3 kinds of ICOs — Protect yourself

[dobrescu.mihnea]

Oh, my bad jlp, ignore my previous post. I just saw that you already mentioned your view on ARToken and yes, the scaling and size problem does make a lot of sense.

[slaman29]

Great post, jlp. Of course, I feel that it is a minor "shame" that some legitimate ICOs would fall under your category as #2 or even an outright scam. I definitely agree that some of the names you've mentioned, viewed by many as legitimate are just smoke and mirrors. They spend hundreds of thousands of dollars on great videos and promotional material that they had almost nothing to do with creating.

But this is also the problem that is self-creating. People see that without the marketing hype and great videos, they will struggle to compete for attention and space. I know there are many great projects out there that don't get the attention they deserve because everyone is caught up with the next big thing. And these crypto multi-billionaires like Vitalik are party to this, they know they get their appearance fees or "advisor fees" upfront.

Look at Humaniq for a prime example. Pumped by Vitalik, and now look at where they are going. Absolutely clueless with no product to use in the real world except all their betas and trials.

[josephinerosdy]

it's the first thread I read carefully. your statment is very clear and easy to understand and makes me think twice before dedicated to join an ICO.

[Casdinyard]

OP nailed it. And this thread should be sticky on top so many can read this informative thread. This can raise awareness to all the people especially to those who are planning to make an ICO that aim to fool people so they can know that their evil secrets are somehow expose. This is also serves as a wake up call for all of us not to be easily deceive by fancy thread and lucrative bounty as we all need is a more realistic and timely projects. People really change when money talks so let's us all be vigilant to this.

[Willitivity]

Great wrote up, thanks for the heads up. The Crypto space is filled with a lot of unnecessary projects that have no real life evaluation.
Some are just try to rip people apart. It's just all about being safe.

[Crumple Cat]

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

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

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

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

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

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

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

The only people who know and will tell the truth are those who have to part with their money and will get enough value in return to justify it. Anyone who has studied Marketing knows this.

Probably you are confused in the concept of the project or didn't understand it correctly. That's it to such people are invited to participate in the co-creation, development, promotion of projects that they like, consumers of which they can also become. And for this people will receive tokens of these projects. Everything is very good. Someone invests money, someone invests time and ability. And someone and money and time and ability

[MikuMiku]

thanks for this information. I think I will pay attention before I invest some money on ICOs.

[crypto-curious]

This is great to share with beginners that keep asking this question of legitimacy and investment. Thank you for putting this together. 

[hashtag101]

To be honest, after reading it again and again. Actually for making money right after the ICO there are MAYBE 1 or 2 ICO a month which will really give you a return after investing in them. I mean with the price going UP and not DOWN after the ICO!

Everything is traded nowadays Etherdelta and its crap no vol everything goes down!

I agree in your statement, If you will just focus on their coins value then probably it might really have a hard time before it will increase. The market is based on supply and demand so you cannot say that it will really increase after the end of the ico.

However, the potetial project has the whale have invested always increases, but when the price of the token increase, no one knows that, unless the mover the price. Because the whale can't take loss after used a lot of money to pump the price of token has potential and hype. Few years still normal with them because they are rich.

[dobrescu.mihnea]

Another type of ICO I was wondering about with regards to your view on it would be digital advertising ICOs like Papyrus for example. Considering social media and digital advertising are growing exponentially in this age, do you think Altcoins would have any potential to penetrate this space?

Papyrus is probably the 3rd or 4th project I’ve seen related to a new token being able to control advertising.

They cite a lot of business problems, which seem legitimate. But I don’t see how they can solve them.

Papyrus states the following as a Papyrus Advantage (solution to problem):

Controlled advertising
Users are able to create precise policies to control what ads they see and what data they share with advertisers.

How?

The majority of advertising that you see is from Google, Youtube (which is Google), Facebook and Twitter. You can’t control the advertising that they show you. When you search on Google, it shows ads on top of the search results. How do you think Papyrus is going to let you control that? Are they going to hack into Google’s servers? When you watch Youtube, it shows commercials at the beginning of the video. How is Papyrus going to let you control Youtube? When Facebook shows ads in the right column, how are you going to stop them? Is Papyrus going to use a blockchain to stop these ads? How?

