🙇🏽The bigger the mouth, the bigger the risk.
Normally, when a project seems to be prominent is because has solid team and development, not necessarily a good facade. Investing on a big mouth, is investing on a big risk.
Mainly in cryptocurrencies, as is open to everyone who's interested on investing, many users are prone to run over the typical: "this is gonna be huge" promise and no more, just a promise.
The reason of this article is because many users put their money on those big mouth projects.
Let's look at the facts firstly.
According to deadcoins.com there are over 1.6k failed projects, between failures and Scams. Information is provided by users, but sets a precedent. Besides, there are so many other projects not listed there.
In a more accurate summary we have data which suggest that about US$ 98 million dollars were lost in venture investments between 2016 and 2018. Not mentioning the big EOS flock.
Source: https://thenextweb.com/hardfork/2018/08/13/exit-scam-cryptocurrency-blockchain/
Users and small investors have lost thousands, if not hundreds of thousands, on facade projects; the hardest part is that: keeps happening yet. End users are normally driven by the facade and not the facts. A figure appears to be smart and suddenly looks like a good investment.
As there's no brokerage in crypto, is hard for end users to do research and all scrutiny into a project to fully understand all the facts, hence the end-user is the one that loses more on the long run.
After money is invested, of course it's going to be "valuable".
There's a common mistake for new investors valuing projects on the invested amount and not the actual function/ecosystem of it, in the long run. A money hungry jog will tell you that this is how money works, but it ain't so.
At a given time lapse, of course the raised amount is gonna provide value to a project; but if there's no assets, products, team, plans or ecosystem… is just gonna be a quick money grab from the end-user, who do not understand the economics very well.
Just see this chart with top ten money loss projects. 👇🏽
Source: https://diar.co/volume-2-issue-38/Company's real value is not set on the share price, but in their potential product and prominent assets. To have an idea Google this topics: "The Dot Com Bubble" or "The housing market crisis".
A company can have US$ 1,000,000,000 dollars invested but if that company is thin air, obviously the "price" of that "shares/coins" will go to the toilet. Therefor, the end-user has to take many factors at hand before acquiring a token or running wild because some well-dressed person tells you a lot of pretty promises.
The bigger the mouth, the bigger the risk.
A project based on "shilling" is a risky project.
Real projects, even though they shill, their actual value or focus is on the project it self not on the investors.
If a project is way too focused on you to invest, and their team main task is based on you to connect with them, because they "have the best future product on the market", that's a red flag. Real projects focus on product, on deliverance, on prototypes; not really on grabbing quick investors.
Real projects have working prototypes before raising money. If you do not trust me, ask Satoshi Nakamoto and Bitcoin, and why it gained value.
Real companies, where people can invest, are mostly based on teams, products, services, real world work; not only asking people to buy their shares. If any project is too focused on it: That's a red flag.
🆘Things you need to know.
Take these points before considering an investment on any project that you see:
Verify the team is real and has real expertise.
The product and real world technology is achievable. Sci-Fi is cool in movies but approvals, regulations, adoption and so on; are key instruments for any product and service to reach scalability and have ROI for investors.
Business plan. Having millions of dollars is not the key problem when there's no plan or consistency.
Company is legally existent and has physical offices.
The company has been around some time. A wanna be company has no expertise on the matter or hasn't even started working before collecting funds. Be aware that the company is really working before taking your investment.
Is safe to say that any investment has a risk margin and every investment can collapse no matter the points you take into accounts, sh*t happens.
As an investor be picky where you put funds, because the louder a company is requesting funds and projecting their idea, the higher the risk of investors can be.
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