LEGITIMATE

There are only a few applications that make a lot of sense for the blockchain: transfer of value (currency), store of value, remittances (disrupt Western Union and bank wire transfers), smart contracts, gaming and gambling. These applications will disrupt their respective industries, because the blockchain will provide a lot of cost-savings or time-savings to the users. There might be other applications that make sense that I missed, but applications proposed by many ICOs do not make sense. Jesus Coin is an extreme example, but there are applications that fall across the spectrum from Jesus Coin to Bitcoin.


YOU CAN REDUCE THE RISK BY USING 3 FILTERS

1)  The project’s idea should make sense, but do not base your investment decision purely on the idea. Watch:

“Ideas are like assholes - everyone has one, no one cares”
https://www.youtube.com/watch?v=PhJgrEackis

Entrepreneurs typically try to hide their ideas because they think they are the only ones that came up with the ideas. Venture Capitalists tell them to scream their ideas to the public and they’ll see that nobody will steal them. Ideas are a dime a dozen. There are probably 10 other people with the same idea that you have or that the ICO has. The most important factor to success is the ability to execute. This is why Venture Capitalists refuse to sign non-disclosure agreements and rarely invest in startups which haven’t built a prototype or product.

HAS THE ICO TEAM BUILT ANYTHING THAT WE CAN USE TODAY?

If not, take a pass. This is the best evidence that the team can execute. It takes way more skill, time, work and money to build an app than to create a one-page website and video. It shows:

• The team has proven that they can develop.
• It is less likely that the team will invest so much and not follow through.

Everything else is useless. Don’t be fooled by big teams, fancy pretentious titles, references, roadmap, video, fancy animations, escrow, blogs, Slack, Telegram, Twitter, Facebook, Reddit and white paper.

One project stacked their team with a dozen people and then lied about them. One member had the title of “Blockchain Expert”, but he worked in Inside Sales until 1.5 months prior. One member had the title “Blockchain Developer”, but he never developed a blockchain before.

Here is an example of a project team using fake photos and fake names: https://bitcointalk.org/index.php?topic=1949528.msg19485217#msg19485217

Don't rely on Github unless you can verify that they didn't copy the code from someone else and you can run it.

Several high profile projects raised millions of dollars and still have not produced an app. This number will grow and become more evident in the coming years.

Gnosis raised $12.5 million and their website says:

“The Hunch Game is nearly ready and can be launched in the first half of 2017 as an example Gnosis app.”

No app yet.

Qtum raised $15.6 million. I don't see anything produced on Qtum's website.

After raising $50 million, Cosmos's website is still pitching its white paper. Come on. What have they produced with that $50 million?

Augur had Vitalik Buterin on their team. After Satoshi Nakamoto, Vitalik is the most desirable person in the universe to have on an ICO team. After raising multiple millions and after two and a half years, all they’ve released is a simple beta that is barely usable.

Don’t be suckered by animations and videos. Satoshi didn’t have any of this and his coin was the most successful. Besides, the animations aren’t that impressive anymore, as I’m beginning to see the same animation on multiple websites. Some of these teams must be using the same graphic designer.

2)  IS THE TEAM FROM A CORRUPT COUNTRY?

Check Transparency International's ranking.

If so, take a pass.

The number of ICOs from corrupt countries, especially those that were famous for sending out phishing scams for years, have exploded.

Yes, there are scams from countries that are not corrupt and successful projects from corrupt countries. What is important is the probability and if you are willing to take the extra risk.

3)  “NEVER INVEST IN A BUSINESS THAT YOU DO NOT UNDERSTAND”

This is a quote from Warren Buffett. It is very applicable because many ICO teams try to impress the audience with technical jargon. Many investors are not tech savvy and are baffled or confused, but they invest because they think that the project team must have come up with a technological break-through.

Last word:

You need to be able to verify that the business problem exists, that the market size is truly as big as the ICO claims and that the solution is possible. Quite often, they exaggerate on most of these. You need to verify that a blockchain or a cryptocurrency actually is needed for the solution. Quite often, they’re not.

Do not rely solely on ICO listing or rating sites. They likely do not know about all of the ICOs. Not all ICOs are willing to pay to be listed. They have methodologies that you may not agree with. Some claim to be experts, but you are likely more of an expert in your own field, whether that is medical, law, engineering or finance, than they are. They will likely have biases, especially for ICOs originating from their country or region. Putin wants to increase the crypto industry in Russia. Is this why there has been an explosion of ICOs from Russia? Even Putin’s Advisor ran an ICO. If Russia took out Facebook ads to disrupt U.S. and European politics, who is to say that they will not pay off ICO listing and ratings sites to favor Russian ICOs?

I agree with a lot of stuffs but i am personally not comfortable with a lot of your stands too. A lot of the good icos have no working products and can grow very huge while on the other hand a lot of the icos have working products but fail terribly. One of the best case is that ethereum. It begins as an idea when it started and it takes years and years to iron the product out, even till now it is still in the upgrade phrase. On the other hand, some icos already have products but after the fund rising, products did not get adopted or there were unforeseen problems keep appearing and the team is not able to solve. So to me, what is more important is the dev team.

[R.Hasan]

Thumbs up for you!

One of the best things I've ever read about ICOs. Thanks for the very informative thread.

[R.Hasan]

Folks, www.balanc3.net a new accounting platform prove value with new accounting Tech, claims this would be good for investors. Would that work?

[jlp]

I agree with a lot of stuffs but i am personally not comfortable with a lot of your stands too. A lot of the good icos have no working products and can grow very huge while on the other hand a lot of the icos have working products but fail terribly. One of the best case is that ethereum. It begins as an idea when it started and it takes years and years to iron the product out, even till now it is still in the upgrade phrase. On the other hand, some icos already have products but after the fund rising, products did not get adopted or there were unforeseen problems keep appearing and the team is not able to solve. So to me, what is more important is the dev team.

You are correct that some ICOs with prototypes/products will fail and some ICOs without prototypes/products will succeed. What you have to assess for yourself is the probability. Venture Capitalists have decades of experience and they rarely invest in startups without a prototype/product. They are trying to reduce their risk.

There are a few differences between when Ethereum had its ICO and today:

• There are far more ICOs today than back then, so you can be much choosier
• Vitalik Buterin was co-founder of Bitcoin Magazine in 2011. This means that he was already a leader in the field, when he started Ethereum in 2014. Most of the ICOs today are not started by leaders in this field. Some of them have only been exposed to cryptocurrencies for a few months. Change Bank's "Blockchain Expert" worked in Inside Sales until 1.5 months prior.
• Vitalik grew up in Canada and Ethereum started in Switzerland. Today, you have many ICOs coming from corrupt countries around the world. In 2014, you didn't.

There is no guarantee that any business will not fail. But, when the ICO team has a prototype/product, they have proven that they can develop. That significantly reduces your risk. With many ICOs, you have no idea if they can. You cannot trust the information on the profile of many ICOs. Just because they can hire somebody to make a video, it does not mean they can write thousands of lines of complicated code. It's like you giving money to someone to fix your car, simply because he says he can fix cars but have never fixed one before.

Y Combinator is one of the biggest startup incubators in the world. They provide a small amount of funding (approx. $25k to 50k) to startups, which usually consists of 2 founders each. Then they build prototypes or products. Then the startups give pitches to angel investors or Venture Capitalists. If prototypes or products are unnecessary, then why do they waste so much time and money before pitching to angels and VCs?

Almost all incubators have startups that consist of usually only 2 founders, that are building prototypes and products. ICOs are stacking their team with a dozen people and they still cannot build anything. With 12 people, they should've built 6 prototypes/products by now. This shows that they are simply stacking their teams with useless people, in order to impress you or sucker you in.

[jlp]

Electroneum is dishonest. Their website states:

“Cryptocurrencies are so hard to come by! The barriers to entry for most people are too large. Complex software, GPU Mining rigs, sending personal identification to strange websites.”

That’s not true. Those things are not needed with PoS and PoI blockchains.

Their website states:

“Electroneum makes it easy to access and use a super secure cryptocurrency that has all of the benefits of Bitcoin and more. Transactions in Electroneum happen faster and are more anonymous. Did you know that anyone with your public Bitcoin wallet address can see how many bitcoin you have, and your entire transaction history? Electroneum protects your transaction history and wallet contents from prying eyes, whilst leaving publicly accessible transaction hashes available for the technically discerning to authenticate transactions.”

Is the Electroneum team living in 2009 or 2017? Or, are they trying to scam newbies into thinking that Bitcoin is the only crypto currency that exists? There are many crypto currencies already that provide privacy, such as Monero, PIVX and Zcash.

Mobile? Lots of altcoins can be on the phone. Offline wallet? This is when Electroneum is deliberately misleading or lying. They state:

““Googling” for Bitcoin Hack or Ethereum Hack will find you dozens of stories of stolen cryptocurrencies. We’ve developed an OFFLINE wallet that is 100% secure. You can create as many offline wallets as you like (free) and transfer the bulk of your Electroneum to those wallets.”

Are they trying to make you think that there are no offline wallets for Bitcoin and Ethereum? There are LOTS of them.

On this interview with the CEO, he talks about how 200 million mobile phone users will be able play online gambling sites if they had crypto currencies on their phones:

https://youtu.be/qq24jCuHi7k

So, what’s so special about Electroneum? You already have a multitude of crypto currencies on your phones today.


Spectivvr.com’s white paper has only one problem that they are trying to solve. Their write up of the problem is less than one page and is one of the weakest and most nebulous problems I’ve ever read. I have no idea why a new crypto is needed.

If Spectivvr.com is trying to put virtual reality onto the blockchain, then it shows that they are clueless about the blockchain and that they have never run Bitcoin’s full node. ARToken wants to put 3D data onto a blockchain. This implies hundreds of Terabytes of data. Bitcoin’s blockchain is 120 GB and Ethereum’s blockhain is 200 GB and they are both having scaling problems.

Their business model is given in one sentence:

“Specs are a virtual reality token supporting internal platform functions like tipping, premium content purchases, and ad rewards.”

How are they going to compete against Youtube, which already provides 4k videos? What’s to stop Youtube from providing virtual reality videos? How many viewers are going to go through the hassle of buying Spec tokens just to tip video producers, when they don’t have to do that now on Youtube?

[edir_ruvall]

To be honest, I do not agree with everything. about the corrupt countries - this is not always a risk. I also noticed that a lot of ICO from Russia is now on the market, but the fact that they are from Russia does not make them risky at once. Therefore, it is better to look at the competencies and style of communication, rather than the country. And the advice "not to go where you do not understand anything" - but what about read, see, learn, ask, finally? The main thing is interest and desire to learn.

[jlp]

To be honest, I do not agree with everything. about the corrupt countries - this is not always a risk. I also noticed that a lot of ISO from Russia is now on the market, but the fact that they are from Russia does not make them risky at once.

As I wrote in the OP:

Yes, there are scams from countries that are not corrupt and successful projects from corrupt countries. What is important is the probability and if you are willing to take the extra risk.

In corrupt countries, ethics and honesty are more lax. Does this mean that the likelihood of exaggeration or dishonesty to be greater? If you do not think so, then go ahead and invest.

In non corrupt countries, people grow up with lots of regulations and enforcement. Though there are exceptions, the people feel that the way to get ahead is based largely on merit. In corrupt countries, there is less regulation, less enforcement and more people trying to find ways to get ahead by working around the system. In fact, they see that the most successful people in their country, usually in their government, are those who get ahead by lying, cheating or working around the system, instead of based on merit. If you do not think this is a risk, then go ahead and invest.

Just because the ICO’s coin is on an exchange, it does not mean that they will execute. On Coinmarketcap, Gnosis is ranked 52, Qtum is ranked 14 and Augur is ranked 28. Here is what I wrote about them in the OP:

Gnosis raised $12.5 million and their website says:

“The Hunch Game is nearly ready and can be launched in the first half of 2017 as an example Gnosis app.”

No app yet.

Qtum raised $15.6 million. I don't see anything produced on Qtum's website.

Augur had Vitalik Buterin on their team. After Satoshi Nakamoto, Vitalik is the most desirable person in the universe to have on an ICO team. After raising multiple millions and after two and a half years, all they’ve released is a simple beta that is barely usable.

In regards to Russia specifically, you should be aware of another risk. As I wrote in the OP:

Putin wants to increase the crypto industry in Russia. Is this why there has been an explosion of ICOs from Russia? Even Putin’s Advisor ran an ICO. If Russia took out Facebook ads to disrupt U.S. and European politics, who is to say that they will not pay off ICO listing and ratings sites to favor Russian ICOs?

Is the Russian government funding Russian ICOs to help them maximize the money that they raise? If so, you should be aware of this risk. Though there are exceptions, in the far majority of time, when a government tries to pick and choose companies, it’s not a good idea. The U.S. government forced taxpayers to give $535 million to Solyndra. It looked great at first and then it went bankrupt. Governments are not educated nor skilled to be Venture Capitalists, investors or stock pickers. Their money is often spent on policies to further their political or social goals.

In the extreme cases when the government tries to centrally manage the economy, they create socialism, or communism which is the extreme form of socialism. Every government that centrally manages their economy have always made their economies poorer in the long run. Think of Cuba, Venezuela, when Russia was communist, when China was communist, etc. The people who are best at picking which business will succeed or fail, are those in the free market.

Therefore, it is better to look at the competencies and style of communication, rather than the country. And the advice "not to go where you do not understand anything" - but what about read, see, learn, ask, finally? The main thing is interest and desire to learn.

Yes, the best evidence of their competency is if they have built a prototype or product.

If you read, see, learn and ask sufficiently, then you should understand the business, which means you will not be investing in a business that you do not understand.

[jlp]

Minerva gives tokens to platforms that accept Minerva’s OWL token. But they never explain where the money comes from? How will Minerva continue giving their token away forever? Business model makes no sense.

Blockv.io’s homepage says:

“These smart objects, called vAtoms (Virtual Atoms) combine code with multimedia elements and are dynamic, compelling digital goods that make a cryptocurrency come alive as an asset…”

This is similar to what ARToken and Datum want to do: put TONS of data onto the blockchain. This shows that they are clueless about the blockchain. At 120 GB, Bitcoin’s blockchain is already causing scaling problems.

Blockv.io’s token allocation shows that they are among the greediest teams around. Only 35% will be go to buyers. Developers and company will keep 65%. Unbelievable. Not only is this an extreme example of greed, there is no decentralization. Their team can overpower and control the blockchain whenever they want.

[indrakusumaindra]

yeah legitimate and crap ico is everywhere but im sure there is plenty ico that had a bright project. i mean there do a great ico that strungle in the middle of fake ico. for sure we need a universal regulation for cryptocurrency, not just an internal regulation from country to country.

[Casabrandy]

Minerva gives tokens to platforms that accept Minerva’s OWL token. But they never explain where the money comes from? How will Minerva continue giving their token away forever? Business model makes no sense.

Blockv.io’s homepage says:

“These smart objects, called vAtoms (Virtual Atoms) combine code with multimedia elements and are dynamic, compelling digital goods that make a cryptocurrency come alive as an asset…”

This is similar to what ARToken and Datum want to do: put TONS of data onto the blockchain. This shows that they are clueless about the blockchain. At 120 GB, Bitcoin’s blockchain is already causing scaling problems.

Blockv.io’s token allocation shows that they are among the greediest teams around. Only 35% will be go to buyers. Developers and company will keep 65%. Unbelievable. Not only is this an extreme example of greed, there is no decentralization. Their team can overpower and control the blockchain whenever they want.

Only crazy investors will risk to fund an ICO which the devs holds the majority of the supply. Even the devs has a valid reason to get the 65% but still they are just using the money of investors to run the project. So it is basically unfair. I salute you for exposing ICO's flaws simce nowadays there are so many crap ICO showing.

[jlp]

DOVU says people will pay for car data. Who will? What value are they going to get when they can already get tons of data from a fleet of test cars. Let’s say there are, why wouldn’t they pay with BTC, ETH, USD, EUR or any other existing currency?

Request Network sounds like a me-too. Bitpay and other companies already enable online payment.

Hedge is another me-too. There are already many investment funds, and they all suffer the same problem as exchanges or DAO. By doing the taboo, centralizing, you are putting your money in a honey pot, which can be stolen by hackers or employees.

[cryptodoll]

I bookmarked your thread, it is very legitimate. Unfortunately, many millions of dollars that could be used to invest in currently traded coins are being dumped into this ICO hysteria. I 100% agree that there better be a damn product in existence before running an ICO! No product = no good.

The ICO hysteria will not last long as the SEC gets it claws clamped down. I don't think they can disassemble ICOs from the past, but future ICOs will be soon extinct before too long.

There are many other more legitimate ways to raise funds for projects, such as the dev fee. But the ICO is one thing that is far too shady IMO.

[Kunlejoe0]

ICO will always be controversial! Especially now with hundreds of them with all kind of promises! Yet, there are still very good ones out there, one just have to look for them.

[jlp]

Someone private messaged me and asked me for a review of:

ModulTrade
https://bitcointalk.org/index.php?topic=2240518.0

If this is executed well, it has potential. However, there are several projects trying to do something similar. Their video didn’t say anything special or different than what other projects are trying to do. This idea is old and has been around for a while. The key to success will be execution.

They have a “prototype” but it’s really a demo (only on the client computer), because it doesn’t execute any transactions. A demo is far easier to build than a prototype. With 11 people on their team, they should’ve been able to build 5 prototypes by now. Nevertheless, a demo is better than nothing.

With 8 advisors, they have 19 people on their team. Most of them probably do not do much. They’re stacking their team to fool you.

They have lots of competitors, but their white paper does not compare them. This is misleading. Even the existing way of doing international trade is a competitor. They should’ve provided side by side comparisons to competitors and explain why each of their features/functions are superior.

They plan to use Ethereum as the production blockchain. I question the viability of this. Ethereum is already getting bogged down with just ICOs. Wait until several projects get some traction in production usage. Ethereum might grind to a halt. ModulTrade’s white paper explains that this will not be an issue and they can get around this. But this is an additional risk that you’ll be taking because it’s unlikely that you’ll be able to verify ModulTrade’s numbers.

Only 40% of tokens are sold to buyers and they’re keeping 38% of the tokens, which is too greedy and centralized.

They started their idea in October 2016. Startups at Y Combinator with only 2 people on the team, build their prototypes in 6 months.

The CEO and several team members are from Russia. Not all Russian ICOs are bad, but you’ll be taking an additional risk.

On their Bitcointalk announcement, they say:

“While the number of MTRc is limited the increase of trades pushes the demand for MTRc and its valuation”

This means that they are selling a security and will be on regulators’ lists. Maybe ModulTrade doesn’t care about regulators because Russia does not have extradition agreements with other countries, but what happens if regulators ban their token in Europe or North America?

As a side note, countries without extradition agreements make teams feel more invulnerable. Therefore, they are more likely to lie and cheat investors from other countries, because there is little to no recourse from the other countries' governments.

[jlp]

Someone private messaged me and asked me for a review of:

Winding Tree
https://bitcointalk.org/index.php?topic=1946065.0

They stacked their team with 6 people and 3 advisors. They should’ve been able to create 3 prototypes by now, but I do not see any.

Their white paper states:

“Individual travel companies are notoriously out of date in terms of technological adoption: travel companies still rely on fax machines and phones as main communication methods, while others struggle to connect to data sources to power their sales efforts.”

That’s likely a lie. Every hotel I’ve stayed at, even small ones in 3rd world countries, use computers.

Then it states:

“Five companies in the travel industry control the most of the travel market. The two largest OTAs (Online Travel Agencies), Priceline Group and Expedia Inc.,control 95% of OTA market in the U.S. Amadeus, Sabre, and Travelport, the top three GDSs (Global Distribution Systems), have 99% combined market share”

Is Winding Tree trying make us believe that travel companies communicate with the Online Travel Agencies by using fax?

Winding Tree gives a good explanation of the problem with the OTA space and the lack of competition. This sounds like a serious business problem that should be solved. I agree that there needs to be more competitors in the OTA space. But for Winding Tree to be a serious competitor is questionable. They’ll need to raise a ton of money and do more than just create a new token.

The challenge is similar to internet search and advertising. Google controls the market and makes tons of money. There needs to be more competition. But an ICO is not going to be able to compete against Google just because it creates a new token.

In order to compete against these OTAs and GDSs, you need huge CENTRALIZED systems that can store and process PETABYTES or EXABYTES of photos and other data. Ethereum’s blockchain can barely handle 200 GB because it is decentralized. Then Winding Tree would need to spend a thousand person-years of programming to build a system that has enough features and functions to compete. Then Winding Tree would need a massive budget and outbound corporate sales staff to get hotels and airlines to sign up with them. Then Winding Tree would need a massive budget, marketing staff and inside sales and support staff to market their service to consumers.

It would seem that none of their team members had worked for large companies to manage very large databases.

There have been many competitors. Does Hotels.com still run their commercials? Obviously, they haven’t succeeded.

Creating a new crypto currency does not make you a competitor to Expedia. These OTAs can start accepting Bitcoin or Ethereum if they wanted to.

This is a massive project and Winding Tree's white paper only has 6 pages on the business aspects. Any other startup in this space should have 100 pages minimally. To take on Priceline or Expedia with a 6 page explanation, is a joke.

The right solution is for the government to break up the OTAs and GDSs into multiple smaller companies, similar to what the U.S. did to AT&T a few decades ago, in order to increase competition.

Winding Tree is a very high risk project.

[Francis Freeman]

Your post is GOLD. Thank you for sharing this, I think this should be put on top of this section.
I agree with all of your points, except the one about "Corrupted Country". In my opinion, it means nothing. A good project can be done even if the main developers are from Venezuela, for example, or Angola. There are many good project done in Russia, even if this country seems quite corrupted. You have to separate individuals from government. The government could be corrupted and yet a single developed could be the most serious and reliable person on Earth.

[gpsel008]

This is an excellent analysis of ICOs and is definitely an eye opener for me. Thanks!!

[mysacrifice]

This is very extensive and descriptive post. I believe it will be very useful for beginners. I've just introduced crypto world to my little brother, he will like to read this.

[Qpeep]

This is a very good way to distinguish between ICOs. Thank you for having posted this useful guide. I will forward it to all my crypto friends.

[JanpriX]

This is a very well-thought post that should be read by newbies who are just starting their crypto journey especially when they are entering their first ICO. Many people think that ICOs will just make you more money once you get in early but that's not the case most of the time. I've known different person who lost numerous amounts of BTC by just joining and investing in scam ICOs. You laid out the most important things that should be considered before joining an ICO. This should be pinned at the top of this section. 

[jlp]

Your post is GOLD. Thank you for sharing this, I think this should be put on top of this section.
I agree with all of your points, except the one about "Corrupted Country". In my opinion, it means nothing. A good project can be done even if the main developers are from Venezuela, for example, or Angola. There are many good project done in Russia, even if this country seems quite corrupted. You have to separate individuals from government. The government could be corrupted and yet a single developed could be the most serious and reliable person on Earth.

As mentioned in my OP:

Yes, there are scams from countries that are not corrupt and successful projects from corrupt countries. What is important is the probability and if you are willing to take the extra risk.

In non corrupt countries, people grow up with lots of regulations and enforcement. Though there are exceptions, the people feel that the way to get ahead is based largely on merit. In corrupt countries, there is less regulation, less enforcement and more people trying to find ways to get ahead by working around the system. In fact, they see that the most successful people in their country, usually in their government, are those who get ahead by lying, cheating or working around the system, instead of based on merit. If you do not think this is a risk, you may be right. I may be wrong.

ModulTrade
https://bitcointalk.org/index.php?topic=2240518.0

“While the number of MTRc is limited the increase of trades pushes the demand for MTRc and its valuation”

This means that they are selling a security and will be on regulators’ lists. Maybe ModulTrade doesn’t care about regulators because Russia does not have extradition agreements with other countries, but what happens if regulators ban their token in Europe or North America? Will you suffer a loss?

Countries without extradition agreements make teams feel more invulnerable. Therefore, they are more likely to lie and cheat investors from other countries, because there is little to no recourse from the other countries' governments.

I watched a video of a conference. ConsenSys was warning about selling securities. Waves’ CEO, who is from Russia, debated this and shrugged it off. Is he less concerned because the chances of him getting punished is minimal?

Russia wants to boost the crypto industry in their country. Putin's advisor ran an ICO. Is the Russian government funding Russian teams to help them maximize the money that they raise on ICOs? If so, you should be aware of this risk. Though there are exceptions, in the far majority of time, when a government tries to pick and choose companies, it’s not a good idea. The U.S. government forced taxpayers to give $535 million to Solyndra. It looked great at first and then it went bankrupt. Governments are not educated nor skilled to be Venture Capitalists, investors or stock pickers. Their money is often spent on policies to further their political or social goals.

In the extreme cases when the government tries to centrally manage the economy, they create socialism, or communism which is the extreme form of socialism. Every government that centrally manages their economy have always made their economies poorer in the long run. Think of Cuba, Venezuela, when Russia was communist, when China was communist, etc. The people who are best at picking which business will succeed or fail, are those in the free market.

[Leonbtc]

There are 3 kinds of ICOs:

1)  SCAMS

There have always been a lot of scammers, hackers and thieves in the crypto space since day one. Think of Mount Gox. According to Business Insider:

“…one out of every 16-17 Bitcoins belongs to someone who stole it”

If you don’t think that these thieves are trying to steal money through ICOs or from ICOs, you are kidding yourself. You just need to see the Bitcointalk forum dedicated to scams, or to participate in a Slack channel and you will see the never-ending phishing e-mails trying to lure you to their sites, in order to empty your wallet.

In addition to thieves and scammers, there are those who lie or exaggerate. Many users on Bitcointalk are pump and dumpers.

2)  CRAP

Everyone is desperate to host an ICO to make money. Therefore, they are throwing anything and everything onto the blockchain, including the kitchen sink. They may not be intentionally trying to scam, but they think that they have a good enough idea for an ICO. But these will fail because the blockchain will not solve anything for them. Examples include ICOs that want to put 3D data (which would equate to hundreds of Terabytes of data) or 153 exabytes of medical data on a blockchain. This shows that they are clueless about the blockchain and have never run Bitcoin’s full node. Bitcoin’s blockchain is 120 GB and Ethereum’s blockhain is 200 GB and they are both having scaling problems.

They are also throwing any kind of business problem that they can make up, into the ICO. If they cannot make up the business problem, they will exaggerate about it. They will fail because the business problem doesn’t really exist, isn’t significant enough, cannot be solved by a blockchain or they do not really have the solution, though they try to make it sound like they do with lots of technical jargon.

Swarm Fund cites this business problem:

“You need large amounts of money to buy real estate and your money is tied down for an indefinite amount of time.”

This is a lie and not a business problem. You can buy one share of a REIT, and there are thousands of REITs to choose from, and you can sell it one minute later. If they start off their pitch with a lie, what else are they lying about?

Energi cites this business problem:

“A small number of large energy companies supply millions of customers who are price takers.”

Therefore, the solution is to create more energy suppliers, especially nuclear power plants, which is the cheapest source of electricity. But the project does not propose this. They propose to enable consumers to sell their solar self-generated electricity directly to other consumers.

To do this, consumers should have BOTH solar panels and batteries. This is a TINY market. Though solar panels are growing, it is still a tiny percent of the market and solar generated electricity is still much more expensive than nuclear generated.

Consumers with solar panels do not have that much surplus electricity to sell anyways. They use most of what they generate. Tesla and Enphase hyped up their batteries for solar panel owners to store their surplus electricity. These batteries are NOT selling. Enphase spent over $100 million to develop their battery and partly because of the lack of battery sales, their stock has plummeted approximately 85%.

Of course, the project’s pitch looks impressive at first glance.

3)  LEGITIMATE

There are only a few applications that make a lot of sense for the blockchain: transfer of value (currency), store of value, remittances (disrupt Western Union and bank wire transfers), smart contracts, gaming and gambling. These applications will disrupt their respective industries, because the blockchain will provide a lot of cost-savings or time-savings to the users. There might be other applications that make sense that I missed, but applications proposed by many ICOs do not make sense. Jesus Coin is an extreme example, but there are applications that fall across the spectrum from Jesus Coin to Bitcoin.


YOU CAN REDUCE THE RISK BY USING 3 FILTERS

1)  The project’s idea should make sense, but do not base your investment decision purely on the idea. Watch:

“Ideas are like assholes - everyone has one, no one cares”
https://www.youtube.com/watch?v=PhJgrEackis

Entrepreneurs typically try to hide their ideas because they think they are the only ones that came up with the ideas. Venture Capitalists tell them to scream their ideas to the public and they’ll see that nobody will steal them. Ideas are a dime a dozen. There are probably 10 other people with the same idea that you have or that the ICO has. The most important factor to success is the ability to execute. This is why Venture Capitalists refuse to sign non-disclosure agreements and rarely invest in startups which haven’t built a prototype or product.

HAS THE ICO TEAM BUILT ANYTHING THAT WE CAN USE TODAY?

If not, take a pass. This is the best evidence that the team can execute. It takes way more skill, time, work and money to build an app than to create a one-page website and video. It shows:

• The team has proven that they can develop.
• It is less likely that the team will invest so much and not follow through.

Everything else is useless. Don’t be fooled by big teams, fancy pretentious titles, references, roadmap, video, fancy animations, escrow, blogs, Slack, Telegram, Twitter, Facebook, Reddit and white paper.

One project stacked their team with a dozen people and then lied about them. One member had the title of “Blockchain Expert”, but he worked in Inside Sales until 1.5 months prior. One member had the title “Blockchain Developer”, but he never developed a blockchain before.

Here is an example of a project team using fake photos and fake names: https://bitcointalk.org/index.php?topic=1949528.msg19485217#msg19485217

Don't rely on Github unless you can verify that they didn't copy the code from someone else and you can run it.

Several high profile projects raised millions of dollars and still have not produced an app. This number will grow and become more evident in the coming years.

Gnosis raised $12.5 million and their website says:

“The Hunch Game is nearly ready and can be launched in the first half of 2017 as an example Gnosis app.”

No app yet.

Qtum raised $15.6 million. I don't see anything produced on Qtum's website.

After raising $50 million, Cosmos's website is still pitching its white paper. Come on. What have they produced with that $50 million?

Augur had Vitalik Buterin on their team. After Satoshi Nakamoto, Vitalik is the most desirable person in the universe to have on an ICO team. After raising multiple millions and after two and a half years, all they’ve released is a simple beta that is barely usable.

Don’t be suckered by animations and videos. Satoshi didn’t have any of this and his coin was the most successful. Besides, the animations aren’t that impressive anymore, as I’m beginning to see the same animation on multiple websites. Some of these teams must be using the same graphic designer.

There is no guarantee that any business will not fail. But, when the ICO team has a prototype/product, they have proven that they can develop. That significantly reduces your risk. With many ICOs, you have no idea if they can build anything. You cannot trust the information on the profile of many ICOs. Just because they can hire somebody to make a video, it does not mean they can write thousands of lines of complicated code. It's like you giving money to someone to fix your car, simply because he says he can fix cars but have never fixed one before.

Y Combinator is one of the biggest startup incubators in the world. They provide a small amount of funding (approx. $25k to 50k) to startups, which usually consists of 2 founders each. Then they build prototypes or products. Then the startups give pitches to angel investors or Venture Capitalists. If prototypes or products are unnecessary, then why do they waste so much time and money before pitching to angels and VCs?

Almost all incubators have startups that consist of usually only 2 founders, that are building prototypes and products. ICOs are stacking their team with a dozen people and they still cannot build anything. With 12 people, they should've built 6 prototypes/products by now. This shows that they are simply stacking their teams with useless people, in order to impress you or sucker you in.

2)  IS THE TEAM FROM A CORRUPT COUNTRY?

Check Transparency International's ranking.

If so, take a pass.

The number of ICOs from corrupt countries, especially those that were famous for sending out phishing scams for years, have exploded.

Yes, there are scams from countries that are not corrupt and successful projects from corrupt countries. What is important is the probability and if you are willing to take the extra risk.

3)  “NEVER INVEST IN A BUSINESS THAT YOU DO NOT UNDERSTAND”

This is a quote from Warren Buffett. It is very applicable because many ICO teams try to impress the audience with technical jargon. Many investors are not tech savvy and are baffled or confused, but they invest because they think that the project team must have come up with a technological break-through.

Last word:

You need to be able to verify that the business problem exists, that the market size is truly as big as the ICO claims and that the solution is possible. Quite often, they exaggerate on most of these. You need to verify that a blockchain or a cryptocurrency actually is needed for the solution. Quite often, they’re not.

Do not rely solely on ICO listing or rating sites. They likely do not know about all of the ICOs. Not all ICOs are willing to pay to be listed. They have methodologies that you may not agree with. Some claim to be experts, but you are likely more of an expert in your own field, whether that is medical, law, engineering or finance, than they are. They will likely have biases, especially for ICOs originating from their country or region. Putin wants to increase the crypto industry in Russia. Is this why there has been an explosion of ICOs from Russia? Even Putin’s Advisor ran an ICO. If Russia took out Facebook ads to disrupt U.S. and European politics, who is to say that they will not pay off ICO listing and ratings sites to favor Russian ICOs?

i will Keep thi in my mind but how to understand if an ICO scam or not?

[steveouttrim]

Good information here. A nuance: investing in an ICO is not the same as investing in a company. Typically, coin holders do not have the same legal rights and protections as shareholders. Coins may go up and down in value independently of the performance in the company, which means that some investors invest in the coin itself, and its prospects for increasing in value.

[jlp]

Good information here. A nuance: investing in an ICO is not the same as investing in a company. Typically, coin holders do not have the same legal rights and protections as shareholders. Coins may go up and down in value independently of the performance in the company, which means that some investors invest in the coin itself, and its prospects for increasing in value.

Good point.

In the long run, I think that coins will be tied to fundamentals. As an example, if Ethereum does not solve its scaling problem, ETH will not continue going up in value and might even decline. Right now, there are many tokens that serve no function. The whole purpose of buying Gnosis tokens was that Gnosis will eventually create prediction markets. If Gnosis never releases any software so that Gnosis tokens can be put into use, I cannot see how the Gnosis token will maintain value.

[OriginalBankster]

Good information here. A nuance: investing in an ICO is not the same as investing in a company. Typically, coin holders do not have the same legal rights and protections as shareholders. Coins may go up and down in value independently of the performance in the company, which means that some investors invest in the coin itself, and its prospects for increasing in value.

best example is Ripple. The company thrives, ILP and Ripple Connect are growing in acceptance.
XRP is not.

[OriginalBankster]

very good input from OP.
But i can't help to think that you are a little biased. There are some good projects, altough i agree that 98% are not substantial.
But you're assumption of Kyber was wrong, i cleared that already up and Reuqest Network and Bitpay are fundamentally different.

[beachbummer]

Everyone congratulating the OP for a great post. Lol


Sorry to burst the bubble but you know all ICOs will soon very very likely be banned globally. They all breach basic securities law. You cannot advertise the sale of a security. It's on the books in international law. Dump all the tokens you have they are soon to become worthless.

A very well written thread by the OP.

BTW, not all ICOs are considered securities, and thus not all ICOs will fall under securities regulations.

[SlaughterGirl]

Thank you everyone should know what you write here, I totally agree with all your writing.
Today ICO is like a marathon race, they make it collect money then lost. just leave the junk coin.
this is a disaster for investors.

[telcoin]

Awesome advice! Definitely can empathize with all you wrote. Moreover, would add that transparency is vital; Team (LinkedIn, public Profile), Product (at least a smoke screen test), Whitepaper (well written, detailed, timeline, compensation, distribution, concept, people, etc), and online presence (Social media, blogs, etc). All helps with credibility (references never hurt either). 

Feel free to give us some advice to make us as transparent at possible: http://www.telco.in

Cheers!
Chris

[CjMapope]

Great thread man, should be pinned here haha
If Bitcointalk had a tip system i would tip you ;p 
So many projects raised millions, have NOTHING, some just tax miners and make hands free money
Everyone wants to get rich, and it's easier to take it from the uninformed in crypto sadly
Dont trust anything with Vitaliks face on it, thats one of my rules haha

[elson]

ico is how to determine their own market value? What is the proof of what they have, and if they can not prove this and what is the difference between the air?

[PokerStein1]

I think ICO's are revolution that's for sure , because it is like every individual can invest in 90's 00's tech companies regardless how much money they have that is one good part of it. But there is too many junk and similar ico's , every entrepreneur or scammer wants to grab some easy money. We need to be so selective and need to make our own due diligence , we need to search team , product , market , is there a need for this idea.. Because nearly we are all invest our own hard gained money...

[bornforfreedom]

Nice thread and great breakdown!!!

I tell people time and time again that these should be the MINIMUMS for any ICO's. Team, idea, and proof of concept. I found out about Unikoingold recently and they seem to fit the bill

[inthelongrun]

Thanks for this, Jilp! This is educating the people here in terms of how to classify the so many ICOs that are offering their sets of tokens right now with a price. However, the knowledge to be able to determine which ICO is a scam, just a crap, or legitimate still needs to be learned by the great majority of us here.

[bamb]

The success of any ico is  what the owner of the ico snd it's community made of it! There is no hard or fast rule! The truth of the matter here is nothing is actually legit, People create value on anything they decide on and make it legit. This is the more reasons for you to look for ico that had created value and is continuing to create value both in short and long term!

[R.Hasan]

Folks, I am badly in need of advice, all sounds convincing


https://bitcointalk.org/index.php?topic=2240518.0
https://bitcointalk.org/index.php?topic=1946065.0
https://bitcointalk.org/index.php?topic=2143279.0

[R.Hasan]

Your post is GOLD. Thank you for sharing this, I think this should be put on top of this section.
I agree with all of your points, except the one about "Corrupted Country". In my opinion, it means nothing. A good project can be done even if the main developers are from Venezuela, for example, or Angola. There are many good project done in Russia, even if this country seems quite corrupted. You have to separate individuals from government. The government could be corrupted and yet a single developed could be the most serious and reliable person on Earth.

As mentioned in my OP:

Yes, there are scams from countries that are not corrupt and successful projects from corrupt countries. What is important is the probability and if you are willing to take the extra risk.

In non corrupt countries, people grow up with lots of regulations and enforcement. Though there are exceptions, the people feel that the way to get ahead is based largely on merit. In corrupt countries, there is less regulation, less enforcement and more people trying to find ways to get ahead by working around the system. In fact, they see that the most successful people in their country, usually in their government, are those who get ahead by lying, cheating or working around the system, instead of based on merit. If you do not think this is a risk, you may be right. I may be wrong.

ModulTrade
https://bitcointalk.org/index.php?topic=2240518.0

“While the number of MTRc is limited the increase of trades pushes the demand for MTRc and its valuation”

This means that they are selling a security and will be on regulators’ lists. Maybe ModulTrade doesn’t care about regulators because Russia does not have extradition agreements with other countries, but what happens if regulators ban their token in Europe or North America? Will you suffer a loss?

Countries without extradition agreements make teams feel more invulnerable. Therefore, they are more likely to lie and cheat investors from other countries, because there is little to no recourse from the other countries' governments.

I watched a video of a conference. ConsenSys was warning about selling securities. Waves’ CEO, who is from Russia, debated this and shrugged it off. Is he less concerned because the chances of him getting punished is minimal?

Russia wants to boost the crypto industry in their country. Putin's advisor ran an ICO. Is the Russian government funding Russian teams to help them maximize the money that they raise on ICOs? If so, you should be aware of this risk. Though there are exceptions, in the far majority of time, when a government tries to pick and choose companies, it’s not a good idea. The U.S. government forced taxpayers to give $535 million to Solyndra. It looked great at first and then it went bankrupt. Governments are not educated nor skilled to be Venture Capitalists, investors or stock pickers. Their money is often spent on policies to further their political or social goals.

In the extreme cases when the government tries to centrally manage the economy, they create socialism, or communism which is the extreme form of socialism. Every government that centrally manages their economy have always made their economies poorer in the long run. Think of Cuba, Venezuela, when Russia was communist, when China was communist, etc. The people who are best at picking which business will succeed or fail, are those in the free market.

How about Genesis Vision mate?

[spngebob]

Took me some time to read all posts, i can say this is very useful thread and it answers to 99% questions asked in this section.
Moderator should pin it.

[Monnt]

Fantastic thread! Would you mind reviewing every single ICO so I don't have to do any work?

LOL. I want to believe that to be a joke. If with all OP has stated here, anyone cannot make use of it to help themselves from getting scammed, then they truly deserve to be scammed.

Almost all the people have fallen for these sort of ICO scams today because they really cannot do the needful diligence out of laziness, which is why we have China coming up with all these regulations otherwise some of those ICOs won’t even have been able to make it past the pre-ico before they see there is absolutely no room for them.

[asdalani]

There are 3 kinds of ICOs:

1)  SCAMS

There have always been a lot of scammers, hackers and thieves in the crypto space since day one. Think of Mount Gox. According to Business Insider:

“…one out of every 16-17 Bitcoins belongs to someone who stole it”

If you don’t think that these thieves are trying to steal money through ICOs or from ICOs, you are kidding yourself. You just need to see the Bitcointalk forum dedicated to scams, or to participate in a Slack channel and you will see the never-ending phishing e-mails trying to lure you to their sites, in order to empty your wallet.

In addition to thieves and scammers, there are those who lie or exaggerate. Many users on Bitcointalk are pump and dumpers.

2)  CRAP

Everyone is desperate to host an ICO to make money. Therefore, they are throwing anything and everything onto the blockchain, including the kitchen sink. They may not be intentionally trying to scam, but they think that they have a good enough idea for an ICO. But these will fail because the blockchain will not solve anything for them. Examples include ICOs that want to put 3D data (which would equate to hundreds of Terabytes of data) or 153 exabytes of medical data on a blockchain. This shows that they are clueless about the blockchain and have never run Bitcoin’s full node. Bitcoin’s blockchain is 120 GB and Ethereum’s blockhain is 200 GB and they are both having scaling problems.

They are also throwing any kind of business problem that they can make up, into the ICO. If they cannot make up the business problem, they will exaggerate about it. They will fail because the business problem doesn’t really exist, isn’t significant enough, cannot be solved by a blockchain or they do not really have the solution, though they try to make it sound like they do with lots of technical jargon.

Swarm Fund cites this business problem:

“You need large amounts of money to buy real estate and your money is tied down for an indefinite amount of time.”

This is a lie and not a business problem. You can buy one share of a REIT, and there are thousands of REITs to choose from, and you can sell it one minute later. If they start off their pitch with a lie, what else are they lying about?

Energi cites this business problem:

“A small number of large energy companies supply millions of customers who are price takers.”

Therefore, the solution is to create more energy suppliers, especially nuclear power plants, which is the cheapest source of electricity. But the project does not propose this. They propose to enable consumers to sell their solar self-generated electricity directly to other consumers.

To do this, consumers should have BOTH solar panels and batteries. This is a TINY market. Though solar panels are growing, it is still a tiny percent of the market and solar generated electricity is still much more expensive than nuclear generated.

Consumers with solar panels do not have that much surplus electricity to sell anyways. They use most of what they generate. Tesla and Enphase hyped up their batteries for solar panel owners to store their surplus electricity. These batteries are NOT selling. Enphase spent over $100 million to develop their battery and partly because of the lack of battery sales, their stock has plummeted approximately 85%.

Of course, the project’s pitch looks impressive at first glance.

3)  LEGITIMATE

There are only a few applications that make a lot of sense for the blockchain: transfer of value (currency), store of value, remittances (disrupt Western Union and bank wire transfers), smart contracts, gaming and gambling. These applications will disrupt their respective industries, because the blockchain will provide a lot of cost-savings or time-savings to the users. There might be other applications that make sense that I missed, but applications proposed by many ICOs do not make sense. Jesus Coin is an extreme example, but there are applications that fall across the spectrum from Jesus Coin to Bitcoin.


YOU CAN REDUCE THE RISK BY USING 3 FILTERS

1)  The project’s idea should make sense, but do not base your investment decision purely on the idea. Watch:

“Ideas are like assholes - everyone has one, no one cares”
https://www.youtube.com/watch?v=PhJgrEackis

Entrepreneurs typically try to hide their ideas because they think they are the only ones that came up with the ideas. Venture Capitalists tell them to scream their ideas to the public and they’ll see that nobody will steal them. Ideas are a dime a dozen. There are probably 10 other people with the same idea that you have or that the ICO has. The most important factor to success is the ability to execute. This is why Venture Capitalists refuse to sign non-disclosure agreements and rarely invest in startups which haven’t built a prototype or product.

HAS THE ICO TEAM BUILT ANYTHING THAT WE CAN USE TODAY?

If not, take a pass. This is the best evidence that the team can execute. It takes way more skill, time, work and money to build an app than to create a one-page website and video. It shows:

• The team has proven that they can develop.
• It is less likely that the team will invest so much and not follow through.

Everything else is useless. Don’t be fooled by big teams, fancy pretentious titles, references, roadmap, video, fancy animations, escrow, blogs, Slack, Telegram, Twitter, Facebook, Reddit and white paper.

One project stacked their team with a dozen people and then lied about them. One member had the title of “Blockchain Expert”, but he worked in Inside Sales until 1.5 months prior. One member had the title “Blockchain Developer”, but he never developed a blockchain before.

Here is an example of a project team using fake photos and fake names: https://bitcointalk.org/index.php?topic=1949528.msg19485217#msg19485217

Don't rely on Github unless you can verify that they didn't copy the code from someone else and you can run it.

Several high profile projects raised millions of dollars and still have not produced an app. This number will grow and become more evident in the coming years.

Gnosis raised $12.5 million and their website says:

“The Hunch Game is nearly ready and can be launched in the first half of 2017 as an example Gnosis app.”

No app yet.

Qtum raised $15.6 million. I don't see anything produced on Qtum's website.

After raising $50 million, Cosmos's website is still pitching its white paper. Come on. What have they produced with that $50 million?

Augur had Vitalik Buterin on their team. After Satoshi Nakamoto, Vitalik is the most desirable person in the universe to have on an ICO team. After raising multiple millions and after two and a half years, all they’ve released is a simple beta that is barely usable.

Don’t be suckered by animations and videos. Satoshi didn’t have any of this and his coin was the most successful. Besides, the animations aren’t that impressive anymore, as I’m beginning to see the same animation on multiple websites. Some of these teams must be using the same graphic designer.

There is no guarantee that any business will not fail. But, when the ICO team has a prototype/product, they have proven that they can develop. That significantly reduces your risk. With many ICOs, you have no idea if they can build anything. You cannot trust the information on the profile of many ICOs. Just because they can hire somebody to make a video, it does not mean they can write thousands of lines of complicated code. It's like you giving money to someone to fix your car, simply because he says he can fix cars but have never fixed one before.

Y Combinator is one of the biggest startup incubators in the world. They provide a small amount of funding (approx. $25k to 50k) to startups, which usually consists of 2 founders each. Then they build prototypes or products. Then the startups give pitches to angel investors or Venture Capitalists. If prototypes or products are unnecessary, then why do they waste so much time and money before pitching to angels and VCs?

Almost all incubators have startups that consist of usually only 2 founders, that are building prototypes and products. ICOs are stacking their team with a dozen people and they still cannot build anything. With 12 people, they should've built 6 prototypes/products by now. This shows that they are simply stacking their teams with useless people, in order to impress you or sucker you in.

2)  IS THE TEAM FROM A CORRUPT COUNTRY?

Check Transparency International's ranking.

If so, take a pass.

The number of ICOs from corrupt countries, especially those that were famous for sending out phishing scams for years, have exploded.

Yes, there are scams from countries that are not corrupt and successful projects from corrupt countries. What is important is the probability and if you are willing to take the extra risk.

In non-corrupt countries, people grow up with lots of regulations and enforcement. Though there are exceptions, the people feel that the way to get ahead is based largely on merit. In corrupt countries, there is less regulation, less enforcement and more people trying to find ways to get ahead by working around the system. In fact, they see that the most successful people in their country, usually in their government, are those who get ahead by lying, cheating or working around the system, instead of based on merit. If you do not think this is a risk, you may be right. I may be wrong.

Law enforcement is a big deterrent. Hurricanes prove this. After hurricanes Katrina and Irma, there was widespread looting. Why? Because police are not on the streets and criminals feel immune from punishment.

Law enforcement through extradition is a deterrent. If an Australian defrauds investors in Germany, Germany can extradite the Australian and punish him. However, there are many countries without extradition agreements. This provides immunity to ICO teams. Therefore, they can lie, defraud and cheat investors from other countries, and there will be little to no recourse from the other countries.

There are many ICOs enticing investors, by claiming that their token or coin will go up in value or that token holders will get dividends, profits or ownership in other assets. Some tell buyers that they are “investing”. This means that they are selling securities and are breaking security laws.

I watched a video of a conference. ConsenSys was warning about the repercussions of selling securities. Waves’ CEO, who is from a country without extradition agreements with Europe or U.S., debated this, downplayed the concern and shrugged it off. Even if Europe cannot punish him, if Europe bans his coin, will you suffer?

Without law enforcement, ICOs can lie and get away with it. One project claimed that they will make 400+% return per year for the investor. In countries that enforce securities laws, if you make this claim and do not deliver, investors can sue you. In countries with advertising laws, the police can punish you for false advertising. In countries that are immune from these laws, ICOs can make any claim they want. One of the most egregious claims is when an ICO that tells you that you will be a part owner of a physical company. Good luck in getting a judge in their country to force the company to give you equity because you own some ERC-20 tokens. Good luck to you and your multiple flights to that country.

Few corrupt countries have extradition agreements. For those that do, can you rely on their corrupt governments to fulfill their obligations?

3)  “NEVER INVEST IN A BUSINESS THAT YOU DO NOT UNDERSTAND”

This is a quote from Warren Buffett. It is very applicable because many ICO teams try to impress the audience with technical jargon. Many investors are not tech savvy and are baffled or confused, but they invest because they think that the project team must have come up with a technological break-through.

Last word:

You need to be able to verify that the business problem exists, that the market size is truly as big as the ICO claims and that the solution is possible. Quite often, they exaggerate on most of these. You need to verify that a blockchain or a cryptocurrency actually is needed for the solution. Quite often, they’re not.

Do not rely solely on ICO listing or rating sites. They likely do not know about all of the ICOs. Not all ICOs are willing to pay to be listed. They have methodologies that you may not agree with. Some claim to be experts, but you are likely more of an expert in your own field, whether that is medical, law, engineering or finance, than they are. They will likely have biases, especially for ICOs originating from their country or region. Putin wants to increase the crypto industry in Russia. Is this why there has been an explosion of ICOs from Russia? Even Putin’s Advisor ran an ICO. If Russia took out Facebook ads to disrupt U.S. and European politics, who is to say that they will not pay off ICO listing and ratings sites to favor Russian ICOs?

That's a pretty brief outlook on the things that someone should try to understand when the come by an ICO that is going on or is going to start soon.

Thanks for the info.

[jlp]

Crowdholding claims that they have a working beta, which is good news. However, I can’t find it on their website. Have you used it? Have lots of people used it to help guide a startup to success?

Their white paper says that the problem is that too many startups fail due to lack of market need. Their solution is that funders (YUPIE token holders) will be able to tell the startups how to find market needs.

