The Often Ignored Red Flags of Cryptocurrency Projects

elysium-renegade (30)in #steemit • 7 years ago

#NotFinancialAdvice

Here are some practices I see from ICOs and other cryptocurrency projects that aren't mentioned or discussed much, much less criticized, by the crypto shillers. There are many other red flags to look out for, but these are some not mentioned as often. These are big red flags to me that say: approach with caution.

Keep in mind that many of these flags could be good short-term signs for a project, but are probably bad in the long term.

Comparison tables - complete strawman argument. They are very often produced by people with an incentive to prop up their coin over competitors. Some of them even include coins which aren't even competing with the 'Chosen Coin of Shilling,' but the creator just thought it looked good to add that coin and 'beat it.' It is likely that upwards of 90% of the charts you see are complete BS.
List of review scores from ICO websites you can pay for scores from (e.g. ICObench). This one is mentioned a bit more by some more critical reviewers/influencers. Here's one example I found with one project:
Vague partnerships with no details - just called strategic, etc. This practice is also mentioned by more respectable influencers. Sometimes this can be because of NDAs or nothing official yet, so they can't talk about it too much. But then again, later on they can simply say nothing could be agreed upon.
- However, I'm moreso talking about when they say they have a strategic partnership with X company and make some sort of post talking about how big that company or project is, etc. but don't explain the relevance.
- Another version of this is when projects announce partnerships with big tech companies, but turns out there is no partnership. It's more likely that they paid for a service offered by the huge tech company, and the project is calling it a partnership. Sergio, an ICO project reviewer and angel investor talks about this very accurately here.
- It is possible for a partnership with big tech companies to exist, but you would see the announcement from both sides.

Flashy websites, but seems to have little substance. Bright, vibrant colors and visuals of people having fun, showing plenty of positive emotions. These website designs are intentional in trying to draw you in, emotionally. The more focus on this the worse it is. You can have a visually appealing website, but there's a line.
Hyping up announcements. This can work to increase value of a token, because crypto is currently fairly speculative and has a wide range of investors (read: many people who don't do research or due diligence). Organic growth is fairly low right now. However, if the project is focused entirely on hype, announcements, etc and is not also actually working on their roadmap, you can bet that at some point, the balloon is going to burst. And it can be ugly.
Serial Crypto project jumpers. This is often seen as a positive sign for the new ICO project and you can view it that way. However, if a core team member of another project leaves his project behind for this new shiny ICO, it should raise questions. Especially when the former crypto project hasn't been around for very long (which is most of them). It should make you wonder how committed the person is to the new project and whether the team hired them to legitimize their project or to fill an actual gap (or both).

I'll leave you with a final thought:

When looking at whether something is a red flag, also consider how many other ICOs and cryptocurrency projects are doing it, including ones you really like. There's something you might call a 'fair market advantage.' If every other project is doing something that is questionable, it might be because it has a proven track record of working and it might even be necessary for survival in an ever increasingly competitive space.

I will be writing another article on some of these 'fair' practices that I am seeing adopted by ICOs in order to survive and compete, but might be morally questionable.