How to Identify Cryptocurrency and ICO Scams!

[idirben]

https://i.imgur.com/5VKXejM.png

Dozens of new cryptocurrencies launch each month, and alongside these new tokens and coins comes a series of initial coin offerings (ICOs). The appetite among a broad pool of investors for these opportunities has grown, even in spite of the fact that cryptocurrencies have been battered in 2018. All of these factors combine to entice scammers. After all, if investors have proven that they are willing to throw money toward a highly speculative cryptocurrency, they seem to be equally likely to invest in fraudulent tokens or ICOs.

For the cryptocurrency investor looking to make the most of the host of new investment opportunities while remaining safe from fraudulent ICOs and sketchy coins and tokens, the prospect can be daunting. Blockchain and cryptocurrency technology is developing at a rapid pace, and even experienced investors may find it hard to keep up with the terminology. While there's no guarantee that any cryptocurrency or blockchain-related startup will be legitimate or successful, the steps outlined below can help you to be as sure as possible that you're not falling for a scam.

Get to Know the Team
Perhaps the single most important success factor for any ICO or cryptocurrency is the developers and administrative team behind the project. The cryptocurrency space is dominated by major names, with superstar developers like Ethereum founder Vitalik Buterin capable of making or breaking new projects simply by having their names listed on a development team. For that reason, it's increasingly common for scammers to invent fake founders and biographies for their projects.

The best protection against this fraudulent tactic is to thoroughly research the individual team members of a project before you invest. It's a bad sign, for example, if you're unable to find any information about a particular developer or founder on LinkedIn or other social media outlets. Even if profiles do exist, check to see if their activity seems to match up with the number of followers and likes they accrue. Individuals who rarely engage with their followers and yet have thousands of fans may not be real.

Beyond determining whether the development team is real, it's important to make an effort to see if their qualifications measure up. Do the founders have the experience they claim to have? Is it relevant to the current project at hand?

Pore Over the Whitepaper
A cryptocurrency or ICO whitepaper is the foundational document for that project. The whitepaper should lay out the background, goals, strategy, concerns, and timeline for implementation for any blockchain-related project. Whitepapers can be incredibly revealing: companies that have a flashy website may reveal they lack a fundamentally sound concept. On the other hand, a company with a website containing spelling errors may have a whitepaper that indicates a rock-solid concept and a carefully conceived implementation plan.

The first step toward analyzing a whitepaper is to read it very thoroughly. Check to see if the whitepaper has complementary resources as well, including financial models, legal concerns, SWOT analysis, and a roadmap for implementation.

Companies that don't offer whitepapers should be avoided at all costs. Still, it's possible for a fraudulent company to put forward a convincing whitepaper, as was the case with PlexCoin; this company managed to raise over $15 million before the U.S Securities and Exchange Commission (SEC) stepped in to shut it down. A whitepaper should answer all of the questions a potential investor might have about what sets this particular project apart from its competitors, how it aims to be successful, and the measures it will take to achieve its goals.

Look to the Token Sale
Any ICO will depend upon a token or currency system in order to facilitate the crowdfunding process. Legitimate companies and endeavors make the system itself and the progress of the token sale easy for potential investors to view. Look for the token sale figures as the ICO is ongoing. Better yet, watch the token sale over time to see how it is progressing. If a company makes it difficult for anyone to chart the progress of its ICO, this is a major red flag. Some scam ICOs will hide their token sale progress under the pretense of individual contribution addresses; this prevents potential investors from seeing exactly how much has been raised and how much time remains in the sale. In some cases, this might be an effort to generate a sense of urgency among potential investors, even if there isn't evidence of a successful sale going on at the same time.

How Feasible is the Project?
While it may seem obvious, ICOs and cryptocurrencies with the greatest chances for success are those that have the fundamental structure to outlast their competitors. Many launches, even highly-publicized ones, have sputtered after initial interest faded. Your best chance of a successful investment relies on a company having an achievable, feasible set of aims. The company should have a compelling concept for the time being, but it also must be able to carry that concept over into execution over the short and long terms alike.

Going along with the question of feasibility is the issue of transparency. Companies that have outstanding concepts and models are more likely than others to want to be as transparent as possible with the broader community. Look for companies that aim to keep potential investors up to date with regular, detailed progress reports on a company website or on social media. It's also useful to look if a company has a timeline for what has taken place in the development process as well.

Exercise Caution
Even the most successful ICOs and cryptocurrencies are slammed for being fueled by speculative investing. The idea of getting rich quick on an investment in a hot new project is tempting enough to draw seasoned investors and beginners into risky areas. Keep an eye toward caution as you look for new investment opportunities in the ICO and cryptocurrency spaces. Be aware that projects sounding too good to be true likely are. Spend time scrutinizing every detail, and assume that the absence of a piece of crucial information may be an attempt to hide an unsound model or concept. Look for outside sources to verify the legitimacy of any project before making an investment, and always ask questions that you can't already find the answers to. The cryptocurrency and ICO spaces offer tremendous opportunity for investors who have done their homework and are able to make sound investment decisions. They also feature pitfalls which can lead to large amounts of money being lost due to scams, frauds or even legitimate businesses which are simply poorly designed and unlikely to succeed.