This is ridiculous. If this is the case, then companies would be asking their shareholders on what the market needs. Google, Apple, Facebook and the hundreds of thousands of companies should be asking their shareholders about market needs. They don’t. Why not? Because the shareholders do not know. The only people who will know are the end-users and customers. That’s why companies spend billions on market research, focus groups, free samples, surveys, product trials, etc., etc. The only people who know and will tell the truth are those who have to part with their money and will get enough value in return to justify it. Anyone who has studied Marketing knows this.

Let’s say that there is a startup that wants to sell Japanese seaweed snacks. How much are you willing to pay for the snacks? What would you recommend to the startup? Even if you wouldn’t eat this, how would you know others won’t? You may never have tasted it before, so you will have no idea. The only way the startup will know if these snacks will sell is if they do market research, in the right target markets, with product trials, etc.

Even if Crowdholding's idea has merit, how do you, as a YUPIE token holder, know for sure that startup companies will reward you after they succeed? The tokens are not legal contracts. You cannot get a judge to force the company to pay.

Startups take many years before they are financially successful. Most companies are still losing money when they go IPO on the stock market. Amazon is barely making any profits. Twitter is still losing money. Facebook took way longer than most companies to IPO and they barely showed a profit. Technology and growing companies rarely pay dividends. How long will you wait before Crowdholding’s startups start rewarding you?

I do not think Crowdholding is trying to scam anyone. They likely think that they have a good idea, but do not see the flaws. Most ICO buyers do not see these flaws because they haven’t spent enough time in the business world and are impressed by lots of jargon and big teams with fancy titles.

[TheDAL]

Nice thread to read, thanks for sharing!

[Coldsnap4457]

everyone ico having bright future because now a days people are launching good projects which is quite great for investor to invest in right place because they are giving demos etc and everything which is given below so i would like to say that we should never ignore any ico because every ico having good future which is quite great.

  I think you need to add some punctuation.

[Blake_Last]

Interesting post. Now if I can add a thing or two, I'll add that one should also look at the past professions and achievements of people behind the ICO project. For example, keep track of all the available information you can get about the founders and team members behind the ICO. Are they credible enough to start and make what they propose successfully? And likewise, are they transparent when it comes to providing records, specifically where they will use the contributions or where the contributions of the people who invested in will go?

I remember that I once read what Peter Sin Guili shared on his Twitter. He said that for an ICO to be credible, everything about the company's management should be transparent. This is what I say too to people I know to check before they start investing their money with any initial coin offerings.

[fedor3327]

Hey guys - HAVE YOU HEARD!!!!

There is this awesome new ICO's with KITCHEN SINKS as its focus!

LOL - just kidding.

Great article - I feel its a little unfair to judge an ICO via its location however. There are scammers in every country. Dont make the mistake of NOT investing if it falls into a "high risk" country - it could very well be the best investment of your life.

By the same token DONT make the mistake of just investing in an ICO that is in a low risk country. If you do, using this as a basis for your decision - you are very likely to be scammed.

[jlp]

Kyber brags that one of its benefits is that it doesn’t hold the users’ tokens. Therefore, the tokens won’t get hacked or stolen. They are implying that if they hold tokens, the tokens can get hacked or stolen.

Then they say that they guarantee high liquidity by “holding reserves of all tokens in the network” that users may want. They would need to hold TONS of tokens to guarantee high liquidity. By holding tokens, these tokens can get hacked or stolen, according to Kyber.

Their business model is completely flawed.

In regards to CombiCoin, their pitch is that you reduce risk by diversifying. However, they increase risk for you because they have your money and you have to believe that it’s backed by other coins. Tether is doing this already, except they back up Tether with USD.  There is already talk that Tether is not backing up their coin with sufficient USD. You’ll never know for sure that CombiCoin’s TRIA is backed up by sufficient coins. Instead, if you went out and bought the other coins on your own, you’ll never need to believe anyone’s claims.

Agreed on Swarm and Combicoin.
But, with Kyber it is a different story. As far as i understood, they don't hold tokens. They have reserve managers (anyone with specified credentials can be one) and Reserve Contributors (could be you or me). The reserve contributors hold the tokens and supply the Reserve Managers. These Reserve Managers trade on the Kyber Network Platform and are paying a fee in KNC to Kyber, which will get burned.
So, if my understanding is right, Kyber told the truth. They don't hold the tokens and they can provide the liquidity.

I do not know if Kyber is truthful or not. I wrote that their business model is flawed.

They have a MVP (minimum viable product), which is very good news, though I didn’t try it to confirm that it works.

Kyber’s white paper explains the problem of exchanging/converting coins or tokens to other coins or tokens.  I agree with this problem and it’s getting worse every month.

Their white paper correctly states:

“…most of the trades happening on centralized exchanges are vulnerable to internal fraud and external hacking. This is an ongoing concern and a number of hacking incidents has been reported at various exchanges​ ​affecting​ ​thousands​ ​of​ ​users​ ​and​ ​loss​ ​of​ ​hundreds​ ​of​ ​million​ ​of​ ​dollars.”

Then their white paper states:

“we maintain a reserve warehouse which holds an appropriate amount of crypto tokens for purposes of maintaining exchange liquidity.”

This means that they are doing exactly what they said is risky about centralized exchanges. They will be creating a honey-pot for hackers, employees or reserve managers to steal. Every reserve created by users will be honey-pots. One might argue that it’s more difficult to steal because the money is in a smart contract. That’s not necessarily true. DAO’s money was in a smart contract and it was stolen.

Also, they didn’t say where the data is stored. They did say that it will be “on-chain”. Will it be on the Ethereum blockchain? If so and if they have a lot of trades, they are going to have significant scaling issues.

They have a comparison to competitors which is good to see and should be in every white paper. However, they say that they are the only one that is secure against attacks. How can they say that? Nothing is guaranteed against attacks, not even Bitcoin. If Chinese miners collude, they can attack Bitcoin. Someone hacked DAO on Ethereum. That’s why they forked into Ethereum Classic. If someone hacks KyberNetwork’s reserve, is Vitalik going to fork Ethereum for KyberNetwork?

In 4.2 of their white paper, they state:

“The entire process occurs within a single transaction, and the KyberNetwork never has a possession on the user tokens​ ​(neither​ ​token​ ​A​ ​nor​ ​token​ ​B).”

But their diagram shows the user sending token A to the KyberNetwork.

I hope that Kyber works. We need decentralized exchanges. But the crypto/blockchain technologies still have vulnerabilities and limitations. Centralizing money is risky. Just be aware of this risk.

Their white paper says that Vitalik Buterin is an advisor. If true, then this shows that stacking a team with lots of people doesn’t mean the ICO is flawless. If untrue, then the ICO put in a famous person without his permission.

I don't know if Kyber is unscrupulous. I don't think they are, but don’t think that unscrupulous people won’t put Vitalik’s name in their team without his knowledge. I’ve seen Vitalik’s name in many ICOs. I cannot see how he would have the time to advise so many ICOs.

Besides, Augur had Vitalik on their team and after 2.5 years, they have a beta that is barely usable.

[jlp]

I just came across this thread:

How to create a ICO
https://bitcointalk.org/index.php?topic=2255274.0

It provides a link to an article and says that after reading it, you will learn how to find good ICOs. But the article is written by Crowdholding, which is hosting an ICO.

Read my thoughts on Crowdholding in a comment above.

[omerchip]

i congrate you for this amazing thread.You make a hard work and i think you can will pissed somebody if people trust your thread.we all have to consider you.but i dont think even they can understand you

[Vaultbank.io]

Great thread. Definitely tons of very important information here for everyone. Thank you for posting.

[Digitalbitcoin]

Great article includes every single thing that must have to think before making investment in cryptocurrency.

Bitcoin is the pioneer of Digital Virtual Currency, after Bitcoin there are numerous number of altcoins are in market, but many of them are shit coins.

Information mention in post is really helpful for everyone weather it many newbie or experienced. Many newbies get trapped in such scam ICO, and such user lost their trust in cryptocurrency.

[wsmolive]

Amazing thread!!   A man can write the comment with the attitude of being serious and conscientious.  Give the thumbs-up!!

[davey76]

This is a great thread! It is better than "the ICO X is a scam" or "Invest in ICO X" threads ... I rather read some good arguments why I should or shouldn't invest in an ICO. Thanks!

[PPleaseman]

Thanks for the read. i like the tips with the countries and dont invest in something you dont understand (although its hard)

Cheers

[larks500]

Very nice Article! Thank you

[JHR1963]

Very usefull stuff thanks.

[jlp]

How about Genesis Vision mate?

Genesis Vision’s team is from Russia, which does not have extradition agreements with much of the world. This means that if they screw you, there is little you can do. Do not expect the Russian government to extradite the team to your country.

They have a nice rating from icorating.com. However, I’ll always have a question in the back of my mind: Did Russia pay off icorating to give a better rating to Genesis Vision? But, I could be wrong.

Their project is very specific to forex trading. The team claims to have experience in this in St. Petersburg. I didn’t know that St. Petersburg was a major forex trading center. I would’ve thought of London, New York, Paris or Frankfurt. If you understand forex trading and you think that Genesis Vision can execute, then you should invest. For me, I see the execution to be very difficult. They would need a large budget for marketing and outbound corporate sales force to get forex traders to sign up to their program. If the traders are already performing well and making good money, why would they want prospects (potential clients) to be able to scrutinize them more through Genesis Vision?

If I was a forex trader, I would wonder why I would want to sign up to Genesis Vision, in order to be scrutinized by prospects and compared to other traders. Genesis Vision will tell me that I will get more clients. But I will agree only if I’m a better than average trader. If I'm a below average trader, Genesis Vision will show this to all of my clients, which will prompt them to leave me to go to an above average trader.

This is what I think will likely happen, though I do not know for sure. Let’s say there are 100 traders in the world. If you are among the top 50 traders, you will sign up to Genesis Vision. If you are among the bottom 50 traders, you will not. Now, there are 50 traders using Genesis Vision. After a while, the bottom 25 traders will drop out because they don’t want prospects to see how they are underperforming. Now, there are 25 traders using Genesis Vision. After a while, the bottom 12 traders will drop out. If this trend continues, there will only be one trader using Genesis Vision.

I stopped reading their white paper after this. I do not know for sure that Genesis Vision lacks potential. I do not think they are scamming. I just think they have a flaw in their idea, I don’t see the potential and I think the execution will be difficult. Others may think differently. Maybe the rest of the white paper has good stuff that I didn’t read.

Also, I'm not sure why a new token is needed for this. Any competitor can create a similar system and charge clients in USD, EUR, YEN, BTC or ETH. The competitor's pitch can be: "Why bother going through the hassle of getting a new Genesis token that is used only between you and Genesis, when you can simply pay us with USD, EUR, YEN, BTC or ETH? What are you going to do with your Genesis tokens after you get data about your trader? Is it a one time use?"

Also, their white paper is very complicated to forex. If you read it all and fully understand their business, then you should invest. Otherwise, reconsider.

[parassinghal]

Awsome thread. This post is having most helpfull information reagarding ICOs. I have also seen a lot of scam ICOs, which i was not able to identify that they are scams but with this information now i can easily identify the real ICOs.

[Crypto Batman]

How about Genesis Vision mate?

Genesis Vision’s team is from Russia, which does not have extradition agreements with much of the world. This means that if they screw you, there is little you can do. Do not expect the Russian government to extradite the team to your country.

They have a nice rating from icorating.com. However, I’ll always have a question in the back of my mind: Did Russia pay off icorating to give a better rating to Genesis Vision? But, I could be wrong.

Their project is very specific to forex trading. The team claims to have experience in this in St. Petersburg. I didn’t know that St. Petersburg was a major forex trading center. I would’ve thought of London, New York, Paris or Frankfurt. If you understand forex trading and you think that Genesis Vision can execute, then you should invest. For me, I see the execution to be very difficult. They would need a large budget for marketing and outbound corporate sales force to get forex traders to sign up to their program. If the traders are already performing well and making good money, why would they want prospects (potential clients) to be able to scrutinize them more through Genesis Vision?

If I was a forex trader, I would wonder why I would want to sign up to Genesis Vision, in order to be scrutinized by prospects and compared to other traders. Genesis Vision will tell me that I will get more clients. But I will agree only if I’m a better than average trader. If I'm a below average trader, Genesis Vision will show this to all of my clients, which will prompt them to leave me to go to an above average trader.

This is what I think will likely happen, though I do not know for sure. Let’s say there are 100 traders in the world. If you are among the top 50 traders, you will sign up to Genesis Vision. If you are among the bottom 50 traders, you will not. Now, there are 50 traders using Genesis Vision. After a while, the bottom 25 traders will drop out because they don’t want prospects to see how they are underperforming. Now, there are 25 traders using Genesis Vision. After a while, the bottom 12 traders will drop out. If this trend continues, there will only be one trader using Genesis Vision.

I stopped reading their white paper after this. I do not know for sure that Genesis Vision lacks potential. I do not think they are scamming. I just think they have a flaw in their idea, I don’t see the potential and I think the execution will be difficult. Others may think differently. Maybe the rest of the white paper has good stuff that I didn’t read.

Also, I'm not sure why a new token is needed for this. Any competitor can create a similar system and charge clients in USD, EUR, YEN, BTC or ETH. The competitor's pitch can be: "Why bother going through the hassle of getting a new Genesis token that is used only between you and Genesis, when you can simply pay us with USD, EUR, YEN, BTC or ETH? What are you going to do with your Genesis tokens after you get data about your trader? Is it a one time use?"

Also, their white paper is very complicated to forex. If you read it all and fully understand their business, then you should invest. Otherwise, reconsider.

Completely agree. They take the existing Mutual Fund Concept and rename with Cryptoterms with the promise of solving non-existent problems. Iconomi has more chance to succeed than Genesis Vision.

[kloudz79]

This thread was wonderfull and educative for dummies like me who like to love invest with any ico. Well not every ico is scam, but may end up with fail or success.

Thanks man.

Great job.

[x86Daddy]

yes, that's is a good topic! You have provided much useful information to people who are investing in coins or tokens. Be careful with what you don't understand! 

[Paycoinzzz]

How about Genesis Vision mate?

Genesis Vision’s team is from Russia, which does not have extradition agreements with much of the world. This means that if they screw you, there is little you can do. Do not expect the Russian government to extradite the team to your country.

They have a nice rating from icorating.com. However, I’ll always have a question in the back of my mind: Did Russia pay off icorating to give a better rating to Genesis Vision? But, I could be wrong.

Their project is very specific to forex trading. The team claims to have experience in this in St. Petersburg. I didn’t know that St. Petersburg was a major forex trading center. I would’ve thought of London, New York, Paris or Frankfurt. If you understand forex trading and you think that Genesis Vision can execute, then you should invest. For me, I see the execution to be very difficult. They would need a large budget for marketing and outbound corporate sales force to get forex traders to sign up to their program. If the traders are already performing well and making good money, why would they want prospects (potential clients) to be able to scrutinize them more through Genesis Vision?

If I was a forex trader, I would wonder why I would want to sign up to Genesis Vision, in order to be scrutinized by prospects and compared to other traders. Genesis Vision will tell me that I will get more clients. But I will agree only if I’m a better than average trader. If I'm a below average trader, Genesis Vision will show this to all of my clients, which will prompt them to leave me to go to an above average trader.

This is what I think will likely happen, though I do not know for sure. Let’s say there are 100 traders in the world. If you are among the top 50 traders, you will sign up to Genesis Vision. If you are among the bottom 50 traders, you will not. Now, there are 50 traders using Genesis Vision. After a while, the bottom 25 traders will drop out because they don’t want prospects to see how they are underperforming. Now, there are 25 traders using Genesis Vision. After a while, the bottom 12 traders will drop out. If this trend continues, there will only be one trader using Genesis Vision.

I stopped reading their white paper after this. I do not know for sure that Genesis Vision lacks potential. I do not think they are scamming. I just think they have a flaw in their idea, I don’t see the potential and I think the execution will be difficult. Others may think differently. Maybe the rest of the white paper has good stuff that I didn’t read.

Also, I'm not sure why a new token is needed for this. Any competitor can create a similar system and charge clients in USD, EUR, YEN, BTC or ETH. The competitor's pitch can be: "Why bother going through the hassle of getting a new Genesis token that is used only between you and Genesis, when you can simply pay us with USD, EUR, YEN, BTC or ETH? What are you going to do with your Genesis tokens after you get data about your trader? Is it a one time use?"

Also, their white paper is very complicated to forex. If you read it all and fully understand their business, then you should invest. Otherwise, reconsider.

Of course they need to spend some money to pay for ICOrating listed on top.
You also know most of the ICO reviews are make money from this thing and ICOrating is aslo no exception.

[thepo1m]

From allthe point you raised, the most important is never to invest in a project you don't understand, this is a common practice now people are following crowd mentality especially listing to all these youtubers promoting ICO and people don't know most of them are only doing their job they are paid to do

[annazaitun87]

how to know with easy if some project ICO recommended or not, because many people let to join with more ico to get the profit. I think some idea if the developers want to start their project may be they are need to complete their document self.

[awilliams]

so many crap coins out there lol. Always research and look at team, idea, and proof.

Good example of a good ico is unikoingold and waves. Look into those

[rube08]

That is a pretty well thought out thread.  In the recent days, you see a lot of airdrops ebtc, eltc, eethereum, ethis and ethat.  Those coins do not have any substance and they only go by their names to gain value.  Unfortunately, a lot of people invest in the name and not thinking what the future of the coin might be.

[jlp]

Zonto is very high risk.

Zonto has a business plan. I’ve rarely read a business plan that was so filled with jargon, yet meaningless. It has tons of hard to understand and disconnected features and function. No benefits. After 10 pages, I couldn’t read any more. Maybe they’re onto something, but I couldn’t figure it out.

It looks like they grabbed every jargon they can find and threw them into the business plan and white paper, to see what will stick.

Their white paper has 14 pages of text. 5 of those are about their ICO and bounty. This tells you where their priority is.

They will give ZONTO coins to users for free. Businesses can get ZONTO coins from users (I assume from selling services) and pay Zonto for advertising.

From what I can tell, they are in the social network field.

This is a high risk project for these reasons:

• Google has access to BILLIONS of users and top technologies. Google+ tried to compete against Facebook and they failed. You are dreaming if you think a rag tag group is going to successfully compete against Facebook. Creating a new token does not mean that you will become a competitor to Facebook.
  
• Even if Zonto gets millions of users, it does not mean it will make a profit. Facebook lost money for most of the first 9 years. For year ending 2013, Facebook made $1.73 profit per user. Twitter is still losing money.

Even if Zonto can miraculously come up with better technology than Google or Facebook, it doesn’t mean it will get lots of users for these reasons:

• NETWORK EFFECT. Nobody at Facebook is going to leave their 200 friends to go to Zonto. I’ve seen several ICO projects trying to be the next social network. They are dreaming and most likely will fail. They claim that they will get users because the users will be paid. From whom? The money has to ultimately come from advertisers.
  
• Monero, PIVX, Zcash, Dash and NEM have better technology than Bitcoin in terms of privacy, lower energy usage and (currently) speed. But people buy Bitcoin because of Brand awareness. Better technology does not always win. There are hundreds of altcoins trying to dethrone Bitcoin and they cannot.

An analogy of losing money for Zonto would mean that they are giving more coins to users than they are receiving from advertisers. This equates to inflation, which equates to devaluation of the coin. So, if Zonto is losing money like Twitter, or Facebook in the first several years, its coin will devalue during that time.

If Zonto follows the same EXPLOSIVE path that Facebook had, which would be an absolute miracle, its users will watch their ZONTO coins devalue for 9 years before it starts increasing in value. Would you want to be one of these users?

The difference between Twitter and Zonto is that Twitter can always go to the secondary markets and sell more stock to raise capital, in order to pay for its annual losses. Can Zonto do that? Is it going to host an ICO every year?

Another problem is on the advertiser side. I assume that the advertiser buys Zonto coins on an exchange, in order to pay Zonto. This adds a layer of hassle for the advertiser that he doesn't have to put up with when he advertises on other sites.

[JaFa]

It's probably safer just to skip most ICOs and wait for the coins to be listed on exchanges.  If they can make it that far, you'll get a fairly good idea how solid a project is based on how quickly the ICO buyers dump their coins onto the market 

[meta100000]

Really nice thread, very informative. Thanks for sharing with us!!!

[Forward_Thinking]

There are 3 kinds of ICOs:

1)  SCAMS

There have always been a lot of scammers, hackers and thieves in the crypto space since day one. Think of Mount Gox. According to Business Insider:

“…one out of every 16-17 Bitcoins belongs to someone who stole it”

If you don’t think that these thieves are trying to steal money through ICOs or from ICOs, you are kidding yourself. You just need to see the Bitcointalk forum dedicated to scams, or to participate in a Slack channel and you will see the never-ending phishing e-mails trying to lure you to their sites, in order to empty your wallet.

In addition to thieves and scammers, there are those who lie or exaggerate. Many users on Bitcointalk are pump and dumpers.

2)  CRAP

Everyone is desperate to host an ICO to make money. Therefore, they are throwing anything and everything onto the blockchain, including the kitchen sink. They may not be intentionally trying to scam, but they think that they have a good enough idea for an ICO. But these will fail because the blockchain will not solve anything for them. Examples include ICOs that want to put 3D data (which would equate to hundreds of Terabytes of data) or 153 exabytes of medical data on a blockchain. This shows that they are clueless about the blockchain and have never run Bitcoin’s full node. Bitcoin’s blockchain is 120 GB and Ethereum’s blockhain is 200 GB and they are both having scaling problems.

They are also throwing any kind of business problem that they can make up, into the ICO. If they cannot make up the business problem, they will exaggerate about it. They will fail because the business problem doesn’t really exist, isn’t significant enough, cannot be solved by a blockchain or they do not really have the solution, though they try to make it sound like they do with lots of technical jargon.

Swarm Fund cites this business problem:

“You need large amounts of money to buy real estate and your money is tied down for an indefinite amount of time.”

This is a lie and not a business problem. You can buy one share of a REIT, and there are thousands of REITs to choose from, and you can sell it one minute later. If they start off their pitch with a lie, what else are they lying about?

Energi cites this business problem:

“A small number of large energy companies supply millions of customers who are price takers.”

Therefore, the solution is to create more energy suppliers, especially nuclear power plants, which is the cheapest source of electricity. But the project does not propose this. They propose to enable consumers to sell their solar self-generated electricity directly to other consumers.

To do this, consumers should have BOTH solar panels and batteries. This is a TINY market. Though solar panels are growing, it is still a tiny percent of the market and solar generated electricity is still much more expensive than nuclear generated.

Consumers with solar panels do not have that much surplus electricity to sell anyways. They use most of what they generate. Tesla and Enphase hyped up their batteries for solar panel owners to store their surplus electricity. These batteries are NOT selling. Enphase spent over $100 million to develop their battery and partly because of the lack of battery sales, their stock has plummeted approximately 85%.

Of course, the project’s pitch looks impressive at first glance.

3)  LEGITIMATE

There are only a few applications that make a lot of sense for the blockchain: transfer of value (currency), store of value, remittances (disrupt Western Union and bank wire transfers), smart contracts, gaming and gambling. These applications will disrupt their respective industries, because the blockchain will provide a lot of cost-savings or time-savings to the users. There might be other applications that make sense that I missed, but applications proposed by many ICOs do not make sense. Jesus Coin is an extreme example, but there are applications that fall across the spectrum from Jesus Coin to Bitcoin.


YOU CAN REDUCE THE RISK BY USING 3 FILTERS

1)  The project’s idea should make sense, but do not base your investment decision purely on the idea. Watch:

“Ideas are like assholes - everyone has one, no one cares”
https://www.youtube.com/watch?v=PhJgrEackis

Entrepreneurs typically try to hide their ideas because they think they are the only ones that came up with the ideas. Venture Capitalists tell them to scream their ideas to the public and they’ll see that nobody will steal them. Ideas are a dime a dozen. There are probably 10 other people with the same idea that you have or that the ICO has. The most important factor to success is the ability to execute. This is why Venture Capitalists refuse to sign non-disclosure agreements and rarely invest in startups which haven’t built a prototype or product.

HAS THE ICO TEAM BUILT ANYTHING THAT WE CAN USE TODAY?

If not, take a pass. This is the best evidence that the team can execute. It takes way more skill, time, work and money to build an app than to create a one-page website and video. It shows:

• The team has proven that they can develop.
• It is less likely that the team will invest so much and not follow through.

Everything else is useless. Don’t be fooled by big teams, fancy pretentious titles, references, roadmap, video, fancy animations, escrow, blogs, Slack, Telegram, Twitter, Facebook, Reddit and white paper.

One project stacked their team with a dozen people and then lied about them. One member had the title of “Blockchain Expert”, but he worked in Inside Sales until 1.5 months prior. One member had the title “Blockchain Developer”, but he never developed a blockchain before.

Here is an example of a project team using fake photos and fake names: https://bitcointalk.org/index.php?topic=1949528.msg19485217#msg19485217

Don't rely on Github unless you can verify that they didn't copy the code from someone else and you can run it.

Several high profile projects raised millions of dollars and still have not produced an app. This number will grow and become more evident in the coming years.

Gnosis raised $12.5 million and their website says:

“The Hunch Game is nearly ready and can be launched in the first half of 2017 as an example Gnosis app.”

No app yet.

Qtum raised $15.6 million. I don't see anything produced on Qtum's website.

After raising $50 million, Cosmos's website is still pitching its white paper. Come on. What have they produced with that $50 million?

Augur had Vitalik Buterin on their team. After Satoshi Nakamoto, Vitalik is the most desirable person in the universe to have on an ICO team. After raising multiple millions and after two and a half years, all they’ve released is a simple beta that is barely usable.

Don’t be suckered by animations and videos. Satoshi didn’t have any of this and his coin was the most successful. Besides, the animations aren’t that impressive anymore, as I’m beginning to see the same animation on multiple websites. Some of these teams must be using the same graphic designer.

There is no guarantee that any business will not fail. But, when the ICO team has a prototype/product, they have proven that they can develop. That significantly reduces your risk. With many ICOs, you have no idea if they can build anything. You cannot trust the information on the profile of many ICOs. Just because they can hire somebody to make a video, it does not mean they can write thousands of lines of complicated code. It's like you giving money to someone to fix your car, simply because he says he can fix cars but have never fixed one before.

Y Combinator is one of the biggest startup incubators in the world. They provide a small amount of funding (approx. $25k to 50k) to startups, which usually consists of 2 founders each. Then they build prototypes or products. Then the startups give pitches to angel investors or Venture Capitalists. If prototypes or products are unnecessary, then why do they waste so much time and money before pitching to angels and VCs?

Almost all incubators have startups that consist of usually only 2 founders, that are building prototypes and products. ICOs are stacking their team with a dozen people and they still cannot build anything. With 12 people, they should've built 6 prototypes/products by now. This shows that they are simply stacking their teams with useless people, in order to impress you or sucker you in.

2)  IS THE TEAM FROM A CORRUPT COUNTRY?

Check Transparency International's ranking.

If so, take a pass.

The number of ICOs from corrupt countries, especially those that were famous for sending out phishing scams for years, have exploded.

Yes, there are scams from countries that are not corrupt and successful projects from corrupt countries. What is important is the probability and if you are willing to take the extra risk.

In non-corrupt countries, people grow up with lots of regulations and enforcement. Though there are exceptions, the people feel that the way to get ahead is based largely on merit. In corrupt countries, there is less regulation, less enforcement and more people trying to find ways to get ahead by working around the system. In fact, they see that the most successful people in their country, usually in their government, are those who get ahead by lying, cheating or working around the system, instead of based on merit. If you do not think this is a risk, you may be right. I may be wrong.

Law enforcement is a big deterrent. Hurricanes prove this. After hurricanes Katrina and Irma, there were widespread lootings. Why? Because police are not on the streets and criminals feel immune from punishment.

Law enforcement through extradition is a deterrent. If an Australian defrauds investors in Germany, Germany can extradite the Australian and punish him. However, there are many countries without extradition agreements. This provides immunity to ICO teams. Therefore, they can lie, defraud and cheat investors from other countries, and there will be little to no recourse from the other countries.

There are many ICOs enticing investors, by claiming that their token or coin will go up in value or that token holders will get dividends, profits or ownership in other assets. Some tell buyers that they are “investing”. This means that they are selling securities and are breaking security laws.

I watched a video of a conference. ConsenSys was warning about the repercussions of selling securities. Waves’ CEO, who is from a country without extradition agreements with Europe or U.S., debated this, downplayed the concern and shrugged it off. Even if Europe cannot punish him, if Europe bans his coin, will you suffer?

Without law enforcement, ICOs can lie and get away with it. One project claimed that they will make 400+% return per year for the investor. In countries that enforce securities laws, if you make this claim and do not deliver, investors can sue you. In countries with advertising laws, the police can punish you for false advertising. In countries that are immune from these laws, ICOs can make any claim they want. One of the most egregious claims is when an ICO that tells you that you will be a part owner of a physical company. Good luck in getting a judge in their country to force the company to give you equity because you own some ERC-20 tokens. Good luck to you and your multiple flights to that country.

Few corrupt countries have extradition agreements. For those that do, can you rely on their corrupt governments to fulfill their obligations?

3)  “NEVER INVEST IN A BUSINESS THAT YOU DO NOT UNDERSTAND”

This is a quote from Warren Buffett. It is very applicable because many ICO teams try to impress the audience with technical jargon. Many investors are not tech savvy and are baffled or confused, but they invest because they think that the project team must have come up with a technological break-through.

Last word:

You need to be able to verify that the business problem exists, that the market size is truly as big as the ICO claims and that the solution is possible. Quite often, they exaggerate on most of these. You need to verify that a blockchain or a cryptocurrency actually is needed for the solution. Quite often, they’re not.

Do not rely solely on ICO listing or rating sites. They likely do not know about all of the ICOs. Not all ICOs are willing to pay to be listed. They have methodologies that you may not agree with. Some claim to be experts, but you are likely more of an expert in your own field, whether that is medical, law, engineering or finance, than they are. They will likely have biases, especially for ICOs originating from their country or region. Putin wants to increase the crypto industry in Russia. Is this why there has been an explosion of ICOs from Russia? Even Putin’s Advisor ran an ICO. If Russia took out Facebook ads to disrupt U.S. and European politics, who is to say that they will not pay off ICO listing and ratings sites to favor Russian ICOs?

Wow! This is some really great work. Thank you for sharing it. The Russian ICOs are something I avoid as well, and there are a lot of them. Really great work here!

[Forward_Thinking]

It's probably safer just to skip most ICOs and wait for the coins to be listed on exchanges.  If they can make it that far, you'll get a fairly good idea how solid a project is based on how quickly the ICO buyers dump their coins onto the market 

Safer, yes, but many ICOs have produced sizable returns. If an ICO meets the criteria in this thread, to me it's worth the risk for a small amount. The scams are really the worst part. I always check LinkedIn profiles to make sure these people are real. I found a professor listed on a site and wrote him and he said he is not advising them. Scam! Do your homework.

[Forward_Thinking]

One point you may have missed is the level of invention. ICOs attract inventors and invention minded people. Everyone want to be the next Bitcoin. But those really big ideas take time and might fail. That is probably why some of those ICO you mentioned that are big have not produced anything yet. I don't know, I didn't look them up, but for ICO advice, if the product is so revolutionary that everyone will surely want one, it's has a high likelihood of failure, because the idea is just too big.

[jiapetz]

great input, thanks for providing these details.

1. Invest in an existing product
2. Invest in a team that has a proven record!

[gtinvest]

90% of ICOs are scams

I think is more, 95% ICO are scams. After the ICO eBTC exploded then other dev trying to make it happen too. Beware !
Thank you for reminding us bru

[mohucool]

A very insightful article, yes we need to be very careful while choosing ICO as most of the icos doesn't solve a business problem and some are pure scams. I also ponder the way ICO's raise money so quickly instead if people are eager to put that money in humanitarian efforts the world would be a better place with less hunger and poorness. But human greed it seems just wired into genes.

[Jaya912]

I read all of this word carefully to understand how to decide good ico or not but i still can not do. Since there are many of them offer a good thing but they just scammers. But thanks for sharing this thread.

[Mzai620]

i think they is 4 type of ICO money grabers.
There is a lot of ICOs in space that will rapie you.
Have you heard of PRESALE Cheesy.. own yea.
Now imagine sand ico and regular price was like 1.5$ per token but...
insider got deal like 0.25$ per token. Those gy got so cheap token becouse those groups will promote an shill for that ICO.
With such shit you can essy and with bag of shit.

There is always option that ICO creator will self invest in own ICO making it price looking much better tht it is in reality.
This is crypto here all shit moves are possible guys.

[thebitter]

Thanks

[ichanjay]

I just came across this thread:

How to create a ICO
https://bitcointalk.org/index.php?topic=2255274.0

It provides a link to an article and says that after reading it, you will learn how to find good ICOs. But the article is written by Crowdholding, which is hosting an ICO.

Read my thoughts on Crowdholding in a comment above.

What can you say about vibehub and eloplay? Thanks for your response

[arcfaith]

Great output! Thanks for the informative info!
Too many people have seen ICOs rising few hundred percents and in the rush to follow suit a lot of them do not research that thoroughly, thus falling into scams ICOs in the end!

[Rebellious]

Very nice and instructive post, thank you!

[Oakey22]

Thanks for this, it was a very good read and highlights some very important issues.

[Ric8]

thanks for the info

[Emworks]

You made a lot of point, this are useful information that need to be keep as a reminder for all of us..i truly believe that most of ico fall in that 3 category and i think wide regulation in every ico project must be implemented and this is the right time were the cryptocurrency are on its peaks time.
Theres no doubt blockchain technology are great.but lot of start up right now are completely unrelated to blockchain industry, everything they build are there just to make money and no value at all.

[Champ1]

Great post, there needs to be more information like this out there for retail / new investors in the crypto-space.

Too many vulnerable people are being hit with scams.

[loty1825]

How about Genesis Vision mate?

Genesis Vision’s team is from Russia, which does not have extradition agreements with much of the world. This means that if they screw you, there is little you can do. Do not expect the Russian government to extradite the team to your country.

They have a nice rating from icorating.com. However, I’ll always have a question in the back of my mind: Did Russia pay off icorating to give a better rating to Genesis Vision? But, I could be wrong.

Their project is very specific to forex trading. The team claims to have experience in this in St. Petersburg. I didn’t know that St. Petersburg was a major forex trading center. I would’ve thought of London, New York, Paris or Frankfurt. If you understand forex trading and you think that Genesis Vision can execute, then you should invest. For me, I see the execution to be very difficult. They would need a large budget for marketing and outbound corporate sales force to get forex traders to sign up to their program. If the traders are already performing well and making good money, why would they want prospects (potential clients) to be able to scrutinize them more through Genesis Vision?

If I was a forex trader, I would wonder why I would want to sign up to Genesis Vision, in order to be scrutinized by prospects and compared to other traders. Genesis Vision will tell me that I will get more clients. But I will agree only if I’m a better than average trader. If I'm a below average trader, Genesis Vision will show this to all of my clients, which will prompt them to leave me to go to an above average trader.

This is what I think will likely happen, though I do not know for sure. Let’s say there are 100 traders in the world. If you are among the top 50 traders, you will sign up to Genesis Vision. If you are among the bottom 50 traders, you will not. Now, there are 50 traders using Genesis Vision. After a while, the bottom 25 traders will drop out because they don’t want prospects to see how they are underperforming. Now, there are 25 traders using Genesis Vision. After a while, the bottom 12 traders will drop out. If this trend continues, there will only be one trader using Genesis Vision.

I stopped reading their white paper after this. I do not know for sure that Genesis Vision lacks potential. I do not think they are scamming. I just think they have a flaw in their idea, I don’t see the potential and I think the execution will be difficult. Others may think differently. Maybe the rest of the white paper has good stuff that I didn’t read.

Also, I'm not sure why a new token is needed for this. Any competitor can create a similar system and charge clients in USD, EUR, YEN, BTC or ETH. The competitor's pitch can be: "Why bother going through the hassle of getting a new Genesis token that is used only between you and Genesis, when you can simply pay us with USD, EUR, YEN, BTC or ETH? What are you going to do with your Genesis tokens after you get data about your trader? Is it a one time use?"

Also, their white paper is very complicated to forex. If you read it all and fully understand their business, then you should invest. Otherwise, reconsider.

Of course they need to spend some money to pay for ICOrating listed on top.
You also know most of the ICO reviews are make money from this thing and ICOrating is aslo no exception.

It's obivous they spend money on advertising. Not only on ICO rating sites, they also pay youtubers and statistics of their website show they also use every possible way of advertising including news sites, display adds, e-mails, social media. I don't think that's but neccessary for successful ICO. There are legit projects out there that will fail to collect enough funds just because noone knows they exist. So I think investing in marketing is important.

Forex is very tough market. Estimates are only up to 5% traders are able to make profit long term. And not all of them are managers. It think most managers would lose their clients if they used Genesis Vision or not just because clients would leave them because of bad performance anyway. Making bad performance of managers transparent is actually good for their clients. It would make competition between managers tougher and only those who would be best of the best would remain giving clients top notch performance on markets, probably much better than an average client receives now. that might be one of possible scenarios too. But noone can know for sure what will happen with the project. Will they succeed to deliver? Will their model realy work? There's many things that could go wrong with every project. All startups even those funded by VC have more than 90% chance of failure and ICO's aren't any different. So investing in long term is very risky. But Genesis Vision at least seems legit and serious project that is trying hard to succeed and stand out of the crowd of below average ICO's. I think investor has still some chance investing in such a startup, but investing in some crappy unserious project he has no chance at all.

I think many people investing in ICO's aren't in for the long term profit anyway, but looking for quick profit after an ICO is listed on exchanges. They also managed to get some kind of permit so US citizens can participate. There's hardly any such ICO so I expect this will bring in a lot of investors from the US. And I think Genesis vision is marketing themselves well, they already have arrangement with their first exchange and they're not crappy project. This seem very good combination for some quick profit and they probably won't have trouble reaching hard cap.

About the tokens. They probably could have done the project without issuing their own tokens that's true. But then they couldn't make their ICO, they would have to get funded the harder, slower and more expensive way gathering VC funds. Many projects collect their funds this way. I know many people think that's bad. But I don't think that's always the case. It can be good business decision. Why would someone company choose to spend more resources than they have to achieve their goal. Well there are ICO's that incorporate tokens in their projects in a stupid way like CarTaxi for example, that makes their model worse than if there were no tokens at all. But I think Genesis Vision use of tokens makes at least some sense and doesn't hurt operation of the platform. And it also gives us opportunity to invest with possibility of quick profit (mind this is not investment advice or prediction, it's just my humble opinion). If they took the VC root we wouldn't even have the possibility to invest.

[jlp]

Rega Crowdsurance is trying to mislead you.  Their website state:

“We all heard about shared economy: people sharing cars, home, bikes, even wi-fi. But why can’t we share our risks and protect each other without insurance companies. We have to pay lots of money because only insurance companies have algorithms for risk assessment, technology and resources.”

Currently, few cars and homes are shared. Cars and bikes are parked and unused 90% of the time. Therefore, there is an opportunity to increase utilization by sharing them. This is not applicable to insurance. Risks are already shared with insurance companies. There is no such thing as a risk sitting on your driveway, waiting to be used. When you buy insurance from anyone, you are automatically sharing the risk.

The way to reduce the money you pay, is to increase competition. There are already tens of thousands of insurance companies and there are bankruptcies (insolvencies) every year. Google it. They go bankrupt because they are NOT charging the customers enough to cover the risks that the insurer is taking on. This implies that customers can be paying too little already.

A crypto currency speeds up and lowers cost for bank wire transfers. A crypto currency eliminates the high cost and multi-day withdrawal from gambling sites. The key to success in insurance is not related to the currency. A new currency does NOTHING for the insured nor does it improve an insurer’s operating costs or COMBINED RATIO, which is one factor to profitability.

Their white paper states:

“That’s why leveraging our 20 years experience in risk assessment and scoring we are creating REGA Risk Sharing platform - the new standard for insurance market with state-of-art technology that will be available for everyone as a new segment of the shared economy.”

Does Rega Crowdsurance think that their 20 years experience in risk assessment is superior to Berkshire Hathaway’s 60 years experience in risk assessment?  Even though AIG has 100 years of experience in risk assessment, they almost went bankrupt.

What makes Rega Crowdsurance think they know more than anyone else in how much to charge you to insure your car against the next accident?

Even if Rega Crowdsurance thinks they know risk assessment, there is another major factor to profitability:  KNOWING HOW TO INVEST. Let’s say you are an insurer and you collect $100 million of premiums, which is called the PREMIUM POOL. You won’t have any claims until the next hurricane. What you do with the premium pool is critical. You cannot let it sit there to collect dust. You have to invest it. Where and how are you going to invest it? Quite often, insurance companies lose money from underwriting (risk assessment) and make up the loss from their investments. The majority of profits for Berkshire Hathaway comes from how the premium pool is invested. What makes you think Rega Crowdsurance knows how to invest?

Their white paper states:

“Compared to traditional insurance, in crowdsurance there are no insurers, intermediaries and brokers, all the processes being controlled and managed by programs and algorithms.”

Yes, there are insurers: other users. GEICO has had no intermediaries nor brokers for 70 years. Other insurance companies exist without brokers.

If you are a Rega Crowdsurance user, you will be an insurer or insured. If you are an insurer, are you going to go through the hassle of complying with the multitude of state government regulations on insurers?

If you are an insured, is the state government going to make sure that Rega Crowdsurance is properly capitalized so that they will have enough to fully reimburse you and all of the insured when your cars are destroyed?

Their white paper addresses regulations by stating this:

“We ensure regulators to comply with all necessary procedures including identification of platform members, working according to current jurisdiction legislation. Internal policies are designated to prevent and mitigate possible risks of the platform being involved in any kind of illegal activity. REGA Risk Sharing adopts risk-based approach to combat money laundering and terrorist financing. The principle is that resources should be directed in accordance with priorities so that the greatest risks receive the highest attention. Upon request of regulating authorities we disclose all information concerning the case, if that information can not be found in public blockchain.”

Most of this is verbose. The rest is misleading. Regulations of insurance is not related to illegal activities or money laundering. They are there to make sure that the insurer has enough money to pay all of the claims.

Rega Crowdsurance is extremely is extremely high risk, unless it is being started by former executives of GEICO, State Farm, etc.

Also, they are in a country without extradition agreements. If they screw you over, they are immune from punishment from your government. This makes them more invulnerable and likely to make any claim they want.

[hownowbrowncow]

Thanks jlp for this post. Really helped me rethink my investment strategy with a much better understanding of what to look for in a successful coin.

Much appreciate.

[CarlJohnson89]

Thank you for this post!

[jlp]

"SEC Committee Lashes Out at Bitcoin and ICOs"
https://www.coindesk.com/obvious-bubble-sec-committee-lashes-bitcoin-icos/

"My sense is that most of the conversation that goes on around this is essentially designed to obscure. [It] uses big ideas and technical jargon to evade fundamental questions that should be asked in this institution about any investment product."

"...growing incidences of fraud."

There are legitimate ICOs that make sense and that the blockchain can help. You just have to do more work to filter out the scams and crap to find them.

[CH-Henry]

Hi jlp, I'm one of the Crowdholding team. Thanks for voicing your concerns, I'll see what I can do to address each of the points you made.

Crowdholding claims that they have a working beta, which is good news. However, I can’t find it on their website. Have you used it? Have lots of people used it to help guide a startup to success?

Our beta app is https://crowdholding.com. We ran an alpha since October 2016, and beta has been going since March 2017. We've been trying a lot of cool stuff with it, but it's absolutely open to further change and improvement. We are working on making it a smooth PWA (progressive web app), but it's more desktop friendly at the moment.

Their white paper says that the problem is that too many startups fail due to lack of market need. Their solution is that funders (YUPIE token holders) will be able to tell the startups how to find market needs.

This is ridiculous. If this is the case, then companies would be asking their shareholders on what the market needs. Google, Apple, Facebook and the hundreds of thousands of companies should be asking their shareholders about market needs. They don’t. Why not? Because the shareholders do not know.

I don't believe this is a good comparison. The idea of the website is that absolutely anyone in the world can join the community - it's not a walled garden for YUPIE token holders. It's as we describe it - an open innovation platform.

The only people who will know are the end-users and customers. That’s why companies spend billions on market research, focus groups, free samples, surveys, product trials, etc., etc. The only people who know and will tell the truth are those who have to part with their money and will get enough value in return to justify it. Anyone who has studied Marketing knows this.

Well, we certainly aim to encompass end users and customers in the community! Personally I have a lot of respect for market research, and I don't think our app is going to suddenly render it useless, but I do believe we also have great value in what we are undertaking.

Let’s say that there is a startup that wants to sell Japanese seaweed snacks. How much are you willing to pay for the snacks? What would you recommend to the startup? Even if you wouldn’t eat this, how would you know others won’t? You may never have tasted it before, so you will have no idea. The only way the startup will know if these snacks will sell is if they do market research, in the right target markets, with product trials, etc.

You're right, some questions aren't necessarily appropriate, and probably wouldn't yield valuable results. A more appropriate question might be "Here's a couple of designs we're planning to use for the packaging of our new 'Japanese Seaweed Snacks'. Do you like 'A' or 'B'? Why?" Of course, this is a really basic survey question, and surveys are nothing new. However, the nature of putting the question to people has a lot of space for improvement.

Also consider that the value is not always in the result, but in the discussion itself. Probably one of my favourite examples of businesses connecting with a crowd is the 'Do us a flavour' campaigns (https://en.wikipedia.org/wiki/Lay%27s#Do_Us_a_Flavour_contests). Crowdholding is all about this connection between businesses and the public, which I have good reason to believe has enormous space for improvement.

Being able to actually discuss topics with a company can not only be a good chance to impact change for the better, but it can actually be fun too. Again, this absolutely has more potential for some types of business over others. Consider the gaming industry for example, there's plenty of places to discuss games online, but we feel we can facilitate that exchange in a much more meaningful way for both parties.

Even if Crowdholding's idea has merit, how do you, as a YUPIE token holder, know for sure that startup companies will reward you after they succeed? The tokens are not legal contracts. You cannot get a judge to force the company to pay.

You're absolutely right - we don't use the tokens to enforce contracts. We use separate contracts! During our beta we have been experimenting with the concept of 'crowdshares'. Basically this would involve a contract between the startup and the company committing a share of revenue, with specified parameters. The tokens are there to function as a currency, which simply put, is a great use of a token. For now we want explanations as simple as possible, because just like the traditional system of shares and currencies, it can get enormously complicated! If you think including this discussion in our core materials is needed though, we're really happy for the feedback. Personally I'd like to keep it to other documentation, FAQs, etc. Ultimately we need to improve on this, but we're still a fairly small team and are desperately trying to prioritise.

Startups take many years before they are financially successful. Most companies are still losing money when they go IPO on the stock market. Amazon is barely making any profits. Twitter is still losing money. Facebook took way longer than most companies to IPO and they barely showed a profit. Technology and growing companies rarely pay dividends. How long will you wait before Crowdholding’s startups start rewarding you?

A crucial point to note is that we are not suggesting profit sharing, but revenue sharing. And how long you wait before Crowdholding's startups start rewarding you is a really good question. Currently we are setting a threshold for a company to pass a certain annual revenue before any is shared to the public. However, we are absolutely open to changing this model if we have good reason to. The idea of a fixed sum bounty can be a much simpler alternative, for example.

Also, consider that while you can invest in companies using YUPIES, we don't believe this is suitable for everyone, or even most people. The typical case for most users will simply be as an active community member, meaning you would have the potential to receive YUPIES, which (if you want to cash out) can be exchanged for other cryptocurrencies, or used in the Crowdholding economy - investing in companies, or purchasing products directly.

I do not think Crowdholding is trying to scam anyone. They likely think that they have a good idea, but do not see the flaws. Most ICO buyers do not see these flaws because they haven’t spent enough time in the business world and are impressed by lots of jargon and big teams with fancy titles.

There's definitely a lot of challenges here, but also enormous opportunity. If it was easy then someone probably would have done it ages ago! We don't want to ride off jargon - but you're absolutely right that our language can be improved. If there's any specific ways we phrase things which stand out, I'd honestly appreciate feedback on them.


Hope this clears some points up! 

Cheers,

Henry

[Viberate team]

"This is a quote from Warren Buffett. It is very applicable because many ICO teams try to impress the audience with technical jargon. Many investors are not tech savvy and are baffled or confused, but they invest because they think that the project team must have come up with a technological break-through."

I couldn't agree more. If you can't deliver something that the common people understand, don't even bother.

[CH-Henry]

If you can't deliver something that the common people understand, don't even bother.

Well, it's absolutely true that you shouldn't invest in something you don't understand, but it's also important to consider that not every ICO is intended for everyone to invest in! Arguably the more honest ones are actually not targeting everyone, but rather focusing on those who do understand what they're getting involved with.

Likewise, the end users of a product may not need to understand the fundamentals of how that product actually functions. So there can be some contrast between materials which explain what a product is, and materials which explain what a product is for the purpose of getting investments.

Take some of the most successful ICOs for instance: Filecoin, Ethereum, etc. They don't strain themselves to make everything super-simple so everyone can understand. Check out their whitepaper for example. They do also provide a very simple and effective explanation of what their product is for the general public, though. These are two very different sets of material for different purposes.

[ico_reviews]

Do your own homework - read reviews.

[jlp]

Hi Henry,

If funders can guide the company, then most companies would be soliciting their shareholders for input, because this is much cheaper than paying market research companies. But companies don’t do this for good reason.

The most difficult part for startups is getting HONEST answers. The last people that they should solicit input from, are their friends and family. These people will NOT tell the truth, because they do not want to hurt the founder’s feelings or discourage the founder.

The most important answer that all startups should seek, but they rarely do, is:  “Your startup SUCKS and will FAIL”. It is actually very difficult to get this input because most people do not want to offend the founder. But this answer is critical. If is much better that the startup gets this answer, so they can pivot or cancel their startup to save a ton of time and money for everyone.

What happens quite often is that startups will ask people, including acquaintances, what do they think of their product? Instead of getting “it STINKS and will FAIL”, they’ll get “well…if this was changed this way…it might have potential…I may not use it, but maybe other people will use it…”.  They do this because they want to be nice or courteous to the founder. So, the startup continues working on it when they should be abandoning it.

The only people who will tell the TRUTH are potential customers who are told to part with their money. They will say “There’s no way I’m paying $5 for that!”

Not only do you need to ask potential customers, you need to get answers from total strangers who are not answering questions to you.

Let’s say you are standing on the street asking strangers this question: “I’m thinking of selling Japanese seaweed snacks. Will you buy some?” Some strangers will not want to offend you. They will be nice and courteous and say “Hmmm, I don’t know. Thanks anyway.” or “Maybe, but I’m in a rush.” or “Wow, that’s new. Never heard of it. I don’t know if I would buy them, but I’ll keep an eye out for it the next time I’m at the store.”

