eICOs are essentially crowdfunding: a company explains to the public what they want to achieve and offers a limited number of tokens to potential backers. Those interested will buy the digital coin but instead of getting shares, they get digital assets in which they can transact. Sounds legitimate enough right? Well, unfortunately, the crypto industry has its fair share of ICO scams as well.
If you are planning to invest in an ICO, here are five things that you need to consider:
1.How to Spot an ICO Scam: Does the name sound right?
Granted, chances are Ethereum didn’t sound that legit until everyone started talking about it, but if the name makes no sense or sounds like a crypto that’s already been launched, think twice about investing your money. Would you invest in a company called My Big Coin? Some people did, and they lost everything.
2. How to Spot an ICO SCam: Make sure their advisors don’t look exactly like Ryan Gosling.
If they have less than five advisors and they all sound too good to be true check their LinkedIn profiles. No profile available? Give them a second chance and Google them. Still no luck? Run as fast as you can, those people aren’t real. Real advisors add years of experience to a nascent company. For example, Nauticus has amassed more than 150 years of experience thanks to its more than 20 advisers. Most of them are leaders in the fintech industry, researchers, software designers and blockchain experts who are passionate about the potential uses of cryptocurrency and blockchain technology.
3. How to Spot and ICO Scam: Read their white paper and timeline, if it’s all big words and mumbo-jumbo don’t bother
Anyone can make a paragraph sound interesting by adding a few big words and adjectives. But when you know what you are talking about and are serious in sharing it with others, the last thing you do is write words devoid of meaning. Want to invest in an ICO? Download their white paper and read it. You may not grasp everything about the technology, but the white paper as a whole should make sense. In the end, a white paper is a manual, and it’s the only document that can help you understand what the company will do with the money raised after the ICO.
4. How to Find an ICO Scam: Don’t find them on Bitcointalk or Cointelegraph? Don’t bother
A company that is serious about its ICO will try to promote it everywhere. It will design a marketing campaign that includes press releases and guests’ blog posts in reputable crypto and blockchain websites. More importantly, their idea will be so bold that it will attack the interest of journalists — in short, you’ll see it in the media but for all the right reasons.
5. How to Find an ICO Scam Their social media channels are ghost towns
Most entrepreneurs launch an ICO to create a hub of like-minded people, among other things. If their Facebook, Twitter and Telegram channel is empty, don’t bother. Look for an ICO that is trying to build a community and join the conversation.