10 Signs you are investing in a bad ICO

[abake]

There are many ICOs. The phenomenon, that started three years ago, has become very accessible due to Ethereum based ERC-20 tokens. After you’ve learned how to identify a good ICO, in the following list you will find 10 red-lights for bad ICO investments.

1 – Team is inexperienced in the crypto field: No well-known crypto advisers, no famous venture capitalists investing. Watching interviews with the team’s key members can help answer if you trust them or not.

2 – “This is an existing company, with 3 years’ experience and 20 workers”: Is the company only here for the money? If the pivot is not necessary, then yes. If the company is already profitable in their field, why is the ICO needed, besides the “easy money?”

3 – Bonuses for everyone: The more funds are raised with a bonus – the more likely the price will be traded close to that discount level. The more serious case is when there is no vesting for the pre-sale investors.

4 – Hard cap is huge: other than a very few cases, an unlimited cap or a very-high cap means huge demand is needed to make up a secondary market (or exchanges). No one will be waiting to buy the tokens on the exchanges.

5 – No real need for the token: The whole ecosystem is built around the project’s token. If you can replace the token with Ethereum or Bitcoin and it still works, there is no real need for a token, hence no real need for an ICO.

6 – Aggressive marketing: when you see too many Facebook and Google Remarketing banners and ads, especially when they promise nice profits. That’s a red light.

7 – Community’s discussions are of low quality: Join the Telegram, ask questions, see how the developers respond to these questions. Same can be said about the ICO’s BitcoinTalk Announcement thread. A strong community creates high-value discussions.

8 – The public sale lasts too long: either the cap is too high, or the demand is too low, or both. Better for the project to raise 100% of 20M than 50% of 40M.

9 – No signs of a major exchange looking to list the ICO’s tokens: It won’t be said clearly because the legal team doesn’t let the ICO teams speak about exchanges, but this is a major part of the game. In 2016 Poloniex was the hottest exchange, 2017 was Bittrex’s year. Is Binance the exchange of 2018? Might be. What we do know, is that each new coin added there – benefits its initial ICO investors.

10 – Market cap is already huge: Assuming the company is selling only 10% of the circulating tokens for 100 Million USD, the token initial market cap is starting from 1 Billion, without making any 3x or 5x that will explode the market cap value before trading even started. This depends on the circulating supply. Be suspicious of the following: If there is no finite number of tokens, a small percentage is distributed to the public, no lock up on the tokens reserved for the team.

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[Guvn0r]

Very useful post, I  totally agree with no.5 and no.7,

It is a sure shitcoin if no one can find a real world use, they pump it a little so all the bots and newbs buy them and hope to make some easy money.

There are "Services" offered by people in this forum that will bump up the ANN thread and let bots make posts so that it ll imitate a discussion,  it is sad really. But, anyone with an IQ higher than 10 can understand that it is full of shit.

[Betwrong]

I agree with what is said in the list, especially with the parts about researching on the developers team and the community.

But I disagree with this part:

4 – Hard cap is huge: other than a very few cases, an unlimited cap or a very-high cap means huge demand is needed to make up a secondary market (or exchanges). No one will be waiting to buy the tokens on the exchanges.

Huge hard cap is not a red flag by itself. On the contrary, it could be a good sign if there's a good team of developers behind the project and when a big amount was raised already OR when you can see from exploring the community that it will be raised most likely.

Also, I slightly disagree with #9. I think it's possible to make a good profit with a token even if it wasn't listed on a major exchange at all. And also we cannot rule out the possibility of token being listed on a major exchange in the future when we make our research in early stages.

[abake]

I agree with what is said in the list, especially with the parts about researching on the developers team and the community.

But I disagree with this part:

4 – Hard cap is huge: other than a very few cases, an unlimited cap or a very-high cap means huge demand is needed to make up a secondary market (or exchanges). No one will be waiting to buy the tokens on the exchanges.

Huge hard cap is not a red flag by itself. On the contrary, it could be a good sign if there's a good team of developers behind the project and when a big amount was raised already OR when you can see from exploring the community that it will be raised most likely.

