How to Avoid ICO Scams
These days, a term ‘Initial Coin Offering’ has been the talk of the town, especially among people who are involved in online trading of Crypto Currencies. But what exactly is Initial Coin Offering?
What is ICO?
Simply stating, it’s a ‘decentralized crowd-funding method’ through which Crypto-Start-ups gain funding for their venture. It is somewhat similar to an Initial Public Offering, in which a private company offers ownership to the public through shares. In an ICO campaign, a company offers Crypto Currency or tokens to the general public around the world in exchange for other tokens or Crypto Currencies.
ICO Scam
As ICO’s are unregulated, scammers use them as a way to defraud investors. There have been numerous instances where general public was scammed through ICO, such as PlexCoin ICO, Benebit ICO, Opair and Ebitz ICO, among others.
How to avoid ICO Scam?
Ahead, we have suggested some points which would help you in avoiding ICO Scams-
- Know the team
The people behind the project constitute the ‘team’. The points to consider while evaluating the team are, 1) Are the team members well known and reputed in the community 2) Were those people involved in legitimate projects in the past? A YES to these questions would be considered as safe.
It is observed that fraudulent companies often use common names, such as John Smith and present resumes which could be termed as unrealistic.
2. Read the ICO Whitepaper
Whitepaper is similar to the prospectus issued by a company undergoing IPO. A Whitepaper contains all the relevant information and details about the background, goals, legal concerns, implementation blueprint, among other things. A company which doesn’t issue Whitepaper must be avoided at all costs; however it may be possible that the fraudulent company makes a convincing Whitepaper which achieves its purpose of duping people.
Furthermore, a Whitepaper must be able to answer all the queries that a potential investor has.
3. Check Reliable Online Forums
Online forums such as Bitcointalk are widely famous among the developers, investors and enthusiast of Crypto Currencies. Through these forums, you could gain insight about the community’s opinion about the ICO. Also, these forums have people who have been victims of scams, so they would be able to gauge the situation owing to their prior experience.
4. Code Repository
The company must provide access or link to code utilized in the project. If there exists no mention of the code at all, or there exists only a few lines of code, then you could easily sense the fault and consider not investing in the project.
5. Feasibility of the project
At last, the feasibility or the viability of the project must be analyzed. The project must solve a problem or provide strategies to outlast their competitors in a realistic methodology. An added advantage would be when the company provides regular insights about the ongoing developments in the project, detailed reports about the progress made on their website or on through their social media account.
This is all from our side; hope you found the article on ICO scams helpful.