Weeding Out SCAM ICOs With 3 Questions

[icodaily]

Hello Everyone,

Quite a number of people feel unsafe or uncomfortable when choosing an ICO because they think that it might blow up in their faces. Is that ICO a scam or not? Sometimes it's hard to understand.

I wanted to share a simple framework that might work in order to weed out Scam ICOs from the good ones. 3 simples and straightforward questions that should shed light on the good guys.

WEEDING OUT BAD ICOS
Some say that 99% of ICO projects are fraud. One of the worst things about ICOs is the stigma. The ICO title can make good teams and projects appear shady, and we must put an end to this.

People can spend a whole day trying to figure out whether their selected ICO is a fraud or not. Some sort of a framework must be used to easily weed out the bad ICOs from the rest.

First of all, we must understand what Decentralized Networks, Tokens, and ICOs are. After we do our research, then we can distinguish trustworthy ICOs relatively easy.


Decentralized networks don’t have a central/main hub
These networks don’t have a central operator who could enforce certain rules. Also, the network is distributed all over the globe and doesn’t rely on one single entity.


Tokens keep networks alive
Tokens are virtual items that help people interact with the Networks. They are just like an entry for the database. The value of the token can increase if the network grows. Also, tokens are really useful when it comes to decentralized networks since there is no central operator you could contact in case you don’t understand something.


ICOs are the innovative business model for new organizations
An ICO can be described as a transaction between the organization and the future consumer. The consumers pay the organization to develop their business.

 
How to find a needle in a haystack (ICO Edition)?
First of all, you have to ask yourself the following questions:

1. Is the organization trying to build a Network or it’s just a regular company trying to make easy and unregulated money?

2. Would it be valuable to decentralize this network? Some things work really well in a centralized environment. Decentralization is still a technology in its early stages which is really expensive, and in some ways – troublesome. We shouldn’t decentralize everything we see.

3. Is the value of the product/service/solution the organization is trying to build related to the amount and % of tokens it’s asking for? (Example: asking for $x00 Million and x0% of tokens to “Build the first flying car” by copying Ethereum is questionable).

If you answer Yes to these questions, you have probably spotted an appropriate ICO with a legitimate business model. The rest is a traditional analysis of the team, market, product and etc.

I will certainly prepare more guides on how to choose a good ICO in the future. This post can be the first guideline for the ones that are to come.
Also, if you are interested in more ICO related news, pay a visit to today's blog post: https://icodaily.net/2017/10/09/weeding-out-bad-icos/

Cheers!

[Eugenius2]

Any results yet by following this strategy??

[TrumpD]

Not everybody takes their time to read. If the hype is good, scam or legit, investors will flood in. People will be people.

[peter0425]

You make things complicated for you. Do you think that investors will dig deeper to this technical aspects of ICO? I seriously doubt it. If there is a hype they will flock because they are really in for one thing, to make profit and then go on the next ICO, rinse and repeat. If they lose investment and scam, its there fault because they are greedy. And nobody will really know if an ICO can be a success, and even good reputable company that put up an ICO didn't even reach half of the target marketcap. So its really up to how a ICO can be market and advertised that will spell the doom or success of a project. Look at Tezos, more than 200M raise already, its just the presale. Investors are flocking because of the hype and not who are behind the project.

[icodaily]

It's really true about the hype trap. But in the end, the hype is the reason behind some ICOs failing and not meeting expectations. It looks like investors are flies and the ICOs are honey - they don't care and just want to suck that sweet, sugary profit. I still believe that weeding out bad ICOs is a good practice instead of blindly throwing your money at some questionable project.