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Author Topic: 3 kinds of ICOs — Protect yourself  (Read 13566 times)
jlp (OP)
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October 06, 2017, 07:55:53 PM
Last edit: October 31, 2017, 12:16:50 PM by jlp
Merited by CjMapope (5), Getmon (2), Andre# (2), cheezcarls (1), 8count (1)
 #1

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:

Quote
“…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:

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 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:

Quote
“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:

Quote
“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?
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October 06, 2017, 08:05:24 PM
 #2

nice thread. Investing into something without understanding it based on someone else suggestion is like gambling in casino.
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October 06, 2017, 08:14:51 PM
 #3

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.
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October 06, 2017, 08:19:13 PM
 #4

90% of ICOs are scams
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October 06, 2017, 08:21:58 PM
 #5

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.
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October 06, 2017, 08:31:40 PM
 #6

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 Cheesy...

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

Request / 26th September / 2022 APP-06-22-4587
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October 06, 2017, 08:38:05 PM
 #7

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!

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October 06, 2017, 08:45:09 PM
 #8

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.
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October 06, 2017, 08:45:30 PM
 #9

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 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.

Request / 26th September / 2022 APP-06-22-4587
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October 06, 2017, 09:05:15 PM
 #10

wonderful thread. ico101 for dummies:) i strongly recommend this suggestions to newbies, and non experienced users.
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October 06, 2017, 09:36:00 PM
 #11

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!

Calculate the chance of hitting a bitcoin block when solo mining at
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October 07, 2017, 08:34:15 PM
 #12

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:

Quote
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?
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October 07, 2017, 08:54:49 PM
 #13

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:

Quote
“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.
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October 07, 2017, 10:50:38 PM
 #14

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.
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October 07, 2017, 10:54:34 PM
 #15

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
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October 07, 2017, 11:12:11 PM
 #16

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
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October 07, 2017, 11:49:47 PM
 #17

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..
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October 07, 2017, 11:56:49 PM
 #18

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.

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October 08, 2017, 02:01:00 AM
 #19

Fantastic thread! Would you mind reviewing every single ICO so I don't have to do any work? Grin
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October 08, 2017, 03:22:04 AM
 #20

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.
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October 08, 2017, 03:59:35 AM
 #21

Thank you for the insights  Grin.

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●                                 facebook     slack     VK     twitter     telegram                                 ●
ICO | 1st of March     kickcity WHITEPAPER 
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October 08, 2017, 04:58:36 AM
 #22

Quote
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. Smiley

“Bad men need nothing more to compass their ends, than that good men should look on and do nothing.”
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October 08, 2017, 05:07:47 AM
 #23

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
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October 08, 2017, 05:37:02 AM
 #24

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:

Quote
“…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:

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 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:

Quote
“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:

Quote
“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?"
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October 08, 2017, 06:58:32 AM
 #25

Fantastic thread! Would you mind reviewing every single ICO so I don't have to do any work? Grin
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.
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October 08, 2017, 10:10:10 AM
 #26

This worth to read Smiley 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.
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October 08, 2017, 10:46:20 AM
 #27

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.
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October 08, 2017, 10:55:54 AM
 #28

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:

Quote
“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.

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October 08, 2017, 12:10:31 PM
 #29

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.

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October 08, 2017, 12:19:47 PM
 #30

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.
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October 08, 2017, 12:57:19 PM
 #31

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.
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October 08, 2017, 01:13:15 PM
 #32

thanks for the infomation mate. well detailed and will take your points into consideration. thanks again!
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October 08, 2017, 01:15:37 PM
 #33

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.
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October 08, 2017, 01:24:51 PM
 #34

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.
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October 09, 2017, 12:32:22 AM
 #35

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.
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October 09, 2017, 12:59:12 AM
 #36

this topic can provide good insight and knowledge about prevention of the negative effects of ICO. this can minimize losses for investors and others.
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October 09, 2017, 01:01:13 AM
 #37

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!
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October 09, 2017, 01:13:05 AM
 #38

@jlp thanks for your work.
I always enjoy reading your posts. you clearly know what you are talking about.
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October 09, 2017, 01:43:34 PM
 #39