The biggest source of revenue for Google is AdWords and Google is the biggest advertising middleman on the internet. Therefore, Google AdWords is the biggest form of advertising on the internet, and it runs on Google's sites. How is Papyrus going to interfere with this?

For all of the other sites on the internet that have ads, most of them use Google AdSense. They put Google’s code into their website, select some parameters and let Google serve the ads into their websites. Then Google charges the advertiser every time a visitor clicks on that ad, and pays a percentage of that to the site owner. How is Papyrus going to interfere with this?

Papyrus has all of these fancy diagrams, but no mention of Google Adwords or AdSense.

The people who controls the advertising are the people who control the traffic. How will Papyrus convince these people to let them take over control?

I didn’t read all of their information, so maybe I missed it. Maybe someone can explain to me how a blockchain is going to enable Papyrus take control.

Hey jlp, what do you think about Playkey ICO? It seems quite promising.

[Legendari]

Good thread, thank you very much. Now I hardly go to Kapkan fraudulent ICO.

[dobrescu.mihnea]

Another type of ICO I was wondering about with regards to your view on it would be digital advertising ICOs like Papyrus for example. Considering social media and digital advertising are growing exponentially in this age, do you think Altcoins would have any potential to penetrate this space?

Papyrus is probably the 3rd or 4th project I’ve seen related to a new token being able to control advertising.

They cite a lot of business problems, which seem legitimate. But I don’t see how they can solve them.

Papyrus states the following as a Papyrus Advantage (solution to problem):

Controlled advertising
Users are able to create precise policies to control what ads they see and what data they share with advertisers.

How?

The majority of advertising that you see is from Google, Youtube (which is Google), Facebook and Twitter. You can’t control the advertising that they show you. When you search on Google, it shows ads on top of the search results. How do you think Papyrus is going to let you control that? Are they going to hack into Google’s servers? When you watch Youtube, it shows commercials at the beginning of the video. How is Papyrus going to let you control Youtube? When Facebook shows ads in the right column, how are you going to stop them? Is Papyrus going to use a blockchain to stop these ads? How?

The biggest source of revenue for Google is AdWords and Google is the biggest advertising middleman on the internet. Therefore, Google AdWords is the biggest form of advertising on the internet, and it runs on Google's sites. How is Papyrus going to interfere with this?

For all of the other sites on the internet that have ads, most of them use Google AdSense. They put Google’s code into their website, select some parameters and let Google serve the ads into their websites. Then Google charges the advertiser every time a visitor clicks on that ad, and pays a percentage of that to the site owner. How is Papyrus going to interfere with this?

Papyrus has all of these fancy diagrams, but no mention of Google Adwords or AdSense.

The people who controls the advertising are the people who control the traffic. How will Papyrus convince these people to let them take over control?

I didn’t read all of their information, so maybe I missed it. Maybe someone can explain to me how a blockchain is going to enable Papyrus take control.

Hey jlp, what do you think about Playkey ICO? It seems quite promising.

Also, if you have time, I'd love to hear about your thoughts on Cryder ICO, a sort of Uber equivalent in blockchain.

[Open4lies]

OP nailed it. And this thread should be sticky on top so many can read this informative thread. This can raise awareness to all the people especially to those who are planning to make an ICO that aim to fool people so they can know that their evil secrets are somehow expose. This is also serves as a wake up call for all of us not to be easily deceive by fancy thread and lucrative bounty as we all need is a more realistic and timely projects. People really change when money talks so let's us all be vigilant to this.

You can create a poll or voting for this thread to Moderator or request in Meta thread. I think the moderator of this forum will not ignore a qualify thread like this. To be honest, if you are an investor or newbie want to invest in the ICOs market, these words can helps you know the risk and the method can help you protect yourseft, especially it is very useful for newbie.

[ApocalypseNow]

This is really an informative thread but to be honest people will still rely on other reviews and ratings because of two reasons. First is they don't have that much knowledge to filter these things even if they want to because it's complicated for them. Second, they are too lazy to do it.

[jlp]

Hey jlp, what do you think about Playkey ICO? It seems quite promising.