Also, I slightly disagree with #9. I think it's possible to make a good profit with a token even if it wasn't listed on a major exchange at all. And also we cannot rule out the possibility of token being listed on a major exchange in the future when we make our research in early stages.

Every opinion is absolutely accepted. The post is to learn and I think i’m Still adding tknknowlege through every replies here. Thanks Boss

[dumplingsandsushi]

Here are some more signs I can add (warning sign 11 - 15 if you will lol):

#11 - There is no technical footprint.  For example, there is nothing on github (or only smart contract info), public access to mvp or beta, backtesting results etc.

#12 - Their social media is highly regulated.  This means that they delete posts, ban members, etc. instead of addressing concerns or questions raised by the community.

#13 - They do not do any networking.  A legitimate startup should be putting a high emphasis on market legitimacy by attending crypto conferences, creating networking communities, and forming partnerships.

#14 - There is no open line of communication with devs.  A serious start up will have ways for the public to talk to and interact with devs as a means of creating trust amongst investors.

#15 - They are entering an already flooded market.  For example, the smart contract platform market is absolutely flooded now with big players (eth, neo, ada, eos) and literally hundreds of up and coming ones (neblio, polymath, etc).  Exchanges are also a flooded market as well as gaming.

When you really think about it, are icos even really that worth it?
I would say 90% of them drop below ico price immediately after being released or about a month afterwards.

[abake]

Here are some more signs I can add (warning sign 11 - 15 if you will lol):

#11 - There is no technical footprint.  For example, there is nothing on github (or only smart contract info), public access to mvp or beta, backtesting results etc.

#12 - Their social media is highly regulated.  This means that they delete posts, ban members, etc. instead of addressing concerns or questions raised by the community.

#13 - They do not do any networking.  A legitimate startup should be putting a high emphasis on market legitimacy by attending crypto conferences, creating networking communities, and forming partnerships.

#14 - There is no open line of communication with devs.  A serious start up will have ways for the public to talk to and interact with devs as a means of creating trust amongst investors.

#15 - They are entering an already flooded market.  For example, the smart contract platform market is absolutely flooded now with big players (eth, neo, ada, eos) and literally hundreds of up and coming ones (neblio, polymath, etc).  Exchanges are also a flooded market as well as gaming.

When you really think about it, are icos even really that worth it?
I would say 90% of them drop below ico price immediately after being released or about a month afterwards.

I absolutely commend your effor for adding up to these and i deny no one of the points you just added. Thanks for the update

[yazher]

But most of the sites are like professionaly created by a web designer, it is hard to distinguished weather you have join the wrong ICO or not. until i see this post thanks for the nice information.

[abake]

Very useful post, I  totally agree with no.5 and no.7,

It is a sure shitcoin if no one can find a real world use, they pump it a little so all the bots and newbs buy them and hope to make some easy money.

There are "Services" offered by people in this forum that will bump up the ANN thread and let bots make posts so that it ll imitate a discussion,  it is sad really. But, anyone with an IQ higher than 10 can understand that it is full of shit.

Dear Guvn0r, Firstly i appreciated you for the merits you issued on my post. Thank you very much on this.
Secondly and the major reason why i'm quoting you is i'm stocked in newbie rank despite for a while the fact that i have much posts and i want you to put me through, i don't really know if i'm doing anything which is wrong. I'm only preparing my account so i would be able to participate in Signature campaign since i heard about them. I would wait your reply. Thanks

[adekogbe]

This is a very helpful post, every point made is solid.
A lot of people think large social media groups relates to a widely acceptance of a projects but on the contrary it is mostly common with projects that give out bonuses inform of airdrops.
Also the marketing point is true, XYO created a $3mill budget for bounty and also promoted aggressively with google ads but only raised 25% of their hard cap.

[BetadiNe]

I'm new to this forum, thank you for the information you gave me, hope it helps me, because right now I do not know to look for good ICO.

