Topic: 3 kinds of ICOs — Protect yourself - page 24. (Read 13704 times)

There are a lot of scammy icos, and i agree with your tips list in there, but there are legit projects, maybe it doesnt seem like there are honest people in bitcoin world, but it happens sometimes, only that those "legit projects" are asking to raise for about $10 million dollars to make a simple idea that doesnt need more than $100k.
So it is a 50/50, they are legit, but they want a lot of money..

Or you have ones like this one below?  Great tech and good team.  They even have a BIP.  However they are pathetic on the marketing, etc. 

https://bitcointalksearch.org/topic/--2190748

thanks you for clearing it up
i really dont understand how people choose their investments sometimes
and its sad when you see a shitty ico makes millions when real coins dont get enough attention

Ambrosus doesn’t make sense.  Why do we need a new altcoin to record the history of products?  Even if you record the history of products on the blockchain, how do you know the data is accurate?  How can you trust the inputters of data?  How do you know it isn’t put in by the manufacturers, who will exaggerate or lie?  This sounds like another project trying to put the kitchen sink onto the blockchain.

Airtoken is lying or sounds like a pipe dream. In order to pay the users for advertising, Airtoken will need to get advertisers and earn advertising revenue. Then it needs complicated processes to show the ads where the advertisers want, to charge properly and to share the revenue with users. This incurs significant costs and is a huge undertaking, which requires much more than just creating an Ethereum token. They need to show how they will be able to do these numerous processes much more cheaply than the existing companies, in order to be able to share some of the advertising revenue with users. Have they ever done anything similar to this before? Probably not. They have 6 reviews of their AirFox Browser on Google Play, probably by people who saw their ICO.

Airtoken’s website states: “Publishers will have higher monetization, new user reach, and a better user experience.” But its white paper does not explain how. Is this blowing smoke?

There is another major problem with Airtoken. They want to provide micro-loans. This is a complicated, costly and money-losing business. Google “micro loan failure” and you’ll see articles like:


Micro loans was concocted by emotional socialists who think with their hearts instead of their brains, which always makes a country poorer.

The Airtoken team only needs to do 5 minutes of research on micro-loans and would have found the above. This means that they are dishonest. If they did not do the research, then they are incompetent.

Somebody asked me to comment on Polkadot.

The white paper is written by Gavin Wood, founder of Ethereum & Parity. This is obviously a credible developer. It passes my first filter with flying colors. It also passes my second filter.

However, I don’t know if it passes my third filter. It is filled with technical features and functions, but little explanation of the benefits. It wants to connect (bridge) different blockchains, which will enable scaling, which is a good thing. However, to do so would be an incredibly difficult task and I question if Polkadot will be able to pull it off. Hopefully, they’ll prove me wrong.

There is another project that is trying to connect different blockchains together, as well, but I forget the name.

If Polkadot wanted people, other than blockchain developers to understand their project, they should’ve done a better job of explaining the problem(s) that they are trying to solve and the benefits of solving those problems to non-technical people. But, do they need to? I don’t see any info about ICO or token sale. Maybe they have enough money from their ETH holdings that they don’t need funding.

One interesting excerpt from the white paper is this:


I’m not quite sure how the Polkadot tokens will go up in value. For any token or coin to go up in value, the usage or demand must go up. Bitcoin is going up because people are throwing money into it to store value. Ethereum is going up because people are throwing money into it, in order to buy tokens at ICOs. What will be the fuel for Polkadot?

If it is indeed Gavin Wood running this project, then it is obviously not a scam or crap. It’s just hard to quantify the benefits of holding Polkadot tokens.

Though, there is one minor stain on Gavin. Someone hacked $32 million from Parity. Who hacked it? Was it an inside job?

I would say about 85% of all ICO's fall into category 1 and 2. Quite hard to find a legit ICO. What's funny is how even the bad ones still pump once they hit the exchanges!

wonderful thread. ico101 for dummies:) i strongly recommend this suggestions to newbies, and non experienced users.

And they is 4 type of ICO money grabers.
There is a lot of ICOs in space that will rapie you.
Have you heard of PRESALE .. own yea.
Now imagine sand ico and regular price was like 1.5$ per token but...
insider got deal like 0.25$ per token. Those gy got so cheap token becouse those groups will promote an shill for that ICO.
With such shit you can essy and with bag of shit.

There is always option that ICO creator will self invest in own ICO making it price looking much better tht it is in reality.
This is crypto here all shit moves are possible guys.

really nice thread. It is possible to beat the scammers at there own game if you are not greedy so let the scams go on.

Good and very insightful write up! I love the way you critic the primary intension and motivation of creating the ICO in the first place. Vast majority of ICO founder fall in to this category. The  other part of your writing  addressed the visible and workable project! In summary You have done a good Job. I will implore that you keep giving us food for thought on regular basis  concerning happening in crypto space!

Maybe not even scams but it end as fail like average startups does.
In REAL LIVFE:
1 of 10 startups survives 1st year
and then
1 of 10 startups survive next 5 years.
 so you have 1/100 chance to survive with ICO ...

this is nature of startups you won't win with it.

I think blockchain applications are not (a few), there are a lot of applications for blockchain, however, it is better to say that there are a few legitimate ICOs. From other side, most of people invest to make fast profit, even though an ICO is a CRAP, it might get huge investments with some hype and big names backing it.

90% of ICOs are scams

Thanks for putting this together. It's well written and everyone should follow something similar to this before investing. I'm adding this as a favorite because I like your link.

nice thread. Investing into something without understanding it based on someone else suggestion is like gambling in casino.

