If this keeps one person from getting scammed, I will be happy.
According to a recent article from Investopedia, $9 MILLION is being lost on a daily basis due to ICO scams! Are you investing in the next Facebook or are you investing in the next Enron? This will be a short write up on how to protect your hard earned money from ending up in a an ICO scam. Disclaimer here, please do not take this as investment advice. Investing in Initial Coin Offerings can either be extremely rewarding or you could potentially lose all of your money! I recommend Alt Coin investing for advanced level investors only!
Team:One of the first things you should look for in a good ICO is a PUBLIC team with advisers. However, having a public team is not enough. You need to manually go check every key member of the team to check that they are in fact real and associated with the ICO. Is the founder a CEO from a Fortune 500 company and is this a new project for him, or is he coming from an unknown town in Siberia? There should also be some decent advisers on the team that are willing to risk their reputation on the project. A lot of scams don’t list the team members or use fake team members/advisers.
White Paper:Yes, you need to take the time and read EVERY white paper on every project you invest in. If you don’t read the white paper, you are asking to lose money. How well is the white paper written and how is the overall layout? Is the white paper offering something too good to be true like 500% returns in the first year? Is there a clear and thoughtful road map? A good white paper will clearly contain all the necessary information about the project. A lot of scam projects are ambiguous. Caution, a lot of scams copy white papers from other projects.
Social Media:Check the projects overall social media presence. How many Twitter, Reddit, Telegram, and Facebook followers do they have? How often have they been discussed in bitcoin talk? Have they been posted on any famous news websites? A lot of fake projects will have little social media presence or fake followers.
The Code:I must admit, this is not my specialty. Most ICOs will post their code for all to see on Github. Check to see if the code is something meaningful or a bunch of lines of nonsense. You may not be able to tell the difference so get a tech friend to help you.
Company Legal Status:Make sure that the people conducting the ICO have registered the company in the country that they want to operate. A lot of ICOs create shell companies and are trying to hide their real identity. In most cases, you should be able to find an address.
Status of Product:Does the company have anything to show? If an ICO has NOTHING to show for their project that can be a red flag. Most serious ICOs should have a working prototype, APP, or product in their Alpha or Beta stage. Again, manually check the product.
In Summary:Scammers are getting smarter and know a lot of this. This is just to help you check off the boxes to reduce your chances of getting scammed. Even after you find a REAL project, your job is just beginning. You still have to determine if it is a good investment! This is why I recommend ICOs for advanced investors. With that said, good luck finding the next unicorn!