What you want is the truth. You want them to say: “No, I would never buy that.” That’s why companies hire market research companies to ask strangers: “Company ABC is thinking of selling Japanese seaweed snacks. Would you buy any?” This takes the pressure off the strangers and lets them be more honest.

The other problem with asking friends, family and acquaintances is that most people try to answer even when their answer should be: “I don’t know”. With some people I know, they will never answer “I don’t know”. They’ll guess at the answer. I don’t want guesses. I want to hear “I don’t know” if they don’t know.

If your startups ask your YUPIE token holders for input, there is the real danger that your token holders will do one of the following:

• Not tell the truth in fear of hurting anyone’s feelings
  
• Compelled to give input when he has no answer to the question, which is really garbage input. If your startup asks “How much would you pay for Japanese seaweed snacks?” Most of your token holders should say “I don’t know”. But I guarantee you that a significant percentage will make up an answer.
  

[jlp]

Do your own homework - read reviews.

I haven't looked at most of the coins on your list, but I have looked at a few and I think those have significant flaws which I wrote about in this thread:

ARToken
LAToken (inference from write up of Swarm)
Change Bank (and Bankera)
TokenStars

[Tamy]

One of the best things that I found on the bitcointalk. Thank you for all the information that you added here. It is very helpful.
I think that nowadays it is hard to find a good ICO. Too many scams out there. Therefore I don't invest in ICOs. Until now I didn't found something worth my time and money.
But I suppose that if you find a good ICO, it could be a good thing to invest. It requires a lot of reading and researching.

[CH-Henry]

Hi Henry,

If funders can guide the company, then most companies would be soliciting their shareholders for input, because this is much cheaper than paying market research companies. But companies don’t do this for good reason.

The most difficult part for startups is getting HONEST answers. The last people that they should solicit input from, are their friends and family. These people will NOT tell the truth, because they do not want to hurt the founder’s feelings or discourage the founder.

You're absolutely right about needing honest answers - but as I said, we don't aim to invalidate good market research. Some things really do need answering with specific methods, and we don't expect to offer a silver bullet solution to companies.

The most important answer that all startups should seek, but they rarely do, is:  “Your startup SUCKS and will FAIL”. It is actually very difficult to get this input because most people do not want to offend the founder. But this answer is critical. If is much better that the startup gets this answer, so they can pivot or cancel their startup to save a ton of time and money for everyone.

What happens quite often is that startups will ask people, including acquaintances, what do they think of their product? Instead of getting “it STINKS and will FAIL”, they’ll get “well…if this was changed this way…it might have potential…I may not use it, but maybe other people will use it…”.  They do this because they want to be nice or courteous to the founder. So, the startup continues working on it when they should be abandoning it.

The only people who will tell the TRUTH are potential customers who are told to part with their money. They will say “There’s no way I’m paying $5 for that!”

You don't feel that facilitating investment in companies is undertaking exactly what you are describing? We do expect people to consider parting with their money, and therefore very critically assessing companies. It doesn't mean every user will approach discussions this way, but it will ensure that there's not simply an echo chamber.

Not only do you need to ask potential customers, you need to get answers from total strangers who are not answering questions to you.

Let’s say you are standing on the street asking strangers this question: “I’m thinking of selling Japanese seaweed snacks. Will you buy some?” Some strangers will not want to offend you. They will be nice and courteous and say “Hmmm, I don’t know. Thanks anyway.” or “Maybe, but I’m in a rush.” or “Wow, that’s new. Never heard of it. I don’t know if I would buy them, but I’ll keep an eye out for it the next time I’m at the store.”

What you want is the truth. You want them to say: “No, I would never buy that.” That’s why companies hire market research companies to ask strangers: “Company ABC is thinking of selling Japanese seaweed snacks. Would you buy any?” This takes the pressure off the strangers and lets them be more honest.

The other problem with asking friends, family and acquaintances is that most people try to answer even when their answer should be: “I don’t know”. With some people I know, they will never answer “I don’t know”. They’ll guess at the answer. I don’t want guesses. I want to hear “I don’t know” if they don’t know.

No need to try and convince me further that market research is still of value, I agree. I believe it's mutually compatible with what we are doing.

If your startups ask your YUPIE token holders for input, there is the real danger that your token holders will do one of the following:

• Not tell the truth in fear of hurting anyone’s feelings
  
• Compelled to give input when he has no answer to the question, which is really garbage input. If your startup asks “How much would you pay for Japanese seaweed snacks?” Most of your token holders should say “I don’t know”. But I guarantee you that a significant percentage will make up an answer.
  

Token holders must not be confused with people who actually have a stake in a company - those with a stake in a company will certainly want it to succeed, which I'm sure many people can figure out (just as you so clearly point out) means not simply agreeing with everything.

You have some great points, and I assure you we are carefully considering exactly what you bring up. It's something we will have to adapt to as we move on. I don't think you have found a major flaw in our concept, though. Truthful answers are great, and companies need them, but they are not the only thing of value to be had from a relationship between business and public.

[blacktux88]

saddyl that there are to much scam -.-
 

[anasso]

you can also add:

how devs answers to technical questions and criticism?

how many percents of total tokens will devs hold?

[coupable]

Great job man. Your attitudes are nicely logic. I can't count the number of useless services given by un-known persons that focuses all their attention to the token and the ICO when they should be spending time making prototypes/products. Would you kindly share your opinions about start-ups on the prediction market using hybrid intelligence into blockchain, i recently saw two projects starting with ICO; Cindicator and Trackr. Also the two famous ICO working on freelance market; Bitjob (freelance for students.ICO just finished) Blocklancer (platform for freelance jobs.ICO sheduled to winter 17/18).
Thanks in advance 

[strategikcrypto]

Great post - well written... One thing to add is that even legitimate ICOs have a chance of not making it do to a multitude of factors just how it is for startups that choose traditional funding. Investing is evaluating risk and reward and there are underlying risks even with legitimate ICOs.

[CloudM]

After reading tons of whitepapers of crap icos, I found this thread to be so informative and useful. 90% of current ICO projects are either non-sense or simply scams, 9% could be startups that could have failed first round in real world presentations for investors, probably 1% or less is the blockchain app that really makes sense and their coin value could be more than 0...

[jlp]

One of the best things that I found on the bitcointalk. Thank you for all the information that you added here. It is very helpful.
I think that nowadays it is hard to find a good ICO. Too many scams out there. Therefore I don't invest in ICOs. Until now I didn't found something worth my time and money.
But I suppose that if you find a good ICO, it could be a good thing to invest. It requires a lot of reading and researching.

One way to reduce the amount of reading is to use filters. Use the filters that I suggested, or come up with your own. They should quickly filter out most of the ICOs.

Then, there should be only a handful of ICOs that pass your filters. With these, you can read their website more in depth or their white paper.

[ichanjay]

Nice thread you created. What can you say of involving the blockchain in e-sports community. Does it have potential?

[Gastotade]

Nice thread you created. What can you say of involving the blockchain in e-sports community. Does it have potential?

I think there are already projects that do that platform, blockchain esport community, and i think it's quite good for players or gamers and still business minded, they will be able to earn in it.

[IceOleg]

That is the best article that I read on ICO. Thanks to the author! I'm sure that this will help to educate newbie investors.

WOW!!!! Thanks a lot!

[MiXxe]

Nice thread you created. What can you say of involving the blockchain in e-sports community. Does it have potential?

I think there are already projects that do that platform, blockchain esport community, and i think it's quite good for players or gamers and still business minded, they will be able to earn in it.

Instead of asking it ask yourself because all of the information that will help you in understanding any ICO or esport ico have a good project or not. See it in the OP Post how he analyze every ico.

[allycn]

Great post. This is a must read for newbies. I might not agree with everything you said, but I really liked your explanation regarding what things could work and couldn't work in the blockchain. When I first started learning about ICOs (less than 3 months ago, so I wish this article had been out there), I would focus only on the ones I could understand the language because, why complicate myself even more? So I would always lean towards gaming and gambling oriented projects ... yes, that doesn't make it legitimate on their own, but at least I feel my gut has been leading me in the right direction (before reading your article I hadn't thought of what applications made sense for the blockchain ... everything seemed exciting).

[carlisle1]

Great post. This is a must read for newbies. I might not agree with everything you said, but I really liked your explanation regarding what things could work and couldn't work in the blockchain. When I first started learning about ICOs (less than 3 months ago, so I wish this article had been out there), I would focus only on the ones I could understand the language because, why complicate myself even more? So I would always lean towards gaming and gambling oriented projects ... yes, that doesn't make it legitimate on their own, but at least I feel my gut has been leading me in the right direction (before reading your article I hadn't thought of what applications made sense for the blockchain ... everything seemed exciting).

that's right why making yourself trying to understand things which is new to your ears better to go and proceed with project that you are already aware so it wont complicate your understanding, placing money in an ico is really like risking your money into a gambling games if you don't have any idea but if you
have advantage will be at your side.

[AriannaSantosUU]

Thank you good sir for this post. Im new in the bitcoin world and planning on doing some signature campaign work for ICO. Its very informative at the same time makes me worry that i might end up campaigning  the wrong ICO. Hope I don't encounter these scam ICOs.

[ibasatec]

Thank you for sharing this story, it was very useful for me.

[jlp]

Great job man. Your attitudes are nicely logic. I can't count the number of useless services given by un-known persons that focuses all their attention to the token and the ICO when they should be spending time making prototypes/products. Would you kindly share your opinions about start-ups on the prediction market using hybrid intelligence into blockchain, i recently saw two projects starting with ICO; Cindicator and Trackr. Also the two famous ICO working on freelance market; Bitjob (freelance for students.ICO just finished) Blocklancer (platform for freelance jobs.ICO sheduled to winter 17/18).
Thanks in advance  

In regards to Cindicator, a prediction market project, I had written the following in a previous post:


PeerGuess is one of those ICOs using the same star constellation animation that I've seen on other sites. Are they using the same graphic designer, or is PeerGuess another ICO put out by the same group of scammers? Even if PeerGuess is not a scam, it is TOO LATE and TOO LITTLE.

TOO LATE: Gnosis, Augur and Stox already had ICOs to get into prediction markets, though Gnosis and Stox still haven't built anything yet and Augur built a beta that is barely usable. This shows that execution is much harder than anything they've done before, including an ICO.

TOO LATE and TOO LITTLE: Stockbet already has built software that lets people bet on crypto currencies (and stocks). PeerGuess has a sales pitch.


According to Cindicator’s Roadmap:

December 2015

Global public release of 1.0 version of the collective intelligence platform on iOS

I searched on iOS app store and couldn’t find anything for Cindicator. Can you?

Startups at Y Combinator consist of 2 founders each and they build prototypes in 6 months. Cindicator has been working on this for 36 months, since November 2014. They’ve stacked their team with 28 people. They should’ve built 6 to 84 prototypes, or multiple products, by now. This shows that ICOs with large teams mean nothing. They are just blowing smoke. Since Cindicator hasn't built anything significant, it probably means that most members add little to no value, but they included them to make you think that they add value. Most members (assuming that they are real people) probably do no work for the project, but simply agreed to let the founders add their names and photos.

I tried to read their white paper, but the scrolling was slow and jerky, so I gave up. If 28 people cannot fix this, how will they build artificial intelligence?

Cindicator is also from that large country that is east of Europe, with no extradition agreements with much of the world. If they screw you, there’s nothing your government can do to help you.

If I have time later, I’ll look at Trackr, Bitjob and Blocklancer.

[appleffi]

This is a great thread, I found this as very informative to all the ICO enthusiast out here. Also this serves as a pre-advisory for all the starters, for them to be more aware whats in store when they join campaigns and for them to not even experience these bad scenarios. Thanks for this! In addition, I would just like advise everyone that you must not join/enter any transactions empty handed or having no or even little knowledge. Make sure always that you 'll always feel assured in everything you do, because that only means success will soon come near to you.

[arlinf]

Thanks for the write-up!

[alex.bird]

Nice thread. Definitely need to do a lot of research before buying into an ICO. When I read the whitepaper of some of the ICOs I just find it ridiculous. No solid idea, no plan for execution, just hype of blockchain. If they can't put what they are going to do on paper, they won't be able to execute it either.

[coupable]

I wanna thank you again for your informative response to my request. Am not about to defend any project or any ICO but i just have some notes:
  

According to Cindicator’s Roadmap:

December 2015

Global public release of 1.0 version of the collective intelligence platform on iOS

I searched on iOS app store and couldn’t find anything for Cindicator. Can you?

Startups at Y Combinator consist of 2 founders each and they build prototypes in 6 months. Cindicator has been working on this for 36 months, since November 2014. They’ve stacked their team with 28 people. They should’ve built 6 to 84 prototypes, or multiple products, by now. This shows that ICOs with large teams mean nothing. They are just blowing smoke. Since Cindicator hasn't built anything significant, it probably means that most members add little to no value, but they included them to make you think that they add value. Most members (assuming that they are real people) probably do no work for the project, but simply agreed to let the founders add their names and photos.

I tried to read their white paper, but the scrolling was slow and jerky, so I gave up. If 28 people cannot fix this, how will they build artificial intelligence?

Cindicator is also from that large country that is east of Europe, with no extradition agreements with much of the world. If they screw you, there’s nothing your government can do to help you.
If I have time later, I’ll look at Trackr, Bitjob and Blocklancer.

I still don't have a smartphone but when i checked i found that cindicator has an already running application via google play (check this link:  https://play.google.com/store/apps/details?id=com.cindicator  with a good feed back. I agree with you about the complicated whitepaper and the regulations terms in the country where the project has been established but i know a little more about hybrid intelligence and its potentials in the prediction markets (cindicator reached enougn funds to establish such a powerful system) when other projects still seeking their ways to create real values so it's may be not too late nor too little for Cindicator. Indeed i don't know so much about other projects in the prediction markets (unless what you wrote in this fantastic thread about Augur and others) so i really still don't have enough machanisms/knowledge to make such compares or analysis.


Make sure that am not the only who wanna read your opinions about Trackr,Bitjob,and Blocklancer  

[bennybeezy]

Thank you for taking the time to thoroughly break down the validity (or lack thereof) of these ICOs. I'm literally now seeing them pop up everywhere, as if all of a sudden the blockchain is the answer to all of these problems that really don't exist or are just wildly inflated to create an unnecessary solution. Having said that, I also feel that a lot of these scam ICOs exist because people aren't doing their research and just hopelessly investing in something they know nothing about with the mindset of hitting the jackpot. These 'developers' realize that and then just put together a whole bunch of nonsense that sounds good without creating any value whatsoever. ICOs, in and of themselves, are absolutely necessary to help cultivate new ideas that can legitimately help revolutionize or innovate certain segments or industries but, unfortunately, more often than not the majority of them out there currently have very little substance to them and have only one aim in mind.

Having said all that, do you think Electroneum falls into any 3 of those categories? 

[taeewo]

Thanks, this is informative..

[2Pac]

thanks for this nice thread.
yes we have no chance to be certain and sure about investing an ICO but we are able to take some true decisions after good research and we were informed. Reading much more articles like below gives true ideas and knowledges to the investors and also helps about to understand contents of ICOs when we see and read.

[jlp]

Having said all that, do you think Electroneum falls into any 3 of those categories?  

Electroneum has an app, which is very good news. They’re based in a country with lots of extradition agreements, which is very good news. Their business is understandable, which is good news.

They’re probably low risk, with some potential. However, I don’t think they are completely honest. You can read my comments about them in a previous post on page 3 of this thread.

I took a deeper look and found the following:

Electroneum plans to have 21 billion coins with 2 decimal places. This is a mistake as this is not nearly enough (either before or after the decimal place) if they want millions of people to use it.

Bitcoin and Ethereum have scaling issues. As Andreas Antonopoulos said, the reason most altcoins do not have scaling issues is because they do not have as many users yet. Once they do, they will likely face similar issues. Bitcoin’s blockchain is 120 GB in size and growing. You cannot run a full node on a phone.

Their technical white paper says that their blockchain is based on Monero’s and that the phones will not download the blockchain. Computers will. That makes sense. It sounds like the phones will be acting like a mining pool.

But, there are already mining pool apps for phones, such as this one, which mines multiple coins:
https://play.google.com/store/apps/details?id=com.miner&hl=en

Here is an Android app to mine Monero:
https://play.google.com/store/apps/details?id=com.myportablesoftware.minermonero&hl=en

The technical white papers says:

“These users will be encouraged and likely to take advantage of the significant mining speed and coin emission improvements of mining with the Windows, Mac or Linux GUI miner, which will enable Electroneum to grow to huge user numbers via the app, whilst still retaining a significant mining community running the transactional blockchain by running the intuitive Windows, Mac or Linux application.”

This sounds like the majority of the mining will still be done on computers. So, how much mining will the phones do and how much of the block rewards will the phones get?

Their technical white paper talks a lot about privacy, but this is already provided by Monero, PIVZ, Dash, NEM and Zcash. All of these other altcoins also have mobile wallets.

Therefore, I didn’t read much difference from what Monero already has.

It’s possible that I did not grasp their technical white paper completely. Maybe they’ve invented a way to mine much more efficiently. However, I didn’t see it. They should’ve shown a comparison between their mining and the existing mobile mining apps, and explain clearly how their mining is superior.

As it stands now, there is no evidence or proof that Electroneum's mobile mining is any better than Monero's mobile mining. If you test these two, you'll likely find that Electroneum will run faster, but that is only because its blockchain is so small and they have so few users relative to Monero. So, users who download Electroneum will think it is fantastic. Several years ago, Bitcoin's transactions confirmed in less than a minute. Now, you can wait for more than an hour.

[DigitalLemming]

Great advice. Especially now that there are more ICO scams than ever.

[Brandoncooks]

I feel like the best way to figure out which ICO's to believe is in the whitepaper. Start to familiarize yourself with what to look for and red flags that present themselves to you. Always ask yourself is it a better investment than just putting it in btc and watching it grow slowly and consistently.

[1Click Medical]

There are 3 kinds of ICOs:

1)  SCAMS

There have always been a lot of scammers, hackers and thieves in the crypto space since day one. Think of Mount Gox. According to Business Insider:

“…one out of every 16-17 Bitcoins belongs to someone who stole it”

If you don’t think that these thieves are trying to steal money through ICOs or from ICOs, you are kidding yourself. You just need to see the Bitcointalk forum dedicated to scams, or to participate in a Slack channel and you will see the never-ending phishing e-mails trying to lure you to their sites, in order to empty your wallet.

In addition to thieves and scammers, there are those who lie or exaggerate. Many users on Bitcointalk are pump and dumpers.

2)  CRAP

Everyone is desperate to host an ICO to make money. Therefore, they are throwing anything and everything onto the blockchain, including the kitchen sink. They may not be intentionally trying to scam, but they think that they have a good enough idea for an ICO. But these will fail because the blockchain will not solve anything for them. Examples include ICOs that want to put 3D data (which would equate to hundreds of Terabytes of data) or 153 exabytes of medical data on a blockchain. This shows that they are clueless about the blockchain and have never run Bitcoin’s full node. Bitcoin’s blockchain is 120 GB and Ethereum’s blockhain is 200 GB and they are both having scaling problems.

Even though crypto veterans and fans would like it to be, the blockchain is NOT the panacea to every problem in the world.

ICOs are also throwing any kind of business problem that they can make up, into the ICO. If they cannot make up the business problem, they will exaggerate about it. They will fail because the business problem doesn’t really exist, isn’t significant enough, cannot be solved by a blockchain or they do not really have the solution, though they try to make it sound like they do with lots of technical jargon.

Swarm Fund cites this business problem:

“You need large amounts of money to buy real estate and your money is tied down for an indefinite amount of time.”

This is a lie and not a business problem. You can buy one share of a REIT, and there are thousands of REITs to choose from, and you can sell it one minute later. If they start off their pitch with a lie, what else are they lying about?

Energi cites this business problem:

“A small number of large energy companies supply millions of customers who are price takers.”

Therefore, the solution is to create more energy suppliers, especially nuclear power plants, which is the cheapest source of electricity. But the project does not propose this. They propose to enable consumers to sell their solar self-generated electricity directly to other consumers.

To do this, consumers should have BOTH solar panels and batteries. This is a TINY market. Though solar panels are growing, it is still a tiny percent of the market and solar generated electricity is still much more expensive than nuclear generated.

Consumers with solar panels do not have that much surplus electricity to sell anyways. They use most of what they generate. Tesla and Enphase hyped up their batteries for solar panel owners to store their surplus electricity. These batteries are NOT selling. Enphase spent over $100 million to develop their battery and partly because of the lack of battery sales, their stock has plummeted approximately 85%.

Of course, the project’s pitch looks impressive at first glance.

3)  LEGITIMATE

There are only a few applications that make a lot of sense for the blockchain: transfer of value (currency), store of value, remittances (disrupt Western Union and bank wire transfers), smart contracts, gaming and gambling. These applications will disrupt their respective industries, because the blockchain will provide a lot of cost-savings or time-savings to the users. There might be other applications that make sense that I missed, but applications proposed by many ICOs do not make sense. Jesus Coin is an extreme example, but there are applications that fall across the spectrum from Jesus Coin to Bitcoin.


YOU CAN REDUCE THE RISK BY USING 3 FILTERS

1)  The project’s idea should make sense, but do not base your investment decision purely on the idea. Watch:

“Ideas are like assholes - everyone has one, no one cares”
https://www.youtube.com/watch?v=PhJgrEackis

Entrepreneurs typically try to hide their ideas because they think they are the only ones that came up with the ideas. Venture Capitalists tell them to scream their ideas to the public and they’ll see that nobody will steal them. Ideas are a dime a dozen. There are probably 10 other people with the same idea that you have or that the ICO has. The most important factor to success is the ability to execute. This is why Venture Capitalists refuse to sign non-disclosure agreements and rarely invest in startups which haven’t built a prototype or product.

HAS THE ICO TEAM BUILT ANYTHING THAT WE CAN USE TODAY?

If not, take a pass. This is the best evidence that the team can execute. It takes way more skill, time, work and money to build an app than to create a one-page website and video. It shows:

• The team has proven that they can develop.
• It is less likely that the team will invest so much and not follow through.

Everything else is useless. Don’t be fooled by big teams, fancy pretentious titles, references, roadmap, video, fancy animations, escrow, blogs, Slack, Telegram, Twitter, Facebook, Reddit and white paper.

One project stacked their team with a dozen people and then lied about them. One member had the title of “Blockchain Expert”, but he worked in Inside Sales until 1.5 months prior. One member had the title “Blockchain Developer”, but he never developed a blockchain before.

Here is an example of a project team using fake photos and fake names: https://bitcointalk.org/index.php?topic=1949528.msg19485217#msg19485217

Don't rely on Github unless you can verify that they didn't copy the code from someone else and you can run it.

Several high profile projects, with big teams, nice videos, lots of social media activity and hype, raised millions of dollars and still have not produced an app. This number will grow and become more evident in the coming years.

Gnosis raised $12.5 million and their website says:

“The Hunch Game is nearly ready and can be launched in the first half of 2017 as an example Gnosis app.”

No app yet.

Qtum raised $15.6 million. I don't see anything produced on Qtum's website.

After raising $50 million, Cosmos's website is still pitching its white paper. Come on. What have they produced with that $50 million?

Augur had Vitalik Buterin on their team. After Satoshi Nakamoto, Vitalik is the most desirable person in the universe to have on an ICO team. After raising multiple millions and after two and a half years, all they’ve released is a simple beta that is barely usable.

Don’t be suckered by animations and videos. Satoshi didn’t have any of this and his coin was the most successful. Besides, the animations aren’t that impressive anymore, as I’m beginning to see the same animation on multiple websites. Some of these teams must be using the same graphic designer.

There is no guarantee that any business will not fail. But, when the ICO team has a prototype/product, they have proven that they can develop. That significantly reduces your risk. With many ICOs, you have no idea if they can build anything. You cannot trust the information on the profile of many ICOs. Just because they can hire somebody to make a video, it does not mean they can write thousands of lines of complicated code. It's like you giving money to someone to fix your car, simply because he says he can fix cars but have never fixed one before.

Y Combinator is one of the biggest startup incubators in the world. They provide a small amount of funding (approx. $25k to 50k) to startups, which usually consists of 2 founders each. Then they build prototypes or products. Then the startups give pitches to angel investors or Venture Capitalists. If prototypes or products are unnecessary, then why do they waste so much time and money before pitching to angels and VCs?

Almost all incubators have startups that consist of usually only 2 founders, that are building prototypes and products. ICOs are stacking their team with a dozen people and they still cannot build anything. With 12 people, they should've built 6 prototypes/products by now. This shows that they are simply stacking their teams with useless people, in order to impress you or sucker you in.

2)  IS THE TEAM FROM A CORRUPT COUNTRY?

Check Transparency International's ranking.

If so, take a pass.

The number of ICOs from corrupt countries, especially those that were famous for sending out phishing scams for years, have exploded.

Yes, there are scams from countries that are not corrupt and successful projects from corrupt countries. What is important is the probability and if you are willing to take the extra risk.

In non-corrupt countries, people grow up with lots of regulations and enforcement. Though there are exceptions, the people feel that the way to get ahead is based largely on merit. In corrupt countries, there is less regulation, less enforcement and more people trying to find ways to get ahead by working around the system. In fact, they see that the most successful people in their country, usually in their government, are those who get ahead by lying, cheating or working around the system, instead of based on merit. If you do not think this is a risk, then we will agree to disagree.

Law enforcement is a big deterrent. Hurricanes prove this. After hurricanes Katrina and Irma, there were widespread lootings. Why? Because police are not on the streets and criminals feel immune from punishment.

Law enforcement through extradition is a deterrent. If an Australian defrauds investors in Germany, Germany can extradite the Australian and punish him. This makes the Australian think twice before he defrauds Germans. However, there are many countries without extradition agreements. This provides immunity to ICO teams. Therefore, they can lie, defraud and cheat investors from other countries, and there will be little to no recourse from the other countries. This can bring out the looting mentality.

There are many ICOs enticing investors, by claiming that their token or coin will go up in value or that token holders will get dividends, profits or ownership in other assets. Some tell buyers that they are “investing”. This means that they are selling securities and are breaking security laws.

I watched a video of a conference. ConsenSys was warning about the repercussions of selling securities. Waves’ CEO, who is from a country without extradition agreements with Europe or U.S., debated this, downplayed the concern and shrugged it off. Why should he care? No European or American government is going to be able to punish him if he broke security laws. Even if Europe cannot punish him, if Europe bans his coin, will you suffer?

Without law enforcement, ICOs can lie and get away with it. One project claimed that they will make 400+% return per year for the investor. In countries that enforce securities laws, if you make this claim and do not deliver, investors can sue you. In countries with advertising laws, the police can punish you for false advertising. In countries that are immune from these laws, ICOs can make any claim they want. One of the most egregious claims is when an ICO that tells you that you will be a part owner of a physical company. Good luck in getting a judge in their country to force the company to give you equity because you own some ERC-20 tokens. Good luck to you and your multiple flights to that country.

Few corrupt countries have extradition agreements. For those that do, can you rely on their corrupt governments to fulfill their obligations?

3)  “NEVER INVEST IN A BUSINESS THAT YOU DO NOT UNDERSTAND”

This is a quote from Warren Buffett. It is very applicable because many ICO teams try to impress the audience with technical jargon. Many investors are not tech savvy and are baffled or confused, but they invest because they think that the project team must have come up with a technological break-through.

Last word:

You need to be able to verify that the business problem exists, that the market size is truly as big as the ICO claims and that the solution is possible. Quite often, they exaggerate on most of these. You need to verify that a blockchain or a cryptocurrency actually is needed for the solution. Quite often, they’re not.

Do not rely solely on ICO listing or rating sites. They likely do not know about all of the ICOs. Not all ICOs are willing to pay to be listed. They have methodologies that you may not agree with. Some claim to be experts, but you are likely more of an expert in your own field, whether that is medical, law, engineering or finance, than they are. They will likely have biases, especially for ICOs originating from their country or region. Putin wants to increase the crypto industry in Russia. Is this why there has been an explosion of ICOs from Russia? Even Putin’s Advisor ran an ICO. If Russia took out Facebook ads to disrupt U.S. and European politics, who is to say that they will not pay off ICO listing and ratings sites to favor Russian ICOs?

That was a very good read. Thanks for the post!

Ken

[Partout]

HAS THE ICO TEAM BUILT ANYTHING THAT WE CAN USE TODAY?

I think its biggest proof of the professional capability of the team.
on ICO stage the company must have some previously build product.

[hownowbrowncow]

HAS THE ICO TEAM BUILT ANYTHING THAT WE CAN USE TODAY?

I think its biggest proof of the professional capability of the team.
on ICO stage the company must have some previously build product.

Could have saved me some bad investments if I had being paying attention to the actual capabilities of the team based on whether they have a working prototype prior to ICO. If they are serious about the project, they should be able to provide a working model to prove the viability of the project prior to asking strangers to give them millions of dollars.

[whalesburg]

In general, there is a reason in your words. I just want to add from my own experience that it is important how the team responds to technical questions and questions about comparing with other projects - do they really know their competitors and their project?

[Leo Mor]

Rega Crowdsurance is trying to mislead you.  Their website state:

“We all heard about shared economy: people sharing cars, home, bikes, even wi-fi. But why can’t we share our risks and protect each other without insurance companies. We have to pay lots of money because only insurance companies have algorithms for risk assessment, technology and resources.”

Currently, few cars and homes are shared. Cars and bikes are parked and unused 90% of the time. Therefore, there is an opportunity to increase utilization by sharing them. This is not applicable to insurance. Risks are already shared with insurance companies. There is no such thing as a risk sitting on your driveway, waiting to be used. When you buy insurance from anyone, you are automatically sharing the risk.

The way to reduce the money you pay, is to increase competition. There are already tens of thousands of insurance companies and there are bankruptcies (insolvencies) every year. Google it. They go bankrupt because they are NOT charging the customers enough to cover the risks that the insurer is taking on. This implies that customers can be paying too little already.

A crypto currency speeds up and lowers cost for bank wire transfers. A crypto currency eliminates the high cost and multi-day withdrawal from gambling sites. The key to success in insurance is not related to the currency. A new currency does NOTHING for the insured nor does it improve an insurer’s operating costs or COMBINED RATIO, which is one factor to profitability.

Their white paper states:

“That’s why leveraging our 20 years experience in risk assessment and scoring we are creating REGA Risk Sharing platform - the new standard for insurance market with state-of-art technology that will be available for everyone as a new segment of the shared economy.”

Does Rega Crowdsurance think that their 20 years experience in risk assessment is superior to Berkshire Hathaway’s 60 years experience in risk assessment?  Even though AIG has 100 years of experience in risk assessment, they almost went bankrupt.

What makes Rega Crowdsurance think they know more than anyone else in how much to charge you to insure your car against the next accident?

Even if Rega Crowdsurance thinks they know risk assessment, there is another major factor to profitability:  KNOWING HOW TO INVEST. Let’s say you are an insurer and you collect $100 million of premiums, which is called the PREMIUM POOL. You won’t have any claims until the next hurricane. What you do with the premium pool is critical. You cannot let it sit there to collect dust. You have to invest it. Where and how are you going to invest it? Quite often, insurance companies lose money from underwriting (risk assessment) and make up the loss from their investments. The majority of profits for Berkshire Hathaway comes from how the premium pool is invested. What makes you think Rega Crowdsurance knows how to invest?

Their white paper states:

“Compared to traditional insurance, in crowdsurance there are no insurers, intermediaries and brokers, all the processes being controlled and managed by programs and algorithms.”

Yes, there are insurers: other users. GEICO has had no intermediaries nor brokers for 70 years. Other insurance companies exist without brokers.

If you are a Rega Crowdsurance user, you will be an insurer or insured. If you are an insurer, are you going to go through the hassle of complying with the multitude of state government regulations on insurers?

If you are an insured, is the state government going to make sure that Rega Crowdsurance is properly capitalized so that they will have enough to fully reimburse you and all of the insured when your cars are destroyed?

Their white paper addresses regulations by stating this:

“We ensure regulators to comply with all necessary procedures including identification of platform members, working according to current jurisdiction legislation. Internal policies are designated to prevent and mitigate possible risks of the platform being involved in any kind of illegal activity. REGA Risk Sharing adopts risk-based approach to combat money laundering and terrorist financing. The principle is that resources should be directed in accordance with priorities so that the greatest risks receive the highest attention. Upon request of regulating authorities we disclose all information concerning the case, if that information can not be found in public blockchain.”

Most of this is verbose. The rest is misleading. Regulations of insurance is not related to illegal activities or money laundering. They are there to make sure that the insurer has enough money to pay all of the claims.

Rega Crowdsurance is extremely is extremely high risk, unless it is being started by former executives of GEICO, State Farm, etc.

Also, they are in a country without extradition agreements. If they screw you over, they are immune from punishment from your government. This makes them more invulnerable and likely to make any claim they want.

Good day, sir!
I would like to argue with you on that.

1) The sharing economy is a definite trend. Many scientific researches admit that. Car sharing is having a boom currently. AirBnB grows very fast.
2) Sharing economy is a definitely applicable for insurance industry, as Vitalik Buterin mentioned "Decentralized insurance is big if it can succeed"
3) Many insurance people such as Head of the biggest Insurance company in Russia - Sberbank Insurance, Hannes Chopra, Jake Diner professional from insurtech space and Vince Chan from Creta Ventures supported the concept. Team members that doing the project are having MBA from the University of Chicago the famous business school.
4) Many people from Blockchain community are from the same country. Vitalik was born here too.
5) On REGA insured are those who need the coverage for risk, not those who buy policies just to obey the rules. It is a service not an obligation
6) The assets invested by Insurance companies are the source of profit for Insurance company, not for the insured. Those funds have to belong to the community not to corporate structures gaining profit out of those. REGA's concept is not to hold too much funds on the balance sheet to gain profit from those, but actually provide service for insured and repay risk premiums back, if nothing happened with the community members.
7) Crowdsurance platform on Blockchain is more efficient than any insurance company drawning in regulation and corruption.

Thx for your feedback anyway.

[jlp]

Good day, sir!
I would like to argue with you on that.

1) The sharing economy is a definite trend. Many scientific researches admit that. Car sharing is having a boom currently. AirBnB grows very fast.
2) Sharing economy is a definitely applicable for insurance industry, as Vitalik Buterin mentioned "Decentralized insurance is big if it can succeed"
3) Many insurance people such as Head of the biggest Insurance company in Russia - Sberbank Insurance, Hannes Chopra, Jake Diner professional from insurtech space and Vince Chan from Creta Ventures supported the concept. Team members that doing the project are having MBA from the University of Chicago the famous business school.
4) Many people from Blockchain community are from the same country. Vitalik was born here too.
5) On REGA insured are those who need the coverage for risk, not those who buy policies just to obey the rules. It is a service not an obligation
6) The assets invested by Insurance companies are the source of profit for Insurance company, not for the insured. Those funds have to belong to the community not to corporate structures gaining profit out of those. REGA's concept is not to hold too much funds on the balance sheet to gain profit from those, but actually provide service for insured and repay risk premiums back, if nothing happened with the community members.
7) Crowdsurance platform on Blockchain is more efficient than any insurance company drawning in regulation and corruption.

Thx for your feedback anyway.

Good day, Leo Mor,

1) I never said that the sharing economy is not a trend. I said that there is no such thing as a risk sitting on a parking lot and unused 90% of the time, which is what a car is.
2) Sharing is already intrinsic in insurance. Insurance cannot exist if people do not share risk. Insurance equates to sharing risk. Insurance is one of the first industries to start sharing, starting hundreds or thousands of years ago, when villagers shared the risk by pooling their money together to pay the unfortunate. That’s why many insurance companies have names that start with “Mutual”. "Mutual" insurance companies evolved from people pooling money together to share risk. REGA Crowdsurance is trying to make the reader think that they came up with this idea of sharing risks, which is misleading. "Mutual insurance" companies are already doing much of what REGA wants to do. https://en.wikipedia.org/wiki/Mutual_insurance : 

A mutual insurance company is an insurance company owned entirely by its policyholders. Any profits earned by a mutual insurance company are either retained within the company or rebated to policyholders in the form of dividend distributions or reduced future premiums.

3) These people are supporting the creation of one or more entities into insurers. There’s nothing wrong with that. New insurers are created every day.
4) Vitalik moved to Canada at age 6 and grew up in Canada. Then they started Ethereum in Switzerland. The risks involved has nothing to do with where a person is born. It is related to the country's modus operandi, culture and especially the country's law enforcement. Someone born in Denmark but running an ICO in another country without extradition agreements, where he is immune to punishment from other countries (and from his new country), will much more likely exaggerate and claim anything he wants on his ICO.
5) I have never bought an insurance policy for the strict purpose of obeying rules. I bought insurance because it is a service. If you’re not doing this, then you need to shop around among the thousands of insurers.
6) Yes, the returns from investing the premium pool goes to the insurance company. But if the insurance company cannot invest wisely, they can go bankrupt or fail to pay claims, which hurts the insured. Many insurance companies lose money on underwriting and make up the loss from the investments. REGA or its users will have to do something similar. Who is going to invest the premium pool? REGA or its users? For you to guarantee that you will always be profitable from underwriting is naive. Almost all insurance companies lose money from underwriting in some or many years. Rarely are any insurance companies able to repay premiums because nothing happened to the insured. REGA’s business model is flawed if it is assuming that it will do this.
7) You are claiming a business problem that does not exist. What corruption? There are tens of thousands of insurance companies competing against each other vigorously. The regulations are for the protection of the insured, to ensure that the insurance company has enough capital to pay off claims, to ensure that they do not squander it and to ensure that the insurance company does not take excessive risk by putting the premium pool into derivatives or leveraged bets.

[cryptoking710]

Some really great info right there that all members should consider when joining ICO's. Well done.

[nareshrohra]

Very nice article. The ICO bubble is going to burst just like the dotcom stock bubble of millennium.

[kslavik]

These are so remarkable suggestions and everyone should recognize them. It is obvious that you really are very experienced member of the community. New members, investors and traders should read them all.

[jlp]

In general, there is a reason in your words. I just want to add from my own experience that it is important how the team responds to technical questions and questions about comparing with other projects - do they really know their competitors and their project?

Yes, every ICO should have a table, comparing themselves to the competitors, explaining why each of their features, functions and benefits are superior to the competitors.

Most ICOs do not have this. It is naive for investors to think that they don't have competitors. Eletroneum is a great example. They have many competitors:  Monero, NEM, Dash, PIVX and Zcash. These competitors are not new ICOs. These competitors are among the biggest coins on Coinmarketcap. But Electroneum does not even mention them as competitors. I'm sure that there are many newbies who think that Electroneum is the first cryptocurrency on a mobile phone.

[jlp]

There is pushback on my suggestion about corrupt countries.

Here is the logic behind it.

It is a common statistic around the world that young males cause more car accidents than anyone else. That means you (as most people in the crypto space are young males) are high risk. If you are a car insurance company, you would be crazy to accept the same premium from a young male as from a 45 year old. If you did, you will be losing money in no time. Or, you would accept fewer young males as customers than older customers.

Is every young male a dangerous driver? No. Is every ICO in a corrupt country a scam? No. But you need to assess your risk appropriately based on probability. It makes financial sense to reduce your risk exposure to young males.

As already explained in the OP, law enforcement is a deterrent to criminal behavior. If there was no law enforcement, crime shoots up. More Germans will be scamming and killing Germans. More Canadians will be scamming and killing Canadians. More Australians will be scamming and killing Australians. This is an undeniable fact.

Store owners understand this phenomenon. They secure their stores much more so before a hurricane because they know that the police will be unavailable and criminals will be out to loot.

If there was no law enforcement, why wouldn’t people steal $1 million instead of working at their crappy $20/hour job?

If there was no inter-country law enforcement through extradition, crime shoots up. More Germans will be scamming Canadians. More Canadians will be scamming Australians. More Australians will be scamming Germans.

If there was no inter-country law enforcement through extradition, why wouldn’t people steal $1 million from foreigners thousands of miles away, with impunity, instead of working at their crappy $20/hour job? In the past, this didn’t happen very often because it was difficult to rob a store or bank in another country and drive back home. Now, it is easy with the internet, crypto currencies and ICOs. Scammers can do this without changing out of their pyjamas in their basement.

Many countries have inter-country law enforcement through extradition. Most corrupt countries don’t. If you get scammed by a fellow citizen, your government can help you. If you get scammed by a foreigner in another country without an extradition agreement, you are S.O.L (shit out of luck). You need to be aware of this and assess your risk. If you do not, you will be losing money like the insurance company that accepts too many young male customers.

I’ve heard from ICO team members from a country with extradition agreements. They’ve told me that they think that their coin can increase in value, but they won’t say that to investors, in fear of prosecution from securities regulators. This makes their ICO less attractive to investors. If an ICO tells investors that their coin is going to go up in value and it does not, the ICO is guilty of fraud or false advertising, both of which are punishable. Securities laws have been around for a hundred years. This is because for hundreds of years, there have been scammers selling securities.

But ICOs in some countries need not fear. They can say whatever they want with impunity. This is why I see ICOs making crazy claims about paying dividends, spectacular returns on investment, etc. This attracts buyers. But when the buyers find out that they’ve been defrauded, they are S.O.L.

[Ging]

some Ico's are without a doubt jaw dropping. for me scam Ico's are obvious you can easily see that through the whitepaper and the developers resume.

[shoreno]

some Ico's are without a doubt jaw dropping. for me scam Ico's are obvious you can easily see that through the whitepaper and the developers resume.

i think no, ive came across recently to some ico that seem verry promising and legit but still turned out to be scam when the ico is about to end and we dont have heard about any news about their project until now. so i guess  its really hard to spot a really legit ico nowadays compared to last  years , maybe this is also due to the competion because i see there were many new ico's and airdrop happening lately.

[Leo Mor]

Good day, sir!
I would like to argue with you on that.

1) The sharing economy is a definite trend. Many scientific researches admit that. Car sharing is having a boom currently. AirBnB grows very fast.
2) Sharing economy is a definitely applicable for insurance industry, as Vitalik Buterin mentioned "Decentralized insurance is big if it can succeed"
3) Many insurance people such as Head of the biggest Insurance company in Russia - Sberbank Insurance, Hannes Chopra, Jake Diner professional from insurtech space and Vince Chan from Creta Ventures supported the concept. Team members that doing the project are having MBA from the University of Chicago the famous business school.
4) Many people from Blockchain community are from the same country. Vitalik was born here too.
5) On REGA insured are those who need the coverage for risk, not those who buy policies just to obey the rules. It is a service not an obligation
6) The assets invested by Insurance companies are the source of profit for Insurance company, not for the insured. Those funds have to belong to the community not to corporate structures gaining profit out of those. REGA's concept is not to hold too much funds on the balance sheet to gain profit from those, but actually provide service for insured and repay risk premiums back, if nothing happened with the community members.
7) Crowdsurance platform on Blockchain is more efficient than any insurance company drawning in regulation and corruption.

Thx for your feedback anyway.

Good day, Leo Mor,

1) I never said that the sharing economy is not a trend. I said that there is no such thing as a risk sitting on a parking lot and unused 90% of the time, which is what a car is.
2) Sharing is already intrinsic in insurance. Insurance cannot exist if people do not share risk. Insurance equates to sharing risk. Insurance is one of the first industries to start sharing, starting hundreds or thousands of years ago, when villagers shared the risk by pooling their money together to pay the unfortunate. That’s why many insurance companies have names that start with “Mutual”. "Mutual" insurance companies evolved from people pooling money together to share risk. REGA Crowdsurance is trying to make the reader think that they came up with this idea of sharing risks, which is misleading. "Mutual insurance" companies are already doing much of what REGA wants to do. https://en.wikipedia.org/wiki/Mutual_insurance : 

A mutual insurance company is an insurance company owned entirely by its policyholders. Any profits earned by a mutual insurance company are either retained within the company or rebated to policyholders in the form of dividend distributions or reduced future premiums.

3) These people are supporting the creation of one or more entities into insurers. There’s nothing wrong with that. New insurers are created every day.
4) Vitalik moved to Canada at age 6 and grew up in Canada. Then they started Ethereum in Switzerland. The risks involved has nothing to do with where a person is born. It is related to the country's modus operandi, culture and especially the country's law enforcement. Someone born in Denmark but running an ICO in another country without extradition agreements, where he is immune to punishment from other countries (and from his new country), will much more likely exaggerate and claim anything he wants on his ICO.
5) I have never bought an insurance policy for the strict purpose of obeying rules. I bought insurance because it is a service. If you’re not doing this, then you need to shop around among the thousands of insurers.
6) Yes, the returns from investing the premium pool goes to the insurance company. But if the insurance company cannot invest wisely, they can go bankrupt or fail to pay claims, which hurts the insured. Many insurance companies lose money on underwriting and make up the loss from the investments. REGA or its users will have to do something similar. Who is going to invest the premium pool? REGA or its users? For you to guarantee that you will always be profitable from underwriting is naive. Almost all insurance companies lose money from underwriting in some or many years. Rarely are any insurance companies able to repay premiums because nothing happened to the insured. REGA’s business model is flawed if it is assuming that it will do this.
7) You are claiming a business problem that does not exist. What corruption? There are tens of thousands of insurance companies competing against each other vigorously. The regulations are for the protection of the insured, to ensure that the insurance company has enough capital to pay off claims, to ensure that they do not squander it and to ensure that the insurance company does not take excessive risk by putting the premium pool into derivatives or leveraged bets.

Hello!

I am sorry, sir, but your words make me doubt that you support all that this community stands for - decentralization.

Don't get me wrong, but what you are trying to communicate:
-that the decentralized insurance is not needed, because there are centralized insurance companies
- that p2p lending is not needed, because there are centralized banks that know better how to give you money.
-that Blockchain is not needed, because there is MC and VISA to transfer money
-that p2p money such as Bitcoin is not needed, because there are Central banks as emission centers.

You vote for government control and centralized corporate structures such as banks and insurance companies

Sorry, but that was the last thing i expected to hear on Bitcointalk.

[jlp]

Hello!

I am sorry, sir, but your words make me doubt that you support all that this community stands for - decentralization.

Don't get me wrong, but what you are trying to communicate:
-that the decentralized insurance is not needed, because there are centralized insurance companies
- that p2p lending is not needed, because there are centralized banks that know better how to give you money.
-that Blockchain is not needed, because there is MC and VISA to transfer money
-that p2p money such as Bitcoin is not needed, because there are Central banks as emission centers.

You vote for government control and centralized corporate structures such as banks and insurance companies

Sorry, but that was the last thing i expected to hear on Bitcointalk.

Hello Leo Mor,

Not only did you claim business problems that do not exist, you are claiming that I wrote things that I did not.

- I never wrote that “decentralized insurance is not needed”. Re-read what I wrote.
- I never wrote “that p2p lending is not needed, because there are centralized banks that know better how to give you money”. Provide the quote. In past comments, I pointed out a poll of Bitcointalk users, the majority of which voted that they do not believe in Bitcoin banks. I did not tell them to vote that way. But if you’re investing in a crypto bank, you should be aware of this. I assume that they voted that way because it is risky to centralize your money, such as in an exchange (dozens have been hacked and stolen from) or investment fund ($50 million stolen from DAO). Even Andreas Antonopoulos, the biggest optimist of Bitcoin, warned about creating a “honey pot”.
- I never wrote the “Blockchain is not needed because there is MC and VISA to transfer money”. Provide the quote. I wrote in the OP:

There are only a few applications that make a lot of sense for the blockchain: transfer of value (currency), store of value, remittances (disrupt Western Union and bank wire transfers), smart contracts, gaming and gambling. These applications will disrupt their respective industries, because the blockchain will provide a lot of cost-savings or time-savings to the users. There might be other applications that make sense that I missed, but applications proposed by many ICOs do not make sense. Jesus Coin is an extreme example, but there are applications that fall across the spectrum from Jesus Coin to Bitcoin.

Blockchain is needed for many applications, which I cited. It takes several days and a lot of fees to withdraw from gambling sites. Crypto is a great solution for replacing credit or debit cards at gambling sites.
- I never wrote “that p2p money such as Bitcoin is not needed, because there are Central banks as emission centers”. Provide the quote.
- Decentralizing is a feature. You need to explain what benefits it creates for your application. Customers do not care about features. They care about benefits, such as saving time or money. REGA’s customers will not save money if they do not invest the premium pool properly.

Decentralizing a currency provides benefits to the currency, such as no single entity (government) can control it, shut it down or print more of it. Decentralizing is needed to create the blockchain and maintain the integrity of the ledgers for a cryptocurrency. Decentralizing is needed for Proof of Work, Proof of Stake, Delegated Proof of Stake or Proof of Importance. Without decentralization, you would not be able to create a crypto currency.

Now that decentralization has created a crypto currency, what are the benefits of the crypto currency over existing currencies? It can be transferred much faster and cheaper than bank wire transfers, Western Union or credit/debit cards at gambling sites. In the long run, it should be better at storing value than fiat currency because governments keep printing more fiat. It is better at storing value than gold in some respects, such as divisibility and cost of storage. These are the benefits ultimately.

You want to create an insurer (or insurers) by decentralizing the stakeholders. (Mutual insurance companies have already decentralized stakeholders.) Now that you have created an insurer, what are the benefits of your insurer over existing insurers?  

Based on your approach and method, it has flaws, and investors should be aware of these flaws.

You haven’t been able to show how the flaws are not flaws. This is what you should be doing to win the confidence of investors.

Nobody buys Bitcoin because it is decentralized. People buy it because it stores value and transfers value faster and cheaper than fiat.

[bigdogdan2]

Try to find ICO that have products in the beta or alpha stage and are close to completion.  This helps reduce the chance of being a scam.

[Leo Mor]

Hello!

I am sorry, sir, but your words make me doubt that you support all that this community stands for - decentralization.

Don't get me wrong, but what you are trying to communicate:
-that the decentralized insurance is not needed, because there are centralized insurance companies
- that p2p lending is not needed, because there are centralized banks that know better how to give you money.
-that Blockchain is not needed, because there is MC and VISA to transfer money
-that p2p money such as Bitcoin is not needed, because there are Central banks as emission centers.

You vote for government control and centralized corporate structures such as banks and insurance companies

Sorry, but that was the last thing i expected to hear on Bitcointalk.

Hello Leo Mor,

Not only did you claim business problems that do not exist, you are claiming that I wrote things that I did not.

- I never wrote that “decentralized insurance is not needed”. Re-read what I wrote.
- I never wrote “that p2p lending is not needed, because there are centralized banks that know better how to give you money”. Provide the quote. In past comments, I pointed out a poll of Bitcointalk users, the majority of which voted that they do not believe in Bitcoin banks. I did not tell them to vote that way. But if you’re investing in a crypto bank, you should be aware of this. I assume that they voted that way because it is risky to centralize your money, such as in an exchange (dozens have been hacked and stolen from) or investment fund ($50 million stolen from DAO). Even Andreas Antonopoulos, the biggest optimist of Bitcoin, warned about creating a “honey pot”.
- I never wrote the “Blockchain is not needed because there is MC and VISA to transfer money”. Provide the quote. I wrote in the OP:

There are only a few applications that make a lot of sense for the blockchain: transfer of value (currency), store of value, remittances (disrupt Western Union and bank wire transfers), smart contracts, gaming and gambling. These applications will disrupt their respective industries, because the blockchain will provide a lot of cost-savings or time-savings to the users. There might be other applications that make sense that I missed, but applications proposed by many ICOs do not make sense. Jesus Coin is an extreme example, but there are applications that fall across the spectrum from Jesus Coin to Bitcoin.

