Topic: How an ICO works... to scam you (Read 161 times)

Step 1. Download the bitcoin source code and do a find/replace of the word "bitcoin". Change it to "scamcoin". Congratulations, without any knowledge of programing you have created an alt-coin. Now you need to find some "marks" (that's conman talk for someone stupid enough to buy alts).

Step 2. Pre-mine a bunch of your new coins. Then advertise your ICO (initial coin offering). Tell stories about how much better your coin is. I know, I know... Just make shit up.

Step 3. Sell a scamcoin to your buddy for $10. Your buddy could just be you posing as another person or an accomplice. Because scamcoin is really bitcoin you know that full production is 21million. So that's a marketcap of $210,000,000. WoW!

Step 4. The next day have your buddy sell you back your scamcoin for $15. Now go brag on the fourms that your new coin has gone up 50% in 24 hours!!!! And now has a marketcap of $315000000!!!!!!! Get them quick these things are going to the moon.

Step 5. Sell all your pre-mined coins and move on. Within days to weeks the coins will be valueless. But who cares? the marks are left holding the bag and you are holding bags of their money.

IMO, ICO's are simply a way to solve the problem of the developer not having your money. Sure, there are legit alts, but until you completely understand bitcoin you would be foolish to buy alts.