Topic: 8 Red flags crypto Investment, Avoid when you see this (Read 151 times)
A project can turn into a scam even if it has all these things you have talked about. There can be a few reasons for that. That project is too ambitious and ahead of its time, so current technology is not sufficient enough to build a project like that or the team leadership is not adaptive to accept new technology and changes in the market and they wanted to keep going with their old ways, which can be the reason for them to fall behind. Also there are some projects that don't want to take their marketing seriously which is also a reason for them to not get the right amount of success they deserve.
Honestly, even though this list is correct, I am pretty sure that there are even more stuff that people could list. It's just so obvious at times that a project is a scam one, but when it is not and it looks like the team is working on it like crazy, that changes some stuff and it ends up not being all that crazy. So, we should consider the possibility that we may end up with some troubles, it's not going to end up with anything that would benefit everyone, it has to be something that may not be all that easy.
I think it's clear that we are going to end up with some benefit if we are careful, and for that we need to end up with learning how to avoid all these scams, it has to be something that would not be easy to handle at all.
I think it's clear that we are going to end up with some benefit if we are careful, and for that we need to end up with learning how to avoid all these scams, it has to be something that would not be easy to handle at all.
Nowaday many of good coins have those criteria, mostly it is because inexperienced dev. Buggy code can be fixed, bad tokenomic is usual in new project, anon dev is not a red flag for me. So probably the only things i avoid is ponzi as that is deliberate attempt to scam people
There’s a big chance for that project to fail and can also become a scam project.Inexperienced team is not a reason because they can get qualified people to handle the project they are really serious about it, so if you see projects like this better to avoid at all cost. We know that many are just here to make easy money even if its doing the bad things, be more cautious and don’t invest without doing your own analysis.
Aside from that short-term gambling, it is hard for anyone to be able to accurately speculate or make any perfect predictions of what the future of those coins can afford to bring up at some point, so for that, altcoins may not be the best form of investment for me on some cases.
Nowaday many of good coins have those criteria, mostly it is because inexperienced dev. Buggy code can be fixed, bad tokenomic is usual in new project, anon dev is not a red flag for me. So probably the only things i avoid is ponzi as that is deliberate attempt to scam people
There’s a big chance for that project to fail and can also become a scam project.Inexperienced team is not a reason because they can get qualified people to handle the project they are really serious about it, so if you see projects like this better to avoid at all cost. We know that many are just here to make easy money even if its doing the bad things, be more cautious and don’t invest without doing your own analysis.
Fake team, ugly website - but having a good website doesn't mean that the project is legitimate. But with these factors, we can already see that the project is likely a scam project or a project that you shouldn't invest. Determining them nowadays is hard, we've seen scam projects that have been prevailed lately when they're on the peak and when people have already invested on them. The scammers are actually good from concealing their real identity and that's making them an investable project to the community.
While we're being aware on what are the red flags that have been mentioned by OP and everyone. You as an investor, you need to take time and DYOR. It is not the others that will save you from the scam projects but you, yourself and none other than only you. Because it is your money and protect it from the projects that are likely to scam investors and just going to milk you from doing so. If you happen to get back with your bad experiences, make sure that you've learnt from them and you'll never be a victim of another scam project.
While we're being aware on what are the red flags that have been mentioned by OP and everyone. You as an investor, you need to take time and DYOR. It is not the others that will save you from the scam projects but you, yourself and none other than only you. Because it is your money and protect it from the projects that are likely to scam investors and just going to milk you from doing so. If you happen to get back with your bad experiences, make sure that you've learnt from them and you'll never be a victim of another scam project.
for me to invest in a crypto investment, prominently crypto projects that are new, i only requires 1 green flag that is being invested by other reputable tier 1 venture capital and angel investors
because if its getting investment from such reputable venture capitals you almost sure that all of those 8 red flags easily are not a concern anymore because surely the team has went through a review and find zero red flags about the project its elf thats why they are willing to invest money amounting to millions to the project
i think thats what important and i'd easily disregard other thing but surely these 8 red flags mentioned can be a concern too if someone want to invest in a coin thats doesn't get invested by any venture capitals.