In regards to PlayKey, they seem to be much further along than most ICOs. They not only have a working product, but they had it for a few years and it looks impressive, though I didn’t try it. Their business is understandable.

If they got 2.5M users in 2016, I do not understand why they need an ICO or another cryptocurrency. Why don’t they continue growing their customer base? If their market is truly as big as they say, then they should be able to make more money by growing their revenue instead of fund-raising through an ICO.

Why don’t they show any revenue from the 2.5M users? Does this mean that they really don’t have 2.5M users, or that their free service does not provide enough value to warrant a fee?

Their website says that the game industry is $109 billion. This is misleading. This would include games for infants and Zynga Poker. Their source (https://newzoo.com/insights/articles/the-global-games-market-will-reach-108-9-billion-in-2017-with-mobile-taking-42/) shows that most of this is not relevant to PlayKey. I would assume that it is the $24.8 billion of “BOXED/DOWNLOADED PC GAMES” that is relevant, and NewZoo says that this is dropping.

Their white paper claims that 1.5 billion people play PC games. If we assume that PC games are played mostly by males, then this means that close to half of all the males in the world play PC games. Is this believable? Most infants, middle-aged men and seniors do not play PC games. I would think that it’s mainly teenage males up to men in their 30’s that play these games. A significant part of the world do not have PCs. 4 billion people do not have internet access.

Their video tells you to “invest” in their token. This means that they are pushing a security, which is illegal in most of the Western world unless you restrict your investors to accredited investors and comply with KYC (Know Your Client) and AML (Anti-Money Laundering) requirements.

Because the team is based in Russia, they are immune from European and North American laws because Russia does not have extradition agreements with them. Therefore, the team doesn’t need to worry about pesky European and North American laws. The team can say and claim anything they want. They can lie and worry much less than other teams about repercussions. If they defraud you, there is little that your lawyers or government can do to help you. An American law firm has filed a class action lawsuit against Tezos (based in Europe) to get money refunded to American investors. Your law firm won’t be able to do that against PlayKey. You won’t be able to do anything.

The risk with any ICO that is selling a security is that if the regulators crack down on these, the token will crash. Teams that are in Russia may be immune from punishment from regulators, but you will still suffer if the token crashes.

Their website says that they raised 16 039 ETH from 1048 backers so far. When I looked at their smart contract (https://etherscan.io/address/0x26d08b9d227933a85e855656dc46ab889e183c88), it says that it received 2,404 Ethers, not 16,039 Ethers. Maybe they withdrew some Ethers from the smart contract, so I went through all 25 pages of the 1242 transactions and none of them were withdrawals. So, are they using a second smart contract, or are they lying about the amount of ETH raised so far in order to give you the impression that they are more popular than they really are? I would tend to think the latter. Since they are immune from European and North American securities laws, they will not get punished for fraud by them, so they can lie a lot more.

I think many ICOs lie about the amount that they’ve raised.

This makes me question the validity of PlayKey’s other numbers:

2 500 000 games
120 servers
$7 000 000 raised from VCs and business angels

It would seem intuitive that there should be a sizeable market for this business. The risks that you are taking are:

• Will regulators ban the token in the future?
• Their numbers are not reliable.
• If they defraud you, you have no recourse.

[amalgamated]

Excellent post, jlp. Thank you.

Would be interesting to reach out to PlayKey and give them an opportunity to weigh in.

[dobrescu.mihnea]

Hey jlp, what do you think about Playkey ICO? It seems quite promising.

In regards to PlayKey, they seem to be much further along than most ICOs. They not only have a working product, but they had it for a few years and it looks impressive, though I didn’t try it. Their business is understandable.

If they got 2.5M users in 2016, I do not understand why they need an ICO or another cryptocurrency. Why don’t they continue growing their customer base? If their market is truly as big as they say, then they should be able to make more money by growing their revenue instead of fund-raising through an ICO.

Why don’t they show any revenue from the 2.5M users? Does this mean that they really don’t have 2.5M users, or that their free service does not provide enough value to warrant a fee?