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.
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October 09, 2017, 01:58:59 PM
Last edit: October 10, 2017, 02:44:04 PM by jlp
 #40

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.
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October 09, 2017, 02:24:42 PM
 #41

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
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October 09, 2017, 02:34:28 PM
 #42

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.
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October 09, 2017, 03:37:39 PM
 #43

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.
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October 09, 2017, 03:50:23 PM
 #44

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:

Quote
“…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:

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 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:

Quote
“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:

Quote
“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!
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October 09, 2017, 04:15:08 PM
 #45

excellent guide and must-read for all new investors (including myself). many thanks, jlp!
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October 09, 2017, 04:51:00 PM
Last edit: October 09, 2017, 05:07:32 PM by jlp
 #46

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?
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October 09, 2017, 04:58:10 PM
 #47

That's so nice, thanks for a good advice!
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October 09, 2017, 05:06:50 PM
 #48

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.


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.Better. Quick..

.Transparent....






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jlp (OP)
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October 09, 2017, 10:28:36 PM
Last edit: October 10, 2017, 06:20:10 PM by jlp
 #49

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.
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October 09, 2017, 11:38:32 PM
 #50

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.
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October 09, 2017, 11:43:44 PM
 #51

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!
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October 09, 2017, 11:45:45 PM
 #52

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!

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October 10, 2017, 01:24:28 AM
 #53

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:

Quote
“…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:

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 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:

Quote
“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:

Quote
“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.
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October 10, 2017, 05:46:06 AM
 #54

Thumbs up for you!

One of the best things I've ever read about ICOs. Thanks for the very informative thread.
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October 10, 2017, 09:23:40 AM
 #55

Folks, www.balanc3.net a new accounting platform prove value with new accounting Tech, claims this would be good for investors. Would that work?
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October 10, 2017, 12:21:51 PM
Last edit: October 10, 2017, 06:20:29 PM by jlp
 #56

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.
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October 10, 2017, 01:14:21 PM
Last edit: October 10, 2017, 02:41:56 PM by jlp
 #57

Electroneum is dishonest. Their website states:

Quote
“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:

Quote
“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:

Quote
““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:

Quote
“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?
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October 10, 2017, 01:45:11 PM
Last edit: October 10, 2017, 02:33:17 PM by edir_ruvall
 #58

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.
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October 10, 2017, 02:24:12 PM
Last edit: October 10, 2017, 02:56:22 PM by jlp
 #59

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:

Quote
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:

Quote
Gnosis raised $12.5 million and their website says:

Quote
“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:

Quote
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.
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October 10, 2017, 03:14:27 PM
 #60

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:

Quote
“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.
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October 10, 2017, 03:20:00 PM
 #61

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.

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October 10, 2017, 03:32:02 PM
 #62

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:

Quote
“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.

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October 10, 2017, 04:38:02 PM
 #63

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.
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October 10, 2017, 04:55:34 PM
 #64

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.
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October 10, 2017, 05:03:58 PM
 #65

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.
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October 10, 2017, 06:05:09 PM
Last edit: October 10, 2017, 06:19:47 PM by jlp
 #66

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:

Quote
“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.
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October 10, 2017, 07:32:10 PM
Last edit: October 10, 2017, 07:51:49 PM by jlp
 #67

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:

Quote
“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:

Quote
“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.
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October 10, 2017, 07:53:32 PM
 #68

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.

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October 10, 2017, 08:12:07 PM
 #69

This is an excellent analysis of ICOs and is definitely an eye opener for me. Thanks!!
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October 10, 2017, 08:13:27 PM
 #70

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.
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October 10, 2017, 08:27:19 PM
 #71

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.
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October 10, 2017, 08:33:29 PM
 #72

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.  Wink
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October 10, 2017, 10:16:55 PM
Last edit: October 10, 2017, 10:49:46 PM by jlp
 #73

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:

Quote
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

Quote
“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.
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October 10, 2017, 10:27:09 PM
 #74

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:

Quote
“…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:

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 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:

Quote
“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:

Quote
“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?

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October 10, 2017, 10:29:02 PM
 #75

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.
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October 10, 2017, 11:56:06 PM
 #76

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.