Blockchain is needed for many applications, which I cited. It takes several days and a lot of fees to withdraw from gambling sites. Crypto is a great solution for replacing credit or debit cards at gambling sites.
- I never wrote “that p2p money such as Bitcoin is not needed, because there are Central banks as emission centers”. Provide the quote.
- Decentralizing is a feature. You need to explain what benefits it creates for your application. Customers do not care about features. They care about benefits, such as saving time or money. REGA’s customers will not save money if they do not invest the premium pool properly.

Decentralizing a currency provides benefits to the currency, such as no single entity (government) can control it, shut it down or print more of it. Decentralizing is needed to create the blockchain and maintain the integrity of the ledgers for a cryptocurrency. Decentralizing is needed for Proof of Work, Proof of Stake, Delegated Proof of Stake or Proof of Importance. Without decentralization, you would not be able to create a crypto currency.

Now that decentralization has created a crypto currency, what are the benefits of the crypto currency over existing currencies? It can be transferred much faster and cheaper than bank wire transfers, Western Union or credit/debit cards at gambling sites. In the long run, it should be better at storing value than fiat currency because governments keep printing more fiat. It is better at storing value than gold in some respects, such as divisibility and cost of storage. These are the benefits ultimately.

You want to create an insurer (or insurers) by decentralizing the stakeholders. (Mutual insurance companies have already decentralized stakeholders.) Now that you have created an insurer, what are the benefits of your insurer over existing insurers?  

Based on your approach and method, it has flaws, and investors should be aware of these flaws.

You haven’t been able to show how the flaws are not flaws. This is what you should be doing to win the confidence of investors.

Nobody buys Bitcoin because it is decentralized. People buy it because it stores value and transfers value faster and cheaper than fiat.

Sorry again, but maybe i got it wrong from you.

Maybe the problem here is that you did not look good into the concept REGA is providing, and didn't bother to look deeper.

But, i would repeat that decentralization is the key issue here, as cryptocurrency is valuable not only because you can only easily withdraw it from gambling sites, rather it is a way of p2p value transfer, the money that you actually possess, the store of value.

Considering mutual insurance companies, it is still a centralized model, as there are still bank accounts that are controlled by the director and accountant, still investment assets that can chosen by a few people to invest into. The money are controlled by minority and still the possibility of credit risk and corruption.

Also please, take into consideration that cryptocurrency, such as Bitcoin has limited emission and increasing demand, that is why it can be considered an investment asset itself, being an appreciating currency. This can be said towards ETH as well.

Back to REGA's concept, the funds that are stored in cryptocurrency to provide risk coverage, that is an investment asset, as we found out. There is no centralized  agent to control the funds, all transactions are governed by smart contracts, and using voting procedures. The excessive funds are returned back to the community by paying premiums back. Those funds can be used by community members at their own convinience and used to invest and gain profit. So here the investment opportunity stays, but not corporate structures gaining profit here rather the community, whos premiums are cryptocurrency and they recieve major part of the premiums back if the risk was not realized, and used at their own discretion.

Thank you for your time.

[SergiuHD]

This was actually very helpful. I must admit, if the website looked good and the idea sounded interesting I would simply jump in. I also got scammed with ETHD and eBTC. So this comes in handy.

[Darker45]

These are basically what ICOs can be categorized. I would like to believe that more than 50 percent of ICOs right now are still legitimate. The rotten tomatoes are very few and these handful of rotten ICOs cannot simply pull down the reputation of ICOs. The majority of token or coins offered in ICOs can still give us a significant amount of profit in the end.

[jlp]

Hello Leo Mor,

Are you saying that one of the problems of Mutual insurance is that the “investments assets that can chosen by a few people to invest into”? Why is that a problem? What are you proposing? Are you proposing that all REGA users invest the premium pool?

Are you saying that REGA will invest its premium pool into Bitcoin and Ethers? Bitcoin has had 4 bubbles. Nobody knows if this if the 5th bubble. It went down for 2 years in 2014 and 2015. What if that happens again? How will REGA pay its claims if it loses 40-50% of its premium pool?

You wrote: “The excessive funds are returned back to the community by paying premiums back.” Mutual insurance companies do this already. Even then, rarely are they or other insurance companies able to pay premiums back. That’s why mutual insurance companies are small in numbers.

When an insured makes a claim, an adjuster physically visits the insured, inspects the damage and tries to prevent insurance fraud by customers. Are you going to have a fleet of adjusters? How will you build this staff and manage them? How will they be paid?

[ichanjay]

Hi jlp. You have a great insight on ICOs.  I know i'm being bias since I'm part of the bounty but I think project related to e-sports such as Eloplay has a good shot in being successful in the future. What can you say about it

[Leo Mor]

Hello Leo Mor,

Are you saying that one of the problems of Mutual insurance is that the “investments assets that can chosen by a few people to invest into”? Why is that a problem? What are you proposing? Are you proposing that all REGA users invest the premium pool?

Are you saying that REGA will invest its premium pool into Bitcoin and Ethers? Bitcoin has had 4 bubbles. Nobody knows if this if the 5th bubble. It went down for 2 years in 2014 and 2015. What if that happens again? How will REGA pay its claims if it loses 40-50% of its premium pool?

You wrote: “The excessive funds are returned back to the community by paying premiums back.” Mutual insurance companies do this already. Even then, rarely are they or other insurance companies able to pay premiums back. That’s why mutual insurance companies are small in numbers.

When an insured makes a claim, an adjuster physically visits the insured, inspects the damage and tries to prevent insurance fraud by customers. Are you going to have a fleet of adjusters? How will you build this staff and manage them? How will they be paid?

It is not a problem. It is just old fashioned way of financial industry to work. New technologies bring new capabilities and efficiencies.

REGA users will pool risk premiums together and decide on payments if smth happens to community members.

I wouldn't call Bitcoin movement as a bubble, rather corrections. Nothing will happen to risk pools as the risk is distributed, all risks shouldn't realise at once. The volatility with currency happens all the time, for example some foreign currencies depreciated twice in some countries. We expect crypto volatility will decrease with time.

Mutual insurance companies lack technological efficiencies as insurtech solutions have.

Claim adjustment in crowdsurance is done by expert voting on the platform, they vote with their tokens. Tokens will be traded on the exchanges, anyone can become an expert and recieve incentive from part of premiums they process. Sorry you missed that point, cause didn't care to go deeper inside the concept.

[jlp]

It is not a problem. It is just old fashioned way of financial industry to work. New technologies bring new capabilities and efficiencies.

REGA users will pool risk premiums together and decide on payments if smth happens to community members.

I wouldn't call Bitcoin movement as a bubble, rather corrections. Nothing will happen to risk pools as the risk is distributed, all risks shouldn't realise at once. The volatility with currency happens all the time, for example some foreign currencies depreciated twice in some countries. We expect crypto volatility will decrease with time.

Mutual insurance companies lack technological efficiencies as insurtech solutions have.

Claim adjustment in crowdsurance is done by expert voting on the platform, they vote with their tokens. Tokens will be traded on the exchanges, anyone can become an expert and recieve incentive from part of premiums they process. Sorry you missed that point, cause didn't care to go deeper inside the concept.

Hello Leo Mor,

What capabilities and efficiencies will new technologies bring to the insurance business? Who or what is going to invest the premium pool? You refuse to answer this question.

You don’t have to call it a bubble if you don’t want. Bitcoin went down 40-50% for two years in 2014-2015. You alluded that your premium pool will be in Bitcoin. What happens if Bitcoin goes down 40-50% again for 2 years? How is REGA going to pay the claims?

So what if Mutual insurance companies lack technological efficiencies as insurtech solutions have. What are these technological efficiencies that will resolve the flaws with REGA that I had pointed out earlier?

Claim adjustment is done by voting? With what information are the token holders going to use to decide how to vote? Let’s say I’m an insured. I claim that my car is destroyed and I file a claim. How are the token holders going to verify that I’m telling the truth? Do I send in photos? If so, I can grab any photos from Google Images and defraud your token holders.

Let’s say my car is truly damaged. How will you ensure that I get it repaired at trustworthy body shops? How do you ensure that I do not send it to my cousin and tell him to over-charge REGA? How do you ensure that I sent you the real receipt, and not a fake one that I made up? Who is going to process these receipts and send the reimbursement to me?

If I was a token holder (voter), I would not want to review information from hundreds of claimants to ensure that they are not defrauding me or over-charging me. Even if your token holders are willing to do this, they are not trained adjusters. Are you going to send them to training school?

I read the white paper. If you want me to go deeper, you need to provide more information and especially good answers to my questions.

I think you’re missing the point. The REGA team didn’t care to go deeper inside the insurance business to understand how it works.

I don't think it's in your best interest to keep discussing REGA. The more we discuss it, the more flaws we uncover.

[CrypticGambit]

very nice thread! The security of the ico is really important. I have witness many icos got hacked like coindash (inside job) insurex, pillar, DAo, and many others. I would say pick the strong icos and most hyped ones just to be safe.

[Leo Mor]

It is not a problem. It is just old fashioned way of financial industry to work. New technologies bring new capabilities and efficiencies.

REGA users will pool risk premiums together and decide on payments if smth happens to community members.

I wouldn't call Bitcoin movement as a bubble, rather corrections. Nothing will happen to risk pools as the risk is distributed, all risks shouldn't realise at once. The volatility with currency happens all the time, for example some foreign currencies depreciated twice in some countries. We expect crypto volatility will decrease with time.

Mutual insurance companies lack technological efficiencies as insurtech solutions have.

Claim adjustment in crowdsurance is done by expert voting on the platform, they vote with their tokens. Tokens will be traded on the exchanges, anyone can become an expert and recieve incentive from part of premiums they process. Sorry you missed that point, cause didn't care to go deeper inside the concept.

Hello Leo Mor,

What capabilities and efficiencies will new technologies bring to the insurance business? Who or what is going to invest the premium pool? You refuse to answer this question.

You don’t have to call it a bubble if you don’t want. Bitcoin went down 40-50% for two years in 2014-2015. You alluded that your premium pool will be in Bitcoin. What happens if Bitcoin goes down 40-50% again for 2 years? How is REGA going to pay the claims?

So what if Mutual insurance companies lack technological efficiencies as insurtech solutions have. What are these technological efficiencies that will resolve the flaws with REGA that I had pointed out earlier?

Claim adjustment is done by voting? With what information are the token holders going to use to decide how to vote? Let’s say I’m an insured. I claim that my car is destroyed and I file a claim. How are the token holders going to verify that I’m telling the truth? Do I send in photos? If so, I can grab any photos from Google Images and defraud your token holders.

Let’s say my car is truly damaged. How will you ensure that I get it repaired at trustworthy body shops? How do you ensure that I do not send it to my cousin and tell him to over-charge REGA? How do you ensure that I sent you the real receipt, and not a fake one that I made up? Who is going to process these receipts and send the reimbursement to me?

If I was a token holder (voter), I would not want to review information from hundreds of claimants to ensure that they are not defrauding me or over-charging me. Even if your token holders are willing to do this, they are not trained adjusters. Are you going to send them to training school?

I read the white paper. If you want me to go deeper, you need to provide more information and especially good answers to my questions.

I think you’re missing the point. The REGA team didn’t care to go deeper inside the insurance business to understand how it works.

I don't think it's in your best interest to keep discussing REGA. The more we discuss it, the more flaws we uncover.

I would still want to address those issues to make it clear. Sorry to bother you.

New technologies that are brought to the market: smart-contracts technology, information stored in public Blockchain, risk segmentation through scoring system, machine learning technology supported by Microsoft (our partner), oracles concept connected to IoT.

Insured member pool will invest his premium into mutual pool represented by smart-contract in Blockchain.

REGA started not from cars, but from pets, which is less risky product and more social. Car crowdsurance claim adjustment can be realized through telematic hardware connected to smart-contracts to know exactly if the accident happened. Claim adjusters in insurance companies also check basic facts, no sophistication. Here the information about the claim is stored safely in Blockchain.

Investment assets of Russian insurance companies also depreciated 50% as the currency depreciated, it is a risk but he is manageable. As i said before even if the crypto went down for a month, still all the accidents don't happen at once. All transactions are traceable and transparent in Blockchain compared to traditional insurance companies that sometimes hide the transactions behind insolvent balance sheets.

And about our "not going deeper" in insurance market, let me point out that Team members been working in insurance companies and banks for more than 15 years. Head of the biggest Insurance company in Russia Sberbank Insurance is part of the Advisory board, as well as Jake Diner, insurtech professional from Silicon valley.
Please investigate.

For you to get closer to the concept please consider  reading provided professional article about insurance on Blockchain.
https://www.dropbox.com/s/ztie24ezn1lejll/Chain_Of_A_Lifetime_December2014.pdf?dl=0

Thank you

[Leo Mor]

It is not a problem. It is just old fashioned way of financial industry to work. New technologies bring new capabilities and efficiencies.

REGA users will pool risk premiums together and decide on payments if smth happens to community members.

I wouldn't call Bitcoin movement as a bubble, rather corrections. Nothing will happen to risk pools as the risk is distributed, all risks shouldn't realise at once. The volatility with currency happens all the time, for example some foreign currencies depreciated twice in some countries. We expect crypto volatility will decrease with time.

Mutual insurance companies lack technological efficiencies as insurtech solutions have.

Claim adjustment in crowdsurance is done by expert voting on the platform, they vote with their tokens. Tokens will be traded on the exchanges, anyone can become an expert and recieve incentive from part of premiums they process. Sorry you missed that point, cause didn't care to go deeper inside the concept.

Hello Leo Mor,

What capabilities and efficiencies will new technologies bring to the insurance business? Who or what is going to invest the premium pool? You refuse to answer this question.

You don’t have to call it a bubble if you don’t want. Bitcoin went down 40-50% for two years in 2014-2015. You alluded that your premium pool will be in Bitcoin. What happens if Bitcoin goes down 40-50% again for 2 years? How is REGA going to pay the claims?

So what if Mutual insurance companies lack technological efficiencies as insurtech solutions have. What are these technological efficiencies that will resolve the flaws with REGA that I had pointed out earlier?

Claim adjustment is done by voting? With what information are the token holders going to use to decide how to vote? Let’s say I’m an insured. I claim that my car is destroyed and I file a claim. How are the token holders going to verify that I’m telling the truth? Do I send in photos? If so, I can grab any photos from Google Images and defraud your token holders.

Let’s say my car is truly damaged. How will you ensure that I get it repaired at trustworthy body shops? How do you ensure that I do not send it to my cousin and tell him to over-charge REGA? How do you ensure that I sent you the real receipt, and not a fake one that I made up? Who is going to process these receipts and send the reimbursement to me?

If I was a token holder (voter), I would not want to review information from hundreds of claimants to ensure that they are not defrauding me or over-charging me. Even if your token holders are willing to do this, they are not trained adjusters. Are you going to send them to training school?

I read the white paper. If you want me to go deeper, you need to provide more information and especially good answers to my questions.

I think you’re missing the point. The REGA team didn’t care to go deeper inside the insurance business to understand how it works.

I don't think it's in your best interest to keep discussing REGA. The more we discuss it, the more flaws we uncover.

I would still want to address those issues to make it clear. Sorry to bother you.

New technologies that are brought to the market: smart-contracts technology, information stored in public Blockchain, risk segmentation through scoring system, machine learning technology supported by Microsoft (our partner), oracles concept connected to IoT.

Insured pool member will invest his premium into mutual pool represented by smart-contract in Blockchain.

REGA started not from cars, but from pets, which is less risky product and more social. Car crowdsurance claim adjustment can be realized through telematic hardware connected to smart-contracts to know exactly if the accident happened. Claim adjusters in insurance companies also check basic facts, no sophistication. Here the information about the claim is stored safely in Blockchain.

Investment assets of Russian insurance companies also depreciated 50% as the currency depreciated, it is a risk but he is manageable. As i said before even if the crypto went down for a month, still all the accidents don't happen at once. All transactions are traceable and transparent in Blockchain compared to traditional insurance companies that sometimes hide the transactions behind insolvent balance sheets.

And about our "not going deeper" in insurance market, let me point out that Team members been working in insurance companies and banks for more than 15 years. Head of the biggest Insurance company in Russia Sberbank Insurance is part of the Advisory board, as well as Jake Diner, insurtech professional from Silicon valley.
Please investigate.

For you to get closer to the concept please consider  reading provided professional article about insurance on Blockchain.
https://www.dropbox.com/s/ztie24ezn1lejll/Chain_Of_A_Lifetime_December2014.pdf?dl=0

Thank you

[jlp]

New technologies that are brought to the market: smart-contracts technology, information stored in public Blockchain, risk segmentation through scoring system, machine learning technology supported by Microsoft (our partner), oracles concept connected to IoT.

They mean nothing unless they improve business metrics, such as improving the combined ratio by X% or improving the returns on investment of the premium pool by Y%, and you can prove these with references.

Insured member pool will invest his premium into mutual pool represented by smart-contract in Blockchain.

So, who is deciding which investments (Bitcoin, stocks or fixed-income) to make? The insured member pool or the smart contract? If it’s the smart contract, how will it pick the investments?

Car crowdsurance claim adjustment can be realized through telematic hardware connected to smart-contracts to know exactly if the accident happened.

What percentage of cars are currently hooked up with telematics that can detect damage? Are you going to turn away customers that don’t have telematics in their cars?

Here the information about the claim is stored safely in Blockchain.

Are you saying that claim info is not stored safely? I’ve rarely heard that this is a business problem in the insurance industry.

As i said before even if the crypto went down for a month, still all the accidents don't happen at once.

Bitcoin can go down 40-50% for 2 years. You’ll likely need to pay claims in that time.

And about our "not going deeper" in insurance market, let me point out that Team members been working in insurance companies and banks for more than 15 years. Head of the biggest Insurance company in Russia Sberbank Insurance is part of the Advisory board, as well as Jake Diner, insurtech professional from Silicon valley.
Please investigate.

As per your request, I investigated. According to LinkedIn, REGA’s CEO, CMO, COO and CFO have never worked in insurance. REGA’s CTO and Chief Architect have no LinkedIn profiles. With all those people and fancy pretentious titles, they cannot get one person experienced in insurance?

They are asking people to give them money to build an insurance business, when they have little understanding of insurance. In addition to this, they are misleading people when they try to make them think that risk is not currently shared. Like many ICOs, REGA is claiming business problems that do not exist.

According to LinkedIn, the CEO was an "Ethereum enthusiast" before starting REGA. You mentioned the Advisor in insurance. If an accountant tells you that he can do surgery because he has an Advisor who is a doctor, would you let him cut open your heart?

[Leo Mor]

New technologies that are brought to the market: smart-contracts technology, information stored in public Blockchain, risk segmentation through scoring system, machine learning technology supported by Microsoft (our partner), oracles concept connected to IoT.

They mean nothing unless they improve business metrics, such as improving the combined ratio by X% or improving the returns on investment of the premium pool by Y%, and you can prove these with references.

Insured member pool will invest his premium into mutual pool represented by smart-contract in Blockchain.

So, who is deciding which investments (Bitcoin, stocks or fixed-income) to make? The insured member pool or the smart contract? If it’s the smart contract, how will it pick the investments?

Car crowdsurance claim adjustment can be realized through telematic hardware connected to smart-contracts to know exactly if the accident happened.

What percentage of cars are currently hooked up with telematics that can detect damage? Are you going to turn away customers that don’t have telematics in their cars?

Here the information about the claim is stored safely in Blockchain.

Are you saying that claim info is not stored safely? I’ve rarely heard that this is a business problem in the insurance industry.

As i said before even if the crypto went down for a month, still all the accidents don't happen at once.

Bitcoin can go down 40-50% for 2 years. You’ll likely need to pay claims in that time.

And about our "not going deeper" in insurance market, let me point out that Team members been working in insurance companies and banks for more than 15 years. Head of the biggest Insurance company in Russia Sberbank Insurance is part of the Advisory board, as well as Jake Diner, insurtech professional from Silicon valley.
Please investigate.

As per your request, I investigated. According to LinkedIn, REGA’s CEO, CMO, COO and CFO have never worked in insurance. REGA’s CTO and Chief Architect have no LinkedIn profiles. With all those people and fancy pretentious titles, they cannot get one person experienced in insurance?

They are asking people to give them money to build an insurance business, when they have little understanding of insurance. In addition to this, they are misleading people when they try to make them think that risk is not currently shared. Like many ICOs, REGA is claiming business problems that do not exist.

According to LinkedIn, the CEO was an "Ethereum enthusiast" before starting REGA. You mentioned the Advisor in insurance. If an accountant tells you that he can do surgery because he has an Advisor who is a doctor, would you let him cut open your heart?

Ok, got it, no voice of reason here, just a prejudice.
Thank you for your opinion

[babsjoe]

Out of these types of ICO,  Spectre is far from crap or scam! The authenticity of Spectre and the problem it's solving are very real. There are life examples of people ruined by brokers all over financial market! Less transparency with brokers has ruined a lot of investor. Spectre platform for brokerless transaction is going to change all of that.

[jlp]

Great job man. Your attitudes are nicely logic. I can't count the number of useless services given by un-known persons that focuses all their attention to the token and the ICO when they should be spending time making prototypes/products. Would you kindly share your opinions about start-ups on the prediction market using hybrid intelligence into blockchain, i recently saw two projects starting with ICO; Cindicator and Trackr. Also the two famous ICO working on freelance market; Bitjob (freelance for students.ICO just finished) Blocklancer (platform for freelance jobs.ICO sheduled to winter 17/18).
Thanks in advance 

Blocklancer is going to compete against Upwork. This will be a big undertaking. It will require a ton of software development.

It claims these business problems:

On Blocklancer you only have to pay if you are 100 % satisfied with the work or if certain milestones are reached. And in case of a dispute the token holders will decide. Never again will you encounter unilateral decisions by a biased authority and an unfair money loss.

Is that a problem on Upwork?

Never depend on a single authority to settle your disputes again. With our token holder tribunal (THT) the decision lies in the hands of thousands of token holders, guaranteeing a fair decision.

Is that a problem on Upwork? If you believe so, then maybe Blocklancer is onto something. I don’t think this is a business problem on Upwork. I would think that even if it was, and if it was replaced by thousands of token holders, then it will likely introduce other problems. How much longer is it going to take to get multiple token holders to arbitrate the dispute?

Blocklancer says that token holders will earn fees from the platform. But how profitable is this business? How much profit is Upwork making? If Upwork is making a lot of profit then Blocklancer has potential. But if Upwork is not profitable, I do not see how Blocklancer will be able to pay token holders, especially if Blocklancer plans to charge a lower to fee to customers.

The biggest issue with Blocklancer is that they want to put job offers on the blockchain. I wonder if they have ever run a full node of Ethereum. Putting job offers, and I assume job postings and messages between contractors and employers, onto the blockchain will make it much bigger than Etheneum’s blockchain. Blocklancer will have significant scaling issues and will unlikely ever be able scale as much as Upwork.

[jlp]

Spectre is impressive because they have an alpha release that you can test out today. This is good news.

However, Spectre is talking about a niche in the trading world, where traders are trading against the broker.

Brokers are typically middlemen between the buyers and sellers. When you are trading on the big brokerage house accounts, such as Charles Schwab, Fidelity, TD, etc., you are trading against other traders, not brokers.

Spectre is talking about going into the market that MetaQuotes, Spot Option and TechFinancials are in. MetaQuotes is the developer of MT4/MT5. MetaQuotes is not a public company, so it isn’t that big. According to Spot Option’s website, they have 150 employees, so it is small. According to TechFinancials’ website, they have 130 employees, so it is small.

Spectre is really a gambling app that lets traders bet against the house. Some gambling sites allow you to bet against other users. Stockbet will allow you to do both.

An issue with Spectre is that they are telling token buyers that they will earn a dividend. This means that they are blatantly pushing a security and likely breaking securities laws. If regulators start enforcing the laws, they will go after these types of ICOs. If they do, then not only will the project team suffer, but so will the token holders.

One of its videos says:

Whether a trader wins or loses, is no longer relevant, as neither Spectre nor the token holders make money only on traders’ losses, but instead purely on volume.

This sounds like a lie. If every trader was winning on every trade, then Spectre and the token holders will lose their shirts. This will only be magnified on higher volume.

The last issue with Spectre is the vig, which is 25%. This sounds very high. But I could be wrong because it could be normal for the niche that Spectre is going into. Most financial betting sites charge far less. If few traders use Spectre because of the high vig, then Spectre and its token holders are not going to make much money.

[jlp]

Tezos Derivatives Crashes Amid Management Infighting after $232 Million ICO
https://www.cryptocoinsnews.com/tezos-derivatives-crash-amid-management-infighting-and-stalled-development/

“causing months of delays”

“This infighting has stunted the development of the Tezos network.”

Actually, it looks like they are locked at an impasse:

“Gevers told The Wall Street Journal that the Breitmans had “attempted to bypass the Swiss legal structure and take over control of the foundation.” He blames them for “causing months of delays in the Tezos project.” The Journal also reports that a lawyer for the Breitmans sent a letter to the foundation threatening to withdraw their support from the project unless Gevers was removed from its board.”

This shows that even if an ICO has Venture Capitalist backing and raises a ton of money, they still cannot prove that they can build a product.

“the tezzie derivatives offered by HitBTC crashed from $2.30 to $1.70 in an hour, and although they have since ticked up to $1.98, they are still down more than 20% for the day.”

Reduce your risk. Look at ICOs that have already built a prototype or product.

“There’s a lot of public information on what’s going on with a project, but most people are too lazy to do any real homework.”

This seems to be the case with most ICOs.

[Kranushin]

The instability not in the currency. It is in people's minds.

[J. Cooper]

The problem with ico's nowadays and people who invest in ico's in general is the following. Too many people assume they know what other people want while in reality this is not the case. Just because something is meant to be used by a specific group doesn't  mean they will use it on a regular basis. So essentially you can divide the last group of legitimate ico's into 2. Legitimate ico's but without a use and ico's with a real use case. You would want to invest ik the latter.

[jlp]

Bancor was another over-bought ICO. Investors gave them $153 million. Now, the market cap is $85 million. That’s a loss of 44%. The price will need to rise 80% for investors to break even.

[Gerharde]

Every one should see this thread. This is very imformative and will save a lot of newbies and some investors their money as we all know that lots if ICO is just a money making way on how they will steal money from the investors. although some ICO's are just crap and not a total scam. So to all investors and newbies out there you should really research the project before investing in. ICO's are risky if you dont really know what it is.

[jlp]

EOS is one of my favorite projects. Dan Larimer has a great track record in proving that he can build a product. But investors overpaid. Last time I checked a month ago, they raised $230 million. Someone said that they raised $300 million so far. Market cap is at $217 million.

[jlp]

Hi jlp. You have a great insight on ICOs.  I know i'm being bias since I'm part of the bounty but I think project related to e-sports such as Eloplay has a good shot in being successful in the future. What can you say about it

In regards to Eloplay, I think gaming and gambling are two excellent applications for cryptocurrency. After transfer of value (currency) and store of value applications, gaming and gambling are very good fits. Cryptocurrencies enable several things to be done that could not be done previously:

For Gaming:

• Win real value that can be withdrawn from the game or gaming ecosystem, instead of winning just digital goods that are locked in.
  
• Winning real value elevates the fun and excitement of the games and competitions.
  
• In essence, crypto currency enables gaming to provide gambling. Gaming (with crypto currency) is an euphemism for gambling. One will argue that gaming has skill whereas gambling does not. This is not true. Lotteries and slots do not involve skill, but many gambling games, such as Black Jack or Poker, involve skill. Financial betting involves skill.

For Gambling:

• Governments around the world are the biggest operators of gambling. Most governments run big lotteries. Several run huge casinos. But, they block competition, such as online gambling, to maximize their own revenue. Many of them do not have specific laws that outlaw online gambling. If they do, they rarely enforce them because it’s difficult, as they themselves are gambling operators. To block online gambling, they ban credit card companies and banks from sending money to and from gambling sites. Cryptocurrencies can solve this business problem for gambling operators. Cryptocurrencies can unshackle and liberate gambling and let anyone to play from anywhere in the world.
• Gambling sites are known to cheat or steal from their customers. If the bets are handled by smart contracts, this business problem can be solved.

Therefore, Eloplay is in a great space. They have a product, which is great news, though I didn’t try it. That proves that they can build.

However, they have lots of competition. There have been many eSports or Gaming ICOs, such as Firstblood, Unikoingold, GameCredits, etc. There are more, but I forgot their names. I’m not saying that this industry cannot support many competitors. I just don’t know how many.

Elopay is from that large country east of Europe, which has no extradition agreements with much of the world. This increases the risk for you, because if they defraud you, your government cannot help you.

[Leo Mor]

Hi jlp. You have a great insight on ICOs.  I know i'm being bias since I'm part of the bounty but I think project related to e-sports such as Eloplay has a good shot in being successful in the future. What can you say about it

In regards to Eloplay, I think gaming and gambling are two excellent applications for cryptocurrency. After transfer of value (currency) and store of value applications, gaming and gambling are very good fits. Cryptocurrencies enable several things to be done that could not be done previously:

For Gaming:

• Win real value that can be withdrawn from the game or gaming ecosystem, instead of winning just digital goods that are locked in.
  
• Winning real value elevates the fun and excitement of the games and competitions.
  
• In essence, crypto currency enables gaming to provide gambling. Gaming (with crypto currency) is an euphemism for gambling. One will argue that gaming has skill whereas gambling does not. This is not true. Lotteries and slots do not involve skill, but many gambling games, such as Black Jack or Poker, involve skill. Financial betting involves skill.

For Gambling:

• Governments around the world are the biggest operators of gambling. Most governments run big lotteries. Several run huge casinos. But, they block competition, such as online gambling, to maximize their own revenue. Many of them do not have specific laws that outlaw online gambling. If they do, they rarely enforce them because it’s difficult, as they themselves are gambling operators. To block online gambling, they ban credit card companies and banks from sending money to and from gambling sites. Cryptocurrencies can solve this business problem for gambling operators. Cryptocurrencies can unshackle and liberate gambling and let anyone to play from anywhere in the world.
• Gambling sites are known to cheat or steal from their customers. If the bets are handled by smart contracts, this business problem can be solved.

Therefore, Eloplay is in a great space. They have a product, which is great news, though I didn’t try it. That proves that they can build.

However, they have lots of competition. There have been many eSports or Gaming ICOs, such as Firstblood, Unikoingold, GameCredits, etc. There are more, but I forgot their names. I’m not saying that this industry cannot support many competitors. I just don’t know how many.

Elopay is from that large country east of Europe, which has no extradition agreements with much of the world. This increases the risk for you, because if they defraud you, your government cannot help you.

Amazing opinion. What cryptocurrency and Blockchain is suitable for is gaming and gambling. Nice.))

[Hach]

I'm watching many ico's these days. Many of them looks like scams and many project seems to be loosers or crap as you said. It's very hard to find legit one.
I'm just trying to be careful and not invest so much in ico's. It's too risky.

[Leo Mor]

I'm watching many ico's these days. Many of them looks like scams and many project seems to be loosers or crap as you said. It's very hard to find legit one.
I'm just trying to be careful and not invest so much in ico's. It's too risky.

LONDON - A blind investment in every initial coin offering (ICO) to date, including those that have failed, would have generated an average return of 1,320% for investors, according to a new report.

http://www.businessinsider.com/ico-mangrove-capital-average-returns-crypto-icos-2017-10?r=UK&IR=T

[jlp]

Tezos had a TON of hype, buzz, big names on its big team, tons of social media activity, thousands of followers, etc., etc., etc. They raised $232 million.

But I was never a fan. I avoided it like it was manure. Their value proposition was formal verification and governance. So what? That’s not a new idea. Who was going to execute it? A couple of people who worked in finance? WTF? What the hell do they know about building large, sophisticated technology projects? What have they built before? Nothing.

More news about Tezos just came out:

A U.S. law firm is investigating a class action lawsuit on behalf of U.S. investors in the Tezos ICO
https://restislaw.com/current-cases-investigations/tezos-initial-coin-offering/

They are seeking a refund to the investors.

This is why it is important that you invest in ICOs from countries with extradition agreements. If they screw you over, your lawyers can help get your money back. If the ICO team is in a corrupt country, kiss your money goodbye.

What Lessons Can Be Learnt From Tezos ICO Debacle
https://cointelegraph.com/news/what-lessons-can-be-learnt-from-tezos-ico-debacle

“pre deals were done as far back as September 2016 valuing the company at $6m without actually having an code ready to be released, barely in alpha.”

“And then as the ICO approached, Tezos was being valued at $150m - whereby Draper [Venture Capitalist] exited his $6 mln investment in DLS [founders' company] and doubled his money.”

This shows that even an ICO with a big name Venture Capitalist on the team can mean nothing.

“Since the end of the ICO there has been a diversion of funds to various corporate structures and foundations. But the biggest issue is clearly the early profit taking for DLS and others ahead of retail investors, way before the venture has delivered anything substantial.”

“One has to ask where was the lock-in for the founders and the commitment to deliver what was promised in the White Paper to retail investors?  Is this a clear warning for future ICO token buyers (of app tokens) and investors (securities tokens)?”

Essentially, they were pocketing the money instead of building a prototype or product. It also shows that the White Paper can mean nothing.

“Why should Mr and Mrs Breitman and the VCs be rewarded before the Tezos proposition deliver on promises made”

“they still have no customers or working production systems!”

“The Brietmans have made their money so why would they stick around to make good on the White Paper?”

“retail investors were hung out to dry.”

Don’t ever invest in an ICO that hasn’t built a prototype or product.

[beginnersluck]

what do you think about KMD (Komodo Platform) ?I have been following them closely. They have Decentralzied Exchange - Barterdex project that's really close to Easy to use GUI.
More info about it https://bitcointalk.org/index.php?topic=1338970.msg23274990#msg23274990

[SpearTackle]

There are 3 kinds of ICOs:

1)  SCAMS

There have always been a lot of scammers, hackers and thieves in the crypto space since day one. Think of Mount Gox. According to Business Insider:

“…one out of every 16-17 Bitcoins belongs to someone who stole it”

If you don’t think that these thieves are trying to steal money through ICOs or from ICOs, you are kidding yourself. You just need to see the Bitcointalk forum dedicated to scams, or to participate in a Slack channel and you will see the never-ending phishing e-mails trying to lure you to their sites, in order to empty your wallet.

In addition to thieves and scammers, there are those who lie or exaggerate. Many users on Bitcointalk are pump and dumpers.

2)  CRAP

Everyone is desperate to host an ICO to make money. Therefore, they are throwing anything and everything onto the blockchain, including the kitchen sink. They may not be intentionally trying to scam, but they think that they have a good enough idea for an ICO. But these will fail because the blockchain will not solve anything for them. Examples include ICOs that want to put 3D data (which would equate to hundreds of Terabytes of data) or 153 exabytes of medical data on a blockchain. This shows that they are clueless about the blockchain and have never run Bitcoin’s full node. Bitcoin’s blockchain is 120 GB and Ethereum’s blockhain is 200 GB and they are both having scaling problems.

Even though crypto veterans and fans would like it to be, the blockchain is NOT the panacea to every problem in the world.

ICOs are also throwing any kind of business problem that they can make up, into the ICO. If they cannot make up the business problem, they will exaggerate about it. They will fail because the business problem doesn’t really exist, isn’t significant enough, cannot be solved by a blockchain or they do not really have the solution, though they try to make it sound like they do with lots of technical jargon.

Swarm Fund cites this business problem:

“You need large amounts of money to buy real estate and your money is tied down for an indefinite amount of time.”

This is a lie and not a business problem. You can buy one share of a REIT, and there are thousands of REITs to choose from, and you can sell it one minute later. If they start off their pitch with a lie, what else are they lying about?

Energi cites this business problem:

“A small number of large energy companies supply millions of customers who are price takers.”

Therefore, the solution is to create more energy suppliers, especially nuclear power plants, which is the cheapest source of electricity. But the project does not propose this. They propose to enable consumers to sell their solar self-generated electricity directly to other consumers.

To do this, consumers should have BOTH solar panels and batteries. This is a TINY market. Though solar panels are growing, it is still a tiny percent of the market and solar generated electricity is still much more expensive than nuclear generated.

Consumers with solar panels do not have that much surplus electricity to sell anyways. They use most of what they generate. Tesla and Enphase hyped up their batteries for solar panel owners to store their surplus electricity. These batteries are NOT selling. Enphase spent over $100 million to develop their battery and partly because of the lack of battery sales, their stock has plummeted approximately 85%.

Of course, the project’s pitch looks impressive at first glance.

3)  LEGITIMATE

There are only a few applications that make a lot of sense for the blockchain: transfer of value (currency), store of value, remittances (disrupt Western Union and bank wire transfers), smart contracts, gaming and gambling. These applications will disrupt their respective industries, because the blockchain will provide a lot of cost-savings or time-savings to the users. There might be other applications that make sense that I missed, but applications proposed by many ICOs do not make sense. Jesus Coin is an extreme example, but there are applications that fall across the spectrum from Jesus Coin to Bitcoin.


YOU CAN REDUCE THE RISK AND THE NUMBER OF ICOS TO REVIEW, BY USING 3 FILTERS

1)  The project’s idea should make sense, but do not base your investment decision purely on the idea. Watch:

“Ideas are like assholes - everyone has one, no one cares”
https://www.youtube.com/watch?v=PhJgrEackis

Entrepreneurs typically try to hide their ideas because they think they are the only ones that came up with the ideas. Venture Capitalists tell them to scream their ideas to the public and they’ll see that nobody will steal them. Ideas are a dime a dozen. There are probably 10 other people with the same idea that you have or that the ICO has. The most important factor to success is the ability to execute. This is why Venture Capitalists refuse to sign non-disclosure agreements and rarely invest in startups which haven’t built a prototype or product.

HAS THE ICO TEAM BUILT ANYTHING THAT WE CAN USE TODAY?

If not, take a pass. This is the best evidence that the team can execute. It takes way more skill, time, work and money to build an app than to create a one-page website and video. It shows:

• The team has proven that they can develop.
• It is less likely that the team will invest so much and not follow through.

Everything else is useless. Don’t be fooled by big teams, fancy pretentious titles, references, roadmap, video, fancy animations, escrow, blogs, Slack, Telegram, Twitter, Facebook, Reddit and white paper.

One project stacked their team with a dozen people and then lied about them. One member had the title of “Blockchain Expert”, but he worked in Inside Sales until 1.5 months prior. One member had the title “Blockchain Developer”, but he never developed a blockchain before.

Here is an example of a project team using fake photos and fake names: https://bitcointalk.org/index.php?topic=1949528.msg19485217#msg19485217

Don't rely on Github unless you can verify that they didn't copy the code from someone else and you can run it.

Several high profile projects, with big teams, nice videos, lots of social media activity and hype, raised millions of dollars and still have not produced an app. This number will grow and become more evident in the coming years.

Gnosis raised $12.5 million and their website says:

“The Hunch Game is nearly ready and can be launched in the first half of 2017 as an example Gnosis app.”

No app yet.

Qtum raised $15.6 million. I don't see anything produced on Qtum's website.

After raising $50 million, Cosmos's website is still pitching its white paper. Come on. What have they produced with that $50 million?

Augur had Vitalik Buterin on their team. After Satoshi Nakamoto, Vitalik is the most desirable person in the universe to have on an ICO team. After raising multiple millions and after two and a half years, all they’ve released is a simple beta that is barely usable.

Don’t be suckered by animations and videos. Satoshi didn’t have any of this and his coin was the most successful. Besides, the animations aren’t that impressive anymore, as I’m beginning to see the same animation on multiple websites. Some of these teams must be using the same graphic designer.

There is no guarantee that any business will not fail. But, when the ICO team has a prototype/product, they have proven that they can develop. That significantly reduces your risk. With many ICOs, you have no idea if they can build anything. You cannot trust the information on the profile of many ICOs. Just because they can hire somebody to make a video, it does not mean they can write thousands of lines of complicated code. It's like you giving money to someone to fix your car, simply because he says he can fix cars but have never fixed one before.

Y Combinator is one of the biggest startup incubators in the world. They provide a small amount of funding (approx. $25k to 50k) to startups, which usually consists of 2 founders each. Then they build prototypes or products. Then the startups give pitches to angel investors or Venture Capitalists. If prototypes or products are unnecessary, then why do they waste so much time and money before pitching to angels and VCs?

Almost all incubators have startups that consist of usually only 2 founders, that are building prototypes and products. ICOs are stacking their team with a dozen people and they still cannot build anything. With 12 people, they should've built 6 prototypes/products by now. This shows that they are simply stacking their teams with useless people, in order to impress you or sucker you in.

2)  IS THE TEAM FROM A CORRUPT COUNTRY?

Check Transparency International's ranking.

If so, take a pass.

The number of ICOs from corrupt countries, especially those that were famous for sending out phishing scams for years, have exploded.

Yes, there are scams from countries that are not corrupt and successful projects from corrupt countries. What is important is the probability and if you are willing to take the extra risk.

In non-corrupt countries, people grow up with lots of regulations and enforcement. Though there are exceptions, the people feel that the way to get ahead is based largely on merit. In corrupt countries, there is less regulation, less enforcement and more people trying to find ways to get ahead by working around the system. In fact, they see that the most successful people in their country, usually in their government, are those who get ahead by lying, cheating or working around the system, instead of based on merit. If you do not think this is a risk, then we will agree to disagree.

Law enforcement is a big deterrent. Hurricanes prove this. After hurricanes Katrina and Irma, there were widespread lootings. Why? Because police are not on the streets and criminals feel immune from punishment.

Law enforcement through extradition is a deterrent. If an Australian defrauds investors in Germany, Germany can extradite the Australian and punish him. This makes the Australian think twice before he defrauds Germans. However, there are many countries without extradition agreements. This provides immunity to ICO teams. Therefore, they can lie, defraud and cheat investors from other countries, and there will be little to no recourse from the other countries. This can bring out the looting mentality.

There are many ICOs enticing investors, by claiming that their token or coin will go up in value or that token holders will get dividends, profits or ownership in other assets. Some tell buyers that they are “investing”. This means that they are selling securities and are breaking security laws.

I watched a video of a conference. ConsenSys was warning about the repercussions of selling securities. Waves’ CEO, who is from a country without extradition agreements with Europe or U.S., debated this, downplayed the concern and shrugged it off. Why should he care? No European or American government is going to be able to punish him if he broke security laws. Even if Europe cannot punish him, if Europe bans his coin, will you suffer?

Without law enforcement, ICOs can lie and get away with it. One project claimed that they will make 400+% return per year for the investor. In countries that enforce securities laws, if you make this claim and do not deliver, investors can sue you. In countries with advertising laws, the police can punish you for false advertising. In countries that are immune from these laws, ICOs can make any claim they want. One of the most egregious claims is when an ICO that tells you that you will be a part owner of a physical company. Good luck in getting a judge in their country to force the company to give you equity because you own some ERC-20 tokens. Good luck to you and your multiple flights to that country.

Few corrupt countries have extradition agreements. For those that do, can you rely on their corrupt governments to fulfill their obligations?

3)  “NEVER INVEST IN A BUSINESS THAT YOU DO NOT UNDERSTAND”

This is a quote from Warren Buffett. It is very applicable because many ICO teams try to impress the audience with technical jargon. Many investors are not tech savvy and are baffled or confused, but they invest because they think that the project team must have come up with a technological break-through.

Last word:

You need to be able to verify that the business problem exists, that the market size is truly as big as the ICO claims and that the solution is possible. Quite often, they exaggerate on most of these. You need to verify that a blockchain or a cryptocurrency actually is needed for the solution. Quite often, they’re not.

Do not rely solely on ICO listing or rating sites. They likely do not know about all of the ICOs. Not all ICOs are willing to pay to be listed. They have methodologies that you may not agree with. Some claim to be experts, but you are likely more of an expert in your own field, whether that is medical, law, engineering or finance, than they are. They will likely have biases, especially for ICOs originating from their country or region. Putin wants to increase the crypto industry in Russia. Is this why there has been an explosion of ICOs from Russia? Even Putin’s Advisor ran an ICO. If Russia took out Facebook ads to disrupt U.S. and European politics, who is to say that they will not pay off ICO listing and ratings sites to favor Russian ICOs?

WOW!! Nice thread. 3. "Never invest in a business that you do not understand." I really like this one, because investing in crypto is not like the real world business that you can easily understand, we must know how it works.

[Suzobo]

Thank you for sharing this story, it was very useful for me.

[xooho]

From Russian ICO I look closely at SONM and WAVES. Sonm is already in my portfolio. Sonm released an updated roadmap yesterday, good project.

[viramarket]

Thanks for the detailed description of the current situation.I think that the market is overheated and worthy projects will no longer

[dobrescu.mihnea]

Hi jlp. You have a great insight on ICOs.  I know i'm being bias since I'm part of the bounty but I think project related to e-sports such as Eloplay has a good shot in being successful in the future. What can you say about it

In regards to Eloplay, I think gaming and gambling are two excellent applications for cryptocurrency. After transfer of value (currency) and store of value applications, gaming and gambling are very good fits. Cryptocurrencies enable several things to be done that could not be done previously:

For Gaming:

• Win real value that can be withdrawn from the game or gaming ecosystem, instead of winning just digital goods that are locked in.
  
• Winning real value elevates the fun and excitement of the games and competitions.
  
• In essence, crypto currency enables gaming to provide gambling. Gaming (with crypto currency) is an euphemism for gambling. One will argue that gaming has skill whereas gambling does not. This is not true. Lotteries and slots do not involve skill, but many gambling games, such as Black Jack or Poker, involve skill. Financial betting involves skill.

For Gambling:

• Governments around the world are the biggest operators of gambling. Most governments run big lotteries. Several run huge casinos. But, they block competition, such as online gambling, to maximize their own revenue. Many of them do not have specific laws that outlaw online gambling. If they do, they rarely enforce them because it’s difficult, as they themselves are gambling operators. To block online gambling, they ban credit card companies and banks from sending money to and from gambling sites. Cryptocurrencies can solve this business problem for gambling operators. Cryptocurrencies can unshackle and liberate gambling and let anyone to play from anywhere in the world.
• Gambling sites are known to cheat or steal from their customers. If the bets are handled by smart contracts, this business problem can be solved.

Therefore, Eloplay is in a great space. They have a product, which is great news, though I didn’t try it. That proves that they can build.

However, they have lots of competition. There have been many eSports or Gaming ICOs, such as Firstblood, Unikoingold, GameCredits, etc. There are more, but I forgot their names. I’m not saying that this industry cannot support many competitors. I just don’t know how many.

Elopay is from that large country east of Europe, which has no extradition agreements with much of the world. This increases the risk for you, because if they defraud you, your government cannot help you.

Hey jlp, your input into ICO's and your insights regarding to the potential of gaming and gambling are great. I was wondering however, what do you think about Crypto 'hedge funds' ICO's such as Crypto20? Do you think there's any potential there? Apparently they have a tangible platform and tangible results, and overall they seem promising. What's your take on them? Thanks in advance.

[trecore4]

Cool. I enjoyed reading your thread post because it is very very informative. I did not know much about the nodes which you spoke here, that was added knowledge to me. Don’t know when does these so called innovative people will actually think in innovative way to run the successful ICO programs. If things goes on like this then it could be worst in the future.

This is why many countries are stepping forward to legalise the ICO with licenses and try to protect the national economy. Also there is no need of knowing much about ICO which is fake because that we will known just by looking at the crap whitepaper they always publish.

[MetaVerde]

I think David Mondrus' idea to store research results on the blockchain, for immutability, is brilliant.

https://trive.news/ doesn't fit into the categories mentioned, except loosely as a game, but then again, we are unique in our approach.

Thank-you for the excellent OP.
This is certainly an exciting new space.
I kind of like the "wild west" feel.

Don't buy any snakeoil there, Pilgrim.
Walk away from the scam-coin and nobody gets hurt.

:-D

[jlp]

what do you think about KMD (Komodo Platform) ?I have been following them closely. They have Decentralzied Exchange - Barterdex project that's really close to Easy to use GUI.
More info about it https://bitcointalk.org/index.php?topic=1338970.msg23274990#msg23274990

In regards to SuperNet’s BarterDex, I don't see any information about an ICO or their team. Are they running an ICO?

I think there are severe problems with centralized exchanges: risk of funds getting stolen; extremely bogged down. It took many days before the exchange will confirm to me that it received my fiat wire transfer. During this long wait, I was wondering if they are stealing my money. There is a HUGE need for decentralized exchanges. I sincerely wish someone will create a good one. Whoever can, will be hugely successful.

The question is: Who will be able to do this? There have been a number of ICO projects trying to do this, but unfortunately I forgot their names. Is BarterDex superior to the others? I don’t know because I cannot compare them. But SuperNet should have provided a comparison to its competitors, but they didn’t. Most ICOs do not, which implies that they are trying to hide the competition from you.

They have a prototype/product, so that is impressive. However, I’m not sure I like the the Liquidity Multiplier. It only gives an illusion of liquidity, because if you enter 3 orders for the same funds and 2 are cancelled when one of them is filled, then is this fake liquidity. This means that I can put in a buy order of 1 BTC, a 2nd buy order of 1 BTC, a 3rd buy order of 1 BTC and never worry that my 2nd and 3rd orders will get filled. If these buy orders are visible to the other parties, then I can create the impression that there is a lot of demand for BTC, when there isn’t. Does this mean I can manipulate the market?

They have a prototype, which is good news. However, according to their video (https://www.youtube.com/watch?v=XovwcWnZ9vM), you need to install and run full daemons of Bitcoin and Komodo. The guy runs bitcoind with no pruning parameter, so I assume that he is running Bitcoin’s full node. There are problems with this:

• It is a hassle to run a command line interface. The guy even says that you need advanced skills and “it’ll take quite a while” to learn from scratch.
  
• It takes multiple days to download Bitcoin’s full node. Also, most users will not have a spare 120 GB of disk space for the blockchain.
  
• It would be crazy to be running the full node of every coin that you want to convert. Ethereum’s blockchain is 200 GB. Who is going to run that?

Later on in the video, he confirms that you need to “sync”, which means download, the blockchain of any coin that you want to exchange with. I do not see how the average user will be able to do this. Even if you are experienced in running full nodes, it is a major hassle to do this and you likely will not have enough disk space to download Bitcoin’s blockchain, let alone blockchains from multiple coins.

This video (https://www.youtube.com/watch?v=bf371VQRh0M) confirmed that you need to run the full nodes.

But this (https://www.youtube.com/watch?v=Cb7An2CGBQw) says that it can work with Electrum servers to avoid the need to download the blockchain. As far as I know, Electrum only serves the Bitcoin blockchain, not others.