[Black Coffee]

7 – Community’s discussions are of low quality: Join the Telegram, ask questions, see how the developers respond to these questions. Same can be said about the ICO’s BitcoinTalk Announcement thread. A strong community creates high-value discussions.

This is always I do when I am in a telegram group ico, sometimes there we can see how much knowledge and experience owned by the developer. Especially if they often become speakers in a crypto event, then in front of the public is the right thing to ask.

Perhaps the last thing I did was to discuss with the local community to decide on an investment option.

If I have merit, I will definitely give it for your writing, but thank you and I appreciate your shared knowledge.

[randomhumster]

9 – No signs of a major exchange looking to list the ICO’s tokens: It won’t be said clearly because the legal team doesn’t let the ICO teams speak about exchanges, but this is a major part of the game. In 2016 Poloniex was the hottest exchange, 2017 was Bittrex’s year. Is Binance the exchange of 2018? Might be. What we do know, is that each new coin added there – benefits its initial ICO investors.

"Many signs" can be even worse. If an ICO claims it will list on Binance you can automatically assume it is scam. It is illegal to comment on exchange listings. Normaly ICO team should respond to all questions something like "We are discussing listing with a major exchange. We will anounce it after X week after the end of ICO".

[adekogbe]

Very useful post, I  totally agree with no.5 and no.7,

It is a sure shitcoin if no one can find a real world use, they pump it a little so all the bots and newbs buy them and hope to make some easy money.

There are "Services" offered by people in this forum that will bump up the ANN thread and let bots make posts so that it ll imitate a discussion,  it is sad really. But, anyone with an IQ higher than 10 can understand that it is full of shit.

Dear Guvn0r, Firstly i appreciated you for the merits you issued on my post. Thank you very much on this.
Secondly and the major reason why i'm quoting you is i'm stocked in newbie rank despite for a while the fact that i have much posts and i want you to put me through, i don't really know if i'm doing anything which is wrong. I'm only preparing my account so i would be able to participate in Signature campaign since i heard about them. I would wait your reply. Thanks

The maximum you can rank in 2 weeks is 14 activities, if you get 14 activities into your first 2 weeks and another 14 in the next 2 weeks, you will have to wait till the next 2 weeks to get ranked up, I believe the rankings happens on Thursdays so watch your account not week Thursday or the Thursday after  that, your rank would automatically get a bump   

[HadadC]

I totally agree with your 10 signs.But , sometimes you cant understand bad ico at the end you get upset,sad.Good post.

[max fray]

#15 - They are entering an already flooded market.  For example, the smart contract platform market is absolutely flooded now with big players (eth, neo, ada, eos) and literally hundreds of up and coming ones (neblio, polymath, etc).  Exchanges are also a flooded market as well as gaming.

I absolutely agree with this particular statement.
When I analyze ICOs I firstly pay my attention to the problem the project addresses and whether the solution will be demanded by end users.
The most urgent problem to be solved nowadays is the scalability of blockchain (especially increasing the transactions-per-second rate) and there are several prospective projects that promise to increase this rate to like 1 million TPS.

[vorseb]

I agree with you. I think the biggest sign is the team. I always choose ICO with team which already well known. I'm totally agree with you. Can you make some list about 10 sign SCAM ICO. Maybe it will help. Thanks.

[Oniko]

I believe that if the project does not need to use a token or blockchain, then for the sake of the project's popularization, it is not necessary to apply it

For success, a professional team and a popular idea are important

[Pa1n]

These 10 material are very good for understanding something.But , sometimes you cant even understand bad ico or scam at the end.Always be careful and I think sometimes people need luck.

[goyal.dkg]

all the points are well explained , and yes all of these should be our priority to check while investing in any project .
we can ignore 2-3 points out of 10 if any project pass in others . now a days icos are just easy way to make money , reason is crypto is emerging market and those greedy people launch their own ico to earn some quick money without doing any scam directly .

[supergorg27]

Nice information for all of us, this could be helpful in selecting projects that we would like to invest in, so be careful always.