[rapsonic1337]

Gather some informative information regarding with there project and have some background study with the team and also read the white paper if they have.

[Mohamme]

I think you seem to be missing one of the most important issues: open source，Too much attention should be paid to the open source code of GTIHUB, because the open source code can judge the quality of a project.

[duongdaiduong]

Thanks for your sharing. This article is very useful for me and those interested in ICO Scam.

[voltesbazooka]

I think you seem to be missing one of the most important issues: open source，Too much attention should be paid to the open source code of GTIHUB, because the open source code can judge the quality of a project.

How does an open source code affect the quality of the legitimacy of a cryptocurrency? Open source codes are free stuff correct? Just need to know because I'm usually just talking to the team,doing some background check and reading the whitepaper in order to determine if its scam or not

[Ilegendph]

Honestly, Government should take steps towards these scams. I suggest things like regulation on ICOs and to make sure that every ICO in their country is compliant to their law when it regards to cryptocurrency. An international that countries should agreed upon so that people around the world could enjoy cryptocurrency more and to avoid these projects. But as I see it, government bans and its just silly because they didn't consider those small people and freelancer who uses bitcoin to receive their payment for services rendered.

[Andruha1993]

This is certainly good information for beginners. But still, unfortunately, if you follow all these tips, then there is no guarantee, because the ICO project can still be a scam.

[ginobitcoiner]

information that is very useful for us all as a bounty hunter and for investors so we are more selective in choosing the ICO project that we will follow. analysis is our shared responsibility. ranging from bounty managers, investors and bounty hunters. so that we all escape from fraudulent projects

[phreakk]

Nice, but next time you could try sourcing your information... That could give you some more reliability and the original authors some credit.

Here is the link to its likely source for anyone interested: https://www.investopedia.com/tech/how-identify-cryptocurrency-and-ico-scams/

[jwplayer0]

To recognize a bad project, I look at the team, what kind of experience the team members have, how many people are on the team.

[cunese]

80% of the encrypted currency is worthless in the end, and at present, it only has the value of hype. 90% of ico is a fraud, which is to swindle investors' funds.

[demenBTC]

Honestly, Government should take steps towards these scams. I suggest things like regulation on ICOs and to make sure that every ICO in their country is compliant to their law when it regards to cryptocurrency. An international that countries should agreed upon so that people around the world could enjoy cryptocurrency more and to avoid these projects. But as I see it, government bans and its just silly because they didn't consider those small people and freelancer who uses bitcoin to receive their payment for services rendered.

it is already done in every ico, obeying government regulations in ico is required by doing KYC on every investor, and the rule is valid for the reason of avoiding money laundering from all corrupt state officials, to protect public investors from fraud the government has not fully pay attention to it , so investing in crypto has big risks that must be faced on its own

[smoker36]

I had a few bad luck and I got caught up in the scam. Now I still have tokens that no one needs and I can't sell them. But I think that Scam projects a little less

[Hct2005]

it is already done in every ico, obeying government regulations in ico is required by doing KYC on every investor, and the rule is valid for the reason of avoiding money laundering from all corrupt state officials, to protect public investors from fraud the government has not fully pay attention to it , so investing in crypto has big risks that must be faced on its own

KYC is only for citizens of a country that does not allow it's people to participate in an ICO. Besides, government will be having a hard time in regulating cryptocurrency due to it's anonymity.

[Rules85]

Indeed, for beginners, these are things to be concerned about.
In particular, the prospects of an ICO, which is very important, for a project to be successful, you have to have a good outlook, then you have hope of success.

[Assface16678]

Gather some informative information regarding with there project and have some background study with the team and also read the white paper if they have.

This is probably correct. We need to be a critical thinker in ordee to analyze everything. At the same time we need to gather data or somewhat proofs, or maybe information in order to have a better judgement. Also do not believe easily on someone's opinion even if that someone stated a fact. Trust only yourself and your intuition.

[ryanfromrethink]

Very useful information and I think that it will be easier to find the necessary ICO. Now, unfortunately, it is very difficult to get into a bad project

[dhemasm]

A very useful post, Currently a scam project has been greatly improved and makes some investors or newbies like me easily scammed. Anyway besides this thread lately the SEC made Fake ICO which tries to educate crypto enthusias to conclude an ICO is a scam or not.
Check here: https://cryptocurrencynews.com/icos/ico-news/sec-launched-fake-ico-howey-coins/
And here: https://bitcointalk.org/index.php?topic=3920469.0

[binghope]

The easiest way for you to determine if a cheating bonus is your community is if you join the community and have a high number of participants but are not very active.

[Tonygold1967]

Here is the blog on how to identify scam ICOs, there are main tips: https://icoguide.com/en/blog/how-to-identify-scam-icos but I think except all this general tips and advises, intuition also works.