Their white paper gets very technical and hard to understand. It would be good if they included more diagrams to help explain. I still do not understand how they can provide lots of liquidity. Let’s say you put in a buy order of 1 BTC. Let’s say there isn’t a single sell order of BTC. What will BarterDex do? Will BarterDex step in, like a market maker, and sell 1 BTC? Without understanding how their technology works, you will be taking a risk by assuming that it will work.

Their documentations says:

Adding a coin to the BarterDEX is as simple as writing one line of code if your coin is a Bitcoin compatible.

**Non-Bitcoin compatibles can be integrated to the BarterDex. However, the further away the coin is from a btc fork, the more developer work hours it will take to integrate.**

This means that BarterDex will only work with a small number of coins.

[barbierir]

In regards to SuperNet’s BarterDex, I don't see any information about an ICO or their team. Are they running an ICO?

There was SuperNet Ico in 2014 that funded the initial development and Komodo Ico last year (because Komodo replaced Bitcoindark)

Is BarterDex superior to the others? I don’t know because I cannot compare them.

BarterDex is by far the leader in this stuff, the closest thing is Blocknet

They have a prototype/product, so that is impressive. However, I’m not sure I like the the Liquidity Multiplier. It only gives an illusion of liquidity...

I think you will like it, LM helps the small traders because you have more options to catch a dip

However, according to their video (https://www.youtube.com/watch?v=XovwcWnZ9vM), you need to install and run full daemons of Bitcoin and Komodo.

No need to download full blockchains, since the time the video was made Electrum mode was tested and added. Now you can choose either full mode or Electrum. Also the video is using a simple ugly gui with command line, this is not the version meant for release. The pretty gui won't require any command line use!

I still do not understand how they can provide lots of liquidity.

Any advanced user can act as liquidity provider by interfacing with centralized exchanges with their api

BarterDex will only work with a small number of coins.

BarterDex already works with Bitcoin, Litecoin, Stratis, Vertcoin, Dogecoin, Dash, PIVX, Zcash, Komodo and many other minor ones (beside Komodo assetchains and fiat pegs). Not bad for a first release! Making a coin compatible with BarterDex is not too hard if their devs are willing to make the work for it. I believe that once it gets some recognition more coin developers will be willing to make the effort! There will be bounties too. One thing is sure: coins that don't support atomic swaps are going to suffer a lot of friction in the near future.

Look at a short summary of all the features here: https://twitter.com/Komodo_Italy/status/920589969198108672

[InvisibilityFP]

nice thread. keep up brother

[jlp]

Hi jlp. You have a great insight on ICOs.  I know i'm being bias since I'm part of the bounty but I think project related to e-sports such as Eloplay has a good shot in being successful in the future. What can you say about it

In regards to Eloplay, I think gaming and gambling are two excellent applications for cryptocurrency. After transfer of value (currency) and store of value applications, gaming and gambling are very good fits. Cryptocurrencies enable several things to be done that could not be done previously:

For Gaming:

• Win real value that can be withdrawn from the game or gaming ecosystem, instead of winning just digital goods that are locked in.
  
• Winning real value elevates the fun and excitement of the games and competitions.
  
• In essence, crypto currency enables gaming to provide gambling. Gaming (with crypto currency) is an euphemism for gambling. One will argue that gaming has skill whereas gambling does not. This is not true. Lotteries and slots do not involve skill, but many gambling games, such as Black Jack or Poker, involve skill. Financial betting involves skill.

For Gambling:

• Governments around the world are the biggest operators of gambling. Most governments run big lotteries. Several run huge casinos. But, they block competition, such as online gambling, to maximize their own revenue. Many of them do not have specific laws that outlaw online gambling. If they do, they rarely enforce them because it’s difficult, as they themselves are gambling operators. To block online gambling, they ban credit card companies and banks from sending money to and from gambling sites. Cryptocurrencies can solve this business problem for gambling operators. Cryptocurrencies can unshackle and liberate gambling and let anyone to play from anywhere in the world.
• Gambling sites are known to cheat or steal from their customers. If the bets are handled by smart contracts, this business problem can be solved.

Therefore, Eloplay is in a great space. They have a product, which is great news, though I didn’t try it. That proves that they can build.

However, they have lots of competition. There have been many eSports or Gaming ICOs, such as Firstblood, Unikoingold, GameCredits, etc. There are more, but I forgot their names. I’m not saying that this industry cannot support many competitors. I just don’t know how many.

Elopay is from that large country east of Europe, which has no extradition agreements with much of the world. This increases the risk for you, because if they defraud you, your government cannot help you.

Hey jlp, your input into ICO's and your insights regarding to the potential of gaming and gambling are great. I was wondering however, what do you think about Crypto 'hedge funds' ICO's such as Crypto20? Do you think there's any potential there? Apparently they have a tangible platform and tangible results, and overall they seem promising. What's your take on them? Thanks in advance.

In regards to Crypto20, I think there is a need for an index fund of cryptocurrencies. However, the risk with crypto investment funds is that they centralize money and therefore create “honey pots” (term from Andreas Antonopoulos) for hackers and thieves. A thief stole $50 million from DAO. Hackers (and possibly employees) stole from many exchanges.

The other risk with Crypto20 is that they are obviously and blatantly selling a security. If and when regulators come after ICOs for selling securities, they will go after the ones that were most obvious. If they do, then both the project team and token holders will suffer.

How do we know that the Crypto20 tokens truly have ownership of the underlying assets (top 20 cryptocurrencies)? Is there a Crypto20 smart contract where we can call one of its GETTER functions to see the balances of the 20 cryptocurrencies that the smart contract is holding? I did not see this in the white paper. Even if we can verify that the smart contract is holding the 20 cryptocurrencies, how do we know that the Crypto20 tokens own the assets that the smart contract holds? But the smart contract does not hold the 20 cryptocurrencies. According to the white paper, these will be held in cold storage.

If the majority of the Crypto20 token holders want to claim the assets (20 cryptocurrencies), can they? Can they go to a judge and prove that they legally own the assets in Crypto20’s cold storage? I could not find answers to these questions.

Tether has the same principles. It is supposed to be backed by and track the US dollar. Each Tether is supposed to equal one US dollar in value. There are talks that they do not have enough US dollars and they have not been able to prove that they do. Let’s say there are 1 million Tether tokens, but they only have 100,000 US dollars to back it up. What do you if you are a token holder? Take a flight to the team’s country and try to hunt them down?

When you give your ETH to Crypto20, they are supposed to take that and buy the equivalent amounts of Bitcoin, Ripple, Bitcoin Cash, Ethereum Classic, NEM, Dash, etc. How do you know that they have? You cannot have access to their cold storage. How do you know that they haven’t skimmed off 50% of the ETH and put it into their personal wallets?

These are the risks of every type of crypto investment fund. There are many of them now. Some of them might be honest and legitimate. Some of them will not be. The risk is that it is hard to be sure that you are investing in the honest one, unless they provide all of the answers to questions like mine. If there is a way to know for sure that they cannot screw you, then these types of investment funds can provide a lot of value.

[dobrescu.mihnea]

Hi jlp. You have a great insight on ICOs.  I know i'm being bias since I'm part of the bounty but I think project related to e-sports such as Eloplay has a good shot in being successful in the future. What can you say about it

In regards to Eloplay, I think gaming and gambling are two excellent applications for cryptocurrency. After transfer of value (currency) and store of value applications, gaming and gambling are very good fits. Cryptocurrencies enable several things to be done that could not be done previously:

For Gaming:

• Win real value that can be withdrawn from the game or gaming ecosystem, instead of winning just digital goods that are locked in.
  
• Winning real value elevates the fun and excitement of the games and competitions.
  
• In essence, crypto currency enables gaming to provide gambling. Gaming (with crypto currency) is an euphemism for gambling. One will argue that gaming has skill whereas gambling does not. This is not true. Lotteries and slots do not involve skill, but many gambling games, such as Black Jack or Poker, involve skill. Financial betting involves skill.

For Gambling:

• Governments around the world are the biggest operators of gambling. Most governments run big lotteries. Several run huge casinos. But, they block competition, such as online gambling, to maximize their own revenue. Many of them do not have specific laws that outlaw online gambling. If they do, they rarely enforce them because it’s difficult, as they themselves are gambling operators. To block online gambling, they ban credit card companies and banks from sending money to and from gambling sites. Cryptocurrencies can solve this business problem for gambling operators. Cryptocurrencies can unshackle and liberate gambling and let anyone to play from anywhere in the world.
• Gambling sites are known to cheat or steal from their customers. If the bets are handled by smart contracts, this business problem can be solved.

Therefore, Eloplay is in a great space. They have a product, which is great news, though I didn’t try it. That proves that they can build.

However, they have lots of competition. There have been many eSports or Gaming ICOs, such as Firstblood, Unikoingold, GameCredits, etc. There are more, but I forgot their names. I’m not saying that this industry cannot support many competitors. I just don’t know how many.

Elopay is from that large country east of Europe, which has no extradition agreements with much of the world. This increases the risk for you, because if they defraud you, your government cannot help you.

Hey jlp, your input into ICO's and your insights regarding to the potential of gaming and gambling are great. I was wondering however, what do you think about Crypto 'hedge funds' ICO's such as Crypto20? Do you think there's any potential there? Apparently they have a tangible platform and tangible results, and overall they seem promising. What's your take on them? Thanks in advance.

In regards to Crypto20, I think there is a need for an index fund of cryptocurrencies. However, the risk with crypto investment funds is that they centralize money and therefore create “honey pots” (term from Andreas Antonopoulos) for hackers and thieves. A thief stole $50 million from DAO. Hackers (and possibly employees) stole from many exchanges.

The other risk with Crypto20 is that they are obviously and blatantly selling a security. If and when regulators come after ICOs for selling securities, they will go after the ones that were most obvious. If they do, then both the project team and token holders will suffer.

How do we know that the Crypto20 tokens truly have ownership of the underlying assets (top 20 cryptocurrencies)? Is there a Crypto20 smart contract where we can call one of its GETTER functions to see the balances of the 20 cryptocurrencies that the smart contract is holding? I did not see this in the white paper. Even if we can verify that the smart contract is holding the 20 cryptocurrencies, how do we know that the Crypto20 tokens own the assets that the smart contract holds? But the smart contract does not hold the 20 cryptocurrencies. According to the white paper, these will be held in cold storage.

If the majority of the Crypto20 token holders want to claim the assets (20 cryptocurrencies), can they? Can they go to a judge and prove that they legally own the assets in Crypto20’s cold storage? I could not find answers to these questions.

Tether has the same principles. It is supposed to be backed by and track the US dollar. Each Tether is supposed to equal one US dollar in value. There are talks that they do not have enough US dollars and they have not been able to prove that they do. Let’s say there are 1 million Tether tokens, but they only have 100,000 US dollars to back it up. What do you if you are a token holder? Take a flight to the team’s country and try to hunt them down?

When you give your ETH to Crypto20, they are supposed to take that and buy the equivalent amounts of Bitcoin, Ripple, Bitcoin Cash, Ethereum Classic, NEM, Dash, etc. How do you know that they have? You cannot have access to their cold storage. How do you know that they haven’t skimmed off 50% of the ETH and put it into their personal wallets?

These are the risks of every type of crypto investment fund. There are many of them now. Some of them might be honest and legitimate. Some of them will not be. The risk is that it is hard to be sure that you are investing in the honest one, unless they provide all of the answers to questions like mine. If there is a way to know for sure that they cannot screw you, then these types of investment funds can provide a lot of value.

I see, what you're saying makes a lot of sense. if we had the assurance that those funds were completely honest or legitimate, they would have great potential in the future, unless the whole crypto ecosystem would crash. Anyway, I was also wondering, what's your take on Blockchain ICOs like Universa, who claim they will be superior to Bitcoin and other platforms in many aspects? Obviously, Universa doesn't have any prototype it seems, but solely from the perspective of potential and adoption rate, could they work? Another type of ICO I was wondering about with regards to your view on it would be digital advertising ICOs like Papyrus for example. Considering social media and digital advertising are growing exponentially in this age, do you think Altcoins would have any potential to penetrate this space?

[mmm01]

It was an informative article, thank you. Can I ask what you think of Guts by taking advantage of your experience in this area? I appreciate your opinion, thank you

[cicnos]

2)  CRAP

Everyone is desperate to host an ICO to make money. Therefore, they are throwing anything and everything onto the blockchain, including the kitchen sink. They may not be intentionally trying to scam, but they think that they have a good enough idea for an ICO. But these will fail because the blockchain will not solve anything for them. Examples include ICOs that want to put 3D data (which would equate to hundreds of Terabytes of data) or 153 exabytes of medical data on a blockchain. This shows that they are clueless about the blockchain and have never run Bitcoin’s full node. Bitcoin’s blockchain is 120 GB and Ethereum’s blockhain is 200 GB and they are both having scaling problems.

Even though crypto veterans and fans would like it to be, the blockchain is NOT the panacea to every problem in the world.

ICOs are also throwing any kind of business problem that they can make up, into the ICO. If they cannot make up the business problem, they will exaggerate about it. They will fail because the business problem doesn’t really exist, isn’t significant enough, cannot be solved by a blockchain or they do not really have the solution, though they try to make it sound like they do with lots of technical jargon.

Swarm Fund cites this business problem:

“You need large amounts of money to buy real estate and your money is tied down for an indefinite amount of time.”

This is a lie and not a business problem. You can buy one share of a REIT, and there are thousands of REITs to choose from, and you can sell it one minute later. If they start off their pitch with a lie, what else are they lying about?

I have to disagree regarding Swarm fund. REITs definitely have their place as an investment to consider, but Swam takes this concept many levels deeper. Swarm is about much more than real estate, it is fully decentralized, members vote on the direction of the platform via a stake weighted liquid democracy system (already developed) with the first vote scheduled for a week after the ICO. It would be foolish to dismiss any ICO based on one aspect you disagree with or misunderstood. Not to mention that the whole idea of Swarm is to function as an agnostic platform where anyone can bring an investment opportunity to it and tokenize it. Just like Ethereum created an ecosystem for applications to be run on top of it, Swarm is doing the same but for any and every investment opportunity out there. I will definitely be investing on their ICO and using their platform, which by the way, already has a beta version out. Like any investment of course you have to do your due diligence but to call them liars is a bit  of a stretch.

[Betrayhumanity]

Thanks for this summary: very useful.

[ValoremFoundation]

Very nice article. The ICO bubble is going to burst just like the dotcom stock bubble of millennium.

Very true. This is a great article to slow the uninformed investor and allow real projects to come forward.

[Huan Pres]

Kyber brags that one of its benefits is that it doesn’t hold the users’ tokens. Therefore, the tokens won’t get hacked or stolen. They are implying that if they hold tokens, the tokens can get hacked or stolen.

Then they say that they guarantee high liquidity by “holding reserves of all tokens in the network” that users may want. They would need to hold TONS of tokens to guarantee high liquidity. By holding tokens, these tokens can get hacked or stolen, according to Kyber.

Their business model is completely flawed.

In regards to CombiCoin, their pitch is that you reduce risk by diversifying. However, they increase risk for you because they have your money and you have to believe that it’s backed by other coins. Tether is doing this already, except they back up Tether with USD.  There is already talk that Tether is not backing up their coin with sufficient USD. You’ll never know for sure that CombiCoin’s TRIA is backed up by sufficient coins. Instead, if you went out and bought the other coins on your own, you’ll never need to believe anyone’s claims.

Agreed on Swarm and Combicoin.
But, with Kyber it is a different story. As far as i understood, they don't hold tokens. They have reserve managers (anyone with specified credentials can be one) and Reserve Contributors (could be you or me). The reserve contributors hold the tokens and supply the Reserve Managers. These Reserve Managers trade on the Kyber Network Platform and are paying a fee in KNC to Kyber, which will get burned.
So, if my understanding is right, Kyber told the truth. They don't hold the tokens and they can provide the liquidity.

If it's flawed why Vitalik claims to advise the project, I'm not a Kyberians but really believe in every Vitalik project also based on they said  remaining 95% of the fees will be burned, and my believe is knc going to hits Bittrex soon, so would be fine for a short term. 

[jlp]

I have to disagree regarding Swarm fund. REITs definitely have their place as an investment to consider, but Swam takes this concept many levels deeper. Swarm is about much more than real estate, it is fully decentralized, members vote on the direction of the platform via a stake weighted liquid democracy system (already developed) with the first vote scheduled for a week after the ICO. It would be foolish to dismiss any ICO based on one aspect you disagree with or misunderstood. Not to mention that the whole idea of Swarm is to function as an agnostic platform where anyone can bring an investment opportunity to it and tokenize it. Just like Ethereum created an ecosystem for applications to be run on top of it, Swarm is doing the same but for any and every investment opportunity out there. I will definitely be investing on their ICO and using their platform, which by the way, already has a beta version out. Like any investment of course you have to do your due diligence but to call them liars is a bit  of a stretch.

You didn’t disagree with what I wrote about Swarm Fund. I wrote that they lied when they said:

“You need large amounts of money to buy real estate and your money is tied down for an indefinite amount of time.”

I have the same questions about Swarm Fund, or any fund, as I do for Crypto20. See my posting above about Crypto20. How can they prove that the tokens legally own the real estate? Ownership of real estate is recorded by municipalities. They record the name of the owner. I assume that municipalities will record Swarm Fund as the owner? If so, then what are the legal documents that will prove that my ERC20 token entitles me to part ownership of the real estate that has Swarm Fund’s name recorded as owner?

How do we confirm that Swarm Fund is going to take all of the ETH that I give them to buy real estate? How do we confirm that they won’t skim off 10%, 20% or 50% of the ETH and put it into their personal wallets?

I’m not saying that investment funds (into any asset) does not have value. There have been many investment funds throughout history that have provided a lot of value. There have been many investment funds throughout history that have been scams. How do we confirm that Swarm fund will be the former and not the latter?

[ValoremFoundation]

I have to disagree regarding Swarm fund. REITs definitely have their place as an investment to consider, but Swam takes this concept many levels deeper. Swarm is about much more than real estate, it is fully decentralized, members vote on the direction of the platform via a stake weighted liquid democracy system (already developed) with the first vote scheduled for a week after the ICO. It would be foolish to dismiss any ICO based on one aspect you disagree with or misunderstood. Not to mention that the whole idea of Swarm is to function as an agnostic platform where anyone can bring an investment opportunity to it and tokenize it. Just like Ethereum created an ecosystem for applications to be run on top of it, Swarm is doing the same but for any and every investment opportunity out there. I will definitely be investing on their ICO and using their platform, which by the way, already has a beta version out. Like any investment of course you have to do your due diligence but to call them liars is a bit  of a stretch.

You didn’t disagree with what I wrote about Swarm Fund. I wrote that they lied when they said:

“You need large amounts of money to buy real estate and your money is tied down for an indefinite amount of time.”

I have the same questions about Swarm Fund, or any fund, as I do for Crypto20. See my posting above about Crypto20. How can they prove that the tokens legally own the real estate? Ownership of real estate is recorded by municipalities. They record the name of the owner. I assume that municipalities will record Swarm Fund as the owner? If so, then what are the legal documents that will prove that my ERC20 token entitles me to part ownership of the real estate that has Swarm Fund’s name recorded as owner?

How do we confirm that Swarm Fund is going to take all of the ETH that I give them to buy real estate? How do we confirm that they won’t skim off 10%, 20% or 50% of the ETH and put it into their personal wallets?

I’m not saying that investment funds (into any asset) does not have value. There have been many investment funds throughout history that have provided a lot of value. There have been many investment funds throughout history that have been scams. How do we confirm that Swarm fund will be the former and not the latter?

Deed must list the wallet address, like a property description. That's the only way.

[jlp]

Deed must list the wallet address, like a property description. That's the only way.

Really? Will municipalities accept a wallet address? Highly unlikely.

Which countries does Swarm Fund plan to operate in? Can they prove that each of these countries will accept a crypto wallet address on a land title deed? Highly unlikely.

Let's say that these municipalities will, which is a stretch, how does Swarm Fund prove that my ERC20 token owns a percentage of the assets that their wallet owns?

[ValoremFoundation]

Deed must list the wallet address, like a property description. That's the only way.

Really? Will municipalities accept a wallet address? Highly unlikely.

Which countries does Swarm Fund plan to operate in? Can they prove that each of these countries will accept a crypto wallet address on a land title deed? Highly unlikely.

Let's say that these municipalities will, which is a stretch, how does Swarm Fund prove that my ERC20 token owns a percentage of the assets that their wallet owns?

I'm not saying it's likely or that it's going to happen realistically, but I know that if you need to write the deed, things can be added in there. Although I agree the likelihood of anyone knowing exactly how to even get started would be a stretch. But not impossible.

Forgot to add the other part of you question. They can only prove that the wallet owns the property. Not the token themselves. Just like anything else on the deed it says "Value exchanged for deed" tokens are simply a medium of exchange. Again, not likely, but not impossible.

[mr_uk_btc]

Deed must list the wallet address, like a property description. That's the only way.

Really? Will municipalities accept a wallet address? Highly unlikely.

Which countries does Swarm Fund plan to operate in? Can they prove that each of these countries will accept a crypto wallet address on a land title deed? Highly unlikely.

Let's say that these municipalities will, which is a stretch, how does Swarm Fund prove that my ERC20 token owns a percentage of the assets that their wallet owns?

I think the OP and you are both genuinely misunderstanding the Swarm Fund model. Also the OP's initial quote of Swarm Fund is clearly being used out of context...

Perhaps you should reread their offering.... but in short....

Swarm Fund are providing a platform for existing funds, such as the existing US-based Real Estate fund they are launching with, to gain access to new sources of capital from the crypto markets. Property title deeds are not held by Swarm or the users of the platform, they are held by the third-party RE fund. The investors sourced via Swarm will be issued asset-backed tokens that represent the dollar-value that they invested into that fund initially. As the Real Estate fund gains in performance the asset-backed tokens increase in value and may be exchanged at any time via the Swarm Network exchange, providing instant liquidity in what is normally a less liquid market.

[deportivo]

Most of ICOs are scams. Almost all knew that but continue to give the scammers money. Need control over new ICOs i think.

[Quidat]

Most of ICOs are scams. Almost all knew that but continue to give the scammers money. Need control over new ICOs i think.

If you can see that some countries did really made such move on making ICO to be regulated to prevent or avoid this kind of situation on ICO because some people do really make this as a safe haven for them to make easy money from the community.Just make a new coins,get their hands dirty,announce it on public then viola instant money specially if the coin did able to hype up.

[mr_uk_btc]

Swarm Fund is lying. They say that you need large amounts of money to buy real estate and your money is tied down for an indefinite amount of time. This is false. You can buy one share of a REIT, and there are thousands of REITs to choose from, and you can sell it one minute later.  If they start off their pitch with a lie, what else are they lying about?

There is another flaw with Swarm, which is similar to the flaw with CombiCoin. You will have to trust that the coin is backed up LEGALLY by the land title of the real estate. Who is the owner of the real estate? John Doe? Who is to say John Doe will uphold any agreement that the real estate, that has his name in the municipal records as the owner, will be ascribed to the coin holders? Is there a legal contract that you can take to a court to uphold the agreement?

Atlant and HomeToken have the same problems as Swarm. In addition to that, they both have the same problem as coin banks, exchanges and investment funds. The money is centralized into a honey pot, which makes it attractive to hackers and employees to steal.

Take many of the recommendations on Bitcointalk with a grain of salt. Many of them are pump and dumpers.

Man you guys are paranoid eh! No one at Swarm Fund is lying.  You are all totally misunderstanding their platform and how their tokens work. It might be worth reading this to bring yourselves up to speed. https://www.swarm.fund/swarm-token/  

The "asset-backed tokens" mentioned are backed not by actual property deeds but by legally binding Private Equity investment contracts with real world funds that focus on projects that invest in real assets themselves.  Yes you have to trust the teams that are executing the real-world projects... but only in the same way you would need to have trust in any crypto team you invest in to deliver a blockchain product. The difference is these Real Estate funds already have an investment performance history and so too the two finance-focussed founders of Swarm... you only have to google their names Timo Lehes and Philipp Pieper to see their previous successes.

To answer another question about how you "hold a title deed in a wallet" and where is would be accepted etc etc you should really look at the tech that LA Token are building. The way that works is that when a property is to be tokenised they physically sell the property to a custodian or legal trustee for a fixed period (10 yrs). That trustee then issues a limited issuance of asset-backed tokens on LATokens platform and those tokens can be held in a wallet. I believe the tokens act like a futures contract and therefore expire after a fixed period of time with the price difference credited / debited from the holder at the time of expiry.

You should really read the Swarm Fund literature more carefully, look at the hugely experienced Private Equity founders and stop spreading all this negativity.

[jlp]

I think the OP and you are both genuinely misunderstanding the Swarm Fund model. Also the OP's initial quote of Swarm Fund is clearly being used out of context...

Perhaps you should reread their offering.... but in short....

Swarm Fund are providing a platform for existing funds, such as the existing US-based Real Estate fund they are launching with, to gain access to new sources of capital from the crypto markets. Property title deeds are not held by Swarm or the users of the platform, they are held by the third-party RE fund. The investors sourced via Swarm will be issued asset-backed tokens that represent the dollar-value that they invested into that fund initially. As the Real Estate fund gains in performance the asset-backed tokens increase in value and may be exchanged at any time via the Swarm Network exchange, providing instant liquidity in what is normally a less liquid market.

How is the initial quote of Swarm Fund used out of context?  Swarm Fund cites this business problem:

“You need large amounts of money to buy real estate and your money is tied down for an indefinite amount of time.”

This is untrue.  How is it out of context?

By saying this, Swarm Fund is trying to make you believe that this is a business problem, when it is not.

https://www.swarm.fund/how-swarm-works/ shows Alice. “She is a small-scale investor”.  “Most of the attractive opportunities are outside of her financial means.”  “She finds out about Swarm Fund”.

This is misleading. There are thousands of REITs in 30 countries that Alice can choose from and she can buy one share for as little as $5.

Please explain how Swarm’s “subfunds” will be able to compete against the variety and liquidity of REITs. Alice should do some reading about REITs:

https://www.forbes.com/sites/marcprosser/2017/07/19/data-proves-reits-are-better-than-buying-real-estate/2/#7c4b113f5cc3

REITS vs real estate crowdfunding (author is from private equity real estate)
https://seekingalpha.com/article/4051897-reits-vs-real-estate-crowdfunding

Swarm Fund should be explaining how they are superior to REITs, not trying to make the reader think that he/she could never have invested in real estate before Swarm Fund came along.

[pinkliar]

It was an informative article, thank you. Can I ask what you think of Guts by taking advantage of your experience in this area? I appreciate your opinion, thank you

I really appreciate too the information given by our co bitcoiners here in forum i think that they take some information regarding on their what experience for.

[BlockFolksHQ]

I am very interested in this thread. As I am specialize in doing community management, our team do have a checklist to identify if the ICO is worth taking up or not.

One of the most important point is the development team. We will check the individual profile and their related working experience. I remember attending a talk from an ICO cofounder. He was an CEO of a popular company but the product of the ICO that he was working with had no relevant to his previous company. And it seems like he did not have proper knowledge in blockchain and crypto to answer some of the questions.

[Temmy007]

This is a very important thread, I got to learn new things I was not aware of before hand. It good of the op for bring this to the awareness of others. This is a real ico101, that need to being taken by investors

[kinnu]

We have to check about the people behind ico and business, strategy, long run, commitment. Some coins give multiple returns in short time because they have good fundamentals.

[zerghunter68]

3)  “NEVER INVEST IN A BUSINESS THAT YOU DO NOT UNDERSTAND”

I find this advice the most helpful, I invested in a few projects that I heard and there was buzzwords flying all around, but I didn't knew exactly why they will be useful. And of course they were just pump and dump coins. I guess I will try to learn from mistakes.

[jlp]

3)  “NEVER INVEST IN A BUSINESS THAT YOU DO NOT UNDERSTAND”

I find this advice the most helpful, I invested in a few projects that I heard and there was buzzwords flying all around, but I didn't knew exactly why they will be useful. And of course they were just pump and dump coins. I guess I will try to learn from mistakes.

It would be interesting to get a poll to find out the % of investors who have done this. You're honest enough to admit it, but the poll will not be accurate unless people can anonymously answer.

[ValoremFoundation]

We have to check about the people behind ico and business, strategy, long run, commitment. Some coins give multiple returns in short time because they have good fundamentals.

Thats correct. If they are real people in real life, you can bet they will perform.

[jlp]

It was an informative article, thank you. Can I ask what you think of Guts by taking advantage of your experience in this area? I appreciate your opinion, thank you

In regards to GUTS, this is not the first project that is putting tickets on a blockchain. I forgot the name of the other one(s).

I think that ticketing is a good application for the blockchain. It’s not a great application such as currency, store of value or gaming/gambling, but still a good application. It also seems that it should be good to automate tickets, by putting them on a phone. It’s good to see that they have a demo/prototype. It's not impressive and probably doesn't require a lot of complicated code, but decent.

I think it’s good that GUTS is going to eliminate scalpers. This is a sore point with most venue customers. However, is this what venue operators want? Scalpers provide an early source of revenue. With that early revenue, they can spend it on marketing to get more customers. This is why ICOs have pre-sales or 2 rounds of sales. Has GUTS done market research, from both venue customers and operators, to find out how much market demand there is to eliminate scalpers?

Will customers be willing to go through the hassle of downloading, installing a wallet and buying GET tokens, just so they can attend a venue once every year? Some people attend venues once a month. Some attend once every 5 years. Some people may not have smart phones. Has GUTS done market research to answer these questions?

One of GUTS’ value proposition is:

“GUTS knows who is actually attending the event, regardless of how often a ticket is resold. The result is great userdata from the actual attendees, making future promotion a breeze.”

I wouldn’t want to give my data to the venue operator because I wouldn’t want to be spammed.

I can see the need to eliminate the counterfeit or fraudulent tickets. That is a legitimate business problem that GUTS can solve. But how big of a problem is this? I don't know. Did they say? I didn't catch it. It’s hard to know the full potential of GUTS unless they have done more market research.

[magiccarpett]

very nice thread. thank you.  i only can agree with you

[jlp]

Great job man. Your attitudes are nicely logic. I can't count the number of useless services given by un-known persons that focuses all their attention to the token and the ICO when they should be spending time making prototypes/products. Would you kindly share your opinions about start-ups on the prediction market using hybrid intelligence into blockchain, i recently saw two projects starting with ICO; Cindicator and Trackr. Also the two famous ICO working on freelance market; Bitjob (freelance for students.ICO just finished) Blocklancer (platform for freelance jobs.ICO sheduled to winter 17/18).
Thanks in advance 

Bitjob sounds like a project where the founders were trying to find something to throw on a blockchain in order to get money from an ICO.

I’m not saying that a job site is not needed for students. I don’t know. Maybe they’ve identified a need. But they should show their market research as to why students need their site.

The video says “Bitjob is a global job marketplace powered by the Ethereum blockchain technology”. What does that mean? How does a blockchain power a job site? It’s like saying Indeed.com is powered by PayPal technology.

The main powering that a job site needs are:
* Lots of coding for a feature-rich site or app
* Lots of marketing

It sounds like the team is trying to make to project sound like a blockchain project, when it is really a “build a job website” project.

If Bitjob is planning to store all of the job information on the blockchain, especially Etheneum’s, they are naive. The blockchain cannot store that much data.

If I was a student, I would need to spend most or all of my earnings on tuition, books, rent, food, transportation, beer and girls. So, I don’t know why I would want to be paid in Bitjob tokens, when I will need to convert it immediately. Bitjob provides PayPal as an option. I would opt for the PayPal option all the time.

There are hundreds of job sites. Yet, their white paper does not show a comparison of Bitjob to their competitors. This means the founders are naive or trying to deceive the readers. It’s ridiculous to think that they do not have competition.

They have 17 team members and 12 advisors. This is a joke. They’ve been at this since Nov 2016, which means they should have been able to build something much more sophisticated than their alpha. Every once in a while, their alpha will hang on me for about 10 seconds. Would you use this to find a job? They are a long ways away from having anything comparable to existing job sites, such as Monster or Upwork. Startups from Y Combinator with 2 founders build more than this after 6 months.  Most of Bitjob's 28 people are useless.

[dobrescu.mihnea]

Hey jlp, what do you think about Mobius Network? More importantly, what's your take on Mercury Protocol ICO, project in which Mark Cuban has invested as well?

[Coldsnap4457]

Great thread. Agree with everything.

Stockbet passes all of your filters. Check it out.

[jlp]

Hey jlp, what do you think about Mobius Network? More importantly, what's your take on Mercury Protocol ICO, project in which Mark Cuban has invested as well?

If I have time, I’ll take a look at those. In the meantime, I'll comment on Mark Cuban.

I think he’s completely overrated. He became rich because he sold his company, Broadcast.com, near the peak of the Dot Com bubble in 1999 to Yahoo for $5.7 billion, netting $1 billion for Cuban. But the company was TINY and LOSING MONEY. It was so worthless and burning so much money that Yahoo shut it down 3 years later.

https://www.gurufocus.com/news/138012/mark-cuban-and-broadcastcom-the-multibillion-dollar-coup
“When Broadcast.com was taken public it had fewer than $7 million in revenues, $28 million in equity, and an accumulated deficit of of nearly $10 million dollars in its brief history. In reality, the company had little or no chance of achieving profitability in the foreseeable future.”

Here is a micro cap stock that you’ve probably never heard of:  Castle Brands
https://finance.google.com/finance?q=NYSEAMERICAN%3AROX&fstype=ii&ei=dejwWcmaGcaWjAG2sYiAAw

It does $77 million of revenue and has a market cap of $184 million.

Broadcast had one eleventh the revenue. Essentially, Broadcast was a micro micro micro cap.  But, it sold for 31 times more than Castle Brands. Yahoo overpaid by 341 times. Can you imagine paying $13,630,000 for a car that is worth $40,000?

Fortune Magazine listed Broadcast.com as one of the 5 worst internet acquisitions of all time:
http://fortune.com/2013/05/21/5-worst-internet-acquisitions-of-all-time/

Yahoo executives, who were responsible for buying Broadcast.com, were canned.

Essentially, Cuban owes most of his wealth to winning a lottery.

I’m not saying that Cuban is a lousy businessman. He was a small businessman. You probably know businessmen or entrepreneurs who created bigger companies than Cuban did.

Cuban never created any hugely successful operation like Google, Apple, Qualcomm, Foxconn, Nvidia, Intel, Microsoft, Salesforce.com, Oracle, eBay, PayPal, Facebook, Tesla, etc., etc., etc. Not even close. Yet the media treats him like he has more business acumen than the entrepreneurs or executives from many of those companies I listed.

Cuban, the successful businessman and investor, is completely a creation of the media. It's hugely fake news.

Therefore, ignore anything that Cuban says or does.

[quochuan29]

We have to check about the people behind ico and business, strategy, long run, commitment. Some coins give multiple returns in short time because they have good fundamentals.

I think this is good, not all is scam and if find a good once you can 3-10X your acc..

[Crasengover]

I agree that nowadays it's much more difficult to find really prospective ICO amoung the ton of low-quality projects and scams. But even if you find such project it doesn't mean that you'll get x2 and higher just after the listing on exchanges. I know that most of investors tries to sell there token asap, and only experienced can distinguish the potential of long term investment. But if you check the most successful ICOs, you'll see that most of them gave huge income for those who HODL.

[AshCoins]

JLP - thanks for this thread.  I just came across it today and read the whole thing and will continue to do so.  While I don't necessarily agree with all your individual project assessments, EVERYTHING you mentioned in the OP is EXACTLY what I've come to learn over the past year or so through personal experience investing in a couple dozen ICOs. 

[jlp]

I agree that nowadays it's much more difficult to find really prospective ICO amoung the ton of low-quality projects and scams. But even if you find such project it doesn't mean that you'll get x2 and higher just after the listing on exchanges. I know that most of investors tries to sell there token asap, and only experienced can distinguish the potential of long term investment. But if you check the most successful ICOs, you'll see that most of them gave huge income for those who HODL.

“If you aren’t thinking about owning a stock for 10 years, don’t even think about owning it for 10 minutes.”

-- Warren Buffett

[Soutogu]

Nice write up OP, i agree with most points. However, even if there are a few legitimate (and good) ICOs, i think we need to rethink the system as a whole and come up with better solutions to get these worthwhile projects off the ground... The company that solves this will be one of the most important groups in the crypto market.

[MommyElsa]

There are 3 kinds of ICOs:

1)  SCAMS

There have always been a lot of scammers, hackers and thieves in the crypto space since day one. Think of Mount Gox. According to Business Insider:

“…one out of every 16-17 Bitcoins belongs to someone who stole it”

If you don’t think that these thieves are trying to steal money through ICOs or from ICOs, you are kidding yourself. You just need to see the Bitcointalk forum dedicated to scams, or to participate in a Slack channel and you will see the never-ending phishing e-mails trying to lure you to their sites, in order to empty your wallet.

In addition to thieves and scammers, there are those who lie or exaggerate. Many users on Bitcointalk are pump and dumpers.

2)  CRAP

Everyone is desperate to host an ICO to make money. Therefore, they are throwing anything and everything onto the blockchain, including the kitchen sink. They may not be intentionally trying to scam, but they think that they have a good enough idea for an ICO. But these will fail because the blockchain will not solve anything for them. Examples include ICOs that want to put 3D data (which would equate to hundreds of Terabytes of data) or 153 exabytes of medical data on a blockchain. This shows that they are clueless about the blockchain and have never run Bitcoin’s full node. Bitcoin’s blockchain is 120 GB and Ethereum’s blockhain is 200 GB and they are both having scaling problems.

Even though crypto veterans and fans would like it to be, the blockchain is NOT the panacea to every problem in the world.

ICOs are also throwing any kind of business problem that they can make up, into the ICO. If they cannot make up the business problem, they will exaggerate about it. They will fail because the business problem doesn’t really exist, isn’t significant enough, cannot be solved by a blockchain or they do not really have the solution, though they try to make it sound like they do with lots of technical jargon.

Swarm Fund cites this business problem:

“You need large amounts of money to buy real estate and your money is tied down for an indefinite amount of time.”

This is a lie and not a business problem. You can buy one share of a REIT, and there are thousands of REITs to choose from, and you can sell it one minute later. If they start off their pitch with a lie, what else are they lying about?

Energi cites this business problem:

“A small number of large energy companies supply millions of customers who are price takers.”

Therefore, the solution is to create more energy suppliers, especially nuclear power plants, which is the cheapest source of electricity. But the project does not propose this. They propose to enable consumers to sell their solar self-generated electricity directly to other consumers.

To do this, consumers should have BOTH solar panels and batteries. This is a TINY market. Though solar panels are growing, it is still a tiny percent of the market and solar generated electricity is still much more expensive than nuclear generated.

Consumers with solar panels do not have that much surplus electricity to sell anyways. They use most of what they generate. Tesla and Enphase hyped up their batteries for solar panel owners to store their surplus electricity. These batteries are NOT selling. Enphase spent over $100 million to develop their battery and partly because of the lack of battery sales, their stock has plummeted approximately 85%.

Of course, the project’s pitch looks impressive at first glance.

3)  LEGITIMATE

There are only a few applications that make a lot of sense for the blockchain: transfer of value (currency), store of value, remittances (disrupt Western Union and bank wire transfers), smart contracts, gaming and gambling. These applications will disrupt their respective industries, because the blockchain will provide a lot of cost-savings or time-savings to the users. There might be other applications that make sense that I missed, but applications proposed by many ICOs do not make sense. Jesus Coin is an extreme example, but there are applications that fall across the spectrum from Jesus Coin to Bitcoin.


YOU CAN REDUCE THE RISK AND THE NUMBER OF ICOS TO REVIEW, BY USING 3 FILTERS

1)  The project’s idea should make sense, but do not base your investment decision purely on the idea. Watch:

“Ideas are like assholes - everyone has one, no one cares”
https://www.youtube.com/watch?v=PhJgrEackis

Entrepreneurs typically try to hide their ideas because they think they are the only ones that came up with the ideas. Venture Capitalists tell them to scream their ideas to the public and they’ll see that nobody will steal them. Ideas are a dime a dozen. There are probably 10 other people with the same idea that you have or that the ICO has. The most important factor to success is the ability to execute. This is why Venture Capitalists refuse to sign non-disclosure agreements and rarely invest in startups which haven’t built a prototype or product.

HAS THE ICO TEAM BUILT ANYTHING THAT WE CAN USE TODAY?

If not, take a pass. This is the best evidence that the team can execute. It takes way more skill, time, work and money to build an app than to create a one-page website and video. It shows:

• The team has proven that they can develop.
• It is less likely that the team will invest so much and not follow through.

Everything else is useless. Don’t be fooled by big teams, fancy pretentious titles, references, roadmap, video, fancy animations, escrow, blogs, Slack, Telegram, Twitter, Facebook, Reddit and white paper.

One project stacked their team with a dozen people and then lied about them. One member had the title of “Blockchain Expert”, but he worked in Inside Sales until 1.5 months prior. One member had the title “Blockchain Developer”, but he never developed a blockchain before.

Here is an example of a project team using fake photos and fake names: https://bitcointalk.org/index.php?topic=1949528.msg19485217#msg19485217

Don't rely on Github unless you can verify that they didn't copy the code from someone else and you can run it.

Several high profile projects, with big teams, nice videos, lots of social media activity and hype, raised millions of dollars and still have not produced an app. This number will grow and become more evident in the coming years.

Gnosis raised $12.5 million and their website says:

“The Hunch Game is nearly ready and can be launched in the first half of 2017 as an example Gnosis app.”

No app yet.

Qtum raised $15.6 million. I don't see anything produced on Qtum's website.

After raising $50 million, Cosmos's website is still pitching its white paper. Come on. What have they produced with that $50 million?

Augur had Vitalik Buterin on their team. After Satoshi Nakamoto, Vitalik is the most desirable person in the universe to have on an ICO team. After raising multiple millions and after two and a half years, all they’ve released is a simple beta that is barely usable.

Don’t be suckered by animations and videos. Satoshi didn’t have any of this and his coin was the most successful. Besides, the animations aren’t that impressive anymore, as I’m beginning to see the same animation on multiple websites. Some of these teams must be using the same graphic designer.

There is no guarantee that any business will not fail. But, when the ICO team has a prototype/product, they have proven that they can develop. That significantly reduces your risk. With many ICOs, you have no idea if they can build anything. You cannot trust the information on the profile of many ICOs. Just because they can hire somebody to make a video, it does not mean they can write thousands of lines of complicated code. It's like you giving money to someone to fix your car, simply because his video says he can fix cars, but he has never fixed one before.

Y Combinator is one of the biggest startup incubators in the world. They provide a small amount of funding (approx. $25k to 50k) to startups, which usually consists of 2 founders each. Then they build prototypes or products. Then the startups give pitches to angel investors or Venture Capitalists. If prototypes or products are unnecessary, then why do they waste so much time and money before pitching to angels and VCs?

Almost all incubators have startups that consist of usually only 2 founders, that are building prototypes and products. ICOs are stacking their team with a dozen people and they still cannot build anything. With 12 people, they should've built 6 prototypes/products by now. This shows that they are simply stacking their teams with useless people, in order to impress you or sucker you in.

2)  IS THE TEAM FROM A CORRUPT COUNTRY?

Check Transparency International's ranking.

If so, take a pass.

The number of ICOs from corrupt countries, especially those that were famous for sending out phishing scams for years, have exploded.

Yes, there are scams from countries that are not corrupt and successful projects from corrupt countries. What is important is the probability and if you are willing to take the extra risk.

In non-corrupt countries, people grow up with lots of regulations and enforcement. Though there are exceptions, the people feel that the way to get ahead is based largely on merit. In corrupt countries, there is less regulation, less enforcement and more people trying to find ways to get ahead by working around the system. In fact, they see that the most successful people in their country, usually in their government, are those who get ahead by lying, cheating or working around the system, instead of based on merit. If you do not think this is a risk, then we will agree to disagree.

Law enforcement is a big deterrent. Hurricanes prove this. After hurricanes Katrina and Irma, there were widespread lootings. Why? Because police are not on the streets and criminals feel immune from punishment.

Law enforcement through extradition is a deterrent. If an Australian defrauds investors in Germany, Germany can extradite the Australian and punish him. This makes the Australian think twice before he defrauds Germans. However, there are many countries without extradition agreements. This provides immunity to ICO teams. Therefore, they can lie, defraud and cheat investors from other countries, and there will be little to no recourse from the other countries. This can bring out the looting mentality.

There are many ICOs enticing investors, by claiming that their token or coin will go up in value or that token holders will get dividends, profits or ownership in other assets. Some tell buyers that they are “investing”. This means that they are selling securities and are breaking security laws.

I watched a video of a conference. ConsenSys was warning about the repercussions of selling securities. Waves’ CEO, who is from a country without extradition agreements with Europe or U.S., debated this, downplayed the concern and shrugged it off. Why should he care? No European or American government is going to be able to punish him if he broke security laws. Even if Europe cannot punish him, if Europe bans his coin, will you suffer?

Without law enforcement, ICOs can lie and get away with it. One project claimed that they will make 400+% return per year for the investor. In countries that enforce securities laws, if you make this claim and do not deliver, investors can sue you. In countries with advertising laws, the police can punish you for false advertising. In countries that are immune from these laws, ICOs can make any claim they want. One of the most egregious claims is when an ICO that tells you that you will be a part owner of a physical company. Good luck in getting a judge in their country to force the company to give you equity because you own some ERC-20 tokens. Good luck to you and your multiple flights to that country.

Few corrupt countries have extradition agreements. For those that do, can you rely on their corrupt governments to fulfill their obligations?

3)  “NEVER INVEST IN A BUSINESS THAT YOU DO NOT UNDERSTAND”

This is a quote from Warren Buffett. It is very applicable because many ICO teams try to impress the audience with technical jargon. Many investors are not tech savvy and are baffled or confused, but they invest because they think that the project team must have come up with a technological break-through.

Last word:

You need to be able to verify that the business problem exists, that the market size is truly as big as the ICO claims and that the solution is possible. Quite often, they exaggerate on most of these. You need to verify that a blockchain or a cryptocurrency actually is needed for the solution. Quite often, they’re not.

Do not rely solely on ICO listing or rating sites. They likely do not know about all of the ICOs. Not all ICOs are willing to pay to be listed. They have methodologies that you may not agree with. Some claim to be experts, but you are likely more of an expert in your own field, whether that is medical, law, engineering or finance, than they are. They will likely have biases, especially for ICOs originating from their country or region. Putin wants to increase the crypto industry in Russia. Is this why there has been an explosion of ICOs from Russia? Even Putin’s Advisor ran an ICO. If Russia took out Facebook ads to disrupt U.S. and European politics, who is to say that they will not pay off ICO listing and ratings sites to favor Russian ICOs?

Thanks for the time, really appreciate your efforts for informing us to be guided by every steps that we make. Really hard to find the real thing in this present time.

[jlp]

Nice write up OP, i agree with most points. However, even if there are a few legitimate (and good) ICOs, i think we need to rethink the system as a whole and come up with better solutions to get these worthwhile projects off the ground... The company that solves this will be one of the most important groups in the crypto market.

Agreed.

There are legitimate and good projects. But they're getting drowned out by two factors:

• There are so many crap ICOs that investors probably give up searching for the good ones because they've lost patience or don't have the time.
• Investors are being distracted by ICOs with the most marketing. DomRaider comes to mind. This ICO is going after a tiny market. This market is so small that it is questionable that it can even support a small business. Yet DomRaider was running commercials everywhere, including on a Youtube video I was trying to watch. The uninformed viewer will think that DomRaider is onto something big, but the opposite is true.

If this problem isn't solved, then the following might happen in a few years when investors finally realize that they've lost a lot of money on crap ICOs:

• The crypto space will get a bad reputation as being riddled with scammers and crap.
• With the bad reputation, legitimate and good projects will have a harder time raising money, which means fewer good products.
• ICOs will need to do much more work and spend more to prove that they are legitimate and not crap. Think of how much easier and cheaper it would be to build websites if you didn't have to worry about hackers.
• Governments and regulators are always looking for any excuse to label this space as riddled with money launderers, terrorists and drug dealers. They would love to get more excuses to clamp down on cryptocurrencies and ideally shut them down. Soon they'll have more justification. They can shut down ICOs by saying they're protecting investors. China has done this already. Many other governments will get around to it as well. Yes, investors will be protected, but the good ICOs will be shut down as well.

[fedor3327]

Corupt countries??

Then avoid the USA and Europe. Thats were all the high tech people live. You will find the higherest number of hackers per capita there.

[jlp]

Corupt countries??

Then avoid the USA and Europe. Thats were all the high tech people live. You will find the higherest number of hackers per capita there.

There are lots of ICOs from non USA and non European countries. If all the high tech people live in the USA and Europe, then what you're implying is that many ICOs are started by people who do not understand technology. I agree with that.

[warr1979]

I agree that nowadays it's much more difficult to find really prospective ICO amoung the ton of low-quality projects and scams. But even if you find such project it doesn't mean that you'll get x2 and higher just after the listing on exchanges. I know that most of investors tries to sell there token asap, and only experienced can distinguish the potential of long term investment. But if you check the most successful ICOs, you'll see that most of them gave huge income for those who HODL.

“If you aren’t thinking about owning a stock for 10 years, don’t even think about owning it for 10 minutes.”

-- Warren Buffett

Yeah, I love these words, invest in ICO is not the best way for speculation.
The ICO is an investment for long term and only who investor can be patient will get profits from this field.
Accept the risk need to hold the token you will buy make you spend few years or even a decade will help you never feel boring.

[jlp]

Hey jlp, what do you think about Mobius Network? More importantly, what's your take on Mercury Protocol ICO, project in which Mark Cuban has invested as well?

If I have time, I’ll take a look at those. In the meantime, I'll comment on Mark Cuban.

I think he’s completely overrated. He became rich because he sold his company, Broadcast.com, near the peak of the Dot Com bubble in 1999 to Yahoo for $5.7 billion, netting $1 billion for Cuban. But the company was TINY and LOSING MONEY. It was so worthless and burning so much money that Yahoo shut it down 3 years later.

https://www.gurufocus.com/news/138012/mark-cuban-and-broadcastcom-the-multibillion-dollar-coup
“When Broadcast.com was taken public it had fewer than $7 million in revenues, $28 million in equity, and an accumulated deficit of of nearly $10 million dollars in its brief history. In reality, the company had little or no chance of achieving profitability in the foreseeable future.”

Here is a micro cap stock that you’ve probably never heard of:  Castle Brands
https://finance.google.com/finance?q=NYSEAMERICAN%3AROX&fstype=ii&ei=dejwWcmaGcaWjAG2sYiAAw

It does $77 million of revenue and has a market cap of $184 million.

Broadcast had one eleventh the revenue. Essentially, Broadcast was a micro micro micro cap.  But, it sold for 31 times more than Castle Brands. Yahoo overpaid by 341 times. Can you imagine paying $13,630,000 for a car that is worth $40,000?

