How to Protect Yourself From ICO Scams
With all the hype and media attention that cryptocurrencies are getting, criminals and scammers have decided to try their luck in it. So many of the Initial Coin Offerings(ICO) have turned out to be utter sh*t and was just a scam to steal people's money. Thankfully, there are several counter measures you can use to detect them. These are principles I personally use when investing in stocks, just modified slightly to apply to the crypto world.
RESEARCH ABOUT THE TEAM
Think about it, you wouldn't hand your life savings to a hobo holding a fancy whitepaper. You'd give it to those with the skills, resources, credibility, and integrity. One obvious sign of a scam is if their website makes it extremely hard for you to identify the team members. Some won't even show them at all.
Some might also try to deceive you by writing false accomplishments or awards. Do your fact checking to be certain.
Resources you could use for this include linked and news publications as well as community forums. When I mean news publications I'm referring to legitimate sites with a long history. Not a website that was made just a couple of days ago. And most definitely not The Onion.
TOO GOOD TO BE TRUE
Way back during the railroad mania, companies started popping up in the hundreds eager to sell their shares. What the public failed to realize was that the approved paths of most of these were impossible to build on at the time. Some went across the ocean, straight through mountain ranges, over major cities, etc.
Same applies today in cryptocurrencies. Some of these ICOs are just spewing plain bullsh*t. They fill your mind with buzz words like "future", "decentralized", "blockchain", "be the first", "exclusive." They're hoping that their fancy words will confuse you enough to hand them your bank account.
SCRUTINIZE THEIR WHITEPAPER AND CODE
As stated above, scam coins fill your mind with buzz words and jargon. Analyze their whitepaper carefully. The rule of thumb is if they can't explain to you what their coin is about in 3 sentences or else, chances are they're spewing sh*t. One way to validate their whitepaper is by viewing their Github page. Analyze their code or if you don't understand it, let an expert take a look at it. If it turns out it's just a complicated way to print "Hello World" then you'd best be on your way. The official smart contract to be used for the actual ICO must also be audited by a reputable blockchain audit team.
Thank you @dogeking
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Thanks for the fair reminders, dogeking. : )
I definitely agree with you and I think that developing a solid research strategy is of key importance for any investor. There are so many random coins which are using clever marketing tricks. A good example of research from my experience - onG ICO is today and they start with a few massive giveaways on Twitter. This practically means nothing if the project sucks. So at least a month prior to the ICO I did my best to cover the available information, create an account on their platform (it was already up & running, yay! ^^) and I was actually able to chat to some of the members of the team on their Telegram group. All that, especially the latter, where I was able to ask as many questions as I wanted, gave me the confidence to invest in the project.
So, a good suggestion may very well be - do your best to connect with the actual team and see how they respond. : )
Yeah I've researched onG too and their team is solid and active and working platform is deffo a good bonus. I recommend everyone to checkout their whitepaper (ongcoin.io) and decide for themselves!
Ong social is a good project to hold on
I was recently asked to write for an ICO, but the contact wouldn't give me the names of the leaders so I could check them out on LinkedIn.
I passed, obviously. Good stuff here doge.
Nice post thank for info.