Their website says that the game industry is $109 billion. This is misleading. This would include games for infants and Zynga Poker. Their source (https://newzoo.com/insights/articles/the-global-games-market-will-reach-108-9-billion-in-2017-with-mobile-taking-42/) shows that most of this is not relevant to PlayKey. I would assume that it is the $24.8 billion of “BOXED/DOWNLOADED PC GAMES” that is relevant, and NewZoo says that this is dropping.

Their white paper claims that 1.5 billion people play PC games. If we assume that PC games are played mostly by males, then this means that close to half of all the males in the world play PC games. Is this believable? Most infants, middle-aged men and seniors do not play PC games. I would think that it’s mainly teenage males up to men in their 30’s that play these games. A significant part of the world do not have PCs. 4 billion people do not have internet access.

Their video tells you to “invest” in their token. This means that they are pushing a security, which is illegal in most of the Western world unless you restrict your investors to accredited investors and comply with KYC (Know Your Client) and AML (Anti-Money Laundering) requirements.

Because the team is based in Russia, they are immune from European and North American laws because Russia does not have extradition agreements with them. Therefore, the team doesn’t need to worry about pesky European and North American laws. The team can say and claim anything they want. They can lie and worry much less than other teams about repercussions. If they defraud you, there is little that your lawyers or government can do to help you. An American law firm has filed a class action lawsuit against Tezos (based in Europe) to get money refunded to American investors. Your law firm won’t be able to do that against PlayKey. You won’t be able to do anything.

The risk with any ICO that is selling a security is that if the regulators crack down on these, the token will crash. Teams that are in Russia may be immune from punishment from regulators, but you will still suffer if the token crashes.

Their website says that they raised 16 039 ETH from 1048 backers so far. When I looked at their smart contract (https://etherscan.io/address/0x26d08b9d227933a85e855656dc46ab889e183c88), it says that it received 2,404 Ethers, not 16,039 Ethers. Maybe they withdrew some Ethers from the smart contract, so I went through all 25 pages of the 1242 transactions and none of them were withdrawals. So, are they using a second smart contract, or are they lying about the amount of ETH raised so far in order to give you the impression that they are more popular than they really are? I would tend to think the latter. Since they are immune from European and North American securities laws, they will not get punished for fraud by them, so they can lie a lot more.

I think many ICOs lie about the amount that they’ve raised.

This makes me question the validity of PlayKey’s other numbers:

2 500 000 games
120 servers
$7 000 000 raised from VCs and business angels

It would seem intuitive that there should be a sizeable market for this business. The risks that you are taking are:

• Will regulators ban the token in the future?
• Their numbers are not reliable.
• If they defraud you, you have no recourse.

Great input, thanks a lot. If and when you have time, I'd also love to hear your thoughts on Gizer. Its ICO launches through KYC, on SAFT, the same platform which launches tZero in a few days. Gizer is similar to Enjin Coin, and they also have a working product and promising ideas. Looking forward to your view.

[cryptomema]

nice thread bro,very informative.All we need to do is search search and search.

[CryptosapienZA]

Thank you for taking time to compile this. I have to say, I do agree with you 100%. With all the scamming going around unchecked, one can't be too careful. I think its interesting that you mention that people need to look out for icos in certain countries. Personally if the ICO is based in Eastern Europe and India, my antenna are raised. If the whole team is from any of those countries, I bounce :-/

[mx667]

Thank you for taking time to compile this. I have to say, I do agree with you 100%. With all the scamming going around unchecked, one can't be too careful. I think its interesting that you mention that people need to look out for icos in certain countries. Personally if the ICO is based in Eastern Europe and India, my antenna are raised. If the whole team is from any of those countries, I bounce :-/

Hahaha, I never join or invest to an ICO. I also always doubt with ICO. All I know, all forms of investment that is on the internet is just a lie. Whatever it is, I guess it's just another form of HYIP and I do not like it. The only legit and sure investment is Bitcoin. We just buy the currency and wait until the price goes up, as easy and simple as that. But wait, do not get me wrong first.

I'm not saying that all the ICO's are fake. I've even got the news that there are people who can profit 10-fold from ICO in no time. That's a good thing because to be able to profit 10-fold, we have to wait a long time if we invest in Bitcoin.