for example is tokenomic, some really shit project can be allocating 70% for the devs and team alone and that shows their true color.
because if its getting investment from such reputable venture capitals you almost sure that all of those 8 red flags easily are not a concern anymore because surely the team has went through a review and find zero red flags about the project its elf thats why they are willing to invest money amounting to millions to the project
i think thats what important and i'd easily disregard other thing but surely these 8 red flags mentioned can be a concern too if someone want to invest in a coin thats doesn't get invested by any venture capitals.
for example is tokenomic, some really shit project can be allocating 70% for the devs and team alone and that shows their true color.
Well, that makes sense, but these crazy rich investors are simply rich, a million for them means nothing if they happen to have invested to a scam. Still, you'd never know if they have made their own thorough research on that specific project or even just an accomplice to attract more investors to put their money in. However, I'd take this idea to any projects when I see one, but I'm still going to check for possible red flags and make decisions from there.
Typically I would start looking for the team behind it, the white paper, and how active the team in providing updates and responding to investor's queries and as well as the token allocations.
I would add 9. Team:
Poor team, inexperienced team, allocating majority of tokens to themselves, even though they are rising money for the token development.
These people can also promise price growth, which not only makes the token a security and unlistable in any serious CEX. It makes them liars, as no one serious team member should focus on the price.
They often hire meaningless outsiders as advisors just because of their name, and focus on marketing instead of development.
Most team members add no value to the project place being in the team.
They outsource admins in chats as they don't bother to talk with the community.
They are not transparent and avoid hard questions, and in worst caste even dismiss them as FUD.
Poor team, inexperienced team, allocating majority of tokens to themselves, even though they are rising money for the token development.
These people can also promise price growth, which not only makes the token a security and unlistable in any serious CEX. It makes them liars, as no one serious team member should focus on the price.
They often hire meaningless outsiders as advisors just because of their name, and focus on marketing instead of development.
Most team members add no value to the project place being in the team.
They outsource admins in chats as they don't bother to talk with the community.
They are not transparent and avoid hard questions, and in worst caste even dismiss them as FUD.
These are really useful piece of information while I am more or less aligned on the details shared but the common mistake which people still make is they fall for the kind of returns promised and marketing tactics. I feel these market experts and influencers plays a major role in bringing in more people for a project. Average person should never invest just by going through their marketing gimmick.
We will be safe if we invest by doing our own research and checking the details on the dev team and their previous works because this would give us fair idea about the project. But lately we are bit scared to invest into new project after going through scam projects.
We will be safe if we invest by doing our own research and checking the details on the dev team and their previous works because this would give us fair idea about the project. But lately we are bit scared to invest into new project after going through scam projects.
3. Bad Tokenomics
When i do saw that the supply isnt Renounced, not LP locked or the dev does have that bigger allocation of tokens or the team itself
Then thats a solid red flag for me. I dont care much about having doxxed team or not but it would be better if you do really be able to know about the team behind.
Sometimes it would really be just needed for you to have at least having that kind of in depth research before making any investment.
When i do saw that the supply isnt Renounced, not LP locked or the dev does have that bigger allocation of tokens or the team itself
Then thats a solid red flag for me. I dont care much about having doxxed team or not but it would be better if you do really be able to know about the team behind.
Sometimes it would really be just needed for you to have at least having that kind of in depth research before making any investment.
I do not mind if the team has huge allocation of token/coins as long as they don't conduct crowdfunding. I understand the team needs funds to push forward and having a bigger part of the allocation for the project is ok if the only way the can get funds is through selling the allocated token for the team and project.. But if the project already has the crowdfunding and yet they still have huge allocation of funds, that is a huge red flag for me. It is obvious that the developer is just for a money grab.
Yea, especially ponzi scheme is the most common nowadays...