Fortune Magazine listed Broadcast.com as one of the 5 worst internet acquisitions of all time:
http://fortune.com/2013/05/21/5-worst-internet-acquisitions-of-all-time/

Yahoo executives, who were responsible for buying Broadcast.com, were canned.

Essentially, Cuban owes most of his wealth to winning a lottery.

I’m not saying that Cuban is a lousy businessman. He was a small businessman. You probably know businessmen or entrepreneurs who created bigger companies than Cuban did.

Cuban never created any hugely successful operation like Google, Apple, Qualcomm, Foxconn, Nvidia, Intel, Microsoft, Salesforce.com, Oracle, eBay, PayPal, Facebook, Tesla, etc., etc., etc. Not even close. Yet the media treats him like he has more business acumen than the entrepreneurs or executives from many of those companies I listed.

Cuban, the successful businessman and investor, is completely a creation of the media. It's hugely fake news.

Therefore, ignore anything that Cuban says or does.

In regards to Mercury Protocol, their homepage starts off with:

Decentralized

Not owned or controlled by any one party

More Secure

All data is tamper resistant and secured by the blockchain

Trustless

Verify messages and transactions without a trusted third party Application

So what? The above are standard in every blockchain. Are they trying to fool newbies into thinking that they are the first to come up with these?

It also says:

Application Agnostic

Generalized protocol for all communication types

Their first use case includes “messaging” and “large file size”.

Are they going to put this onto the blockchain? If so, then this shows their ignorance. If they’ve run Bitcoin’s full node or Ethereum’s full node, they would know that these are already getting bogged down, and these 2 blockchains store small numbers or snippets of code. If Mercury Protocol puts messaging onto a blockchain, it might work for a year or less, before their blockchain grows to 200 GB. Then they will be more bogged down than Bitcoin.

But it gets worse. I thought they were going to have their own blockchain. No. They’re going to put their stuff on the Ethereum blockchain. This means that their application will be bogged down on day one, and everyone else’s application on Ethereum will get bogged down.

For Ethereum's sake and the dozens of tokens on Ethereum, let's hope Mercury Protocol does not put its messaging on Ethereum. The Ethereum foundation should ban it.

Mark Cuban was on television a couple of days ago, bragging about how he was a “technology guy”. He's definitely not a blockchain guy. He never was much of a technology guy.

Their team has 15 members and 2 advisors. With that many people, they should’ve built 6 prototypes or products by now. This shows that they stacked their team with useless people, in order to impress you. Also, there are no LinkedIn profiles to verify that these people are real, or have any work experience.

[jlp]

Hey jlp, what do you think about Mobius Network? More importantly, what's your take on Mercury Protocol ICO, project in which Mark Cuban has invested as well?

In regards to Mobius, I read this part:

The Mobius universal protocol APIs work across all blockchains and connect the internet world to the blockchain ecosystem so developers only have to learn and support one standard.

I don’t know how they will be able to develop APIs for dozens or hundreds of blockchains. Even if they do, what will the API do? Enable developers to create an universal wallet that can send and receive coins to any blockchain? That would be VERY useful, but I don’t think they mentioned this.

Shortly after reading this, their website was using up a lot of my CPU. My fan was going into overdrive, so I closed the browser tab. Does this happen to you? If they have coding skills, they should not have let this happen.

[dobrescu.mihnea]

I see, very good points, thanks a lot for your input! 

[Whitman]

Shortly after reading this, their website was using up a lot of my CPU. My fan was going into overdrive, so I closed the browser tab. Does this happen to you? If they have coding skills, they should not have let this happen.

Could have been a script they added to the site to mine monero or some other crypto with your CPU while you're there like Pirate Bay

[tomwrx]

Very informative thread and useful information for deciding in which ico to invest. I want to know what's OP opinion about PayPal based business model adaptation on blockchain like Monetha or Utrust? At first it looks like a great idea and proper model for a blockchain. What's your opinion? 

[altrolo017]

Thank you for your time in putting this together.

[jlp]

Folks, www.balanc3.net a new accounting platform prove value with new accounting Tech, claims this would be good for investors. Would that work?

In regards to balanc3.net, their homepage has a lot of verbose but says very little.

What accounting is needed for the blockchain?

It says that it will provide accounting services for token sales. Is there a need for this? I don’t know. They should explain why this is needed by token sales, but they don’t. Token sales usually involve having a smart contract receive ETH and sending tokens. The team only needs the total ETH received (one number) and then can put this in their Excel spreadsheet or other regular accounting software. What else do they need to do? If they need to do more, then balanc3 should explain why.

It doesn’t look like they are hosting an ICO, are they? Maybe they’re running a business and will sell their accounting services to ICOs. I don’t know as it doesn’t say.

This is one of most nebulous websites I’ve read.

[Ponylon]

Great overview. You've covered the very basic which a lot of new investors have to learn about ICO's. They are seeing these crazy gains and believe every ICO will be profitable, when in fact that won't happen. There are thousands of projects currently launched and many hundred trying to launch soon. How do you think things will look like in a couple of years when the market has matured even more? We'll probably see some heavy regulation, because that's what is takes to keep the markets under control. The investors simply hope to land on a good project, while that project has no obligation to register/disclose or implement any regulation that is usually required by corporations. Maybe that's the solution to the problem, more regulation and not less, but it should be just enough to avoid these problems, too much regulation will suffocate the market and it would be a shame to see the crypto space going into shambles because people keep on making the wrong decisions.

[jlp]

Very informative thread and useful information for deciding in which ico to invest. I want to know what's OP opinion about PayPal based business model adaptation on blockchain like Monetha or Utrust? At first it looks like a great idea and proper model for a blockchain. What's your opinion?  

UTRUST’s business is understandable, which is good. I think they’re in a country where we can extradite them or sue them if they screw us, which is good.

Intuitively, one would think that there is big market need for Utrust. The question is whether they can execute.

Bitpay has been doing Bitcoin payment processing for merchants for 4 or more years. One needs to find out why they haven’t expanded to process addition cryptocurrencies. Why haven’t they? Is it unprofitable to do so? Is there insufficient demand from merchants or shoppers? If they wanted to, would they be able to quickly do so?

Bitpay has not exploded in growth. This means that there aren't enough people using Bitcoin to shop. If this is the case, how do you know it's worthwhile to add more cryptos and that processing more cryptos will grow this space?

I like that they have a comparison chart with their competitors. However, how do we know that UTRUST’s will be able to survive by providing the lowest fees?

If UTRUST supports multiple cryptocurrencies, which they should because this is their main differentiator from Bitpay, then why would shoppers use UTRUST’s token?

The CEO does not have a LinkedIn profile. How do we know that he has a high school diploma or any work experience?

With 16 people on the team (and 13 advisors), they should’ve built 8 prototypes by now. Most of these people are doing nothing. This reduces the confidence that they can out-execute Bitpay.

It would be great if a company like Utrust succeeds. Maybe UTRUST can execute. I don’t know, as there isn’t enough information.

[gee777]

Nice writeup...but it is going to be hard for individuals not to be scammed cos of these ico's Airdrops

[zirtlan]

much appreciated you for clearing it up.I truly dont see how individuals pick their speculations once in a while furthermore, its tragic when you see a shitty ico makes millions when genuine coins dont get enough consideration

[dangdangdang]

You had made a very nice thread that educate us what kind of ICOs we're into. I hope everyone should have read this.

[hashtag101]

much appreciated you for clearing it up.I truly dont see how individuals pick their speculations once in a while furthermore, its tragic when you see a shitty ico makes millions when genuine coins dont get enough consideration

There were a lot of shit ICO projects, even scam ICO also happened in the ICO market. After all, the investors still keep their faith in this market. Why? Because they can make money easily through this market instead of trading, but they don't know they are becoming the speculators by short term investment through the ICO projects.

[jlp]

much appreciated you for clearing it up.I truly dont see how individuals pick their speculations once in a while furthermore, its tragic when you see a shitty ico makes millions when genuine coins dont get enough consideration

Couldn't agree with you more.

Tezos is a great example. There was nothing earth shattering about what they wanted to do: better governance and formal verification. They could've built it for less than $10 million, but investors threw $200 million at them.

https://www.coindesk.com/tezos-founders-ico-controversy-will-blow/

director of development at Digital Currency Group, and herself a Tezos backer, asked why the project ended up raising more than 20 times the $10 million the couple had initially envisioned seeking in September 2016.

What's ironic is that Tezos' team cannot govern themselves:

Early in the session, the Breitmans said that one of the reasons they started the project was to solve the governance challenges faced by bitcoin.

Later, during the discussion of their own governance problems, Kathleen smiled and told the audience:

"We appreciate the irony of the situation."

Tezos was one of the most over-hyped and over-rated projects I've ever seen in my life. Investors got snookered and overpaid. If they gave that $200 million to 20 projects instead of one, we would have many more good products to use.

[strickland]

much appreciated you for clearing it up.I truly dont see how individuals pick their speculations once in a while furthermore, its tragic when you see a shitty ico makes millions when genuine coins dont get enough consideration

There were a lot of shit ICO projects, even scam ICO also happened in the ICO market. After all, the investors still keep their faith in this market. Why? Because they can make money easily through this market instead of trading, but they don't know they are becoming the speculators by short term investment through the ICO projects.

With people making more money from coins that get pumped, I don't worry so much of the scams that are lurking in this forum waiting to get launched on somebody.
There's a few ICO's that are real.

[hawkins]

much appreciated you for clearing it up.I truly dont see how individuals pick their speculations once in a while furthermore, its tragic when you see a shitty ico makes millions when genuine coins dont get enough consideration

There were a lot of shit ICO projects, even scam ICO also happened in the ICO market. After all, the investors still keep their faith in this market. Why? Because they can make money easily through this market instead of trading, but they don't know they are becoming the speculators by short term investment through the ICO projects.

With people making more money from coins that get pumped, I don't worry so much of the scams that are lurking in this forum waiting to get launched on somebody.
There's a few ICO's that are real.

you are right, I also do not care about it, the important thing is that we have tried. well, of course i have some real ico and really do it out there, and one of them is gladius. well, all have risks, and without taking that risk, we can not make a profit.

[Croin]

Wow amazing thread! Seriously thank you fro your work!
But I would even subdivide the last categorise. Because I guess for most of the investors a good return is the most important part of the investment.
A ICO can be legitimate but still won't make you rich bcs they fail.

[jlp]

Awesome advice! Definitely can empathize with all you wrote. Moreover, would add that transparency is vital; Team (LinkedIn, public Profile), Product (at least a smoke screen test), Whitepaper (well written, detailed, timeline, compensation, distribution, concept, people, etc), and online presence (Social media, blogs, etc). All helps with credibility (references never hurt either).  

Feel free to give us some advice to make us as transparent at possible: http://www.telco.in

Cheers!
Chris

telcoin's website is a textual, functionless website, but it is using 13-16% of my CPU. My fan is spinning on high speed, so I closed the browser tab.

With 8 people on the team, plus 3 advisors, this should not be happening. I can understand if you're selling furniture or shoes. But if you're going to be in the technology space, you need to show that you can do technology.

Sorry, but I wasn't able to read more of your site.

[tomwrx]

Very informative thread and useful information for deciding in which ico to invest. I want to know what's OP opinion about PayPal based business model adaptation on blockchain like Monetha or Utrust? At first it looks like a great idea and proper model for a blockchain. What's your opinion?  

UTRUST’s business is understandable, which is good. I think they’re in a country where we can extradite them or sue them if they screw us, which is good.

Intuitively, one would think that there is big market need for Utrust. The question is whether they can execute.

Bitpay has been doing Bitcoin payment processing for merchants for 4 or more years. One needs to find out why they haven’t expanded to process addition cryptocurrencies. Why haven’t they? Is it unprofitable to do so? Is there insufficient demand from merchants or shoppers? If they wanted to, would they be able to quickly do so?

Bitpay has not exploded in growth. This means that there aren't enough people using Bitcoin to shop. If this is the case, how do you know it's worthwhile to add more cryptos and that processing more cryptos will grow this space?

I like that they have a comparison chart with their competitors. However, how do we know that UTRUST’s will be able to survive by providing the lowest fees?

If UTRUST supports multiple cryptocurrencies, which they should because this is their main differentiator from Bitpay, then why would shoppers use UTRUST’s token?

The CEO does not have a LinkedIn profile. How do we know that he has a high school diploma or any work experience?

With 16 people on the team (and 13 advisors), they should’ve built 8 prototypes by now. Most of these people are doing nothing. This reduces the confidence that they can out-execute Bitpay.

It would be great if a company like Utrust succeeds. Maybe UTRUST can execute. I don’t know, as there isn’t enough information.

Thanks for a great insights. They are very helpfull. You can say nowadays all ICO's are covered with clouds and it's hard to see real potential and legitimacy of ico in that mist 

[jlp]

I just found out about Overstock:

https://bitcointalk.org/index.php?topic=2324406.0

This project makes a lot of sense. They were the first major merchant to accept Bitcoin back in 2014, which the crypto community was very happy about. I still remember the announcement and we all hoped for more merchants to do the same. Now, they accept 40 altcoins as payment. So they have a lot of experience with cryptocurrencies. They're one of the most crypto friendly companies in existence.

With this ICO, they're not going to do crazy things like put large files, 3D or VR data on the blockchain. They're going to put stock related data on the blockchain. If they've already bought a Wall Street firm that is approved by SEC to trade stocks, then one would assume that their tokens will be legal owners of the shares of the companies that they entitle you to. There are several ICOs that claim that their tokens will entitle you to ownership to real estate, USD, gold or other coins without giving detailed, convincing explanation of how the tokens will have legal ownership.

They're going after a huge market and opportunity, much bigger than Ripple or most other markets that I can think of. This is the best ICO in a long time.

However, we'll need to see if a retailer can transition into a stock exchange operator. The other drawback is the size of the ICO, which is expected to be $500 million. That's a very high price to pay and you can end up overpaying. It's possible that investors throw even more than $500 million at Overstock and increase the risk of losing money in the short term. Stockbet also makes a lot of sense. They won't be as big as Overstock, but their tokens will be more reasonably priced.

[asba]

Interesting information. Especially the corruption ranking 

[Gasotard]

There are 3 kinds of ICOs:

1)  SCAMS

There have always been a lot of scammers, hackers and thieves in the crypto space since day one. Think of Mount Gox. According to Business Insider:

“…one out of every 16-17 Bitcoins belongs to someone who stole it”

If you don’t think that these thieves are trying to steal money through ICOs or from ICOs, you are kidding yourself. You just need to see the Bitcointalk forum dedicated to scams, or to participate in a Slack channel and you will see the never-ending phishing e-mails trying to lure you to their sites, in order to empty your wallet.

In addition to thieves and scammers, there are those who lie or exaggerate. Many users on Bitcointalk are pump and dumpers.

2)  CRAP

Everyone is desperate to host an ICO to make money. Therefore, they are throwing anything and everything onto the blockchain, including the kitchen sink. They may not be intentionally trying to scam, but they think that they have a good enough idea for an ICO. But these will fail because the blockchain will not solve anything for them. Examples include ICOs that want to put 3D data (which would equate to hundreds of Terabytes of data) or 153 exabytes of medical data on a blockchain. This shows that they are clueless about the blockchain and have never run Bitcoin’s full node. Bitcoin’s blockchain is 120 GB and Ethereum’s blockhain is 200 GB and they are both having scaling problems.

Even though crypto veterans and fans would like it to be, the blockchain is NOT the panacea to every problem in the world.

ICOs are also throwing any kind of business problem that they can make up, into the ICO. If they cannot make up the business problem, they will exaggerate about it. They will fail because the business problem doesn’t really exist, isn’t significant enough, cannot be solved by a blockchain or they do not really have the solution, though they try to make it sound like they do with lots of technical jargon.

Swarm Fund cites this business problem:

“You need large amounts of money to buy real estate and your money is tied down for an indefinite amount of time.”

This is a lie and not a business problem. You can buy one share of a REIT, and there are thousands of REITs to choose from, and you can sell it one minute later. If they start off their pitch with a lie, what else are they lying about?

Energi cites this business problem:

“A small number of large energy companies supply millions of customers who are price takers.”

Therefore, the solution is to create more energy suppliers, especially nuclear power plants, which is the cheapest source of electricity. But the project does not propose this. They propose to enable consumers to sell their solar self-generated electricity directly to other consumers.

To do this, consumers should have BOTH solar panels and batteries. This is a TINY market. Though solar panels are growing, it is still a tiny percent of the market and solar generated electricity is still much more expensive than nuclear generated.

Consumers with solar panels do not have that much surplus electricity to sell anyways. They use most of what they generate. Tesla and Enphase hyped up their batteries for solar panel owners to store their surplus electricity. These batteries are NOT selling. Enphase spent over $100 million to develop their battery and partly because of the lack of battery sales, their stock has plummeted approximately 85%.

Of course, the project’s pitch looks impressive at first glance.

3)  LEGITIMATE

There are only a few applications that make a lot of sense for the blockchain: transfer of value (currency), store of value, remittances (disrupt Western Union and bank wire transfers), smart contracts, gaming and gambling. These applications will disrupt their respective industries, because the blockchain will provide a lot of cost-savings or time-savings to the users. There might be other applications that make sense that I missed, but applications proposed by many ICOs do not make sense. Jesus Coin is an extreme example, but there are applications that fall across the spectrum from Jesus Coin to Bitcoin.


YOU CAN REDUCE THE RISK AND THE NUMBER OF ICOS TO REVIEW, BY USING 3 FILTERS

1)  The project’s idea should make sense, but do not base your investment decision purely on the idea. Watch:

“Ideas are like assholes - everyone has one, no one cares”
https://www.youtube.com/watch?v=PhJgrEackis

Entrepreneurs typically try to hide their ideas because they think they are the only ones that came up with the ideas. Venture Capitalists tell them to scream their ideas to the public and they’ll see that nobody will steal them. Ideas are a dime a dozen. There are probably 10 other people with the same idea that you have or that the ICO has. The most important factor to success is the ability to execute. This is why Venture Capitalists refuse to sign non-disclosure agreements and rarely invest in startups which haven’t built a prototype or product.

HAS THE ICO TEAM BUILT ANYTHING THAT WE CAN USE TODAY?

If not, take a pass. This is the best evidence that the team can execute. It takes way more skill, time, work and money to build an app than to create a one-page website and video. It shows:

• The team has proven that they can develop.
• It is less likely that the team will invest so much and not follow through.

Everything else is useless. Don’t be fooled by big teams, fancy pretentious titles, references, roadmap, video, fancy animations, escrow, blogs, Slack, Telegram, Twitter, Facebook, Reddit and white paper.

One project stacked their team with a dozen people and then lied about them. One member had the title of “Blockchain Expert”, but he worked in Inside Sales until 1.5 months prior. One member had the title “Blockchain Developer”, but he never developed a blockchain before.

Here is an example of a project team using fake photos and fake names: https://bitcointalk.org/index.php?topic=1949528.msg19485217#msg19485217

Don't rely on Github unless you can verify that they didn't copy the code from someone else and you can run it.

Several high profile projects, with big teams, nice videos, lots of social media activity and hype, raised millions of dollars and still have not produced an app. This number will grow and become more evident in the coming years.

Gnosis raised $12.5 million and their website says:

“The Hunch Game is nearly ready and can be launched in the first half of 2017 as an example Gnosis app.”

No app yet.

Qtum raised $15.6 million. I don't see anything produced on Qtum's website.

After raising $50 million, Cosmos's website is still pitching its white paper. Come on. What have they produced with that $50 million?

Augur had Vitalik Buterin on their team. After Satoshi Nakamoto, Vitalik is the most desirable person in the universe to have on an ICO team. After raising multiple millions and after two and a half years, all they’ve released is a simple beta that is barely usable.

Don’t be suckered by animations and videos. Satoshi didn’t have any of this and his coin was the most successful. Besides, the animations aren’t that impressive anymore, as I’m beginning to see the same animation on multiple websites. Some of these teams must be using the same graphic designer.

There is no guarantee that any business will not fail. But, when the ICO team has a prototype/product, they have proven that they can develop. That significantly reduces your risk. With many ICOs, you have no idea if they can build anything. You cannot trust the information on the profile of many ICOs. Just because they can hire somebody to make a video, it does not mean they can write thousands of lines of complicated code. It's like you giving money to someone to fix your car, simply because his video says he can fix cars, but he has never fixed one before.

Y Combinator is one of the biggest startup incubators in the world. They provide a small amount of funding (approx. $25k to 50k) to startups, which usually consists of 2 founders each. Then they build prototypes or products. Then the startups give pitches to angel investors or Venture Capitalists. If prototypes or products are unnecessary, then why do they waste so much time and money before pitching to angels and VCs?

Almost all incubators have startups that consist of usually only 2 founders, that are building prototypes and products. ICOs are stacking their team with a dozen people and they still cannot build anything. With 12 people, they should've built 6 prototypes/products by now. This shows that they are simply stacking their teams with useless people, in order to impress you or sucker you in.

2)  IS THE TEAM FROM A CORRUPT COUNTRY?

Check Transparency International's ranking.

If so, take a pass.

The number of ICOs from corrupt countries, especially those that were famous for sending out phishing scams for years, have exploded.

Yes, there are scams from countries that are not corrupt and successful projects from corrupt countries. What is important is the probability and if you are willing to take the extra risk.

In non-corrupt countries, people grow up with lots of regulations and enforcement. Though there are exceptions, the people feel that the way to get ahead is based largely on merit. In corrupt countries, there is less regulation, less enforcement and more people trying to find ways to get ahead by working around the system. In fact, they see that the most successful people in their country, usually in their government, are those who get ahead by lying, cheating or working around the system, instead of based on merit. If you do not think this is a risk, then we will agree to disagree.

Law enforcement is a big deterrent. Hurricanes prove this. After hurricanes Katrina and Irma, there were widespread lootings. Why? Because police are not on the streets and criminals feel immune from punishment.

Law enforcement through extradition is a deterrent. If an Australian defrauds investors in Germany, Germany can extradite the Australian and punish him. This makes the Australian think twice before he defrauds Germans. However, there are many countries without extradition agreements. This provides immunity to ICO teams. Therefore, they can lie, defraud and cheat investors from other countries, and there will be little to no recourse from the other countries. This can bring out the looting mentality.

There are many ICOs enticing investors, by claiming that their token or coin will go up in value or that token holders will get dividends, profits or ownership in other assets. Some tell buyers that they are “investing”. This means that they are selling securities and are breaking security laws.

I watched a video of a conference. ConsenSys was warning about the repercussions of selling securities. Waves’ CEO, who is from a country without extradition agreements with Europe or U.S., debated this, downplayed the concern and shrugged it off. Why should he care? No European or American government is going to be able to punish him if he broke security laws. Even if Europe cannot punish him, if Europe bans his coin, will you suffer?

Without law enforcement, ICOs can lie and get away with it. One project claimed that they will make 400+% return per year for the investor. In countries that enforce securities laws, if you make this claim and do not deliver, investors can sue you. In countries with advertising laws, the police can punish you for false advertising. In countries that are immune from these laws, ICOs can make any claim they want. One of the most egregious claims is when an ICO that tells you that you will be a part owner of a physical company. Good luck in getting a judge in their country to force the company to give you equity because you own some ERC-20 tokens. Good luck to you and your multiple flights to that country.

Few corrupt countries have extradition agreements. For those that do, can you rely on their corrupt governments to fulfill their obligations?

3)  “NEVER INVEST IN A BUSINESS THAT YOU DO NOT UNDERSTAND”

This is a quote from Warren Buffett. It is very applicable because many ICO teams try to impress the audience with technical jargon. Many investors are not tech savvy and are baffled or confused, but they invest because they think that the project team must have come up with a technological break-through.

Last word:

You need to be able to verify that the business problem exists, that the market size is truly as big as the ICO claims and that the solution is possible. Quite often, they exaggerate on most of these. You need to verify that a blockchain or a cryptocurrency actually is needed for the solution. Quite often, they’re not.

Do not rely solely on ICO listing or rating sites. They likely do not know about all of the ICOs. Not all ICOs are willing to pay to be listed. They have methodologies that you may not agree with. Some claim to be experts, but you are likely more of an expert in your own field, whether that is medical, law, engineering or finance, than they are. They will likely have biases, especially for ICOs originating from their country or region. Putin wants to increase the crypto industry in Russia. Is this why there has been an explosion of ICOs from Russia? Even Putin’s Advisor ran an ICO. If Russia took out Facebook ads to disrupt U.S. and European politics, who is to say that they will not pay off ICO listing and ratings sites to favor Russian ICOs?

Thanks for the write up. It seems that people here are mainly interested in promoting their scamcoin.

[FiiNALiZE]

Nice writeup...but it is going to be hard for individuals not to be scammed cos of these ico's Airdrops

The airdrops will fade away when people realize that they are only receiving a small payout or they will be holding a coin that is just taking up space in their wallet.

[Coldsnap4457]

I just found out about Overstock:

https://bitcointalk.org/index.php?topic=2324406.0

This project makes a lot of sense. They were the first major merchant to accept Bitcoin back in 2014, which the crypto community was very happy about. I still remember the announcement and we all hoped for more merchants to do the same. Now, they accept 40 altcoins as payment. So they have a lot of experience with cryptocurrencies. They're one of the most crypto friendly companies in existence.

With this ICO, they're not going to do crazy things like put large files, 3D or VR data on the blockchain. They're going to put stock related data on the blockchain. If they've already bought a Wall Street firm that is approved by SEC to trade stocks, then one would assume that their tokens will be legal owners of the shares of the companies that they entitle you to. There are several ICOs that claim that their tokens will entitle you to ownership to real estate, USD, gold or other coins without giving detailed, convincing explanation of how the tokens will have legal ownership.

They're going after a huge market and opportunity, much bigger than Ripple or most other markets that I can think of. This is the best ICO in a long time.

However, we'll need to see if a retailer can transition into a stock exchange operator. The other drawback is the size of the ICO, which is expected to be $500 million. That's a very high price to pay and you can end up overpaying. It's possible that investors throw even more than $500 million at Overstock and increase the risk of losing money in the short term. Stockbet also makes a lot of sense. They won't be as big as Overstock, but their tokens will be more reasonably priced.

I agree about both Overstock and Stockbet!

[Minotus]

Thank you! it's really nice and informative thread.

[jlp]

Another type of ICO I was wondering about with regards to your view on it would be digital advertising ICOs like Papyrus for example. Considering social media and digital advertising are growing exponentially in this age, do you think Altcoins would have any potential to penetrate this space?

Papyrus is probably the 3rd or 4th project I’ve seen related to a new token being able to control advertising.

They cite a lot of business problems, which seem legitimate. But I don’t see how they can solve them.

Papyrus states the following as a Papyrus Advantage (solution to problem):

Controlled advertising
Users are able to create precise policies to control what ads they see and what data they share with advertisers.

How?

The majority of advertising that you see is from Google, Youtube (which is Google), Facebook and Twitter. You can’t control the advertising that they show you. When you search on Google, it shows ads on top of the search results. How do you think Papyrus is going to let you control that? Are they going to hack into Google’s servers? When you watch Youtube, it shows commercials at the beginning of the video. How is Papyrus going to let you control Youtube? When Facebook shows ads in the right column, how are you going to stop them? Is Papyrus going to use a blockchain to stop these ads? How?

The biggest source of revenue for Google is AdWords and Google is the biggest advertising middleman on the internet. Therefore, Google AdWords is the biggest form of advertising on the internet, and it runs on Google's sites. How is Papyrus going to interfere with this?

For all of the other sites on the internet that have ads, most of them use Google AdSense. They put Google’s code into their website, select some parameters and let Google serve the ads into their websites. Then Google charges the advertiser every time a visitor clicks on that ad, and pays a percentage of that to the site owner. How is Papyrus going to interfere with this?

Papyrus has all of these fancy diagrams, but no mention of Google Adwords or AdSense.

The people who controls the advertising are the people who control the traffic. How will Papyrus convince these people to let them take over control?

I didn’t read all of their information, so maybe I missed it. Maybe someone can explain to me how a blockchain is going to enable Papyrus take control.

[Croin]

Another type of ICO I was wondering about with regards to your view on it would be digital advertising ICOs like Papyrus for example. Considering social media and digital advertising are growing exponentially in this age, do you think Altcoins would have any potential to penetrate this space?

Papyrus is probably the 3rd or 4th project I’ve seen related to a new token being able to control advertising.

They cite a lot of business problems, which seem legitimate. But I don’t see how they can solve them.

Papyrus states the following as a Papyrus Advantage (solution to problem):

Controlled advertising
Users are able to create precise policies to control what ads they see and what data they share with advertisers.

How?

The majority of advertising that you see is from Google, Youtube (which is Google), Facebook and Twitter. You can’t control the advertising that they show you. When you search on Google, it shows ads on top of the search results. How do you think Papyrus is going to let you control that? Are they going to hack into Google’s servers? When you watch Youtube, it shows commercials at the beginning of the video. How is Papyrus going to let you control Youtube? When Facebook shows ads in the right column, how are you going to stop them? Is Papyrus going to use a blockchain to stop these ads? How?

The biggest source of revenue for Google is AdWords and Google is the biggest advertising middleman on the internet. Therefore, Google AdWords is the biggest form of advertising on the internet, and it runs on Google's sites. How is Papyrus going to interfere with this?

For all of the other sites on the internet that have ads, most of them use Google AdSense. They put Google’s code into their website, select some parameters and let Google serve the ads into their websites. Then Google charges the advertiser every time a visitor clicks on that ad, and pays a percentage of that to the site owner. How is Papyrus going to interfere with this?

Papyrus has all of these fancy diagrams, but no mention of Google Adwords or AdSense.

The people who controls the advertising are the people who control the traffic. How will Papyrus convince these people to let them take over control?

I didn’t read all of their information, so maybe I missed it. Maybe someone can explain to me how a blockchain is going to enable Papyrus take control.

I really doubt the stuff will work, there are as you said to many of them already out there and I don#t see how is going to benefit anyone. Beside the ICO guys.!

[smartcomet]

Human are so greedy and selfish in nature, so never invest money you cannot afford to lose.

[CryptoBry]

This is an eye-opener to all of us here who might have become fond of investing some money in ICO. One thing for sure is that in majority of the ICOs, there is still no product yet and no prototype already established...it is more of an idea and how far the team can pursue with the idea will remained unanswered until such a time that the team can claimed it has. This scenario is really making the whole project a big risk so what many are doing is just demand for the tokens/coins to be available in many exchanges as fast as possible so that with a good value they can just dump their holdings and then proceed to another ICO projects...no wonder that this industry really needs to be regulated (not banned though). Sometimes when i read the idea of an ICO my mouth cringes in pain...

[RedX]

This thread blew my mind. This is the information I am trying to find anywhere. There are a lot of threads that tackles this issue but I know there is something missing and this thread filled all of it. It really hits me on the part where ICOs use jargon so they will sound more convincing and they really know what they are doing even if they really don't.

[Gelie13]

This is a good read. I then realized that i really need hardwork and study well the upcoming ICOs before joining.

Thanks for this post

[Croin]

To be honest, after reading it again and again. Actually for making money right after the ICO there are MAYBE 1 or 2 ICO a month which will really give you a return after investing in them. I mean with the price going UP and not DOWN after the ICO!

Everything is traded nowadays Etherdelta and its crap no vol everything goes down!

[dobrescu.mihnea]

So, after all, what's your overall view on ARToken? They seem to be getting involved in a lot of events and collaborations for exposure (at least that's what it seems from their blog) and they look like they have some potential in the medium to distant future? What do you say?

[phpartisanmaster]

To be honest, after reading it again and again. Actually for making money right after the ICO there are MAYBE 1 or 2 ICO a month which will really give you a return after investing in them. I mean with the price going UP and not DOWN after the ICO!

Everything is traded nowadays Etherdelta and its crap no vol everything goes down!

I agree in your statement, If you will just focus on their coins value then probably it might really have a hard time before it will increase. The market is based on supply and demand so you cannot say that it will really increase after the end of the ico.

[dobrescu.mihnea]

Oh, my bad jlp, ignore my previous post. I just saw that you already mentioned your view on ARToken and yes, the scaling and size problem does make a lot of sense.

[slaman29]

Great post, jlp. Of course, I feel that it is a minor "shame" that some legitimate ICOs would fall under your category as #2 or even an outright scam. I definitely agree that some of the names you've mentioned, viewed by many as legitimate are just smoke and mirrors. They spend hundreds of thousands of dollars on great videos and promotional material that they had almost nothing to do with creating.

But this is also the problem that is self-creating. People see that without the marketing hype and great videos, they will struggle to compete for attention and space. I know there are many great projects out there that don't get the attention they deserve because everyone is caught up with the next big thing. And these crypto multi-billionaires like Vitalik are party to this, they know they get their appearance fees or "advisor fees" upfront.

Look at Humaniq for a prime example. Pumped by Vitalik, and now look at where they are going. Absolutely clueless with no product to use in the real world except all their betas and trials.

[josephinerosdy]

it's the first thread I read carefully. your statment is very clear and easy to understand and makes me think twice before dedicated to join an ICO.

[Casdinyard]

OP nailed it. And this thread should be sticky on top so many can read this informative thread. This can raise awareness to all the people especially to those who are planning to make an ICO that aim to fool people so they can know that their evil secrets are somehow expose. This is also serves as a wake up call for all of us not to be easily deceive by fancy thread and lucrative bounty as we all need is a more realistic and timely projects. People really change when money talks so let's us all be vigilant to this.

[Willitivity]

Great wrote up, thanks for the heads up. The Crypto space is filled with a lot of unnecessary projects that have no real life evaluation.
Some are just try to rip people apart. It's just all about being safe.

[Crumple Cat]

Crowdholding claims that they have a working beta, which is good news. However, I can’t find it on their website. Have you used it? Have lots of people used it to help guide a startup to success?

Their white paper says that the problem is that too many startups fail due to lack of market need. Their solution is that funders (YUPIE token holders) will be able to tell the startups how to find market needs.

This is ridiculous. If this is the case, then companies would be asking their shareholders on what the market needs. Google, Apple, Facebook and the hundreds of thousands of companies should be asking their shareholders about market needs. They don’t. Why not? Because the shareholders do not know. The only people who will know are the end-users and customers. That’s why companies spend billions on market research, focus groups, free samples, surveys, product trials, etc., etc. The only people who know and will tell the truth are those who have to part with their money and will get enough value in return to justify it. Anyone who has studied Marketing knows this.

Let’s say that there is a startup that wants to sell Japanese seaweed snacks. How much are you willing to pay for the snacks? What would you recommend to the startup? Even if you wouldn’t eat this, how would you know others won’t? You may never have tasted it before, so you will have no idea. The only way the startup will know if these snacks will sell is if they do market research, in the right target markets, with product trials, etc.

Even if Crowdholding's idea has merit, how do you, as a YUPIE token holder, know for sure that startup companies will reward you after they succeed? The tokens are not legal contracts. You cannot get a judge to force the company to pay.

Startups take many years before they are financially successful. Most companies are still losing money when they go IPO on the stock market. Amazon is barely making any profits. Twitter is still losing money. Facebook took way longer than most companies to IPO and they barely showed a profit. Technology and growing companies rarely pay dividends. How long will you wait before Crowdholding’s startups start rewarding you?

I do not think Crowdholding is trying to scam anyone. They likely think that they have a good idea, but do not see the flaws. Most ICO buyers do not see these flaws because they haven’t spent enough time in the business world and are impressed by lots of jargon and big teams with fancy titles.

The only people who know and will tell the truth are those who have to part with their money and will get enough value in return to justify it. Anyone who has studied Marketing knows this.

Probably you are confused in the concept of the project or didn't understand it correctly. That's it to such people are invited to participate in the co-creation, development, promotion of projects that they like, consumers of which they can also become. And for this people will receive tokens of these projects. Everything is very good. Someone invests money, someone invests time and ability. And someone and money and time and ability

[MikuMiku]

thanks for this information. I think I will pay attention before I invest some money on ICOs.

[crypto-curious]

This is great to share with beginners that keep asking this question of legitimacy and investment. Thank you for putting this together. 

[hashtag101]

To be honest, after reading it again and again. Actually for making money right after the ICO there are MAYBE 1 or 2 ICO a month which will really give you a return after investing in them. I mean with the price going UP and not DOWN after the ICO!

Everything is traded nowadays Etherdelta and its crap no vol everything goes down!

I agree in your statement, If you will just focus on their coins value then probably it might really have a hard time before it will increase. The market is based on supply and demand so you cannot say that it will really increase after the end of the ico.

However, the potetial project has the whale have invested always increases, but when the price of the token increase, no one knows that, unless the mover the price. Because the whale can't take loss after used a lot of money to pump the price of token has potential and hype. Few years still normal with them because they are rich.

[dobrescu.mihnea]

Another type of ICO I was wondering about with regards to your view on it would be digital advertising ICOs like Papyrus for example. Considering social media and digital advertising are growing exponentially in this age, do you think Altcoins would have any potential to penetrate this space?

Papyrus is probably the 3rd or 4th project I’ve seen related to a new token being able to control advertising.

They cite a lot of business problems, which seem legitimate. But I don’t see how they can solve them.

Papyrus states the following as a Papyrus Advantage (solution to problem):

Controlled advertising
Users are able to create precise policies to control what ads they see and what data they share with advertisers.

How?

The majority of advertising that you see is from Google, Youtube (which is Google), Facebook and Twitter. You can’t control the advertising that they show you. When you search on Google, it shows ads on top of the search results. How do you think Papyrus is going to let you control that? Are they going to hack into Google’s servers? When you watch Youtube, it shows commercials at the beginning of the video. How is Papyrus going to let you control Youtube? When Facebook shows ads in the right column, how are you going to stop them? Is Papyrus going to use a blockchain to stop these ads? How?

The biggest source of revenue for Google is AdWords and Google is the biggest advertising middleman on the internet. Therefore, Google AdWords is the biggest form of advertising on the internet, and it runs on Google's sites. How is Papyrus going to interfere with this?

For all of the other sites on the internet that have ads, most of them use Google AdSense. They put Google’s code into their website, select some parameters and let Google serve the ads into their websites. Then Google charges the advertiser every time a visitor clicks on that ad, and pays a percentage of that to the site owner. How is Papyrus going to interfere with this?

Papyrus has all of these fancy diagrams, but no mention of Google Adwords or AdSense.

The people who controls the advertising are the people who control the traffic. How will Papyrus convince these people to let them take over control?

I didn’t read all of their information, so maybe I missed it. Maybe someone can explain to me how a blockchain is going to enable Papyrus take control.

Hey jlp, what do you think about Playkey ICO? It seems quite promising.

[Legendari]

Good thread, thank you very much. Now I hardly go to Kapkan fraudulent ICO.

[dobrescu.mihnea]

Another type of ICO I was wondering about with regards to your view on it would be digital advertising ICOs like Papyrus for example. Considering social media and digital advertising are growing exponentially in this age, do you think Altcoins would have any potential to penetrate this space?

Papyrus is probably the 3rd or 4th project I’ve seen related to a new token being able to control advertising.

They cite a lot of business problems, which seem legitimate. But I don’t see how they can solve them.

Papyrus states the following as a Papyrus Advantage (solution to problem):

Controlled advertising
Users are able to create precise policies to control what ads they see and what data they share with advertisers.

How?

The majority of advertising that you see is from Google, Youtube (which is Google), Facebook and Twitter. You can’t control the advertising that they show you. When you search on Google, it shows ads on top of the search results. How do you think Papyrus is going to let you control that? Are they going to hack into Google’s servers? When you watch Youtube, it shows commercials at the beginning of the video. How is Papyrus going to let you control Youtube? When Facebook shows ads in the right column, how are you going to stop them? Is Papyrus going to use a blockchain to stop these ads? How?

The biggest source of revenue for Google is AdWords and Google is the biggest advertising middleman on the internet. Therefore, Google AdWords is the biggest form of advertising on the internet, and it runs on Google's sites. How is Papyrus going to interfere with this?

For all of the other sites on the internet that have ads, most of them use Google AdSense. They put Google’s code into their website, select some parameters and let Google serve the ads into their websites. Then Google charges the advertiser every time a visitor clicks on that ad, and pays a percentage of that to the site owner. How is Papyrus going to interfere with this?

Papyrus has all of these fancy diagrams, but no mention of Google Adwords or AdSense.

The people who controls the advertising are the people who control the traffic. How will Papyrus convince these people to let them take over control?

I didn’t read all of their information, so maybe I missed it. Maybe someone can explain to me how a blockchain is going to enable Papyrus take control.

Hey jlp, what do you think about Playkey ICO? It seems quite promising.

Also, if you have time, I'd love to hear about your thoughts on Cryder ICO, a sort of Uber equivalent in blockchain.

[Open4lies]

OP nailed it. And this thread should be sticky on top so many can read this informative thread. This can raise awareness to all the people especially to those who are planning to make an ICO that aim to fool people so they can know that their evil secrets are somehow expose. This is also serves as a wake up call for all of us not to be easily deceive by fancy thread and lucrative bounty as we all need is a more realistic and timely projects. People really change when money talks so let's us all be vigilant to this.

You can create a poll or voting for this thread to Moderator or request in Meta thread. I think the moderator of this forum will not ignore a qualify thread like this. To be honest, if you are an investor or newbie want to invest in the ICOs market, these words can helps you know the risk and the method can help you protect yourseft, especially it is very useful for newbie.

[ApocalypseNow]

This is really an informative thread but to be honest people will still rely on other reviews and ratings because of two reasons. First is they don't have that much knowledge to filter these things even if they want to because it's complicated for them. Second, they are too lazy to do it.

[jlp]

Hey jlp, what do you think about Playkey ICO? It seems quite promising.

In regards to PlayKey, they seem to be much further along than most ICOs. They not only have a working product, but they had it for a few years and it looks impressive, though I didn’t try it. Their business is understandable.

If they got 2.5M users in 2016, I do not understand why they need an ICO or another cryptocurrency. Why don’t they continue growing their customer base? If their market is truly as big as they say, then they should be able to make more money by growing their revenue instead of fund-raising through an ICO.

Why don’t they show any revenue from the 2.5M users? Does this mean that they really don’t have 2.5M users, or that their free service does not provide enough value to warrant a fee?

Their website says that the game industry is $109 billion. This is misleading. This would include games for infants and Zynga Poker. Their source (https://newzoo.com/insights/articles/the-global-games-market-will-reach-108-9-billion-in-2017-with-mobile-taking-42/) shows that most of this is not relevant to PlayKey. I would assume that it is the $24.8 billion of “BOXED/DOWNLOADED PC GAMES” that is relevant, and NewZoo says that this is dropping.

Their white paper claims that 1.5 billion people play PC games. If we assume that PC games are played mostly by males, then this means that close to half of all the males in the world play PC games. Is this believable? Most infants, middle-aged men and seniors do not play PC games. I would think that it’s mainly teenage males up to men in their 30’s that play these games. A significant part of the world do not have PCs. 4 billion people do not have internet access.

Their video tells you to “invest” in their token. This means that they are pushing a security, which is illegal in most of the Western world unless you restrict your investors to accredited investors and comply with KYC (Know Your Client) and AML (Anti-Money Laundering) requirements.

Because the team is based in Russia, they are immune from European and North American laws because Russia does not have extradition agreements with them. Therefore, the team doesn’t need to worry about pesky European and North American laws. The team can say and claim anything they want. They can lie and worry much less than other teams about repercussions. If they defraud you, there is little that your lawyers or government can do to help you. An American law firm has filed a class action lawsuit against Tezos (based in Europe) to get money refunded to American investors. Your law firm won’t be able to do that against PlayKey. You won’t be able to do anything.

The risk with any ICO that is selling a security is that if the regulators crack down on these, the token will crash. Teams that are in Russia may be immune from punishment from regulators, but you will still suffer if the token crashes.

Their website says that they raised 16 039 ETH from 1048 backers so far. When I looked at their smart contract (https://etherscan.io/address/0x26d08b9d227933a85e855656dc46ab889e183c88), it says that it received 2,404 Ethers, not 16,039 Ethers. Maybe they withdrew some Ethers from the smart contract, so I went through all 25 pages of the 1242 transactions and none of them were withdrawals. So, are they using a second smart contract, or are they lying about the amount of ETH raised so far in order to give you the impression that they are more popular than they really are? I would tend to think the latter. Since they are immune from European and North American securities laws, they will not get punished for fraud by them, so they can lie a lot more.

I think many ICOs lie about the amount that they’ve raised.

This makes me question the validity of PlayKey’s other numbers:

2 500 000 games
120 servers
$7 000 000 raised from VCs and business angels

It would seem intuitive that there should be a sizeable market for this business. The risks that you are taking are:

• Will regulators ban the token in the future?
• Their numbers are not reliable.
• If they defraud you, you have no recourse.

[amalgamated]

Excellent post, jlp. Thank you.

Would be interesting to reach out to PlayKey and give them an opportunity to weigh in.

[dobrescu.mihnea]

Hey jlp, what do you think about Playkey ICO? It seems quite promising.

In regards to PlayKey, they seem to be much further along than most ICOs. They not only have a working product, but they had it for a few years and it looks impressive, though I didn’t try it. Their business is understandable.

If they got 2.5M users in 2016, I do not understand why they need an ICO or another cryptocurrency. Why don’t they continue growing their customer base? If their market is truly as big as they say, then they should be able to make more money by growing their revenue instead of fund-raising through an ICO.

Why don’t they show any revenue from the 2.5M users? Does this mean that they really don’t have 2.5M users, or that their free service does not provide enough value to warrant a fee?

Their website says that the game industry is $109 billion. This is misleading. This would include games for infants and Zynga Poker. Their source (https://newzoo.com/insights/articles/the-global-games-market-will-reach-108-9-billion-in-2017-with-mobile-taking-42/) shows that most of this is not relevant to PlayKey. I would assume that it is the $24.8 billion of “BOXED/DOWNLOADED PC GAMES” that is relevant, and NewZoo says that this is dropping.

Their white paper claims that 1.5 billion people play PC games. If we assume that PC games are played mostly by males, then this means that close to half of all the males in the world play PC games. Is this believable? Most infants, middle-aged men and seniors do not play PC games. I would think that it’s mainly teenage males up to men in their 30’s that play these games. A significant part of the world do not have PCs. 4 billion people do not have internet access.

Their video tells you to “invest” in their token. This means that they are pushing a security, which is illegal in most of the Western world unless you restrict your investors to accredited investors and comply with KYC (Know Your Client) and AML (Anti-Money Laundering) requirements.

Because the team is based in Russia, they are immune from European and North American laws because Russia does not have extradition agreements with them. Therefore, the team doesn’t need to worry about pesky European and North American laws. The team can say and claim anything they want. They can lie and worry much less than other teams about repercussions. If they defraud you, there is little that your lawyers or government can do to help you. An American law firm has filed a class action lawsuit against Tezos (based in Europe) to get money refunded to American investors. Your law firm won’t be able to do that against PlayKey. You won’t be able to do anything.

The risk with any ICO that is selling a security is that if the regulators crack down on these, the token will crash. Teams that are in Russia may be immune from punishment from regulators, but you will still suffer if the token crashes.

Their website says that they raised 16 039 ETH from 1048 backers so far. When I looked at their smart contract (https://etherscan.io/address/0x26d08b9d227933a85e855656dc46ab889e183c88), it says that it received 2,404 Ethers, not 16,039 Ethers. Maybe they withdrew some Ethers from the smart contract, so I went through all 25 pages of the 1242 transactions and none of them were withdrawals. So, are they using a second smart contract, or are they lying about the amount of ETH raised so far in order to give you the impression that they are more popular than they really are? I would tend to think the latter. Since they are immune from European and North American securities laws, they will not get punished for fraud by them, so they can lie a lot more.

I think many ICOs lie about the amount that they’ve raised.

This makes me question the validity of PlayKey’s other numbers:

2 500 000 games
120 servers
$7 000 000 raised from VCs and business angels

It would seem intuitive that there should be a sizeable market for this business. The risks that you are taking are:

• Will regulators ban the token in the future?
• Their numbers are not reliable.
• If they defraud you, you have no recourse.

Great input, thanks a lot. If and when you have time, I'd also love to hear your thoughts on Gizer. Its ICO launches through KYC, on SAFT, the same platform which launches tZero in a few days. Gizer is similar to Enjin Coin, and they also have a working product and promising ideas. Looking forward to your view.

[cryptomema]

nice thread bro,very informative.All we need to do is search search and search.

[CryptosapienZA]

Thank you for taking time to compile this. I have to say, I do agree with you 100%. With all the scamming going around unchecked, one can't be too careful. I think its interesting that you mention that people need to look out for icos in certain countries. Personally if the ICO is based in Eastern Europe and India, my antenna are raised. If the whole team is from any of those countries, I bounce :-/

[mx667]

Thank you for taking time to compile this. I have to say, I do agree with you 100%. With all the scamming going around unchecked, one can't be too careful. I think its interesting that you mention that people need to look out for icos in certain countries. Personally if the ICO is based in Eastern Europe and India, my antenna are raised. If the whole team is from any of those countries, I bounce :-/

Hahaha, I never join or invest to an ICO. I also always doubt with ICO. All I know, all forms of investment that is on the internet is just a lie. Whatever it is, I guess it's just another form of HYIP and I do not like it. The only legit and sure investment is Bitcoin. We just buy the currency and wait until the price goes up, as easy and simple as that. But wait, do not get me wrong first.

I'm not saying that all the ICO's are fake. I've even got the news that there are people who can profit 10-fold from ICO in no time. That's a good thing because to be able to profit 10-fold, we have to wait a long time if we invest in Bitcoin.

[NeoTech42]

I won't invest in any ICO without a prototype. The risk of being scammed is well too high. How many ICO's don't even have a MVP ? More or less 90% ?

With a prototype, we can expect the team to manage and fully develop the product described in the whitepaper.

Before ICO's, every startup that encountered the success would have developed a high quality product. The product was tested by the public and now ? 

[kkofor]

Thank you for taking time to compile this. I have to say, I do agree with you 100%. With all the scamming going around unchecked, one can't be too careful. I think its interesting that you mention that people need to look out for icos in certain countries. Personally if the ICO is based in Eastern Europe and India, my antenna are raised. If the whole team is from any of those countries, I bounce :-/

Hahaha, I never join or invest to an ICO. I also always doubt with ICO. All I know, all forms of investment that is on the internet is just a lie. Whatever it is, I guess it's just another form of HYIP and I do not like it. The only legit and sure investment is Bitcoin. We just buy the currency and wait until the price goes up, as easy and simple as that. But wait, do not get me wrong first.

I'm not saying that all the ICO's are fake. I've even got the news that there are people who can profit 10-fold from ICO in no time. That's a good thing because to be able to profit 10-fold, we have to wait a long time if we invest in Bitcoin.

Anyway, ICO is also the best way for small investors can get big profit. As you know, Bitcoin price is too high now. How can a small investor get x5, x10 profit from Bitcoin with $100 or $1000 budget? They have to choose ICOs.

[chrismartin]

Thankyou for this very important information you have been given, atleast i know what kind of ico i will choose if my rank will be moving up. I read it from the start to finish.  Lets up this information.

