Buying a coin at an ICO is very profitable; it is so profitable that you can make thousands of Dollars by buying at a cheap price during the initial coin offering period and sell at a high price when the blockchain goes mainstream.
Many of the ICO scam schemes are targeted towards newbies who are getting familiar with the world of cryptocurrency and looking for quick money online.
The scammers take on people's Ignorance and greed. In three years, over $1.74 billion was spent on ICOs, more reason why we are flooded with ICO ads on Facebook and Google.
In this post, we will look at four ways to spot ICO scams. Knowing this will save you from losing your investment to scammers that took advantage of the simplicity of crowdfunding a blockchain project to scam people all over the globe.
1. No Team Or Fake Team Setup:
It is a common practice now in ICO to have a little about the team behind the project listed on the website with links to their Linkedin and Twitter profile.
Some ICOs even go to an extent of putting a link out to the team member's personal Facebook profile or an email address of the member.
Do your research to make sure the team members are real and they have the required set of skills to bring the project to fruition.
Nothing kills a token fast than a failed project.
You can communicate with the team to learn more about the project, to see how dedicated the team is to develop the project.
2. No Working Platform Before The ICO:
This is a very tricky one because not all ICOs without a working platform are scams. Some promising coin used this strategy to secure funds for the development of their blockchain.
Most times, the investors end up with a promise.
If an ICO uses this strategy, it is important you make your research on the team to determine if the team is able to develop the blockchain they promise to create.
Most scam ICOs don't even have a lead developer, if the ICO has one, please communicate with him/her to know how he plans on developing the blockchain.
Remember if the team fails to build the blockchain, you will end up with shitcoin that is worthless.
3. Fake Or No Adviser Team:
Another way that token developers bring credibility to their ICOs is by setting up a team of advisers that have so many reputable people on board the adviser team.
If you have been in the cryptocurrency world for a while, chances are you might recognize someone on the adviser team that has a good reputation.
High reputation equals to high chances of the project coming to fruition after ICO.
4. A Problem Solving Blockchain:
The project needs to solve a real-world problem for it to go mainstream. You don't want to end up owning a coin that is just a digital currency with no viable service behind it.
The more useful the blockchain is to people in the real-world, the more people will on board and use the token which should drive the market capital high and likewise the price of the token.
How will you know if it will solve real-world problems?
Read the whitepaper, it is necessary to read the whitepaper and look at the roadmap also. You will find all the answers you need in the whitepaper or on the roadmap page.
CONCLUSION:
In buying ICOs, newbies and experts alike need to understand that it is a gamble. You may either end up with a worthy or a worthless coin.
Do your personal research before buying any coin.
My advice is that you should buy some of the established altcoins which already have their community and platform running.
If you have other ways one can spot a scam coin, please share it with us in the comment below.
