With a series of threads I want to draw more attention to all the scams in the crypto-scene to better protect all attentive newbies from fraud.
At the point of writing this, there are 355 failed coins on coinopsy's dead coin list.. There are other sources which claim that around 80% of ICO's are scams.Imagine investing into a project you believe is going to break through. Your friend recommended it and you put a big sum of money in it, hoping for big returns. A month later, you check in on the project, and the site is down. There is no trace of the project, the developers or your money. This is when you realise: you have been scammed.Classic ways of fundraising are tough, banks take large amounts of interest, investment firms want shares of the company and crowd investors are hard to find in masses. ICO's are a way easier way of raising cash, as they bypass restrictions and regulations for fundraising, that have been implemented by countries and banks over decades to prevent exactly what is happening now from happening: people getting shamelessly scammed out of their money. All you need is a pretty website, and a few guys that know their way around in marketing and a technical knowledge that surpasses the knowledge of the most investors, and that's it. When they have the money they want, the shut everything down and enjoy internet anonymity again.
The results are bad: scammed people will complain, and the Bitcoin reputation is going to take the hit. Then Bitcoin will get tougher regulations (or get banned), even though the scam has nothing to do with Bitcoin, it has to do with the greed of people, and people not being careful enough. Bitcoin only was the medium.
If you still want to invest in ICO's there is no guarantee for your money but here are a few ideas to prevent this situations:
1. Check their team, don't trust an inexperienced team.
Check if team members are fake with Imagesearches.2. Check the use. If their is no function behind the coin, there really is no need for it.
3. Check their community, their support and everything behind the frontpage.
4. Check to see if the coin might make it to a large exchange.
5. Check how long the ICOs tie up your investment.
6. Check with your friends that are more technically experienced in the cryptoscene, and talk them through the ICO and ask for their advice.
But here is the thing, even a completely professional page with awesome support and a great use is still no guarantee for a big return on your investment. You can compare it with real world businesses: 95% of businesses go broke in the first year, 99% do not survive the first 5 years. In the best case, you put your money in an honest company, that has a 5% chance of surviving. In the worst case, you send your money to nigerian prince who will disappear with your money.Here is my overview thread about all crypto-related scams out there.Have you had experienced anything around fake ICO's? Are there any points I should add or change? And most important, how can we protect new users from investing in bad ICO's if they do not inform themselves enough?