[darkr]

Wow. The author of the post has shared cool information with us. And here are the signs of an ICO-scammer:

- Lack of detailed information about the company's business;
- The company reports events that have not yet happened or are difficult to verify;
- The company's shares start growing rapidly at the same time with PR-activity;
- The company often changes its name, management or field of activity.

[steveouttrim]

Scams would be happening on the Internet with or without ICOs

In some ways investing in ICOs are like gambling. Sometimes you win, sometimes you lose.

You might lose all your money in a scam ICO. But you might lose all your money in a completely legitimate ICO too, with a blue chip team and a fancy white paper.

Better to think of ICOs as gambling than to put your life savings in it. People can be smart about gambling, eg counting cards at Blackjack, studying form guides for horse racing, cheating at poker or rigging boxing matches...

There are many ICOs that might get classed as "scam" by the criteria in this thread, just because they are from new teams with a radical vision. I can guarantee that at least some of these will turn out to be hugely successful ICOs. Facebook was once a bunch of college dropouts smoking b*ngs...

[leyton11]

Thank you for taking time to compile this. I have to say, I do agree with you 100%. With all the scamming going around unchecked, one can't be too careful. I think its interesting that you mention that people need to look out for icos in certain countries. Personally if the ICO is based in Eastern Europe and India, my antenna are raised. If the whole team is from any of those countries, I bounce :-/

Hahaha, I never join or invest to an ICO. I also always doubt with ICO. All I know, all forms of investment that is on the internet is just a lie. Whatever it is, I guess it's just another form of HYIP and I do not like it. The only legit and sure investment is Bitcoin. We just buy the currency and wait until the price goes up, as easy and simple as that. But wait, do not get me wrong first.

I'm not saying that all the ICO's are fake. I've even got the news that there are people who can profit 10-fold from ICO in no time. That's a good thing because to be able to profit 10-fold, we have to wait a long time if we invest in Bitcoin.

Anyway, ICO is also the best way for small investors can get big profit. As you know, Bitcoin price is too high now. How can a small investor get x5, x10 profit from Bitcoin with $100 or $1000 budget? They have to choose ICOs.

No, they can choose make money and use that amount to buy Bitcoin. ICO is risky, this way not useful for newbie while they don't have enough knowledge and experience to take loss and avoid the scam project. There are many scam projects always want to rob money of newbie, why do they need to get more risk?

[Andre#]

I won't invest in any ICO without a prototype. The risk of being scammed is well too high. How many ICO's don't even have a MVP ? More or less 90% ?

With a prototype, we can expect the team to manage and fully develop the product described in the whitepaper.

Before ICO's, every startup that encountered the success would have developed a high quality product. The product was tested by the public and now ? 

Even project has beta product like KICKICO, AirToken, the price of token from these projects are also dump to below the ICO price until today.
Therefore, so difficult to know the potential and the power of the community in the ICO projects.
As long as the whale want to dump the price of ICO token, they can control and dump the price anyway.

[ichanjay]

I definitely still believe in ICOs. I guess you can say a fair amount don't succeed but you can't compare all cryptocurrencies against each other. Many cryptocurrencies serve a different purpose making accurate comparisons near impossible. You have to look over the ICOs business plan and their goal and if they already have a useful output and not just mere ideas. Often doing your research on any given ICO will give you a better idea of what you are getting into.

[bribed]

Thanks for this wonderful guidelines. Everyone should get the opportunity to read this before putting his money in anything crypto related. This just makes sense from all angles. Again, thank you so much for sharing this with the community.

[ZaynDale]

Nice thread, and I've been listing this kinds of ICO also on my other research. But these ICOs that's going to listen their community until time that nobody cares and they're gonna abandoning it like just nothing happened.
They're showing their core team that nothing to do with their project.
SO, better make a good research about the ICOs that you're going to invest because not all of them they'll give you good fortune.

[TiffanyLien23]

Nice thread.. This help me a lot to aware scam ICO.

[NPG331525]

ICO101 for a dummy newbie, like me 

Can't exactly tell, what's right, or what's a crap.

[DAVETUN]

Investing into ICO require hardwork from the investor,this days where we have lots of ICO coming up daily,detailed research is require and an understanding about what they have to offer in the real world

[ruskytailz02]

90% of ICOs are scams

I will not accept these ahahahhaha because some ICO only search for fund raising for example and ..
ICO was getting their image broke because of those managers or one people who are a piece of shit that wants all the money of he/she wants
MANAGERS and people behind are those scumbag scammers hahahah and not ICO it is like politics politicians are the corrupt not the politics

[SkustaClee]

I know that this post will help many person who wants to invest their money to the ICO. We should be aware to what ICO we will investing for us to know whether it is scam or not. Knowledge is very important when we are investing our money in different ICO.

[NeoTech42]

When you invest in ICO, search yourself all information about the team, the project.

The idea has to be realistic and applicable in the real world. There must be a MVP/prototype to see the comitment of the team because it is too easy to just make a website and write a whitepaper with just promises. Also a team with software engineers background is far better than a team composed mostly of advisors or managers...

[taeewo]

Its good to invest on any projects that have team pics display...

[Croin]

Thank you for taking time to compile this. I have to say, I do agree with you 100%. With all the scamming going around unchecked, one can't be too careful. I think its interesting that you mention that people need to look out for icos in certain countries. Personally if the ICO is based in Eastern Europe and India, my antenna are raised. If the whole team is from any of those countries, I bounce :-/

YES - Very important aspect for ICO is the country they are from. The whole "eastern europe" ICO's are most of the time scam (Nowadays!).
On the other hand the best ICO so far are from Russia ETH, WAVES ...

[kseniya.pride]

Crowdholding claims that they have a working beta, which is good news. However, I can’t find it on their website. Have you used it? Have lots of people used it to help guide a startup to success?

Their white paper says that the problem is that too many startups fail due to lack of market need. Their solution is that funders (YUPIE token holders) will be able to tell the startups how to find market needs.

This is ridiculous. If this is the case, then companies would be asking their shareholders on what the market needs. Google, Apple, Facebook and the hundreds of thousands of companies should be asking their shareholders about market needs. They don’t. Why not? Because the shareholders do not know. The only people who will know are the end-users and customers. That’s why companies spend billions on market research, focus groups, free samples, surveys, product trials, etc., etc. The only people who know and will tell the truth are those who have to part with their money and will get enough value in return to justify it. Anyone who has studied Marketing knows this.

Let’s say that there is a startup that wants to sell Japanese seaweed snacks. How much are you willing to pay for the snacks? What would you recommend to the startup? Even if you wouldn’t eat this, how would you know others won’t? You may never have tasted it before, so you will have no idea. The only way the startup will know if these snacks will sell is if they do market research, in the right target markets, with product trials, etc.

Even if Crowdholding's idea has merit, how do you, as a YUPIE token holder, know for sure that startup companies will reward you after they succeed? The tokens are not legal contracts. You cannot get a judge to force the company to pay.

Startups take many years before they are financially successful. Most companies are still losing money when they go IPO on the stock market. Amazon is barely making any profits. Twitter is still losing money. Facebook took way longer than most companies to IPO and they barely showed a profit. Technology and growing companies rarely pay dividends. How long will you wait before Crowdholding’s startups start rewarding you?

I do not think Crowdholding is trying to scam anyone. They likely think that they have a good idea, but do not see the flaws. Most ICO buyers do not see these flaws because they haven’t spent enough time in the business world and are impressed by lots of jargon and big teams with fancy titles.

The only people who know and will tell the truth are those who have to part with their money and will get enough value in return to justify it. Anyone who has studied Marketing knows this.

Probably you are confused in the concept of the project or didn't understand it correctly. That's it to such people are invited to participate in the co-creation, development, promotion of projects that they like, consumers of which they can also become. And for this people will receive tokens of these projects. Everything is very good. Someone invests money, someone invests time and ability. And someone and money and time and ability

Its a great platform for entrepreneurs to validate their business ideas and for supporters to earn some crypto!

Crowdholding is up and running, check it out, if you don't believe us: https://www.crowdholding.com !

[chip1994]

Thank you for taking time to compile this. I have to say, I do agree with you 100%. With all the scamming going around unchecked, one can't be too careful. I think its interesting that you mention that people need to look out for icos in certain countries. Personally if the ICO is based in Eastern Europe and India, my antenna are raised. If the whole team is from any of those countries, I bounce :-/

YES - Very important aspect for ICO is the country they are from. The whole "eastern europe" ICO's are most of the time scam (Nowadays!).
On the other hand the best ICO so far are from Russia ETH, WAVES ...

Really? I saw too many ICOs hyped from Russia without any good result after crowdsale. Example KICKICO, this's one of project from Russia, but look at the price of ICO token now. What is the reason make this token drop a lot of value like that? Below the ICO price and there's no large exchange accept it while it has raised more than 80.000 ETH from crowdsale. Bad project!

[Ruskman93]

really good thread, thanks OP (Y)

[Pasnik]

Thank you for taking time to compile this. I have to say, I do agree with you 100%. With all the scamming going around unchecked, one can't be too careful. I think its interesting that you mention that people need to look out for icos in certain countries. Personally if the ICO is based in Eastern Europe and India, my antenna are raised. If the whole team is from any of those countries, I bounce :-/

YES - Very important aspect for ICO is the country they are from. The whole "eastern europe" ICO's are most of the time scam (Nowadays!).
On the other hand the best ICO so far are from Russia ETH, WAVES ...

Really? I saw too many ICOs hyped from Russia without any good result after crowdsale. Example KICKICO, this's one of project from Russia, but look at the price of ICO token now. What is the reason make this token drop a lot of value like that? Below the ICO price and there's no large exchange accept it while it has raised more than 80.000 ETH from crowdsale. Bad project!

Kickico raise huge of amount during pre sale and I notice that also this kickico is not yet listed in other exchange. There are many Ico's that hype after their project become success no development on thier end. So better we need to research before joining an Ico.

[Mr.cryptos]

Its good to invest on any projects that have team pics display...

If an ICO project have team pics display as you say, is not a guaranty that it's a good. You need to do a lot of research these days since they are a lot of ICOs out there.

[KingScorpio]

90% of ICOs are scams

Maybe not even scams but it end as fail like average startups does.
In REAL LIVFE:
1 of 10 startups survives 1st year
and then
1 of 10 startups survive next 5 years.
 so you have 1/100 chance to survive with ICO ...

this is nature of startups you won't win with it.

well if the financial system wont work people will simply stop working and create more and more money, you might even end up in a medieval age where there are kings with real world coins and their face printed on those,

these kings then kill everyone that didnt payed back, thats a very easy financial system people will understand and will not scam.

[Crumple Cat]

Great article and very useful for the community. Thank you!
At the moment I mainly support projects that at least already have beta and a really useful and unique concept.

[Mr.Anonymous]

Thank you for taking time to compile this. I have to say, I do agree with you 100%. With all the scamming going around unchecked, one can't be too careful. I think its interesting that you mention that people need to look out for icos in certain countries. Personally if the ICO is based in Eastern Europe and India, my antenna are raised. If the whole team is from any of those countries, I bounce :-/

YES - Very important aspect for ICO is the country they are from. The whole "eastern europe" ICO's are most of the time scam (Nowadays!).
On the other hand the best ICO so far are from Russia ETH, WAVES ...

Really? I saw too many ICOs hyped from Russia without any good result after crowdsale. Example KICKICO, this's one of project from Russia, but look at the price of ICO token now. What is the reason make this token drop a lot of value like that? Below the ICO price and there's no large exchange accept it while it has raised more than 80.000 ETH from crowdsale. Bad project!

Kickico raise huge of amount during pre sale and I notice that also this kickico is not yet listed in other exchange. There are many Ico's that hype after their project become success no development on thier end. So better we need to research before joining an Ico.

So hard to know the future of ICOs project. This is the hardest part to decide I should invest to ICOs or not, there are too many interesting projects with promising profits. However, all these projects are hyped and the price can not increase or list on any large exchange. As far as I know, KICKICO, AirToken, Opus ... are the hyped projects.

[cryptotnak]

Awesome information,i wont join any ICOs now for sure.Its better to trade than to expect nothing from these ICOs thanks pal.

[tomvildc]

Beautiful thread. I have some questions. How many percent of your money you use to invest ICOs?

[ernielibre]

Hi.

Anyone can make a suggestion whether it is good to make investment on TOA coin? Thaaaanks 

[SHAWN-MIDWAYS]

This is some useful information and honest review to ways of finding legit projects hope from here onwards  potential investors will look for these features to avoid investing in bogus projects that are just after peoples money.

[wpalczynski]

Thanks for the information it's really valuable. People are often scared by ICOs but if you do your research well you will have big chances to make profit.

[tricialugtu]

Thank you for this! Thank you for the elaboration

[BitcoinSniper]

After reading tons of whitepapers of crap icos, I found this thread to be so informative and useful. 90% of current ICO projects are either non-sense or simply scams, 9% could be startups that could have failed first round in real world presentations for investors, probably 1% or less is the blockchain app that really makes sense and their coin value could be more than 0.

[Aniruddha19]

First I will Thankful for such wonderful information.

It definitely helps to Investors.

[Docbee]

This a good thread. You review will really help those that want to invest a lot.

[bmv143]

This is very useful information for those who are at least somehow connected with this direction.

[hangar18]

After reading tons of whitepapers of crap icos, I found this thread to be so informative and useful. 90% of current ICO projects are either non-sense or simply scams, 9% could be startups that could have failed first round in real world presentations for investors, probably 1% or less is the blockchain app that really makes sense and their coin value could be more than 0.

1% is high number for total numbers of ICO project created in this year. I am sure there are more than 100 ICO projects created but no project can be useful or help the society as their promise in the past. All things are lie and skip all after crowdsale ended (successful for scammer) .

[HELLOFF]

After reading tons of whitepapers of crap icos, I found this thread to be so informative and useful. 90% of current ICO projects are either non-sense or simply scams, 9% could be startups that could have failed first round in real world presentations for investors, probably 1% or less is the blockchain app that really makes sense and their coin value could be more than 0.

1% is high number for total numbers of ICO project created in this year. I am sure there are more than 100 ICO projects created but no project can be useful or help the society as their promise in the past. All things are lie and skip all after crowdsale ended (successful for scammer) .

on this occasion you can joke as much as you want, but it also needs somehow to be determined with How to look for a decent developer and ico of the company, and How to determine their plans and prospects for the future, To avoid fraud.

[Ging]

thank you very much of this thread because with this increasing numbers of icos it has become really hard to distinguish between good ico and a bad ico.

[BitCoinPokerBro]

vary interesting !

[rehydrogenated]

Quote
“You need large amounts of money to buy real estate and your money is tied down for an indefinite amount of time.”

This is a very well thought out article. Thank you very much for writing it. Too many ICOs lately are based on some very basic lies. The annoying part is that at the moment we are firmly in bubble land where every insane idea can get incredible amounts of investor cash by making pie in the sky announcements and it will be years before any sees any results. Most of these ICOs will crash and burn one day and everyone will see them for what they are. Right now, however, you can see a total scamcoin go up 4000% in a couple months. People like to say this is a ponzi scheme, but it is typically investor fraud that is only allowed because we are dealing with an unregulated market. The volatility in altcoins is a direct result. We will all be better off with some government control *ducks*

[Apaxy]

Quote
“You need large amounts of money to buy real estate and your money is tied down for an indefinite amount of time.”

This is a very well thought out article. Thank you very much for writing it. Too many ICOs lately are based on some very basic lies. The annoying part is that at the moment we are firmly in bubble land where every insane idea can get incredible amounts of investor cash by making pie in the sky announcements and it will be years before any sees any results. Most of these ICOs will crash and burn one day and everyone will see them for what they are. Right now, however, you can see a total scamcoin go up 4000% in a couple months. People like to say this is a ponzi scheme, but it is typically investor fraud that is only allowed because we are dealing with an unregulated market. The volatility in altcoins is a direct result. We will all be better off with some government control *ducks*

in fact, and so it is understandable that many ico or aimed at fraudulent actions, or almost have no real prospects in the future. Of course, many users understand this and know about the existence of such dysfunctional projects, but no one talks about how to avoid problems with themselves.

[Paycoinzzz]

Quote
“You need large amounts of money to buy real estate and your money is tied down for an indefinite amount of time.”

This is a very well thought out article. Thank you very much for writing it. Too many ICOs lately are based on some very basic lies. The annoying part is that at the moment we are firmly in bubble land where every insane idea can get incredible amounts of investor cash by making pie in the sky announcements and it will be years before any sees any results. Most of these ICOs will crash and burn one day and everyone will see them for what they are. Right now, however, you can see a total scamcoin go up 4000% in a couple months. People like to say this is a ponzi scheme, but it is typically investor fraud that is only allowed because we are dealing with an unregulated market. The volatility in altcoins is a direct result. We will all be better off with some government control *ducks*

in fact, and so it is understandable that many ico or aimed at fraudulent actions, or almost have no real prospects in the future. Of course, many users understand this and know about the existence of such dysfunctional projects, but no one talks about how to avoid problems with themselves.

According my experency, I can see there are many ICO projects with idea, roadmap can not be the truth in future.
All promises are lie, it just want to make the investor can be keep calm and have strong faith in the project while the devs are robbing the money of investors.

[saycryptohello]

For me, first I'm looking at project idea, is there an MVP? Clients? How long are they working on the project? Why are they need ICO? Second - clear information about future plans and a common vision.

[icosource]

While there are continuous numbers of nefarious ICO's "launching" every week, luckily they are relatively easy to spot.  Alternately, the ICO's that generally float to the top and become well known (and well funded), are also relatively easy to spot as well.

We use a system at https://icosource.io called "Minimum Viable Offering", in which any project on our site to be listed must:

1.  Display the members of their team on their homepage
2.  Contact us via an email which includes the project url.
3.  Have both Facebook and Twitter pages for their project.
4.  Have a minimum of two of:  Slack, Telegram, Reddit, BitcoinTalk, Discord, Github and Medium.
5.  Must have a whitepaper.
6.  Their logo must be of a high enough quality to portray a professional project.


We're asking for suggestions on other checks we can include at https://bitcointalk.org/index.php?topic=2561039.new#new.  We're interested in all points of view and ideas surrounding ways to reduce contact between scam ICO's and users, and would appreciate your contribution to the conversation!

[bribed]

As we see more and more scam ICO's popping up and also ICO's that are legit but still take advantage of shady marketing tacticts because they maybe thing thats ok, because everyone is doing it, I think this thread is really really helpful to everyone that is trying to do due dilligence on his potential investments. The filters are set really good and will most likely expose scam ICO's or ICO's with a shady or unsustainable business model. Can we also ask on this thread about potential scams, where we are not sure if they are or not?

[Matthewmorris4]

I won't invest in any ICO without a prototype. The risk of being scammed is well too high. How many ICO's don't even have a MVP ? More or less 90% ?

With a prototype, we can expect the team to manage and fully develop the product described in the whitepaper.

Before ICO's, every startup that encountered the success would have developed a high quality product. The product was tested by the public and now ? 

Most people just following ICO for the word spread which is too hype for it, and others an ICO with the refferal system, which is there's a lot of bugs inside.
People always trying to cheat to get more and more value in every ICO they choose

[kseniya.pride]

I won't invest in any ICO without a prototype. The risk of being scammed is well too high. How many ICO's don't even have a MVP ? More or less 90% ?

With a prototype, we can expect the team to manage and fully develop the product described in the whitepaper.

Before ICO's, every startup that encountered the success would have developed a high quality product. The product was tested by the public and now ? 

Most people just following ICO for the word spread which is too hype for it, and others an ICO with the refferal system, which is there's a lot of bugs inside.
People always trying to cheat to get more and more value in every ICO they choose

True that! In a future there wont be super high bonuses. ICOs should have a prototype, traction, community.
Hype can hurt a project.. Hype = speculators.
Thats why I believe in Crowdholding. These guys have a working product, low hype and real community.

[Asmus003]

Thx for the useful article! I always advise to invest in few ICO that already have a working business. It will save you from scammers.

[Fedrey]

I won't invest in any ICO without a prototype. The risk of being scammed is well too high. How many ICO's don't even have a MVP ? More or less 90% ?

With a prototype, we can expect the team to manage and fully develop the product described in the whitepaper.

Before ICO's, every startup that encountered the success would have developed a high quality product. The product was tested by the public and now ? 

Most people just following ICO for the word spread which is too hype for it, and others an ICO with the refferal system, which is there's a lot of bugs inside.
People always trying to cheat to get more and more value in every ICO they choose

True that! In a future there wont be super high bonuses. ICOs should have a prototype, traction, community.
Hype can hurt a project.. Hype = speculators.
Thats why I believe in Crowdholding. These guys have a working product, low hype and real community.

I understand that there are a lot of dissatisfied users who express their negative about many ico companies. But it is necessary to take real and effective measures to avoid such situations. But how and what it should do is unclear.

[Sniar]

Most people just following ICO for the word spread which is too hype for it, and others an ICO with the refferal system, which is there's a lot of bugs inside.
People always trying to cheat to get more and more value in every ICO they choose

Well that's how the world goes: people are trying to find a loophole, clever people creating a popping ICOs that are looking like a loophole. Anyway that guys who is loosing their savings in scam ICOs are earning experience: always think carefully and analyze all the factors.

[fearcoka]

Most people just following ICO for the word spread which is too hype for it, and others an ICO with the refferal system, which is there's a lot of bugs inside.
People always trying to cheat to get more and more value in every ICO they choose

Well that's how the world goes: people are trying to find a loophole, clever people creating a popping ICOs that are looking like a loophole. Anyway that guys who is loosing their savings in scam ICOs are earning experience: always think carefully and analyze all the factors.

Honestly, the trash, shit ICO projects made the ecosystem of this field became the speculative place. Look at the profits from ICO lending, wow, if I just care the profits, it's really good for those who invested and bought at ICO price. But for those who bought it at high price, they are the loser at currently. They lost huge money within short time. Ponzi!

[ElitistCA]

I won't invest in any ICO without a prototype. The risk of being scammed is well too high. How many ICO's don't even have a MVP ? More or less 90% ?

With a prototype, we can expect the team to manage and fully develop the product described in the whitepaper.

Before ICO's, every startup that encountered the success would have developed a high quality product. The product was tested by the public and now ? 

Most people just following ICO for the word spread which is too hype for it, and others an ICO with the refferal system, which is there's a lot of bugs inside.
People always trying to cheat to get more and more value in every ICO they choose

True that! In a future there wont be super high bonuses. ICOs should have a prototype, traction, community.
Hype can hurt a project.. Hype = speculators.
Thats why I believe in Crowdholding. These guys have a working product, low hype and real community.

I understand that there are a lot of dissatisfied users who express their negative about many ico companies. But it is necessary to take real and effective measures to avoid such situations. But how and what it should do is unclear.

Everyone all owns the idea to solve its problem, I think the guide of this thread is enough to know the basic knowledge about the way to protect our funds with ICO investment. For this field, speculation is easy to happens, therefore, the price are also very volatile.

[madushanperis11]

The most important point of difference that often confuses participants new to the cryptocurrency space is that tokens are not equity, but are more like paid API keys. In this model contributors don’t measure the attractiveness based on cost of equity, P/E ratios and the like, but on the basis of the future usefulness of the product, number of tokens in circulation (and future inflation/deflation of this number), necessity of the token to the products functionality and the opportunity for capital gains.

[madushanperis11]

The rationale behind ICO funding is that once a product launches and acquires users, demand for its token will increase dramatically, causing token values to rise to the benefit of their holders. Pre-sale participants are often further rewarded with additional bonuses on their token purchase to compensate for their additional exposure. Anyway invest during the pre-sales involves higher risk than other, because pre-sales starts at the very beginning of the project and there are not much information about the project. You have to take high risk as it is difficult to differentiate whether the project will success or it is just another scam.   

[info-ICO.info]

Probably the most useful post in the whole forum.

Thumbs up.

Actually it is very much common sense vs greed.
I followed most the of rules.
Avoid X Countries.
Look for someone with a ready product or atleast working prototype ready.
Something that is viable (blockchain necessary or not, something like WABI, I don't think crypto token are necessary to them, but their product is viable)
Avoid those with long roadmap, seeing the beta in year 2020? I might have already died by then... You might have crashed in the Lambo you bought with our money. Who knows.


Most of the time, one knows that the idea is probably not viable (come on, you wanna take down google or facebook, with a whitepaper that can't even explain things properly?) , but hey, nice graphic, nice team, nice rating, nice return, nice bounty reward (I am going to promote your ICO even to my neighbors' cat), nice +99% bonus for the first day. I AM IN THIS REVOLUTIONARY ICO!!! TO HELL WITH GOOGLE/FACEBOOK/UBER!!!!

Greed kills, stupidity just speed up the process.

[Cryptogiji]

I really like this thread, you speak a lot of sense (most people lose that when they look at marketing from ICOs) and you evaluate clearly according to the market outside of the crypto one.

Keep up the good work, this is a very important thread that any new investors should read.

[BitcoinTurk]

Many thanks for your labor, your topic is very good. Newbie's and another investors can find good information from this topic.

[mroth7684]

nice thread. for newbie and new investor want invest into some ICO. if you invest into a good ICO you will ez to get x2 profit

[yonghongtang]

A very good article , thanks . I will read it many times , and try to translate it into other languages to let more and more people read it . Let's just learn to support the real ico projects.

[Andre#]

I really like this thread, you speak a lot of sense (most people lose that when they look at marketing from ICOs) and you evaluate clearly according to the market outside of the crypto one.

Keep up the good work, this is a very important thread that any new investors should read.

Yes, this is one of good threads helped many people understand the risk of ICOs.
In the past, I did not know the way to keep safe my funds with ICO (before this thread created).
So, I had to pay many money for my loss to get experience.

[ejarales]

Thanks for this man! This is so helpful since I am looking for a good ICO to support. This might help me to determine whether the particular ICO is legit or not.

[cexylikepie]

Thanks for this man! This is so helpful since I am looking for a good ICO to support. This might help me to determine whether the particular ICO is legit or not.

You should give him some merit point to help him have movitation to write more good threads like this thread. I hope this forum can have more people like the owner of this thread and share more experiences to others on this forum without any profit.

[nightwishx]

I really like this thread, you speak a lot of sense (most people lose that when they look at marketing from ICOs) and you evaluate clearly according to the market outside of the crypto one.

Keep up the good work, this is a very important thread that any new investors should read.

Yes, this is one of good threads helped many people understand the risk of ICOs.
In the past, I did not know the way to keep safe my funds with ICO (before this thread created).
So, I had to pay many money for my loss to get experience.

Same here. I used to invest in ICO I did not understand, and eventually the project became a scam, this article is very helpful

[Bambangs]

good yarn.
I will add a bit to follow the legit ico is to see what exactly the purpose of the ico, how many coins will be distributed and whoever team that supports the ico.
maybe I still lack experience, but I got experience from some ico that I follow, but the result is nil

[HaekalZ]

I really like this thread, you speak a lot of sense (most people lose that when they look at marketing from ICOs) and you evaluate clearly according to the market outside of the crypto one.

Keep up the good work, this is a very important thread that any new investors should read.

Yes, this is one of good threads helped many people understand the risk of ICOs.
In the past, I did not know the way to keep safe my funds with ICO (before this thread created).
So, I had to pay many money for my loss to get experience.

Those 3 kinds of ICOs you posted is a very great thread.
I really learn a lot from your post.

“NEVER INVEST IN A BUSINESS THAT YOU DO NOT UNDERSTAND”

That's 100% true, i ever invested in a scam project, not too long after that, i read this thread then i really learn a lot from it. thank you so much.

[d0r10n]

Very helpful post OP, thanks for sharing, I invested in Combi and received dividends and increase in Coin value too so I'm happy.

[CryptoFanholic]

There are 3 kinds of ICOs:

1)  SCAMS

There have always been a lot of scammers, hackers and thieves in the crypto space since day one. Think of Mount Gox. According to Business Insider:

“…one out of every 16-17 Bitcoins belongs to someone who stole it”

If you don’t think that these thieves are trying to steal money through ICOs or from ICOs, you are kidding yourself. You just need to see the Bitcointalk forum dedicated to scams, or to participate in a Slack channel and you will see the never-ending phishing e-mails trying to lure you to their sites, in order to empty your wallet.

In addition to thieves and scammers, there are those who lie or exaggerate. Many users on Bitcointalk are pump and dumpers.

2)  CRAP

Everyone is desperate to host an ICO to make money. Therefore, they are throwing anything and everything onto the blockchain, including the kitchen sink. They may not be intentionally trying to scam, but they think that they have a good enough idea for an ICO. But these will fail because the blockchain will not solve anything for them. Examples include ICOs that want to put 3D data (which would equate to hundreds of Terabytes of data) or 153 exabytes of medical data on a blockchain. This shows that they are clueless about the blockchain and have never run Bitcoin’s full node. Bitcoin’s blockchain is 120 GB and Ethereum’s blockhain is 200 GB and they are both having scaling problems.

Even though crypto veterans and fans would like it to be, the blockchain is NOT the panacea to every problem in the world.

ICOs are also throwing any kind of business problem that they can make up, into the ICO. If they cannot make up the business problem, they will exaggerate about it. They will fail because the business problem doesn’t really exist, isn’t significant enough, cannot be solved by a blockchain or they do not really have the solution, though they try to make it sound like they do with lots of technical jargon.

Swarm Fund cites this business problem:

“You need large amounts of money to buy real estate and your money is tied down for an indefinite amount of time.”

This is a lie and not a business problem. You can buy one share of a REIT, and there are thousands of REITs to choose from, and you can sell it one minute later. If they start off their pitch with a lie, what else are they lying about?

Energi cites this business problem:

“A small number of large energy companies supply millions of customers who are price takers.”

Therefore, the solution is to create more energy suppliers, especially nuclear power plants, which is the cheapest source of electricity. But the project does not propose this. They propose to enable consumers to sell their solar self-generated electricity directly to other consumers.

To do this, consumers should have BOTH solar panels and batteries. This is a TINY market. Though solar panels are growing, it is still a tiny percent of the market and solar generated electricity is still much more expensive than nuclear generated.

Consumers with solar panels do not have that much surplus electricity to sell anyways. They use most of what they generate. Tesla and Enphase hyped up their batteries for solar panel owners to store their surplus electricity. These batteries are NOT selling. Enphase spent over $100 million to develop their battery and partly because of the lack of battery sales, their stock has plummeted approximately 85%.

Of course, the project’s pitch looks impressive at first glance.

3)  LEGITIMATE

There are only a few applications that make a lot of sense for the blockchain: transfer of value (currency), store of value, remittances (disrupt Western Union and bank wire transfers), smart contracts, gaming and gambling. These applications will disrupt their respective industries, because the blockchain will provide a lot of cost-savings or time-savings to the users. There might be other applications that make sense that I missed, but applications proposed by many ICOs do not make sense. Jesus Coin is an extreme example, but there are applications that fall across the spectrum from Jesus Coin to Bitcoin.


YOU CAN REDUCE THE RISK AND THE NUMBER OF ICOS TO REVIEW, BY USING 3 FILTERS

1)  The project’s idea should make sense, but do not base your investment decision purely on the idea. Watch:

“Ideas are like assholes - everyone has one, no one cares”
https://www.youtube.com/watch?v=PhJgrEackis

Entrepreneurs typically try to hide their ideas because they think they are the only ones that came up with the ideas. Venture Capitalists tell them to scream their ideas to the public and they’ll see that nobody will steal them. Ideas are a dime a dozen. There are probably 10 other people with the same idea that you have or that the ICO has. The most important factor to success is the ability to execute. This is why Venture Capitalists refuse to sign non-disclosure agreements and rarely invest in startups which haven’t built a prototype or product.

HAS THE ICO TEAM BUILT ANYTHING THAT WE CAN USE TODAY?

If not, take a pass. This is the best evidence that the team can execute. It takes way more skill, time, work and money to build an app than to create a one-page website and video. It shows:

• The team has proven that they can develop.
• It is less likely that the team will invest so much and not follow through.

Everything else is useless. Don’t be fooled by big teams, fancy pretentious titles, references, roadmap, video, fancy animations, escrow, blogs, Slack, Telegram, Twitter, Facebook, Reddit and white paper.

One project stacked their team with a dozen people and then lied about them. One member had the title of “Blockchain Expert”, but he worked in Inside Sales until 1.5 months prior. One member had the title “Blockchain Developer”, but he never developed a blockchain before.

Here is an example of a project team using fake photos and fake names: https://bitcointalk.org/index.php?topic=1949528.msg19485217#msg19485217

Don't rely on Github unless you can verify that they didn't copy the code from someone else and you can run it.

Several high profile projects, with big teams, nice videos, lots of social media activity and hype, raised millions of dollars and still have not produced an app. This number will grow and become more evident in the coming years.

Gnosis raised $12.5 million and their website says:

“The Hunch Game is nearly ready and can be launched in the first half of 2017 as an example Gnosis app.”

No app yet.

Qtum raised $15.6 million. I don't see anything produced on Qtum's website.

After raising $50 million, Cosmos's website is still pitching its white paper. Come on. What have they produced with that $50 million?

Augur had Vitalik Buterin on their team. After Satoshi Nakamoto, Vitalik is the most desirable person in the universe to have on an ICO team. After raising multiple millions and after two and a half years, all they’ve released is a simple beta that is barely usable.

Don’t be suckered by animations and videos. Satoshi didn’t have any of this and his coin was the most successful. Besides, the animations aren’t that impressive anymore, as I’m beginning to see the same animation on multiple websites. Some of these teams must be using the same graphic designer.

There is no guarantee that any business will not fail. But, when the ICO team has a prototype/product, they have proven that they can develop. That significantly reduces your risk. With many ICOs, you have no idea if they can build anything. You cannot trust the information on the profile of many ICOs. Just because they can hire somebody to make a video, it does not mean they can write thousands of lines of complicated code. It's like you giving money to someone to fix your car, simply because his video says he can fix cars, but he has never fixed one before.

Y Combinator is one of the biggest startup incubators in the world. They provide a small amount of funding (approx. $25k to 50k) to startups, which usually consists of 2 founders each. Then they build prototypes or products. Then the startups give pitches to angel investors or Venture Capitalists. If prototypes or products are unnecessary, then why do they waste so much time and money before pitching to angels and VCs?

Almost all incubators have startups that consist of usually only 2 founders, that are building prototypes and products. ICOs are stacking their team with a dozen people and they still cannot build anything. With 12 people, they should've built 6 prototypes/products by now. This shows that they are simply stacking their teams with useless people, in order to impress you or sucker you in.

2)  IS THE TEAM FROM A CORRUPT COUNTRY?

Check Transparency International's ranking.

If so, take a pass.

The number of ICOs from corrupt countries, especially those that were famous for sending out phishing scams for years, have exploded.

Yes, there are scams from countries that are not corrupt and successful projects from corrupt countries. What is important is the probability and if you are willing to take the extra risk.

In non-corrupt countries, people grow up with lots of regulations and enforcement. Though there are exceptions, the people feel that the way to get ahead is based largely on merit. In corrupt countries, there is less regulation, less enforcement and more people trying to find ways to get ahead by working around the system. In fact, they see that the most successful people in their country, usually in their government, are those who get ahead by lying, cheating or working around the system, instead of based on merit. If you do not think this is a risk, then we will agree to disagree.

Law enforcement is a big deterrent. Hurricanes prove this. After hurricanes Katrina and Irma, there were widespread lootings. Why? Because police are not on the streets and criminals feel immune from punishment.

Law enforcement through extradition is a deterrent. If an Australian defrauds investors in Germany, Germany can extradite the Australian and punish him. This makes the Australian think twice before he defrauds Germans. However, there are many countries without extradition agreements. This provides immunity to ICO teams. Therefore, they can lie, defraud and cheat investors from other countries, and there will be little to no recourse from the other countries. This can bring out the looting mentality.

There are many ICOs enticing investors, by claiming that their token or coin will go up in value or that token holders will get dividends, profits or ownership in other assets. Some tell buyers that they are “investing”. This means that they are selling securities and are breaking security laws.

I watched a video of a conference. ConsenSys was warning about the repercussions of selling securities. Waves’ CEO, who is from a country without extradition agreements with Europe or U.S., debated this, downplayed the concern and shrugged it off. Why should he care? No European or American government is going to be able to punish him if he broke security laws. Even if Europe cannot punish him, if Europe bans his coin, will you suffer?

Without law enforcement, ICOs can lie and get away with it. One project claimed that they will make 400+% return per year for the investor. In countries that enforce securities laws, if you make this claim and do not deliver, investors can sue you. In countries with advertising laws, the police can punish you for false advertising. In countries that are immune from these laws, ICOs can make any claim they want. One of the most egregious claims is when an ICO tells you that you will be a part owner of a physical company. Good luck in getting a judge in their country to force the company to give you equity because you own some ERC-20 tokens. Good luck to you and your multiple flights to that country.

Few corrupt countries have extradition agreements. For those that do, can you rely on their corrupt governments to fulfill their obligations?

3)  “NEVER INVEST IN A BUSINESS THAT YOU DO NOT UNDERSTAND”

This is a quote from Warren Buffett. It is very applicable because many ICO teams try to impress the audience with technical jargon. Many investors are not tech savvy and are baffled or confused, but they invest because they think that the project team must have come up with a technological break-through.

Last word:

You need to be able to verify that the business problem exists, that the market size is truly as big as the ICO claims and that the solution is possible. Quite often, they exaggerate on most of these. You need to verify that a blockchain or a cryptocurrency actually is needed for the solution. Quite often, they’re not.

Do not rely solely on ICO listing or rating sites. They likely do not know about all of the ICOs. Not all ICOs are willing to pay to be listed. They have methodologies that you may not agree with. Some claim to be experts, but you are likely more of an expert in your own field, whether that is medical, law, engineering or finance, than they are. They will likely have biases, especially for ICOs originating from their country or region. Putin wants to increase the crypto industry in Russia. Is this why there has been an explosion of ICOs from Russia? Even Putin’s Advisor ran an ICO. If Russia took out Facebook ads to disrupt U.S. and European politics, who is to say that they will not pay off ICO listing and ratings sites to favor Russian ICOs?

Amazing Information .... Thanks for posting

[Lerikaweb]

Money makes money. Even the most shitty shit may be wrapped in a shining paper by a talented marketologist. People will buy anything if it is advertised correctly.

[SergiOLa]

Thank you! it's really nice and informative thread. Human are so greedy and selfish in nature, so never invest money you cannot afford to lose.

[Andre#]

I really like this thread, you speak a lot of sense (most people lose that when they look at marketing from ICOs) and you evaluate clearly according to the market outside of the crypto one.

Keep up the good work, this is a very important thread that any new investors should read.

Yes, this is one of good threads helped many people understand the risk of ICOs.
In the past, I did not know the way to keep safe my funds with ICO (before this thread created).
So, I had to pay many money for my loss to get experience.

Those 3 kinds of ICOs you posted is a very great thread.
I really learn a lot from your post.

“NEVER INVEST IN A BUSINESS THAT YOU DO NOT UNDERSTAND”

That's 100% true, i ever invested in a scam project, not too long after that, i read this thread then i really learn a lot from it. thank you so much.

Sorry, it seems you have mistaken, I am not the onwer this thread, I am also a person who has been saved by this thread.
If I am not read this thread, I will need to spend much money to get enough experience, even, lose my house is possible.

[macoinz]

Nice thread, and I've been listing this kinds of ICO also on my other research. But these ICOs that's going to listen their community until time that nobody cares and they're gonna abandoning it like just nothing happened.
They're showing their core team that nothing to do with their project.
SO, better make a good research about the ICOs that you're going to invest because not all of them they'll give you good fortune.

[KryptoKnight78]

There are 3 kinds of ICOs:

1)  SCAMS

There have always been a lot of scammers, hackers and thieves in the crypto space since day one. Think of Mount Gox. According to Business Insider:

“…one out of every 16-17 Bitcoins belongs to someone who stole it”

If you don’t think that these thieves are trying to steal money through ICOs or from ICOs, you are kidding yourself. You just need to see the Bitcointalk forum dedicated to scams, or to participate in a Slack channel and you will see the never-ending phishing e-mails trying to lure you to their sites, in order to empty your wallet.

In addition to thieves and scammers, there are those who lie or exaggerate. Many users on Bitcointalk are pump and dumpers.

2)  CRAP

Everyone is desperate to host an ICO to make money. Therefore, they are throwing anything and everything onto the blockchain, including the kitchen sink. They may not be intentionally trying to scam, but they think that they have a good enough idea for an ICO. But these will fail because the blockchain will not solve anything for them. Examples include ICOs that want to put 3D data (which would equate to hundreds of Terabytes of data) or 153 exabytes of medical data on a blockchain. This shows that they are clueless about the blockchain and have never run Bitcoin’s full node. Bitcoin’s blockchain is 120 GB and Ethereum’s blockhain is 200 GB and they are both having scaling problems.

Even though crypto veterans and fans would like it to be, the blockchain is NOT the panacea to every problem in the world.

ICOs are also throwing any kind of business problem that they can make up, into the ICO. If they cannot make up the business problem, they will exaggerate about it. They will fail because the business problem doesn’t really exist, isn’t significant enough, cannot be solved by a blockchain or they do not really have the solution, though they try to make it sound like they do with lots of technical jargon.

Swarm Fund cites this business problem:

“You need large amounts of money to buy real estate and your money is tied down for an indefinite amount of time.”

This is a lie and not a business problem. You can buy one share of a REIT, and there are thousands of REITs to choose from, and you can sell it one minute later. If they start off their pitch with a lie, what else are they lying about?

Energi cites this business problem:

“A small number of large energy companies supply millions of customers who are price takers.”

Therefore, the solution is to create more energy suppliers, especially nuclear power plants, which is the cheapest source of electricity. But the project does not propose this. They propose to enable consumers to sell their solar self-generated electricity directly to other consumers.

To do this, consumers should have BOTH solar panels and batteries. This is a TINY market. Though solar panels are growing, it is still a tiny percent of the market and solar generated electricity is still much more expensive than nuclear generated.

Consumers with solar panels do not have that much surplus electricity to sell anyways. They use most of what they generate. Tesla and Enphase hyped up their batteries for solar panel owners to store their surplus electricity. These batteries are NOT selling. Enphase spent over $100 million to develop their battery and partly because of the lack of battery sales, their stock has plummeted approximately 85%.

Of course, the project’s pitch looks impressive at first glance.

3)  LEGITIMATE

There are only a few applications that make a lot of sense for the blockchain: transfer of value (currency), store of value, remittances (disrupt Western Union and bank wire transfers), smart contracts, gaming and gambling. These applications will disrupt their respective industries, because the blockchain will provide a lot of cost-savings or time-savings to the users. There might be other applications that make sense that I missed, but applications proposed by many ICOs do not make sense. Jesus Coin is an extreme example, but there are applications that fall across the spectrum from Jesus Coin to Bitcoin.


YOU CAN REDUCE THE RISK AND THE NUMBER OF ICOS TO REVIEW, BY USING 3 FILTERS

1)  The project’s idea should make sense, but do not base your investment decision purely on the idea. Watch:

“Ideas are like assholes - everyone has one, no one cares”
https://www.youtube.com/watch?v=PhJgrEackis

Entrepreneurs typically try to hide their ideas because they think they are the only ones that came up with the ideas. Venture Capitalists tell them to scream their ideas to the public and they’ll see that nobody will steal them. Ideas are a dime a dozen. There are probably 10 other people with the same idea that you have or that the ICO has. The most important factor to success is the ability to execute. This is why Venture Capitalists refuse to sign non-disclosure agreements and rarely invest in startups which haven’t built a prototype or product.

HAS THE ICO TEAM BUILT ANYTHING THAT WE CAN USE TODAY?

If not, take a pass. This is the best evidence that the team can execute. It takes way more skill, time, work and money to build an app than to create a one-page website and video. It shows:

• The team has proven that they can develop.
• It is less likely that the team will invest so much and not follow through.

Everything else is useless. Don’t be fooled by big teams, fancy pretentious titles, references, roadmap, video, fancy animations, escrow, blogs, Slack, Telegram, Twitter, Facebook, Reddit and white paper.

One project stacked their team with a dozen people and then lied about them. One member had the title of “Blockchain Expert”, but he worked in Inside Sales until 1.5 months prior. One member had the title “Blockchain Developer”, but he never developed a blockchain before.

Here is an example of a project team using fake photos and fake names: https://bitcointalk.org/index.php?topic=1949528.msg19485217#msg19485217

Don't rely on Github unless you can verify that they didn't copy the code from someone else and you can run it.

Several high profile projects, with big teams, nice videos, lots of social media activity and hype, raised millions of dollars and still have not produced an app. This number will grow and become more evident in the coming years.

Gnosis raised $12.5 million and their website says:

“The Hunch Game is nearly ready and can be launched in the first half of 2017 as an example Gnosis app.”

No app yet.

Qtum raised $15.6 million. I don't see anything produced on Qtum's website.

After raising $50 million, Cosmos's website is still pitching its white paper. Come on. What have they produced with that $50 million?

Augur had Vitalik Buterin on their team. After Satoshi Nakamoto, Vitalik is the most desirable person in the universe to have on an ICO team. After raising multiple millions and after two and a half years, all they’ve released is a simple beta that is barely usable.

Don’t be suckered by animations and videos. Satoshi didn’t have any of this and his coin was the most successful. Besides, the animations aren’t that impressive anymore, as I’m beginning to see the same animation on multiple websites. Some of these teams must be using the same graphic designer.

There is no guarantee that any business will not fail. But, when the ICO team has a prototype/product, they have proven that they can develop. That significantly reduces your risk. With many ICOs, you have no idea if they can build anything. You cannot trust the information on the profile of many ICOs. Just because they can hire somebody to make a video, it does not mean they can write thousands of lines of complicated code. It's like you giving money to someone to fix your car, simply because his video says he can fix cars, but he has never fixed one before.

Y Combinator is one of the biggest startup incubators in the world. They provide a small amount of funding (approx. $25k to 50k) to startups, which usually consists of 2 founders each. Then they build prototypes or products. Then the startups give pitches to angel investors or Venture Capitalists. If prototypes or products are unnecessary, then why do they waste so much time and money before pitching to angels and VCs?

Almost all incubators have startups that consist of usually only 2 founders, that are building prototypes and products. ICOs are stacking their team with a dozen people and they still cannot build anything. With 12 people, they should've built 6 prototypes/products by now. This shows that they are simply stacking their teams with useless people, in order to impress you or sucker you in.

2)  IS THE TEAM FROM A CORRUPT COUNTRY?

Check Transparency International's ranking.

If so, take a pass.

The number of ICOs from corrupt countries, especially those that were famous for sending out phishing scams for years, have exploded.

Yes, there are scams from countries that are not corrupt and successful projects from corrupt countries. What is important is the probability and if you are willing to take the extra risk.

In non-corrupt countries, people grow up with lots of regulations and enforcement. Though there are exceptions, the people feel that the way to get ahead is based largely on merit. In corrupt countries, there is less regulation, less enforcement and more people trying to find ways to get ahead by working around the system. In fact, they see that the most successful people in their country, usually in their government, are those who get ahead by lying, cheating or working around the system, instead of based on merit. If you do not think this is a risk, then we will agree to disagree.

Law enforcement is a big deterrent. Hurricanes prove this. After hurricanes Katrina and Irma, there were widespread lootings. Why? Because police are not on the streets and criminals feel immune from punishment.

Law enforcement through extradition is a deterrent. If an Australian defrauds investors in Germany, Germany can extradite the Australian and punish him. This makes the Australian think twice before he defrauds Germans. However, there are many countries without extradition agreements. This provides immunity to ICO teams. Therefore, they can lie, defraud and cheat investors from other countries, and there will be little to no recourse from the other countries. This can bring out the looting mentality.

There are many ICOs enticing investors, by claiming that their token or coin will go up in value or that token holders will get dividends, profits or ownership in other assets. Some tell buyers that they are “investing”. This means that they are selling securities and are breaking security laws.

I watched a video of a conference. ConsenSys was warning about the repercussions of selling securities. Waves’ CEO, who is from a country without extradition agreements with Europe or U.S., debated this, downplayed the concern and shrugged it off. Why should he care? No European or American government is going to be able to punish him if he broke security laws. Even if Europe cannot punish him, if Europe bans his coin, will you suffer?

Without law enforcement, ICOs can lie and get away with it. One project claimed that they will make 400+% return per year for the investor. In countries that enforce securities laws, if you make this claim and do not deliver, investors can sue you. In countries with advertising laws, the police can punish you for false advertising. In countries that are immune from these laws, ICOs can make any claim they want. One of the most egregious claims is when an ICO tells you that you will be a part owner of a physical company. Good luck in getting a judge in their country to force the company to give you equity because you own some ERC-20 tokens. Good luck to you and your multiple flights to that country.

Few corrupt countries have extradition agreements. For those that do, can you rely on their corrupt governments to fulfill their obligations?

3)  “NEVER INVEST IN A BUSINESS THAT YOU DO NOT UNDERSTAND”

This is a quote from Warren Buffett. It is very applicable because many ICO teams try to impress the audience with technical jargon. Many investors are not tech savvy and are baffled or confused, but they invest because they think that the project team must have come up with a technological break-through.

Last word:

You need to be able to verify that the business problem exists, that the market size is truly as big as the ICO claims and that the solution is possible. Quite often, they exaggerate on most of these. You need to verify that a blockchain or a cryptocurrency actually is needed for the solution. Quite often, they’re not.

Do not rely solely on ICO listing or rating sites. They likely do not know about all of the ICOs. Not all ICOs are willing to pay to be listed. They have methodologies that you may not agree with. Some claim to be experts, but you are likely more of an expert in your own field, whether that is medical, law, engineering or finance, than they are. They will likely have biases, especially for ICOs originating from their country or region. Putin wants to increase the crypto industry in Russia. Is this why there has been an explosion of ICOs from Russia? Even Putin’s Advisor ran an ICO. If Russia took out Facebook ads to disrupt U.S. and European politics, who is to say that they will not pay off ICO listing and ratings sites to favor Russian ICOs?

Unfortunately ICO scams have become more and more prevalent in the space, some kind of regulation is really needed to protect token buyers.

A Decentralized Escrow is the best way to create that safety.

The best ICOs need to be able to follow through on their Pre-ICO promises so their tokens can become valuable and their investors are protected.

I've found one solution (Incremint.io) they have created a decentralized escrow system that protects token buyers and allows them to vote on when funds are released to the ICO as milestones are met.

They are in Pre-ICO stage right now with a live token sale. You can check their website: https://incremint.io/

Or even better go through their Telegram feed and ask questions: https://t.me/incremint_en

[bartekman]

Sadly, there is too much Scam and Crap in this market... Usually I like to check with ICO Bench when there is an ICO out, but even so, the risk of steping in a crappy ico is high.

[Matrond]

Great post jlp! It is very informative and something I'll keep referring back to as I decide which cryptocurrencies to purchase 

[MiXxe]

Sadly, there is too much Scam and Crap in this market... Usually I like to check with ICO Bench when there is an ICO out, but even so, the risk of steping in a crappy ico is high.

Yes thats why the individual investors should check it twice to make sure that an Ico is a legit or not then they should follow up it with some legit informative people or organization whos reviewing an ico before anything else.