3. Bad Tokenomics
When i do saw that the supply isnt Renounced, not LP locked or the dev does have that bigger allocation of tokens or the team itself
Then thats a solid red flag for me. I dont care much about having doxxed team or not but it would be better if you do really be able to know about the team behind.
Sometimes it would really be just needed for you to have at least having that kind of in depth research before making any investment.
It doesnt really cost you an arm and leg for you to be able to do so. There are really just those people who are really that too lazy when it comes to these things
and they would really be able to do such acts on the time that they do experience out such problems.
When i do saw that the supply isnt Renounced, not LP locked or the dev does have that bigger allocation of tokens or the team itself
Then thats a solid red flag for me. I dont care much about having doxxed team or not but it would be better if you do really be able to know about the team behind.
Sometimes it would really be just needed for you to have at least having that kind of in depth research before making any investment.
It doesnt really cost you an arm and leg for you to be able to do so. There are really just those people who are really that too lazy when it comes to these things
and they would really be able to do such acts on the time that they do experience out such problems.
~
I'd usually just in general avoid any coins that can claim to go up X%. Any coin that promises such a thing usually gave up on trying to market the usability of their coin instead and just tries to attract investors with their investors. While I won't deny that there may be some legit coin out there that has their strategy like this, I wouldn't hope that said coin would even last that long. Anything after that, I try to give them a chance and read through whatever resources they provide that can help me judge their project.May differ with meme coins though. Those things just embrace being a meme so I don't expect any semblance of trying to market it so I just auto ignore most of it.
for me to invest in a crypto investment, prominently crypto projects that are new, i only requires 1 green flag that is being invested by other reputable tier 1 venture capital and angel investors
because if its getting investment from such reputable venture capitals you almost sure that all of those 8 red flags easily are not a concern anymore because surely the team has went through a review and find zero red flags about the project its elf thats why they are willing to invest money amounting to millions to the project
i think thats what important and i'd easily disregard other thing but surely these 8 red flags mentioned can be a concern too if someone want to invest in a coin thats doesn't get invested by any venture capitals.
for example is tokenomic, some really shit project can be allocating 70% for the devs and team alone and that shows their true color.
because if its getting investment from such reputable venture capitals you almost sure that all of those 8 red flags easily are not a concern anymore because surely the team has went through a review and find zero red flags about the project its elf thats why they are willing to invest money amounting to millions to the project
i think thats what important and i'd easily disregard other thing but surely these 8 red flags mentioned can be a concern too if someone want to invest in a coin thats doesn't get invested by any venture capitals.
for example is tokenomic, some really shit project can be allocating 70% for the devs and team alone and that shows their true color.
Well, Honestly speaking, some investors believe that a coin project is positive; even though the coin being supported is a red flag, they still believe that it still has potential.
Their mind is closed to their beliefs, and in such a situation, we can do nothing but respect their choice and want for a coin project. And everything that Op said here, I also think will help to somehow identify the red flags of coin projects, and I also think that tokonsniffer.com seems to be useful in my opinion.
for me to invest in a crypto investment, prominently crypto projects that are new, i only requires 1 green flag that is being invested by other reputable tier 1 venture capital and angel investors
because if its getting investment from such reputable venture capitals you almost sure that all of those 8 red flags easily are not a concern anymore because surely the team has went through a review and find zero red flags about the project its elf thats why they are willing to invest money amounting to millions to the project
i think thats what important and i'd easily disregard other thing but surely these 8 red flags mentioned can be a concern too if someone want to invest in a coin thats doesn't get invested by any venture capitals.
for example is tokenomic, some really shit project can be allocating 70% for the devs and team alone and that shows their true color.
because if its getting investment from such reputable venture capitals you almost sure that all of those 8 red flags easily are not a concern anymore because surely the team has went through a review and find zero red flags about the project its elf thats why they are willing to invest money amounting to millions to the project
i think thats what important and i'd easily disregard other thing but surely these 8 red flags mentioned can be a concern too if someone want to invest in a coin thats doesn't get invested by any venture capitals.
for example is tokenomic, some really shit project can be allocating 70% for the devs and team alone and that shows their true color.
