HOW TO IDENTIFY SCAM ICO’s

A successful company has to stand out from the crowd of millions of others, so it should have its own idea, a great vision, and a global mission that can unite different people all over the world around one goal. An ICO with significant potential and really professional developers never makes very big promises, but just describes the opportunities it offers. Moreover, no experienced developer would ever make a prediction about the token price.

Promises are not suitable when it comes to business, as no one knows exactly what is going to happen later.

THESE ARE SOME OF THE FEATURES OF ICO SCAMS

The company does not possess good value.

A company that cannot offer its customers something valuable in their field of interest, but instead encourages them to invest their money in an ICO that is likely to be unsuccessful, will not bring profit to investors. This will definitely be a trap for anyone who joins the campaign.

A lack of real components is a direct signal indicating that a project is a scam. ICOs should include:

  • a well-elaborated idea
  • a product that a crowd will follow
  • minimalist structure
  • blockchain application
  • token economics
  • a white paper
  • an experienced team
  • a technical roadmap
  • a plan of action

Gaps in White-Paper Development

At this stage, ICO founders pay a lot of attention to ICO development by providing a detailed description of their project in a white paper. Collect information on the company’s supporters, and discover the solution it is going to bring to the global market.

Community Support

Attracting a constantly increasing pool of potential contributors from all over the world is possible if the company plans intelligently and has the right people on board. Here is the meaning of community support: the more supporters a company has, the more credible it appears in comparison with competitors, and the greater its chances of raising a lot of money.

It is recommended that you find out whether or not a company receives funding from other supporters, and if so, how it can affect company obligations.

Features of Blockchain Is Not Applied

The first thing one should discover when considering a white paper is whether it predicts potential means of overcoming challenges that blockchain does guarantee.

First, blockchain is a digital database that provides access to shared, replicated, synchronized data that is visible to all participants in a block in the form of a token.

Another thing worth paying attention to is who the owners of a company are, and what amount of stake they have. Nowadays, one of the most common reasons for company failure is a conflict of interest among stakeholders, and nobody knows which working scenario will be followed later if a company undergoes a change of position.

Excellent Preparation Is Nothing Without Practical Meaning

Having all the must-have points for a good ICO covered is great, but the following information, shows real value and should be mentioned, too:

  • how the company will actually build a blockchain solution
  • how much money they need
  • timelines (roadmap and business plan with the description of MVP stage development)

A commonly-faced pitfall for all investors is that a company may have a well-written white paper, which, in practice, indicates no understanding of the practical plan of implementation. This is another reason for calling an ICO a scam. Marketing budgets, well-thought-out branding, great intro videos, and SEO wizards help involve potential investors and get their money.

Hyperbole is an endemic problem that buyers and sellers can face while reading a white paper. So be ready that not everything you will read is the truth.

Analyze in detail all available information about a company in order to draw the right conclusion for further cooperation. Pay attention to the details of the roadmap and the approach the company follows in order to understand what it is going to do to implement all of its outlined goals.

Remember that attractive, promising “to-do lists” are not a basis for an unconditional belief that the company can really do everything, especially under deadlines.

To sum up, cryptocurrency is shaping the future of the world financial system, and scam ICOs are just a temporary emergency that the crypto community is trying to eradicate in order to protect itself from undesirable consequences.

Whether you are just a beginner or an experienced investor, be wise and cautious. Thoroughly analyze each offering, because deep research is a vital element of the investment process that a lot of investors overlook when assessing ICOs.

In practice, more than 90 percent of ICOs fail, especially while there is a technological risk, and this is absolutely normal. Another interesting fact that all investors should remember is that 90–95% of ICOs won’t have any value in 3 years, regardless of whether it is a scam or not.



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