[serkhio]

"NEVER INVEST IN A BUSINESS THAT YOU DO NOT UNDERSTAND"
Yes, this is said by Buffet. In fact, few people could understand the crypto currency and the white paper of a project. Judge the value involves many things including technology, potential of future etc. All of them are hard to analyze.

[dale1075]

It's sad that most projects are scam nowadays. Theyre giving a image of the blockchain industry. One should always research on the projects theyre joining

[Alliipp]

Wow, this project community is growing rapidly and fast in both investors and those who follow its marketing through bounty! this will surely make you feel honored for the dev manager as it can be part of a great project

[Duzenn]

GOOD, this is a good post.
It is very careful to distinguish the current three types of ICO. Indeed, most ICO looks more like a scam. No matter what industry can have a relationship with the blockchain, is it not a circle of money?

[wareen]

GOOD, this is a good post.
It is very careful to distinguish the current three types of ICO. Indeed, most ICO looks more like a scam. No matter what industry can have a relationship with the blockchain, is it not a circle of money?

There are have many things can apply the blockchain technology to develop and grow more, but there are too many ICO projects, it made the ICO market has same idea while the practicality is not reasonable. Why do we need to use blockchain for adult video, lmao?

[bosede1]

This is comprehensive study of ICO and really an eye opener, with this I think one should be able to make right decisions concerning which one to do and one to run away from now.

[Elgrown]

really nice thread. It is possible to beat the scammers at there own game if you are not greedy so let the scams go on.

[DdmrDdmr]

Thanks. Nice summary and experience for us folks put together in a comprehensive manner. Cherry picking good ICOs is fairly difficult since I fear many review sources are not too objective. I think we lack sound independent and non-influenciable sources which we would likely be willing to pay for (slightly).

[merz123]

Thank you so much for sharing us all of these things. These things are all very important to be considered. Especially online businesses, in crypto, scammers have countless ideas just to make money selfishly. It is pretty discouraging but as they say, NO RISK NO GAIN. So, just conduct research all the time.

[newbie-hero]

When I'm choosing the best and reliable ICO project I am watching first of all team of developers. If in the management and between creators are famous names then it is a very good sign, some kind of guarantee.

[hashtag101]

When I'm choosing the best and reliable ICO project I am watching first of all team of developers. If in the management and between creators are famous names then it is a very good sign, some kind of guarantee.

You have to remember these famous people can be the advisor, they aren't the devs if they just earned some money to show their face with that project (spreading some promote words too). Of course, in the past, this case also happened. I remember that project is Centra promoted by Floyd Mayweather

[fearcoka]

Thanks. Nice summary and experience for us folks put together in a comprehensive manner. Cherry picking good ICOs is fairly difficult since I fear many review sources are not too objective. I think we lack sound independent and non-influenciable sources which we would likely be willing to pay for (slightly).

Nowadays, investing into ICO isn't an investment type for normal investor. The whale, the rich, the famous people are creating team to investing and controlling this market. ICO wasn't a good way for real investor from the last year. Many speculator and many worthless projects  made this field became so bad.

[GlennChristopher]

you wrote this post very detailed thanks for that this is what newbie like me needs i have saved this for the future

There are 3 kinds of ICOs:

1)  SCAMS

There have always been a lot of scammers, hackers and thieves in the crypto space since day one. Think of Mount Gox. According to Business Insider:

“…one out of every 16-17 Bitcoins belongs to someone who stole it”

If you don’t think that these thieves are trying to steal money through ICOs or from ICOs, you are kidding yourself. You just need to see the Bitcointalk forum dedicated to scams, or to participate in a Slack channel and you will see the never-ending phishing e-mails trying to lure you to their sites, in order to empty your wallet.

In addition to thieves and scammers, there are those who lie or exaggerate. Many users on Bitcointalk are pump and dumpers.

2)  CRAP

Everyone is desperate to host an ICO to make money. Therefore, they are throwing anything and everything onto the blockchain, including the kitchen sink. They may not be intentionally trying to scam, but they think that they have a good enough idea for an ICO. But these will fail because the blockchain will not solve anything for them. Examples include ICOs that want to put 3D data (which would equate to hundreds of Terabytes of data) or 153 exabytes of medical data on a blockchain. This shows that they are clueless about the blockchain and have never run Bitcoin’s full node. Bitcoin’s blockchain is 120 GB and Ethereum’s blockhain is 200 GB and they are both having scaling problems.

Even though crypto veterans and fans would like it to be, the blockchain is NOT the panacea to every problem in the world.

ICOs are also throwing any kind of business problem that they can make up, into the ICO. If they cannot make up the business problem, they will exaggerate about it. They will fail because the business problem doesn’t really exist, isn’t significant enough, cannot be solved by a blockchain or they do not really have the solution, though they try to make it sound like they do with lots of technical jargon.

Swarm Fund cites this business problem:

“You need large amounts of money to buy real estate and your money is tied down for an indefinite amount of time.”

This is a lie and not a business problem. You can buy one share of a REIT, and there are thousands of REITs to choose from, and you can sell it one minute later. If they start off their pitch with a lie, what else are they lying about?

Energi cites this business problem:

“A small number of large energy companies supply millions of customers who are price takers.”

Therefore, the solution is to create more energy suppliers, especially nuclear power plants, which is the cheapest source of electricity. But the project does not propose this. They propose to enable consumers to sell their solar self-generated electricity directly to other consumers.

To do this, consumers should have BOTH solar panels and batteries. This is a TINY market. Though solar panels are growing, it is still a tiny percent of the market and solar generated electricity is still much more expensive than nuclear generated.

Consumers with solar panels do not have that much surplus electricity to sell anyways. They use most of what they generate. Tesla and Enphase hyped up their batteries for solar panel owners to store their surplus electricity. These batteries are NOT selling. Enphase spent over $100 million to develop their battery and partly because of the lack of battery sales, their stock has plummeted approximately 85%.

Of course, the project’s pitch looks impressive at first glance.

3)  LEGITIMATE

There are only a few applications that make a lot of sense for the blockchain: transfer of value (currency), store of value, remittances (disrupt Western Union and bank wire transfers), smart contracts, gaming and gambling. These applications will disrupt their respective industries, because the blockchain will provide a lot of cost-savings or time-savings to the users. There might be other applications that make sense that I missed, but applications proposed by many ICOs do not make sense. Jesus Coin is an extreme example, but there are applications that fall across the spectrum from Jesus Coin to Bitcoin.


YOU CAN REDUCE THE RISK AND THE NUMBER OF ICOS TO REVIEW, BY USING 3 FILTERS

1)  The project’s idea should make sense, but do not base your investment decision purely on the idea. Watch:

“Ideas are like assholes - everyone has one, no one cares”
https://www.youtube.com/watch?v=PhJgrEackis

Entrepreneurs typically try to hide their ideas because they think they are the only ones that came up with the ideas. Venture Capitalists tell them to scream their ideas to the public and they’ll see that nobody will steal them. Ideas are a dime a dozen. There are probably 10 other people with the same idea that you have or that the ICO has. The most important factor to success is the ability to execute. This is why Venture Capitalists refuse to sign non-disclosure agreements and rarely invest in startups which haven’t built a prototype or product.

HAS THE ICO TEAM BUILT ANYTHING THAT WE CAN USE TODAY?

If not, take a pass. This is the best evidence that the team can execute. It takes way more skill, time, work and money to build an app than to create a one-page website and video. It shows:

• The team has proven that they can develop.
• It is less likely that the team will invest so much and not follow through.

Everything else is useless. Don’t be fooled by big teams, fancy pretentious titles, references, roadmap, video, fancy animations, escrow, blogs, Slack, Telegram, Twitter, Facebook, Reddit and white paper.

One project stacked their team with a dozen people and then lied about them. One member had the title of “Blockchain Expert”, but he worked in Inside Sales until 1.5 months prior. One member had the title “Blockchain Developer”, but he never developed a blockchain before.

Here is an example of a project team using fake photos and fake names: https://bitcointalk.org/index.php?topic=1949528.msg19485217#msg19485217

Don't rely on Github unless you can verify that they didn't copy the code from someone else and you can run it.

Several high profile projects, with big teams, nice videos, lots of social media activity and hype, raised millions of dollars and still have not produced an app. This number will grow and become more evident in the coming years.

Gnosis raised $12.5 million and their website says:

“The Hunch Game is nearly ready and can be launched in the first half of 2017 as an example Gnosis app.”

No app yet.

Qtum raised $15.6 million. I don't see anything produced on Qtum's website.

After raising $50 million, Cosmos's website is still pitching its white paper. Come on. What have they produced with that $50 million?

Augur had Vitalik Buterin on their team. After Satoshi Nakamoto, Vitalik is the most desirable person in the universe to have on an ICO team. After raising multiple millions and after two and a half years, all they’ve released is a simple beta that is barely usable.

Don’t be suckered by animations and videos. Satoshi didn’t have any of this and his coin was the most successful. Besides, the animations aren’t that impressive anymore, as I’m beginning to see the same animation on multiple websites. Some of these teams must be using the same graphic designer.

There is no guarantee that any business will not fail. But, when the ICO team has a prototype/product, they have proven that they can develop. That significantly reduces your risk. With many ICOs, you have no idea if they can build anything. You cannot trust the information on the profile of many ICOs. Just because they can hire somebody to make a video, it does not mean they can write thousands of lines of complicated code. It's like you giving money to someone to fix your car, simply because his video says he can fix cars, but he has never fixed one before.

Y Combinator is one of the biggest startup incubators in the world. They provide a small amount of funding (approx. $25k to 50k) to startups, which usually consists of 2 founders each. Then they build prototypes or products. Then the startups give pitches to angel investors or Venture Capitalists. If prototypes or products are unnecessary, then why do they waste so much time and money before pitching to angels and VCs?

Almost all incubators have startups that consist of usually only 2 founders, that are building prototypes and products. ICOs are stacking their team with a dozen people and they still cannot build anything. With 12 people, they should've built 6 prototypes/products by now. This shows that they are simply stacking their teams with useless people, in order to impress you or sucker you in.

2)  IS THE TEAM FROM A CORRUPT COUNTRY?

Check Transparency International's ranking.

If so, take a pass.

The number of ICOs from corrupt countries, especially those that were famous for sending out phishing scams for years, have exploded.

Yes, there are scams from countries that are not corrupt and successful projects from corrupt countries. What is important is the probability and if you are willing to take the extra risk.

In non-corrupt countries, people grow up with lots of regulations and enforcement. Though there are exceptions, the people feel that the way to get ahead is based largely on merit. In corrupt countries, there is less regulation, less enforcement and more people trying to find ways to get ahead by working around the system. In fact, they see that the most successful people in their country, usually in their government, are those who get ahead by lying, cheating or working around the system, instead of based on merit. If you do not think this is a risk, then we will agree to disagree.

Law enforcement is a big deterrent. Hurricanes prove this. After hurricanes Katrina and Irma, there were widespread lootings. Why? Because police are not on the streets and criminals feel immune from punishment.

Law enforcement through extradition is a deterrent. If an Australian defrauds investors in Germany, Germany can extradite the Australian and punish him. This makes the Australian think twice before he defrauds Germans. However, there are many countries without extradition agreements. This provides immunity to ICO teams. Therefore, they can lie, defraud and cheat investors from other countries, and there will be little to no recourse from the other countries. This can bring out the looting mentality.

There are many ICOs enticing investors, by claiming that their token or coin will go up in value or that token holders will get dividends, profits or ownership in other assets. Some tell buyers that they are “investing”. This means that they are selling securities and are breaking security laws.

I watched a video of a conference. ConsenSys was warning about the repercussions of selling securities. Waves’ CEO, who is from a country without extradition agreements with Europe or U.S., debated this, downplayed the concern and shrugged it off. Why should he care? No European or American government is going to be able to punish him if he broke security laws. Even if Europe cannot punish him, if Europe bans his coin, will you suffer?

Without law enforcement, ICOs can lie and get away with it. One project claimed that they will make 400+% return per year for the investor. In countries that enforce securities laws, if you make this claim and do not deliver, investors can sue you. In countries with advertising laws, the police can punish you for false advertising. In countries that are immune from these laws, ICOs can make any claim they want. One of the most egregious claims is when an ICO tells you that you will be a part owner of a physical company. Good luck in getting a judge in their country to force the company to give you equity because you own some ERC-20 tokens. Good luck to you and your multiple flights to that country.

Few corrupt countries have extradition agreements. For those that do, can you rely on their corrupt governments to fulfill their obligations?

3)  “NEVER INVEST IN A BUSINESS THAT YOU DO NOT UNDERSTAND”

This is a quote from Warren Buffett. It is very applicable because many ICO teams try to impress the audience with technical jargon. Many investors are not tech savvy and are baffled or confused, but they invest because they think that the project team must have come up with a technological break-through.

Last word:

You need to be able to verify that the business problem exists, that the market size is truly as big as the ICO claims and that the solution is possible. Quite often, they exaggerate on most of these. You need to verify that a blockchain or a cryptocurrency actually is needed for the solution. Quite often, they’re not.

Do not rely solely on ICO listing or rating sites. They likely do not know about all of the ICOs. Not all ICOs are willing to pay to be listed. They have methodologies that you may not agree with. Some claim to be experts, but you are likely more of an expert in your own field, whether that is medical, law, engineering or finance, than they are. They will likely have biases, especially for ICOs originating from their country or region. Putin wants to increase the crypto industry in Russia. Is this why there has been an explosion of ICOs from Russia? Even Putin’s Advisor ran an ICO. If Russia took out Facebook ads to disrupt U.S. and European politics, who is to say that they will not pay off ICO listing and ratings sites to favor Russian ICOs?

[sultanali]

If you want to know whether the ico is good or bad and you are an amateur to the cryptocurrency world then it would be better to follow some of the top investors in cryptocurrency on social media and see what initial coin offerings they are investing in and what are the common factors in all of these investments, be careful they might deceive you.

[moshk555]

Thanks for giving this amazing information I will definitely take care of this when I invest in any ICO. I also always read the whitepaper before investing in any ICO and it helps me a lot to get to know about that ICO.

[Lareina]

Thanks for this detailed write up. Extremely useful as well. It was getting hard to chose which ICO was legitimate so just decided not to go with it lately. However it seems Airdrop is all the rage nowadays.

Yes, the current project is really hard for some newcomers to choose from, and it's hard to see what's really worth it.

[warr1979]

Thanks for this detailed write up. Extremely useful as well. It was getting hard to chose which ICO was legitimate so just decided not to go with it lately. However it seems Airdrop is all the rage nowadays.

Yes, the current project is really hard for some newcomers to choose from, and it's hard to see what's really worth it.

Currently, investing into ICO is not a good idea, I think we should to invest into Bitcoin and top altcoins.
Because when the cryptocurrency has bullish trend or hot trend on the world, the ICO can become good place for investment and speculation like the last year.

[Nhebu]

As of now, 80% of ICOs are scam. A lot of projects I supported that in the end, developers run. The worst thing here is that, the legitimate ICOs are sometimes fail. Why? Because scam ICOs offered a great at first, bounty hunters wanted to join in an ICO that has a big bounty pool. When there are lot of promoters, assure that investors will come also. Unfortunately, the time and money spent by the crypto people are wasted because the project they participated was scam and the opportunity to go at the legit ICO is gone. Now, legit ICO failed because they can't market their project because there are a few numbers of promoters.

[drrekkty]

Thank you, very urgent topic.  More to such threads on the forum. All the criteria are very important, because the project that conducts the ICO should contain some idea that will allow to change or bring changes to the sphere where it will work. Unfortunately, a lot of scam projects appear that do not have their own code, but sell only the idea in a beautiful package.

[hjfjmk]

ICO is known as Initial Coin offering, the first digital token of the public offering, modelled on the stock market IPO (Initial).
That is, the project initiator may obtain the financing by the way of the block chain technology issue initial token, however, the initial tokens cannot be purchased in fiat currency (RMB, USD, etc.), because it violates the laws and regulations on financing, and it needs to be purchased with more liquid digital assets such as Bitcoin and Ethernet.
At present, the regulation of ICO has yet to be perfected, which requires us to be dry and carefully screened. "In fact, the evaluation of the project on those criteria, is not a real block chain?" Is it necessary to use block chain to solve? The team is not really engaged in the block chain technology development (many people are fake resumes, block chain technology is still difficult, really mature technicians are not many)? Is there any entity registration (prevent running)?
"The marketing director of the worldwide chain, Lulihua said.
Based on the success of the ICO project over the past 4 years, media has summarized the following key points of the ICO project. First of all, to have the bottom of the block chain philosophy support, block chain of the underlying philosophy is to center. Most of the most reliable ICO projects are based on block chain technology to provide more efficient solutions to existing problems.
In other words, these projects are to solve specific problems, if only simple concept packaging, it is difficult to get support.
Second, almost all code open source projects, most will upload source to GitHub, otherwise the current phase of the basic need not participate in this kind of ico, because the pyramid scheme is very suspicious. At the same time, a detailed white paper is essential, and the general White Paper will have a brief introduction will be able to understand the language to tell you what to solve the problem, behind the principle of what, what is special, what the value of the financing of the tokens, how to use the tokens, ICO rules, what the team is the background, is not a landing project.
Interestingly, there has been an ICO project in the white Paper, the name of Ben Cong (Satoshi Nakamoto) was written Zhong Bencong, the degree of flicker. Of course, even if all the above factors are available, the ICO project still risks, after all, the future of technology will require a long time to test.

[BitcoinPanther]

An absolutely nice read on ICOs.

Kudoos and thanks to the owner for the vital signs of a good and crappy ICO and the fine note on investing in one.

This does help a lot for people interested in ICOs and those who wanted to work under one.

Keep it up!

[burakdat]

Wow are you having some research on this information on your own? you got a lot of ideas there presented and it is not easy to put it in a single thread. Anyway this thread is very informative and useful if i will have smerits then probably i will give all my smerits with this post. And thinking about ICO yes of course we know some of these ICO's that is why we are carefully choosing on joining them as we want also our investment to profit and to getting lose our money in the process. Who would like get lose of their money? No one and that is why investing in crypotcurrency must be examine first in joining and ICO. And i guess that this is part of the investment and that is having risk. All kinds of investments has its own risk and there is no exception.

[lalatao75]

I know that this post will help many person who wants to invest their money to the ICO. We should be aware to what ICO we will investing for us to know whether it is scam or not.

[hundi.online]

Nice thread, good knowledge shared. If you are looking to invest in ICOs then must watch the YouTube video shared in thread.

[tobaccoleaf]

The main thing is not to hurry to invest in ICO, if they have a beautiful site and many promises. Think about whether they can really realize all their promises.

[nguyentuan222]

From Russian ICO I look closely at SONM and WAVES. Sonm is already in my portfolio. Sonm released an updated roadmap yesterday, good project.

[Getmon]

This is a very good job! Keep it up! This post should not only end up here in bitcointalk. It would help a lot more people if this will also be posted outside this forum. I know this forum houses the biggest cryptocurrency community in the world but it is not enough that only the members of this forum will read about this. Please post the same in social media sites, blogging sites, and others. Crypto fans need to educate themselves with the reality.

[clarkt]

Some of the points raised in Op's article are very true and useful.  I will personally make this article my guidance on ICO investment.  The country where ICO is originating from is very important as well.

[sazon84]

We clearly see what a small number of really worthy and promising projects.  And these projects do not even always advertise.  Since they already have a database of clients and investors who are ready to invest in such projects large amounts on closed sales.

[ngochuyen0071]

This is a very important thread, I got to learn new things I was not aware of before hand. It good of the op for bring this to the awareness of others. This is a real ico101, that need to being taken by investors

[cheezcarls]

There are 3 kinds of ICOs:

1)  SCAMS

There have always been a lot of scammers, hackers and thieves in the crypto space since day one. Think of Mount Gox. According to Business Insider:

“…one out of every 16-17 Bitcoins belongs to someone who stole it”

If you don’t think that these thieves are trying to steal money through ICOs or from ICOs, you are kidding yourself. You just need to see the Bitcointalk forum dedicated to scams, or to participate in a Slack channel and you will see the never-ending phishing e-mails trying to lure you to their sites, in order to empty your wallet.

In addition to thieves and scammers, there are those who lie or exaggerate. Many users on Bitcointalk are pump and dumpers.

2)  CRAP

Everyone is desperate to host an ICO to make money. Therefore, they are throwing anything and everything onto the blockchain, including the kitchen sink. They may not be intentionally trying to scam, but they think that they have a good enough idea for an ICO. But these will fail because the blockchain will not solve anything for them. Examples include ICOs that want to put 3D data (which would equate to hundreds of Terabytes of data) or 153 exabytes of medical data on a blockchain. This shows that they are clueless about the blockchain and have never run Bitcoin’s full node. Bitcoin’s blockchain is 120 GB and Ethereum’s blockhain is 200 GB and they are both having scaling problems.

Even though crypto veterans and fans would like it to be, the blockchain is NOT the panacea to every problem in the world.

ICOs are also throwing any kind of business problem that they can make up, into the ICO. If they cannot make up the business problem, they will exaggerate about it. They will fail because the business problem doesn’t really exist, isn’t significant enough, cannot be solved by a blockchain or they do not really have the solution, though they try to make it sound like they do with lots of technical jargon.

Swarm Fund cites this business problem:

“You need large amounts of money to buy real estate and your money is tied down for an indefinite amount of time.”

This is a lie and not a business problem. You can buy one share of a REIT, and there are thousands of REITs to choose from, and you can sell it one minute later. If they start off their pitch with a lie, what else are they lying about?

Energi cites this business problem:

“A small number of large energy companies supply millions of customers who are price takers.”

Therefore, the solution is to create more energy suppliers, especially nuclear power plants, which is the cheapest source of electricity. But the project does not propose this. They propose to enable consumers to sell their solar self-generated electricity directly to other consumers.

To do this, consumers should have BOTH solar panels and batteries. This is a TINY market. Though solar panels are growing, it is still a tiny percent of the market and solar generated electricity is still much more expensive than nuclear generated.

Consumers with solar panels do not have that much surplus electricity to sell anyways. They use most of what they generate. Tesla and Enphase hyped up their batteries for solar panel owners to store their surplus electricity. These batteries are NOT selling. Enphase spent over $100 million to develop their battery and partly because of the lack of battery sales, their stock has plummeted approximately 85%.

Of course, the project’s pitch looks impressive at first glance.

3)  LEGITIMATE

There are only a few applications that make a lot of sense for the blockchain: transfer of value (currency), store of value, remittances (disrupt Western Union and bank wire transfers), smart contracts, gaming and gambling. These applications will disrupt their respective industries, because the blockchain will provide a lot of cost-savings or time-savings to the users. There might be other applications that make sense that I missed, but applications proposed by many ICOs do not make sense. Jesus Coin is an extreme example, but there are applications that fall across the spectrum from Jesus Coin to Bitcoin.


YOU CAN REDUCE THE RISK AND THE NUMBER OF ICOS TO REVIEW, BY USING 3 FILTERS

1)  The project’s idea should make sense, but do not base your investment decision purely on the idea. Watch:

“Ideas are like assholes - everyone has one, no one cares”
https://www.youtube.com/watch?v=PhJgrEackis

Entrepreneurs typically try to hide their ideas because they think they are the only ones that came up with the ideas. Venture Capitalists tell them to scream their ideas to the public and they’ll see that nobody will steal them. Ideas are a dime a dozen. There are probably 10 other people with the same idea that you have or that the ICO has. The most important factor to success is the ability to execute. This is why Venture Capitalists refuse to sign non-disclosure agreements and rarely invest in startups which haven’t built a prototype or product.

HAS THE ICO TEAM BUILT ANYTHING THAT WE CAN USE TODAY?

If not, take a pass. This is the best evidence that the team can execute. It takes way more skill, time, work and money to build an app than to create a one-page website and video. It shows:

• The team has proven that they can develop.
• It is less likely that the team will invest so much and not follow through.

Everything else is useless. Don’t be fooled by big teams, fancy pretentious titles, references, roadmap, video, fancy animations, escrow, blogs, Slack, Telegram, Twitter, Facebook, Reddit and white paper.

One project stacked their team with a dozen people and then lied about them. One member had the title of “Blockchain Expert”, but he worked in Inside Sales until 1.5 months prior. One member had the title “Blockchain Developer”, but he never developed a blockchain before.

Here is an example of a project team using fake photos and fake names: https://bitcointalk.org/index.php?topic=1949528.msg19485217#msg19485217

Don't rely on Github unless you can verify that they didn't copy the code from someone else and you can run it.

Several high profile projects, with big teams, nice videos, lots of social media activity and hype, raised millions of dollars and still have not produced an app. This number will grow and become more evident in the coming years.

Gnosis raised $12.5 million and their website says:

“The Hunch Game is nearly ready and can be launched in the first half of 2017 as an example Gnosis app.”

No app yet.

Qtum raised $15.6 million. I don't see anything produced on Qtum's website.

After raising $50 million, Cosmos's website is still pitching its white paper. Come on. What have they produced with that $50 million?

Augur had Vitalik Buterin on their team. After Satoshi Nakamoto, Vitalik is the most desirable person in the universe to have on an ICO team. After raising multiple millions and after two and a half years, all they’ve released is a simple beta that is barely usable.

Don’t be suckered by animations and videos. Satoshi didn’t have any of this and his coin was the most successful. Besides, the animations aren’t that impressive anymore, as I’m beginning to see the same animation on multiple websites. Some of these teams must be using the same graphic designer.

There is no guarantee that any business will not fail. But, when the ICO team has a prototype/product, they have proven that they can develop. That significantly reduces your risk. With many ICOs, you have no idea if they can build anything. You cannot trust the information on the profile of many ICOs. Just because they can hire somebody to make a video, it does not mean they can write thousands of lines of complicated code. It's like you giving money to someone to fix your car, simply because his video says he can fix cars, but he has never fixed one before.

Y Combinator is one of the biggest startup incubators in the world. They provide a small amount of funding (approx. $25k to 50k) to startups, which usually consists of 2 founders each. Then they build prototypes or products. Then the startups give pitches to angel investors or Venture Capitalists. If prototypes or products are unnecessary, then why do they waste so much time and money before pitching to angels and VCs?

Almost all incubators have startups that consist of usually only 2 founders, that are building prototypes and products. ICOs are stacking their team with a dozen people and they still cannot build anything. With 12 people, they should've built 6 prototypes/products by now. This shows that they are simply stacking their teams with useless people, in order to impress you or sucker you in.

2)  IS THE TEAM FROM A CORRUPT COUNTRY?

Check Transparency International's ranking.

If so, take a pass.

The number of ICOs from corrupt countries, especially those that were famous for sending out phishing scams for years, have exploded.

Yes, there are scams from countries that are not corrupt and successful projects from corrupt countries. What is important is the probability and if you are willing to take the extra risk.

In non-corrupt countries, people grow up with lots of regulations and enforcement. Though there are exceptions, the people feel that the way to get ahead is based largely on merit. In corrupt countries, there is less regulation, less enforcement and more people trying to find ways to get ahead by working around the system. In fact, they see that the most successful people in their country, usually in their government, are those who get ahead by lying, cheating or working around the system, instead of based on merit. If you do not think this is a risk, then we will agree to disagree.

Law enforcement is a big deterrent. Hurricanes prove this. After hurricanes Katrina and Irma, there were widespread lootings. Why? Because police are not on the streets and criminals feel immune from punishment.

Law enforcement through extradition is a deterrent. If an Australian defrauds investors in Germany, Germany can extradite the Australian and punish him. This makes the Australian think twice before he defrauds Germans. However, there are many countries without extradition agreements. This provides immunity to ICO teams. Therefore, they can lie, defraud and cheat investors from other countries, and there will be little to no recourse from the other countries. This can bring out the looting mentality.

There are many ICOs enticing investors, by claiming that their token or coin will go up in value or that token holders will get dividends, profits or ownership in other assets. Some tell buyers that they are “investing”. This means that they are selling securities and are breaking security laws.

I watched a video of a conference. ConsenSys was warning about the repercussions of selling securities. Waves’ CEO, who is from a country without extradition agreements with Europe or U.S., debated this, downplayed the concern and shrugged it off. Why should he care? No European or American government is going to be able to punish him if he broke security laws. Even if Europe cannot punish him, if Europe bans his coin, will you suffer?

Without law enforcement, ICOs can lie and get away with it. One project claimed that they will make 400+% return per year for the investor. In countries that enforce securities laws, if you make this claim and do not deliver, investors can sue you. In countries with advertising laws, the police can punish you for false advertising. In countries that are immune from these laws, ICOs can make any claim they want. One of the most egregious claims is when an ICO tells you that you will be a part owner of a physical company. Good luck in getting a judge in their country to force the company to give you equity because you own some ERC-20 tokens. Good luck to you and your multiple flights to that country.

Few corrupt countries have extradition agreements. For those that do, can you rely on their corrupt governments to fulfill their obligations?

3)  “NEVER INVEST IN A BUSINESS THAT YOU DO NOT UNDERSTAND”

This is a quote from Warren Buffett. It is very applicable because many ICO teams try to impress the audience with technical jargon. Many investors are not tech savvy and are baffled or confused, but they invest because they think that the project team must have come up with a technological break-through.

Last word:

You need to be able to verify that the business problem exists, that the market size is truly as big as the ICO claims and that the solution is possible. Quite often, they exaggerate on most of these. You need to verify that a blockchain or a cryptocurrency actually is needed for the solution. Quite often, they’re not.

Do not rely solely on ICO listing or rating sites. They likely do not know about all of the ICOs. Not all ICOs are willing to pay to be listed. They have methodologies that you may not agree with. Some claim to be experts, but you are likely more of an expert in your own field, whether that is medical, law, engineering or finance, than they are. They will likely have biases, especially for ICOs originating from their country or region. Putin wants to increase the crypto industry in Russia. Is this why there has been an explosion of ICOs from Russia? Even Putin’s Advisor ran an ICO. If Russia took out Facebook ads to disrupt U.S. and European politics, who is to say that they will not pay off ICO listing and ratings sites to favor Russian ICOs?

I must say that this is one of the most informative articles that I’ve ever read. You know how helpful this is for me and the rest when it comes to participating in initial coin offerings. I was scammed twice in ICOs when I was a newbie back then. I still have a lot to learn about playing the game of ICOs, especially that you mentioned that we cannot rely on ICO rating sites to determine if its good or not. There are no guarantees.

A big thank you for this man. I am going to share this to my crypto friends. Cheers!

[ngantrann206]

Corupt countries?Huh?

Then avoid the USA and Europe. Thats were all the high tech people live. You will find the higherest number of hackers per capita there.

[clavirda]

An excellent and useful topic, useful and tested tips for determining the legality and prospects of the ICO. But it is necessary, first of all, to investigate the purpose of the ICO, the team of developers and technology.

[zaluzi modric]

From Russian ICO I look closely at SONM and WAVES. Sonm is already in my portfolio. Sonm released an updated roadmap yesterday, good project

[oxoxoxox]

I totally agree,the current ICO white papers are full of technical terms, and I can't even understand what they are doing. They may think that this shows their professional standards, but for ordinary investors, not all of them are computer experts. Most ordinary investors simply do not understand their white papers. Such a white paper is same as a blank paper and it is meaningless.

[cexylikepie]

I totally agree,the current ICO white papers are full of technical terms, and I can't even understand what they are doing. They may think that this shows their professional standards, but for ordinary investors, not all of them are computer experts. Most ordinary investors simply do not understand their white papers. Such a white paper is same as a blank paper and it is meaningless.

If you cannot understand what saying in white papers, you do not need to invest in that ICO. Because the most important thing is to explain to help the investor know exact about the project cannot solve. How to make that ICO project grow more and provide the profit? Finally, as long as you do not understand about the ICO, you should not invest in anything, even the profit can up to huge amount of money.

[Early_Waffle]

Actually a very good and useful article. I plan to periodically re-read it, share it with other people. Indeed, indeed, real and useful ICO projects should be supported.

[Hudora]

Really useful topic. I will periodically review it. I found the basic criteria for choosing reliable ICOs to support really real and promising projects.

[dinguyenphuong1407]

There are lots of ICOs from non USA and non European countries. If all the high tech people live in the USA and Europe, then what you're implying is that many ICOs are started by people who do not understand technology.

[Augustyusuf]

i think 70% of most ico was scam sir, and few of them was real and legit, so we must choose wisely and carefully enough before decide which ico will be joined.

[kaizerblitz]

Thanks for the tips bro it seems i have knowledge now to invest or to choose the best ICO with a bounty program. Most i joined ICO are all scam and not legitimate there all wasting the money of all investor.

[vivuta107]

Better to think of ICOs as gambling than to put your life savings in it. People can be smart about gambling, eg counting cards at Blackjack, studying form guides for horse racing, cheating at poker or rigging boxing matches...

[bamita131]

the solution is to create more energy suppliers, especially nuclear power plants, which is the cheapest source of electricity. But the project does not propose this. They propose to enable consumers to sell their solar self-generated electricity directly to other consumers.

[mamsong9222]

 the important thing is that we have tried. well, of course i have some real ico and really do it out there, and one of them is gladius.

[reynand]

A very nice thread that I believe it could helps beginners and newbie when they are interested in participating in ICO as investors.Take care for you own money and be safe when picking those ICO.

[hongthanh0290]

This is a very important thread, I got to learn new things I was not aware of before hand. It good of the op for bring this to the awareness of others. This is a real ico101, that need to being taken by investors

[pacho08]

Utility ICOs: Token would not be qualified as securities only if its sole purpose is to confer digital access rights to an application or service and if the utility token can already be used in this way at the point of issue. If a utility token functions solely or partially as an investment in economic terms, such tokens would be treated as securities (i.e. in the same way as asset tokens).

[8count]

There are 3 kinds of ICOs:

1)  SCAMS

There have always been a lot of scammers, hackers and thieves in the crypto space since day one. Think of Mount Gox. According to Business Insider:

“…one out of every 16-17 Bitcoins belongs to someone who stole it”

If you don’t think that these thieves are trying to steal money through ICOs or from ICOs, you are kidding yourself. You just need to see the Bitcointalk forum dedicated to scams, or to participate in a Slack channel and you will see the never-ending phishing e-mails trying to lure you to their sites, in order to empty your wallet.

In addition to thieves and scammers, there are those who lie or exaggerate. Many users on Bitcointalk are pump and dumpers.

2)  CRAP

Everyone is desperate to host an ICO to make money. Therefore, they are throwing anything and everything onto the blockchain, including the kitchen sink. They may not be intentionally trying to scam, but they think that they have a good enough idea for an ICO. But these will fail because the blockchain will not solve anything for them. Examples include ICOs that want to put 3D data (which would equate to hundreds of Terabytes of data) or 153 exabytes of medical data on a blockchain. This shows that they are clueless about the blockchain and have never run Bitcoin’s full node. Bitcoin’s blockchain is 120 GB and Ethereum’s blockhain is 200 GB and they are both having scaling problems.

Even though crypto veterans and fans would like it to be, the blockchain is NOT the panacea to every problem in the world.

ICOs are also throwing any kind of business problem that they can make up, into the ICO. If they cannot make up the business problem, they will exaggerate about it. They will fail because the business problem doesn’t really exist, isn’t significant enough, cannot be solved by a blockchain or they do not really have the solution, though they try to make it sound like they do with lots of technical jargon.

Swarm Fund cites this business problem:

“You need large amounts of money to buy real estate and your money is tied down for an indefinite amount of time.”

This is a lie and not a business problem. You can buy one share of a REIT, and there are thousands of REITs to choose from, and you can sell it one minute later. If they start off their pitch with a lie, what else are they lying about?

Energi cites this business problem:

“A small number of large energy companies supply millions of customers who are price takers.”

Therefore, the solution is to create more energy suppliers, especially nuclear power plants, which is the cheapest source of electricity. But the project does not propose this. They propose to enable consumers to sell their solar self-generated electricity directly to other consumers.

To do this, consumers should have BOTH solar panels and batteries. This is a TINY market. Though solar panels are growing, it is still a tiny percent of the market and solar generated electricity is still much more expensive than nuclear generated.

Consumers with solar panels do not have that much surplus electricity to sell anyways. They use most of what they generate. Tesla and Enphase hyped up their batteries for solar panel owners to store their surplus electricity. These batteries are NOT selling. Enphase spent over $100 million to develop their battery and partly because of the lack of battery sales, their stock has plummeted approximately 85%.

Of course, the project’s pitch looks impressive at first glance.

3)  LEGITIMATE

There are only a few applications that make a lot of sense for the blockchain: transfer of value (currency), store of value, remittances (disrupt Western Union and bank wire transfers), smart contracts, gaming and gambling. These applications will disrupt their respective industries, because the blockchain will provide a lot of cost-savings or time-savings to the users. There might be other applications that make sense that I missed, but applications proposed by many ICOs do not make sense. Jesus Coin is an extreme example, but there are applications that fall across the spectrum from Jesus Coin to Bitcoin.


YOU CAN REDUCE THE RISK AND THE NUMBER OF ICOS TO REVIEW, BY USING 3 FILTERS

1)  The project’s idea should make sense, but do not base your investment decision purely on the idea. Watch:

“Ideas are like assholes - everyone has one, no one cares”
https://www.youtube.com/watch?v=PhJgrEackis

Entrepreneurs typically try to hide their ideas because they think they are the only ones that came up with the ideas. Venture Capitalists tell them to scream their ideas to the public and they’ll see that nobody will steal them. Ideas are a dime a dozen. There are probably 10 other people with the same idea that you have or that the ICO has. The most important factor to success is the ability to execute. This is why Venture Capitalists refuse to sign non-disclosure agreements and rarely invest in startups which haven’t built a prototype or product.

HAS THE ICO TEAM BUILT ANYTHING THAT WE CAN USE TODAY?

If not, take a pass. This is the best evidence that the team can execute. It takes way more skill, time, work and money to build an app than to create a one-page website and video. It shows:

• The team has proven that they can develop.
• It is less likely that the team will invest so much and not follow through.

Everything else is useless. Don’t be fooled by big teams, fancy pretentious titles, references, roadmap, video, fancy animations, escrow, blogs, Slack, Telegram, Twitter, Facebook, Reddit and white paper.

One project stacked their team with a dozen people and then lied about them. One member had the title of “Blockchain Expert”, but he worked in Inside Sales until 1.5 months prior. One member had the title “Blockchain Developer”, but he never developed a blockchain before.

Here is an example of a project team using fake photos and fake names: https://bitcointalk.org/index.php?topic=1949528.msg19485217#msg19485217

Don't rely on Github unless you can verify that they didn't copy the code from someone else and you can run it.

Several high profile projects, with big teams, nice videos, lots of social media activity and hype, raised millions of dollars and still have not produced an app. This number will grow and become more evident in the coming years.

Gnosis raised $12.5 million and their website says:

“The Hunch Game is nearly ready and can be launched in the first half of 2017 as an example Gnosis app.”

No app yet.

Qtum raised $15.6 million. I don't see anything produced on Qtum's website.

After raising $50 million, Cosmos's website is still pitching its white paper. Come on. What have they produced with that $50 million?

Augur had Vitalik Buterin on their team. After Satoshi Nakamoto, Vitalik is the most desirable person in the universe to have on an ICO team. After raising multiple millions and after two and a half years, all they’ve released is a simple beta that is barely usable.

Don’t be suckered by animations and videos. Satoshi didn’t have any of this and his coin was the most successful. Besides, the animations aren’t that impressive anymore, as I’m beginning to see the same animation on multiple websites. Some of these teams must be using the same graphic designer.

There is no guarantee that any business will not fail. But, when the ICO team has a prototype/product, they have proven that they can develop. That significantly reduces your risk. With many ICOs, you have no idea if they can build anything. You cannot trust the information on the profile of many ICOs. Just because they can hire somebody to make a video, it does not mean they can write thousands of lines of complicated code. It's like you giving money to someone to fix your car, simply because his video says he can fix cars, but he has never fixed one before.

Y Combinator is one of the biggest startup incubators in the world. They provide a small amount of funding (approx. $25k to 50k) to startups, which usually consists of 2 founders each. Then they build prototypes or products. Then the startups give pitches to angel investors or Venture Capitalists. If prototypes or products are unnecessary, then why do they waste so much time and money before pitching to angels and VCs?

Almost all incubators have startups that consist of usually only 2 founders, that are building prototypes and products. ICOs are stacking their team with a dozen people and they still cannot build anything. With 12 people, they should've built 6 prototypes/products by now. This shows that they are simply stacking their teams with useless people, in order to impress you or sucker you in.

2)  IS THE TEAM FROM A CORRUPT COUNTRY?

Check Transparency International's ranking.

If so, take a pass.

The number of ICOs from corrupt countries, especially those that were famous for sending out phishing scams for years, have exploded.

Yes, there are scams from countries that are not corrupt and successful projects from corrupt countries. What is important is the probability and if you are willing to take the extra risk.

In non-corrupt countries, people grow up with lots of regulations and enforcement. Though there are exceptions, the people feel that the way to get ahead is based largely on merit. In corrupt countries, there is less regulation, less enforcement and more people trying to find ways to get ahead by working around the system. In fact, they see that the most successful people in their country, usually in their government, are those who get ahead by lying, cheating or working around the system, instead of based on merit. If you do not think this is a risk, then we will agree to disagree.

Law enforcement is a big deterrent. Hurricanes prove this. After hurricanes Katrina and Irma, there were widespread lootings. Why? Because police are not on the streets and criminals feel immune from punishment.

Law enforcement through extradition is a deterrent. If an Australian defrauds investors in Germany, Germany can extradite the Australian and punish him. This makes the Australian think twice before he defrauds Germans. However, there are many countries without extradition agreements. This provides immunity to ICO teams. Therefore, they can lie, defraud and cheat investors from other countries, and there will be little to no recourse from the other countries. This can bring out the looting mentality.

There are many ICOs enticing investors, by claiming that their token or coin will go up in value or that token holders will get dividends, profits or ownership in other assets. Some tell buyers that they are “investing”. This means that they are selling securities and are breaking security laws.

I watched a video of a conference. ConsenSys was warning about the repercussions of selling securities. Waves’ CEO, who is from a country without extradition agreements with Europe or U.S., debated this, downplayed the concern and shrugged it off. Why should he care? No European or American government is going to be able to punish him if he broke security laws. Even if Europe cannot punish him, if Europe bans his coin, will you suffer?

Without law enforcement, ICOs can lie and get away with it. One project claimed that they will make 400+% return per year for the investor. In countries that enforce securities laws, if you make this claim and do not deliver, investors can sue you. In countries with advertising laws, the police can punish you for false advertising. In countries that are immune from these laws, ICOs can make any claim they want. One of the most egregious claims is when an ICO tells you that you will be a part owner of a physical company. Good luck in getting a judge in their country to force the company to give you equity because you own some ERC-20 tokens. Good luck to you and your multiple flights to that country.

Few corrupt countries have extradition agreements. For those that do, can you rely on their corrupt governments to fulfill their obligations?

3)  “NEVER INVEST IN A BUSINESS THAT YOU DO NOT UNDERSTAND”

This is a quote from Warren Buffett. It is very applicable because many ICO teams try to impress the audience with technical jargon. Many investors are not tech savvy and are baffled or confused, but they invest because they think that the project team must have come up with a technological break-through.

Last word:

You need to be able to verify that the business problem exists, that the market size is truly as big as the ICO claims and that the solution is possible. Quite often, they exaggerate on most of these. You need to verify that a blockchain or a cryptocurrency actually is needed for the solution. Quite often, they’re not.

Do not rely solely on ICO listing or rating sites. They likely do not know about all of the ICOs. Not all ICOs are willing to pay to be listed. They have methodologies that you may not agree with. Some claim to be experts, but you are likely more of an expert in your own field, whether that is medical, law, engineering or finance, than they are. They will likely have biases, especially for ICOs originating from their country or region. Putin wants to increase the crypto industry in Russia. Is this why there has been an explosion of ICOs from Russia? Even Putin’s Advisor ran an ICO. If Russia took out Facebook ads to disrupt U.S. and European politics, who is to say that they will not pay off ICO listing and ratings sites to favor Russian ICOs?

Even thou this is a old post it has great information for new members to the forum, as well as people new to investing in ICOs. I think that today this applies even more then last year with how people are investing in ICOs (me included)
It made me rethink how I haven't been doing as much research these days as I use to into my investments. It is great advice and have gave you a merit as I think this could benefit many on this forum. Thank you

[whatthesith]

Thank you!
I have learned something new. Many new ICOs and many new scams, so guys, be aware!

[drofroLinden]

Thanks for the useful article! I always advise to invest in few ICO that already have a working business. It will save you from scammers.

[vivuta119]

There are several ICOs that claim that their tokens will entitle you to ownership to real estate, USD, gold or other coins without giving detailed, convincing explanation of how the tokens will have legal ownership.

[bibitao29]

Thanks for the information it's really valuable. People are often scared by ICOs but if you do your research well you will have big chances to make profit.

[Vova.vova]

I want to invite you to pay attention to a new, but very promising ICO Vireo. This ICO guarantees you high profits and safe cooperation. Vireo is a really cool and unusual project! Check it

[cryptomanspbmgdn]

Oh, thank you, author, put everything in place in my head...and why have I never seen this thread...?

[vivuta102]

This scenario is really making the whole project a big risk so what many are doing is just demand for the tokens/coins to be available in many exchanges as fast as possible so that with a good value they can just dump their holdings and then proceed to another ICO projects

[twicezeroiszero]

Thanks for the tips bro it seems i have knowledge now to invest or to choose the best ICO with a bounty program. Most i joined ICO are all scam and not legitimate there all wasting the money of all investor.

As you said, the government will kill ICO as soon as they can instead of accepting to see more startup use ICO to call for investment like now.
You forget SEC joined the cryptocurrency world to manage this market since the last year.
So, as long as they want, they can do anything as kill this market easily.
But, they know the benefit from ICO for the startup want to call for investment to develop.

[icoprofits]

Thank u for giving a detailed analysis on icos and their growth prospective  it is an eye opener for every one

[weblouartisan]

nice thread. Investing into something without understanding it based on someone else suggestion is like gambling in casino.

Actually, you can always read the platform or the roadmap of the ico in order to determine if it will be successful or not, in this way you can have precautions for your self before investing a huge amount.

[EHT7500]

Thanks to the author! It's like a textbook. After reading this beautiful document, I did a second analysis of the ICO in which I was going to invest. You want to participate for the first time and buy tokens. I think I stopped in time.

[danielphilip574]

Thanks for the tips bro it seems i have knowledge now to invest or to choose the best ICO with a bounty program. Most i joined ICO are all scam and not legitimate there all wasting the money of all investor.

[vinapuppy]

This is a very good job! Keep it up! This post should not only end up here in bitcointalk. It would help a lot more people if this will also be posted outside this forum. I know this forum houses the biggest cryptocurrency community in the world but it is not enough that only the members of this forum will read about this. Please post the same in social media sites, blogging sites, and others. Crypto fans need to educate themselves with the reality.

[hermae]

This is a very good job! Keep it up! This post should not only end up here in bitcointalk. It would help a lot more people if this will also be posted outside this forum. I know this forum houses the biggest cryptocurrency community in the world but it is not enough that only the members of this forum will read about this. Please post the same in social media sites, blogging sites, and others. Crypto fans need to educate themselves with the reality.

Yes, I absolutely agree. This post is very helpful not just for the newbies but for everyone. It is an eye opener for all of us to be careful and to study the icos before investing our money into it.

[bohboh]

This is food for thought especially for people like me who is new into cryptos world.
Choosing ICOs has been a serious actions to execute after hearing, reading and seeing many fall ICO, but your post has been insightful and meaningful. Gracia's

[Matcuda]

Everything is written beautifully, but I believe that the project will either live and justify our investments, or leave the market after a small infusion. And these are all kinds of fraud in the form of an artificially created problem that this project solves or let's say how everything will be beautiful in a month, for frivolous people.

[phamduc171a]

A very nice thread that I believe it could helps beginners and newbie when they are interested in participating in ICO as investors.Take care for you own money and be safe when picking those ICO.

[Arcoin1]

The crypto money market has a lot of options to choose from. You need to do a lot of research to not get into an ICO. 3 ICOs will not be the best bit choice for you. You should investigate yourself.

[popotao93]

Think of how much easier and cheaper it would be to build websites if you didn't have to worry about hackers.

[Rice city7]

A very good article , thanks . I will read it many times , and try to translate it into other languages to let more and more people read it . Let's just learn to support the real ico projects.

[danchozind999]

I want to know what's OP opinion about PayPal based business model adaptation on blockchain like Monetha or Utrust?

[blazsqd]

Thanks for all the information you added here. This is very helpful. This is One of the best things I found in bitcointalk. Everyone should see this thread. This is very imformative and will save many beginners and some investors their money as we all know that a lot if ICO is just money for how they will steal money from investors. although some ICO is just nonsense and not a total scam. So for all the investors and beginners out there you should really research the project before investing in. ICO is risky if you do not really know what it is. Therefore I do not invest in ICO. Until now I have not found anything worth my time and money.But I guess if you find a good ICO, it can be a good thing to invest. It takes a lot of reading and researching.

[yourselfe99z9]

To be honest, after reading it again and again. Actually for making money right after the ICO there are MAYBE 1 or 2 ICO a month which will really give you a return after investing in them. I mean with the price going UP and not DOWN after the ICO!
Everything is traded nowadays Etherdelta and its crap no vol everything goes down!

[travwill]

When choosing a project, you should always spend enough time analyzing it, this is the main key to avoiding the scam of projects.

[Inspiron14]

When choosing a project, you should always spend enough time analyzing it, this is the main key to avoiding the scam of projects.

I've done that you say, I find it very difficult to get an ICO project that ended with success this year, because when the ICO project that I think will be successful but ended up with a scam after their sales success.

[Karina 3340]

Thank you for the information that something similar was looking for, here you have helped me a lot, especially all together laid out and very easily described

[vochau026]

Thankyou for this very important information you have been given, atleast i know what kind of ico i will choose if my rank will be moving up. I read it from the start to finish.  Lets up this information.

[kalincoolcute]

This is a very important thread, I got to learn new things I was not aware of before hand. It good of the op for bring this to the awareness of others. This is a real ico101, that need to being taken by investors

[Taylora]

Nice thread with clear explanation. I wish all panic sellers would read it before investing any money into it.
Thank you for your effort to educate people.

[Armadeus]

90% of ICOs are scams

Not 90%, just about 80%-)

[ven7net]

Thanks to the author for the information. I learned some points for the first time and consider this article to be very useful for studying. Of course, blockchain uses most scammers just for making money and without having the experience and special knowledge it is difficult to distinguish good ico from ico scams. I think that it takes more time to study such information, that it would be better to get into ico and not fall for the bait of scammers.

[princebridge7]

3)  “NEVER INVEST IN A BUSINESS THAT YOU DO NOT UNDERSTAND”

this is a word that must be understood in the business world because acryptocurrency is included in the category of digital asset business.

in all investments we have to know this point, don't be too rash to invest if you don't have the knowledge.

[supperperson86]

For me, first I looked at the project idea, there is no MVP? Customer? How long do they work in the project? Why do they need ICO? Second - clear information on future plans and common vision.