Nowaday many of good coins have those criteria, mostly it is because inexperienced dev. Buggy code can be fixed, bad tokenomic is usual in new project, anon dev is not a red flag for me. So probably the only things i avoid is ponzi as that is deliberate attempt to scam people
Among the 8 red flags of crypto scams I still believe that some of this projects surpasses this stages of we considering them scams and yet they are scams. Some scam crypto projects are working tirelessly to prove otherwise by bring an ATH that will attract investors then it starts taken a fall and hence they use Bitcoin as an example for hope of this project to reach its ATH again because Bitcoin did same too.
Another scam I can't probably fall for is the ponzi scheme scam. I always considered every project that promises some too good to be truth return as scam be cause I know nobody is here to loss so why will a project promises all this at there loss, that's the greatest red flag for me.
Another scam I can't probably fall for is the ponzi scheme scam. I always considered every project that promises some too good to be truth return as scam be cause I know nobody is here to loss so why will a project promises all this at there loss, that's the greatest red flag for me.
What we will talk about today is the 8 common red flags in a crypto project. These are the things we should consider before we buy a project in cryptocurrency so that we can minimize the risk in crypto. Because we are dealing with unregulated
environment. Anyone can issue a token, and exploitative people take advantage of it to fool gullible investors or newbies because they don't have enough experience and don't know the business here. They are the customers of scammers and hackers.
Now, if we know these common red flags in a crypto project we can avoid falling into their traps. I don't want you to believe what I'm going to say here, but mine is just a guide for communities who want to increase their knowledge. Because we have our own reasons why we buy tokens, and the primary reason here is belief. Maybe all of us who buy crypto believe that it will increase in the future.
1. Anonymous Leadership - Bitcoin was exempted from this first, it's different because when Bitcoin came out there was no other crypto but him when it started. And it has built a significant reputation in the cryptocurrency world. Now the image of projects with anonymous teams has been damaged. Not all of them, but the majority of crypto projects have anonymous founders and teams, who often just disappear, especially newly launched projects, after running a pre-sale, they just disappear.
It becomes more risky because there is no accountability when there is an error in the project, and it is also difficult to verify their track records, so that we can understand what experience they have skills in handling the project. And if you also notice that apart from btc, most of the successful projects have well-known leaders, like Vitalik Vuterin of Ethereum, and even the leaders of Cardano, XRP and many others.
2. No Whitepaper - Almost all crypto projects have it, but if you see a crypto project that doesn't have it, it's a red flag. Because of the whitepapare here we can see the plan, purpose of the project, there is the technology, methodology, and long-term vision. This is the blueprint of a crypto project. What is the problem they want to solve? Do they have new innovative technology to offer that will attract investors?
If they don't have documents, it will be difficult for us to analyze the purpose of the project, its potential in the future. And if there is, is it properly written? Is the technical information detailed? Like the blockchain it uses, consensus mechanism, tokenomics, security features and roadmap.
We will know if the whitepaper was just written, if it was really thought about or worked hard. Sometimes it happens that the whitepaper is just copy pasted in another project. So, we should also be aware of that, because other community members will definitely see that too. So if we are conducting research, we should also include their social media communities that they have so that we can gather more information that is not in the whitepaper.
3. Bad Tokenomics - Many investors ignore tokenomics or do not know how to read tokenomics of a project. We can say that the tokenomics of a project is not good if it has unfair distribution and allocations of tokens. Similar to the centralization of ownership when a large percentage of tokens are only held by a few groups, perhaps founders or early investors, that is not good for the project. Because he can end up with token value manipulation. In which they can dump the token to retail holders.
Another bad of Tokenomics is that there is no clear vision for token distirbution, because normally there are plans that have percentages allotted to minting, staking rewards, Allocation for development, marketing and etc. If a project doesn't have a clear token distribution, it just means they don't have a long-term strategy. And it's possible that the project doesn't plan to last too long and it just disappears like a bubble.
