How to differentiate an ICO with a scam

ICO is the abbreviation of Initial Coin Offering. It means that someone offers investors some units of a new cryptocurrency or crypto-token in exchange against cryptocurrencies like Bitcoin or Ethereum. Since 2013 ICOs are often used to fund the development of new cryptocurrencies. The pre-created token can be easily sold and traded on all cryptocurrency exchanges if there is demand for them.

Advantages of ICO:

1. Non-lengthy listing process
2. Low listing cost and yearly maintenance
3. Access to global liquidity

Disadvantages of ICO:

1. No due diligence process
2. Lack of regulations

There are many good ICOs out there.
Its an excellent platform for those who are holding a million dollar idea to expand and execute with funds yet improving the economy with investors. However what its lacking is the due diligence we see in IPOs. New developed platforms definitely lures scammers into the game, but with caution/practice due diligence like finding out more about the whitepaper, development team, address of the company, analyzing the project will lower the risk of being victimized.

Tips to identify and analyse a good ICO:

1. Whitepaper
   Read up the whitepaper, spot for any discrepancies or any thing that doesn't make sense. Identify the key idea of the project and analyse if the idea will work out or make any sense.

2. Founder Team
   Do some research on the founder team members, spot if their names are short names like "Tony" compared to "Tony Jim Rodriguez". Many ICO scams out there uses very short names.

3. Contact and Address
   Practice due diligence, research and look through the contact numbers and address of the project, check if they are using a legit one.

4. Read up forums
   Usually scams might be identified by other victims, do a thorough research on the project you wish to participate. You might find some tell tail signs of a scam.

All in all, practice due diligence to avoid being the next victim.