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October 11, 2017, 12:08:52 AM
 #77

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.
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October 11, 2017, 12:13:04 AM
 #78

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.
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October 11, 2017, 12:56:37 AM
 #79

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.
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October 11, 2017, 01:58:19 AM
 #80

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.

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October 11, 2017, 03:05:48 AM
 #81

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).  Grin

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

Cheers!
Chris

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October 11, 2017, 03:08:15 AM
 #82

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 Sad
Dont trust anything with Vitaliks face on it, thats one of my rules haha

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October 11, 2017, 03:14:14 AM
 #83

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?
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October 11, 2017, 03:46:40 AM
 #84

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...

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October 11, 2017, 03:54:04 AM
 #85

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
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October 11, 2017, 03:59:15 AM
 #86

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.

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October 11, 2017, 04:22:28 AM
 #87

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!

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October 11, 2017, 05:22:06 AM
 #88

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


https://bitcointalk.org/index.php?topic=2240518.0
https://bitcointalk.org/index.php?topic=1946065.0
https://bitcointalk.org/index.php?topic=2143279.0
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October 11, 2017, 09:20:46 AM
 #89

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:

Quote
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

Quote
“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?
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October 11, 2017, 09:39:25 AM
 #90

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.
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October 11, 2017, 12:46:53 PM
 #91

Fantastic thread! Would you mind reviewing every single ICO so I don't have to do any work? Grin
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.
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October 11, 2017, 01:48:49 PM
 #92

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:

Quote
“…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:

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 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:

Quote
“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:

Quote
“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.

 
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October 11, 2017, 02:57:18 PM
 #93

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.
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October 11, 2017, 03:23:15 PM
 #94

Nice thread to read, thanks for sharing!
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October 11, 2017, 10:50:15 PM
 #95

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.

Huh  I think you need to add some punctuation.

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October 12, 2017, 08:19:23 AM
 #96

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.

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October 12, 2017, 09:10:00 AM
 #97

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.
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October 12, 2017, 02:58:14 PM
 #98

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:

Quote
“…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:

Quote
“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:

Quote
“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.
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October 12, 2017, 03:40:46 PM
 #99

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.
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October 12, 2017, 03:43:38 PM
 #100

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

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October 12, 2017, 11:47:26 PM
 #101

Great thread. Definitely tons of very important information here for everyone. Thank you for posting.
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October 13, 2017, 12:25:41 AM
 #102

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.

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October 13, 2017, 01:13:40 AM
 #103

Amazing thread!!   A man can write the comment with the attitude of being serious and conscientious.  Give the thumbs-up!!
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October 13, 2017, 03:31:04 AM
 #104

Great thread! Most of the ICOs that I see don't even have their smart contracts developed. One thing that is also valuable is the source code... I do think that the community makes an important role in the project's success, so if the project isn't open source how would the community collaborate with code blocks and ideas? Many people are working with decentralization but bringing centralized projects. In my opinion, it is not fair to the backers.

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October 13, 2017, 09:45:22 AM
 #105

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!
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October 13, 2017, 09:48:16 AM
 #106

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

Cheers
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October 13, 2017, 09:52:56 AM
 #107

Very nice Article! Thank you

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October 13, 2017, 12:12:24 PM
 #108

Very usefull stuff thanks.
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October 13, 2017, 02:27:28 PM
 #109

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.
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October 13, 2017, 03:03:13 PM
 #110

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.

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October 13, 2017, 03:23:07 PM
 #111

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.
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October 13, 2017, 03:33:36 PM
 #112

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.
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October 13, 2017, 04:07:04 PM
 #113

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! 
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October 13, 2017, 04:17:24 PM
 #114

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.
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October 13, 2017, 04:31:26 PM
 #115

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
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October 13, 2017, 04:43:24 PM
 #116

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.
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October 13, 2017, 06:19:30 PM
 #117

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
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October 13, 2017, 06:26:57 PM
 #118

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.
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October 13, 2017, 09:05:34 PM
Last edit: October 13, 2017, 11:33:58 PM by jlp
 #119

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.
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October 13, 2017, 09:33:18 PM
 #120

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  Tongue
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October 13, 2017, 10:43:06 PM
 #121

Really nice thread, very informative. Thanks for sharing with us!!!
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October 13, 2017, 10:57:36 PM
 #122

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:

Quote
“…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:

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 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:

Quote
“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:

Quote
“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!
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October 13, 2017, 11:03:23 PM
 #123

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  Tongue

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.
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October 13, 2017, 11:09:46 PM
 #124

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.
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October 13, 2017, 11:33:02 PM
 #125

great input, thanks for providing these details.