4. When Red Flag in Token Sniffer - Here in crypto we can see and know if a project is hiding something in the contract addresses. This platform has conducted a contract analysis and it will be shown on the platform if there is a problem with the contract address that will be placed here. They provide a score, and we can say that a project is a red flag when the score is zero or just close to zero and when the score is above 60, it's still good.
And the popular platform in this verification of projects is this token sniffer. And so we can perform an audit here, you just put the contract address here.
5. Static coin - This means that the price movement does not move much for a long time. Especially if the crypto is experiencing an uptrend rally in the bull market and then the coin has no reaction, that means it is a red flag immediately because there is no demand for the project. There is no trade here because the typical crypto must be volatile so the price can move. We can notice this if the volume of a project is low.
Normally, when the coin moves like this, it is deleted from an exchange, either CEX or DEX, because the traders have no interest and it is already considered a dead coin. So it's not because we see a dormant coin that we're going to buy it. We have a lot to consider, like the life of the community and the current updates and developments. Then, if there is none, we should avoid this kind of project.
6. Ponzi scheme crypto project - So, how do we know that a project is a Ponzi scheme? Typically, they make promises to their investors of high returns with little or no risk; they make it appear that they have a unique investment strategy that generates money for investors. And these first investors are the ones who will be the testimonials because they made money. And that will attract new investors.
And since it doesn't really have a legitimate business, the money that old investors actually earn only comes from new recruits, so it's not sustainable. And if there are no new investors, there will be no income. Then this is where the scheme starts to fall apart. And many Ponzi schemes have become popular here in crypto, and others have been jailed or are already in jail.
7. Buggy source code - This simply means that the project is poorly coded and has a history of always being hacked, or there is an exploit in the protocol. Many hack incidents happen in the crypto market, but it is a different matter if the hacking issue is repeated in a project. Which means that the security of a project is not improving. And this can be a reason to leave, and no one believes investors.
And another thing is that it may not have been audited properly, because in crypto, there are legit people who audit the projects to make sure that the code is properly coded. Because possible vulnerabilities are being looked at, and the developers have to fix them first. Especially if the projects handle financial transactions and personal data, auditing is crucial in smart contract crypto-based projects.
8. Promising coin - these are the projects that are just promises, and they can't deliver what they say to the community. Just focused on marketing that is full of hype. If you remember Safemoon, he pumped before because many celebrities promoted it, but he didn't have a solid use case; he was just carried away by hype and speculations. Or the other is that no development is happening; the project is not growing after all the hype.
So these are the only red flags in cryptocurrencies that, when you see them, you already have an idea of how to avoid them so that you don't fall victim again and regret it in the end.
environment. Anyone can issue a token, and exploitative people take advantage of it to fool gullible investors or newbies because they don't have enough experience and don't know the business here. They are the customers of scammers and hackers.
Now, if we know these common red flags in a crypto project we can avoid falling into their traps. I don't want you to believe what I'm going to say here, but mine is just a guide for communities who want to increase their knowledge. Because we have our own reasons why we buy tokens, and the primary reason here is belief. Maybe all of us who buy crypto believe that it will increase in the future.
1. Anonymous Leadership - Bitcoin was exempted from this first, it's different because when Bitcoin came out there was no other crypto but him when it started. And it has built a significant reputation in the cryptocurrency world. Now the image of projects with anonymous teams has been damaged. Not all of them, but the majority of crypto projects have anonymous founders and teams, who often just disappear, especially newly launched projects, after running a pre-sale, they just disappear.
It becomes more risky because there is no accountability when there is an error in the project, and it is also difficult to verify their track records, so that we can understand what experience they have skills in handling the project. And if you also notice that apart from btc, most of the successful projects have well-known leaders, like Vitalik Vuterin of Ethereum, and even the leaders of Cardano, XRP and many others.
2. No Whitepaper - Almost all crypto projects have it, but if you see a crypto project that doesn't have it, it's a red flag. Because of the whitepapare here we can see the plan, purpose of the project, there is the technology, methodology, and long-term vision. This is the blueprint of a crypto project. What is the problem they want to solve? Do they have new innovative technology to offer that will attract investors?
