From practice to theory and vice versa. We dismantle the scam: stay there.
According to the dictionary "scam" is a deception, a fraud. We make a note that it's not good to deceive people.
After getting acquainted with this article, you will learn how to recognize a certain scam out of a thousand cases.
We begin with an introductory tour.
Did you watch the film Ocean's Eleven? Most of the scams are so clumsy that they do not even closely resemble the sophisticated machinations of Ocean and his guys. All the scams can be divided into two unequal types. The first type is subjective - it is the most common, unoriginal fraud, when someone collects your money via the distribution of loud promises about the myriad wealth, the house in the Maldives and the gold of the gnomes in the attic, he buys this house to himself, and next day he is out the reach and the border country of your residence.
There are the objective scams also. When the project is like an immature teenager: small, complex and does not think about his actions, and the team, which is working on it, cannot find a common language and, instead of looking for a specialist, it punishes him immediately. Objectively, it is a failure; no money will pull them out of the dug hole. But who cares about objectivity, when money is burnt?
Unfortunately, there are more and more projects like that in the industry nowadays.
Let’s discuss the structure of subjective scams, and how they can threaten
Let's take a look at the examples of subjective scams.
1. Christopher Columbus was discovering America alone, so he did not have a problem, which we will discuss further. If the project has three or more founders, then the common language is more difficult, and sometimes it happens that one of the comrades says his loud "It’s OK this way!". He folds his hands in pockets and legs on the table and stops working at all. The same thing was with one ICO project of social network on the blockchain, one of the founders just disappeared in an unknown direction even before the network was completed.
2. The second rule is "do not take the dirty linen out of the hut." The quarrel ruined ICO: in 2017, the Tezos service died in such a way. The investors of the project filed the complaints due to the fact that the founders could not divide the assets among themselves. Was it the intent to cheat - it is a controversial issue, but in any case, it plunged the project into an intermediate state between the subjective and objective scam. And all the same, the innocent investors suffer from that.
3. The sense of humor of the founders often also makes a profit, even if the humor is black. It was possible to collect up to 1 000 000 dollars for ICO project Piramidum and a number of other ICO-jokers, who initially stated: love me for who I am, I cannot promise anything and I will not do anything either. But black PR is also a PR, people liked it and the pump reached the unprecedented heights.
This is all a subjective scum, when the founders have a clear intention to deceive you but there is no conscience. And now we are going to discuss the objective scam and a couple of secrets of his identification
The objective scam is much more difficult to recognize, it requires special skills, analytical mindset and the willingness to spend a lot of time to study the problem.
We would recommend a number of simple techniques we find effective, so that the range of accidents should be narrowed to the minimum:
1. Study the methodology of A. Pavlyut on the evaluation of WP: in fact, it means that the White Paper should simply and easily expose the project. If the creators twist idioms as they want - blow the horn! There is clearly something wrong here. The exceptions, such as ICO Telegram or Filecoin will always be, but they are exceptions.
2. Focus on the team's experience. In most cases, the team that gathered only under the ICO and does not have experience in real business for 3-5, or better - even more - years - it is the story without a happy ending. Do not believe me? Look at e-commerce projects in Russia or even some of the dotcoms in the early 2000s in the US, and everything will fall into place.
3. And most importantly: estimate the level of involvement of team members in the project. For example, if a project is about the implementation of a new technology in blockchain, and it is headed by the project lawyer and three more workers specialized in humanities, a reasonable question arises. And vice versa, when the project is technically simple, but overcomplicated with economical and financial concepts, IT professionals team is not a good choice.
The described things could be considered simple, but all together they create the foundation, on which you can build your own financial well-being and critical thinking towards the ICO projects.
Friends, tomorrow we will move from theory to practice. Stay in touch, we will analyze the concrete examples of the scam on your fingers, think together how this could be avoided, and get a little homework to determine the inner world of one of the last scam.
See you at FLOGmall!
