A Guide on How to Identify Cryptocurrency and ICO Scams

It will not be wrong to say that ICOs or the Initial Coin Offerings form the backbone of the cryptocurrency arena. Despite facing the slump in 2018, the digital currency space failed to lose its charm and dominance in the market space. More than a dozen new cryptocurrency projects are introduced for the investors every month. These strategic launches of virtual tokens and coins bring along with them a lucrative suite of Initial Coin Offerings. With a view to double their profits and reimburse the losses faced during the market crash, the investors bank upon these newly launched ICOs, which purposefully satiate their greed for returns in the best possible manner. Apart from experienced investors, ICOs also attract first-time investors in large numbers.

Interestingly, these large-scale ICO offerings put the investors in trouble as they open doors for the entry of fraudulent projects and scammers. These malicious offerings induce the customers and compel them to play their bets on their illicit tokens and coins. It remains quite a tiring task to identify between the genuine and fake ICOs present in the marketspace in disguise. The fast-emerging crypto industry has made it a fierce shot for even the most experienced players to keep pace with the new innovations. And this has made it cumbersome for the investors to examine the new crypto projects and threat-prone ICOs critically.

To give a better understanding of the subject, this informative article is here at your rescue, and it will help the readers to get a thorough knowledge of “How to Identify Cryptocurrency and ICO Scams.” Have a look:

1. A Deep Scrutiny Check on The Team Behind the Cryptocurrency

The administrative team and the developers working behind the cryptocurrency project have an essential role in ensuring the success of the ICOs. Scammers take advantage of this situation to backstab investors in a well-planned manner. They falsely invent non-existent founders of the concerned project and create a legitimate-looking biography of them on the internet. Some fraudsters enlist the names of renowned crypto-developers on their plans to gain the trust of the investors.

It becomes of utmost importance for any investor to first conduct thorough research on the team members of the project before any investment. A scroll check on their social media accounts and LinkedIn profiles can clear the picture in a better way. The investors should also cross-check the followers of the listed developers and make sure that there is active participation from their side with the right number of followers. One can check the official profiles of the well-known crypto developers associated with the project to check if they have accepted such claims.

The investors should also keep track of the qualifications and experience of the developers involved with the project to avoid getting trapped in fraudulent ICOs.

2. Analyze the Whitepaper

The whitepaper of a crypto project gives crucial information like background, project roadmap, strategies, and implementation, etc. A deceptive project might lack the intricacies that are needed to be mentioned in the whitepaper of a project. The project which fails to present its whitepaper to the investors should be neglected at the first thought itself.

Some scammers make well-informed whitepaper to add the element of authenticity in their project. PlexCoin, a scam project dwindled more than $15 million before getting suspended by the U.S Securities and Exchange Commission in December.

An excellent whitepaper strives to attract the investor’s attention by convincing them about the success of the project. If a whitepaper fails to guarantee you with a substantial amount of trust on the project, then you should back out instantly.

3. Examine the Feasibility of the Project

While choosing an ICO project, one should consider the concepts, goals, and implementation strategies to be adopted by the project in the future. New projects often have useful and innovative ideas but fail to prepare the blueprint to bring their goals to reality. They face downfall in a few months making the investors lose their money. A good ICO not only has a profitable idea but also has goal-oriented plans to achieve them.

Transparency of ICO is also a significant point to look upon before making an investment. A good ICO project keeps its customers informed about the developments made in the project by publishing a progress report on their website or social media handles. On the other hand, fake ICOs will never give the complete details about the plan to their investors.

4. Keep a check on the views of other investors

It remains an excellent choice to track down the opinions shared by other investors and non-investors about the crypto project. These views turn out to be right more than oftentimes. The projects which have negative comments should be strictly avoided. Follow the community supporting the project, and if it has a negative perspective towards the project, then one should avoid making an investment for sure. The right ICO project has an active community backing the project firmly.

5. Take a Pause at Unrealistic Goals

The projects that have unrealistic goals often end up failing or getting declared as fraudulent. False claiming projects should never be entertained by the investors.

6. Beware of fake ICO Advisors

An increase in the ICO projects has led to the rise in the number of ICO advisors, which has eventually made room for the entry of fake people into the field. For example, the ratings given by the ICOBench site are false as they do not involve any scrutiny or research before making the information live on the platform. The site has been engaged in payment-for-rating scams as they endorsed a few fraudulent projects like Veio.

Hence, it is imperative for an investor to beware about the projects they are putting their funds into. By keeping patience and a sense of diligent approach, one can easily make suitable investments and earn good profits.