There are 3 kinds of ICOs:

1)  SCAMS

There have always been a lot of scammers, hackers and thieves in the crypto space since day one. Think of Mount Gox. According to Business Insider:


No app yet.

Qtum raised $15.6 million. I don't see anything produced on Qtum's website.

After raising $50 million, Cosmos's website is still pitching its white paper. Come on. What have they produced with that $50 million?

Augur had Vitalik Buterin on their team. After Satoshi Nakamoto, Vitalik is the most desirable person in the universe to have on an ICO team. After raising multiple millions and after two and a half years, all they’ve released is a simple beta that is barely usable.

Don’t be suckered by animations and videos. Satoshi didn’t have any of this and his coin was the most successful. Besides, the animations aren’t that impressive anymore, as I’m beginning to see the same animation on multiple websites. Some of these teams must be using the same graphic designer.

There is no guarantee that any business will not fail. But, when the ICO team has a prototype/product, they have proven that they can develop. That significantly reduces your risk. With many ICOs, you have no idea if they can build anything. You cannot trust the information on the profile of many ICOs. Just because they can hire somebody to make a video, it does not mean they can write thousands of lines of complicated code. It's like you giving money to someone to fix your car, simply because his video says he can fix cars, but he has never fixed one before.

Y Combinator is one of the biggest startup incubators in the world. They provide a small amount of funding (approx. $25k to 50k) to startups, which usually consists of 2 founders each. Then they build prototypes or products. Then the startups give pitches to angel investors or Venture Capitalists. If prototypes or products are unnecessary, then why do they waste so much time and money before pitching to angels and VCs?

Almost all incubators have startups that consist of usually only 2 founders, that are building prototypes and products. ICOs are stacking their team with a dozen people and they still cannot build anything. With 12 people, they should've built 6 prototypes/products by now. This shows that they are simply stacking their teams with useless people, in order to impress you or sucker you in.

2)  IS THE TEAM FROM A CORRUPT COUNTRY?

Check Transparency International's ranking.

If so, take a pass.

The number of ICOs from corrupt countries, especially those that were famous for sending out phishing scams for years, have exploded.

Yes, there are scams from countries that are not corrupt and successful projects from corrupt countries. What is important is the probability and if you are willing to take the extra risk.

In non-corrupt countries, people grow up with lots of regulations and enforcement. Though there are exceptions, the people feel that the way to get ahead is based largely on merit. In corrupt countries, there is less regulation, less enforcement and more people trying to find ways to get ahead by working around the system. In fact, they see that the most successful people in their country, usually in their government, are those who get ahead by lying, cheating or working around the system, instead of based on merit. If you do not think this is a risk, then we will agree to disagree.

Law enforcement is a big deterrent. Hurricanes prove this. After hurricanes Katrina and Irma, there were widespread lootings. Why? Because police are not on the streets and criminals feel immune from punishment.

Law enforcement through extradition is a deterrent. If an Australian defrauds investors in Germany, Germany can extradite the Australian and punish him. This makes the Australian think twice before he defrauds Germans. However, there are many countries without extradition agreements. This provides immunity to ICO teams. Therefore, they can lie, defraud and cheat investors from other countries, and there will be little to no recourse from the other countries. This can bring out the looting mentality.

There are many ICOs enticing investors, by claiming that their token or coin will go up in value or that token holders will get dividends, profits or ownership in other assets. Some tell buyers that they are “investing”. This means that they are selling securities and are breaking security laws.

I watched a video of a conference. ConsenSys was warning about the repercussions of selling securities. Waves’ CEO, who is from a country without extradition agreements with Europe or U.S., debated this, downplayed the concern and shrugged it off. Why should he care? No European or American government is going to be able to punish him if he broke security laws. Even if Europe cannot punish him, if Europe bans his coin, will you suffer?

Without law enforcement, ICOs can lie and get away with it. One project claimed that they will make 400+% return per year for the investor. In countries that enforce securities laws, if you make this claim and do not deliver, investors can sue you. In countries with advertising laws, the police can punish you for false advertising. In countries that are immune from these laws, ICOs can make any claim they want. One of the most egregious claims is when an ICO tells you that you will be a part owner of a physical company. Good luck in getting a judge in their country to force the company to give you equity because you own some ERC-20 tokens. Good luck to you and your multiple flights to that country.

Few corrupt countries have extradition agreements. For those that do, can you rely on their corrupt governments to fulfill their obligations?

3)  “NEVER INVEST IN A BUSINESS THAT YOU DO NOT UNDERSTAND”

This is a quote from Warren Buffett. It is very applicable because many ICO teams try to impress the audience with technical jargon. Many investors are not tech savvy and are baffled or confused, but they invest because they think that the project team must have come up with a technological break-through.

Last word:

You need to be able to verify that the business problem exists, that the market size is truly as big as the ICO claims and that the solution is possible. Quite often, they exaggerate on most of these. You need to verify that a blockchain or a cryptocurrency actually is needed for the solution. Quite often, they’re not.

Do not rely solely on ICO listing or rating sites. They likely do not know about all of the ICOs. Not all ICOs are willing to pay to be listed. They have methodologies that you may not agree with. Some claim to be experts, but you are likely more of an expert in your own field, whether that is medical, law, engineering or finance, than they are. They will likely have biases, especially for ICOs originating from their country or region. Putin wants to increase the crypto industry in Russia. Is this why there has been an explosion of ICOs from Russia? Even Putin’s Advisor ran an ICO. If Russia took out Facebook ads to disrupt U.S. and European politics, who is to say that they will not pay off ICO listing and ratings sites to favor Russian ICOs?