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Author Topic: 3 kinds of ICOs — Protect yourself  (Read 13566 times)
Mr.Nc.Guy
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October 08, 2017, 03:59:35 AM
 #21

Thank you for the insights  Grin.

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October 08, 2017, 04:58:36 AM
 #22

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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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