If they don't have documents, it will be difficult for us to analyze the purpose of the project, its potential in the future. And if there is, is it properly written? Is the technical information detailed? Like the blockchain it uses, consensus mechanism, tokenomics, security features and roadmap.
We will know if the whitepaper was just written, if it was really thought about or worked hard. Sometimes it happens that the whitepaper is just copy pasted in another project. So, we should also be aware of that, because other community members will definitely see that too. So if we are conducting research, we should also include their social media communities that they have so that we can gather more information that is not in the whitepaper.
3. Bad Tokenomics - Many investors ignore tokenomics or do not know how to read tokenomics of a project. We can say that the tokenomics of a project is not good if it has unfair distribution and allocations of tokens. Similar to the centralization of ownership when a large percentage of tokens are only held by a few groups, perhaps founders or early investors, that is not good for the project. Because he can end up with token value manipulation. In which they can dump the token to retail holders.
Another bad of Tokenomics is that there is no clear vision for token distirbution, because normally there are plans that have percentages allotted to minting, staking rewards, Allocation for development, marketing and etc. If a project doesn't have a clear token distribution, it just means they don't have a long-term strategy. And it's possible that the project doesn't plan to last too long and it just disappears like a bubble.
4. When Red Flag in Token Sniffer - Here in crypto we can see and know if a project is hiding something in the contract addresses. This platform has conducted a contract analysis and it will be shown on the platform if there is a problem with the contract address that will be placed here. They provide a score, and we can say that a project is a red flag when the score is zero or just close to zero and when the score is above 60, it's still good.
And the popular platform in this verification of projects is this token sniffer. And so we can perform an audit here, you just put the contract address here.
5. Static coin - This means that the price movement does not move much for a long time. Especially if the crypto is experiencing an uptrend rally in the bull market and then the coin has no reaction, that means it is a red flag immediately because there is no demand for the project. There is no trade here because the typical crypto must be volatile so the price can move. We can notice this if the volume of a project is low.
Normally, when the coin moves like this, it is deleted from an exchange, either CEX or DEX, because the traders have no interest and it is already considered a dead coin. So it's not because we see a dormant coin that we're going to buy it. We have a lot to consider, like the life of the community and the current updates and developments. Then, if there is none, we should avoid this kind of project.
6. Ponzi scheme crypto project - So, how do we know that a project is a Ponzi scheme? Typically, they make promises to their investors of high returns with little or no risk; they make it appear that they have a unique investment strategy that generates money for investors. And these first investors are the ones who will be the testimonials because they made money. And that will attract new investors.
And since it doesn't really have a legitimate business, the money that old investors actually earn only comes from new recruits, so it's not sustainable. And if there are no new investors, there will be no income. Then this is where the scheme starts to fall apart. And many Ponzi schemes have become popular here in crypto, and others have been jailed or are already in jail.
7. Buggy source code - This simply means that the project is poorly coded and has a history of always being hacked, or there is an exploit in the protocol. Many hack incidents happen in the crypto market, but it is a different matter if the hacking issue is repeated in a project. Which means that the security of a project is not improving. And this can be a reason to leave, and no one believes investors.
And another thing is that it may not have been audited properly, because in crypto, there are legit people who audit the projects to make sure that the code is properly coded. Because possible vulnerabilities are being looked at, and the developers have to fix them first. Especially if the projects handle financial transactions and personal data, auditing is crucial in smart contract crypto-based projects.
8. Promising coin - these are the projects that are just promises, and they can't deliver what they say to the community. Just focused on marketing that is full of hype. If you remember Safemoon, he pumped before because many celebrities promoted it, but he didn't have a solid use case; he was just carried away by hype and speculations. Or the other is that no development is happening; the project is not growing after all the hype.
So these are the only red flags in cryptocurrencies that, when you see them, you already have an idea of how to avoid them so that you don't fall victim again and regret it in the end.
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