Dozens of new cryptocurrencies are released every month and there are a series of initial currency offers (ICOs) along with these new tokens and coins. Although cryptocurrency was hit hard in 2018, the desire of a wide range of investors for these opportunities has increased. All these factors combine to attract scammers. In the end, once investors prove they are ready to invest in highly speculative cryptocurrencies, the likelihood of investing in fraudulent tokens or ICOs appears equally.
Prospects can be difficult for cryptocurrency investors who want to make the most of the many new investment opportunities while protecting themselves from fraudulent ICOs and harsh coins and tokens. Blockchain technology and cryptocurrency are evolving rapidly, and the terminology can be difficult to understand even for investors. While there is no guarantee that all launches involving cryptocurrency or blockchain will be legitimate or successful, the steps below will help you have confidence that you will not fall into scams.
Cryptocurrency scams are currently a popular way for scammers to force people to send money. And they appear in different ways. Most crypto scams can appear in the form of extortion emails, chain leads, or fake investments and business opportunities. However, what they have in common is: And they have something in common with the recent Twitter hack. Scammers want you to send money or pay with bitcoin or some other form of cryptocurrency. Once you’ve done this you’ll run out of money and there’s usually no way to get it back.
So, if you look at a Tweet (or text, email, or other social media post) requesting payment in bitcoin, you’ll know it’s a scam. Other signs of fraud? They can guarantee that you can make money (a guarantee like this is fake). Promise you will double your money quickly (again, this is always a wrong promise). Or say you get free money in dollars or cryptocurrency.
Meet the team
The most important factor for the success of an ICO or cryptocurrency is probably the developer and management team of the project. Tycoon dominates the cryptocurrency space, and supermarkets for developers like Ethereum founder Vitalik Buterin can create or destroy new projects just by making their name on the development team. For this reason, scammers are increasingly offering shallow and fake bios for their projects.
The best defense against these scam tactics is to carefully examine individual project members before investing. If, for example, you cannot find a specific developer or founder information on LinkedIn or other social networks, this is a false sign. Even if you have a profile, build by making sure the activity matches your number of followers. People who rarely communicate with their followers, but with thousands of fans, may not be real.
It’s important not only to determine if the development team is real but also to make sure their qualifications are correct. Do the founders have the experience they claim? Is it related to the current project?
Please read the white paper carefully
The cryptocurrency white paper or ICO is the primary document for this project. The white paper should explain the background, goals, strategy, challenges, and timing of each blockchain-related project. The white paper can be very clear. Companies with vibrant websites can prove that they don’t have a solid basic concept. On the other hand, companies with misspelled websites may have white papers explaining the perfect concept and carefully designed action plans.
The first step in reviewing the white paper is to read it carefully. Check out the white paper for additional resources including financial models, legal issues, SWOT analysis, and implementation roadmap.
Companies that do not provide official documentation should be avoided at all costs. However, a rogue company can provide an attractive white paper, as is the case with PlexCoin. The company raised more than $15 million before the US Securities and Exchange Commission (SEC) entered and closed its doors. The white paper should answer any questions that potential investors may have about what sets this particular project apart from its competitors, how they strive for success, and what steps they need to take to achieve their goals.
Token auction confirmation
Each ICO relies on a token or currency system to facilitate the crowdfunding process. Law firms and efforts are creating the system itself and developing ticket sales to potential investors. Keep an eye on the ticket sales figures while the ICO continues. Better yet, check the sales tickets to see how it goes. If a company prevents someone from tracking the progress of the ICO, this is a dangerous sign. Some ICO scams use individual donation addresses as an excuse to hide ticket-selling practices. This does not allow potential investors to know exactly how much attracted before the sale and how much time is left. In some cases, it may be an attempt to create a sense of urgency for potential investors even if there is no evidence that successful sales are going on at the same time.
How practical is the project?
It may seem obvious, but ICOs and cryptocurrencies are most likely to succeed those who have a basic structure capable of defeating their competitors. Many releases, including well-known releases, ended after initial interest declined. The best chances for a successful investment depend on a company with a set of achievable and achievable goals. At this point, the company should have a convincing vision, but be able to achieve that vision in the short and long term.
Along with the feasibility issue, there is a transparency issue. Companies with outstanding concepts and models want to be as transparent as possible to society as a whole more than others. Find companies you want to inform potential investors by regularly posting detailed status reports on your company’s website or social media. It’s also a good idea to make sure your company has a schedule for what happened during development.
Be careful
Even the most successful ICOs and cryptocurrencies are criticized for being kicked out by speculative investments. The idea of getting rich quickly by investing in hot new projects is tempting enough to attract experienced investors and new players into the risky realm. Be careful when looking for new ICOs and cryptocurrency investment opportunities. Keep in mind that patterns that sound too good are more likely to be true. Take the time to go through all the details and assume that the loss of sensitive information could be an attempt to hide the wrong model or concept.
Before investing, look for external sources to check the validity of your project and always ask unanswerable questions. Cryptocurrency and ICO venues provide tremendous opportunities for investors to complete their homework and make informed investment decisions. You also run the risk of losing a lot of money through scams, or simply mal-designed and legitimate companies that are unlikely to succeed.
Conclusion
There are many fraudulent ICOs and suspicious coins and tokens, but there are several ways to avoid these potential scams. One of the best ways to protect yourself is to carefully study individual members of the project team before investing. The white paper on cryptocurrency or ICO is the primary document for this project. Companies that do not provide official documentation should be avoided at all costs. Read and analyze the technical documentation carefully. Each ICO relies on a ticketing or monetary system to facilitate the crowdfunding process. Law firms and efforts are creating the system itself and developing ticket sales to potential investors. Track the dynamics of ICO ticket sales. In general, be very careful when looking for new investment opportunities in the field of ICOs and cryptocurrencies.
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