1. Invest in an existing product
2. Invest in a team that has a proven record!
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October 14, 2017, 12:54:36 AM
 #126

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

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October 14, 2017, 04:51:19 AM
 #127

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.

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October 14, 2017, 08:54:59 AM
 #128

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.
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October 14, 2017, 09:05:43 AM
 #129

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.
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October 14, 2017, 09:05:56 AM
 #130

Thanks
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October 14, 2017, 11:12:43 AM
 #131

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
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October 14, 2017, 11:21:33 AM
 #132

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!

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October 14, 2017, 11:25:47 AM
 #133

Very nice and instructive post, thank you!
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October 14, 2017, 11:48:45 AM
 #134

Thanks for this, it was a very good read and highlights some very important issues.
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October 14, 2017, 11:54:15 AM
 #135

thanks for the info Smiley Smiley
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October 14, 2017, 01:15:41 PM
 #136

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.

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October 14, 2017, 02:28:02 PM
 #137

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.

CHANGE—First Global Crypto Bank | ICO |Discussion[/url
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October 14, 2017, 09:41:11 PM
 #138

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.

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October 15, 2017, 06:05:35 PM
Last edit: October 15, 2017, 07:08:13 PM by jlp
 #139

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

Quote
“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:

Quote
“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:

Quote
“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:

Quote
“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.
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October 16, 2017, 07:02:23 AM
 #140

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.
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October 16, 2017, 08:13:58 AM
 #141

Thank you for this post!

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October 16, 2017, 12:14:09 PM
 #142

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

Quote
"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."

Quote
"...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.
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October 16, 2017, 12:29:30 PM
 #143

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!  Grin

Cheers,

Henry
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October 16, 2017, 12:52:24 PM
 #144

"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.
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October 16, 2017, 01:16:44 PM
Last edit: October 16, 2017, 01:28:30 PM by CH-Henry
 #145

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.
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October 16, 2017, 01:23:37 PM
 #146

Do your own homework - read reviews.
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October 16, 2017, 03:42:26 PM
Last edit: October 16, 2017, 06:13:52 PM by jlp
 #147

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.
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October 16, 2017, 05:56:42 PM
 #148

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
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October 16, 2017, 08:48:14 PM
 #149

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.
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October 16, 2017, 09:14:29 PM
 #150

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.
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October 16, 2017, 09:15:49 PM
 #151

saddyl that there are to much scam -.-
 Angry Angry Angry Angry Angry

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October 16, 2017, 09:39:07 PM
 #152

you can also add:

how devs answers to technical questions and criticism?

how many percents of total tokens will devs hold?

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October 16, 2017, 10:37:59 PM
 #153

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 



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strategikcrypto
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October 16, 2017, 10:56:19 PM
 #154

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.
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October 16, 2017, 11:35:11 PM
 #155

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...

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October 17, 2017, 01:10:38 AM
 #156

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.
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October 17, 2017, 02:23:27 AM
 #157

Nice thread you created. What can you say of involving the blockchain in e-sports community. Does it have potential?
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October 17, 2017, 02:40:44 AM
 #158

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.

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October 17, 2017, 02:46:43 AM
 #159

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!

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October 17, 2017, 02:48:27 AM
 #160

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.

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October 17, 2017, 02:49:17 AM
 #161

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).
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October 17, 2017, 03:13:56 AM
 #162

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.

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October 17, 2017, 10:50:39 AM
 #163

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.
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October 17, 2017, 11:00:37 AM
 #164


Thank you for sharing this story, it was very useful for me.
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October 17, 2017, 01:26:40 PM
Last edit: October 29, 2017, 01:15:49 AM by jlp
 #165

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:

Quote
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.
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October 17, 2017, 01:37:34 PM
 #166

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.

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October 17, 2017, 02:08:21 PM
 #167

Thanks for the write-up!
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October 17, 2017, 02:11:28 PM
 #168

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.