With the apparent and frankly insanely high amounts of ICO fraud in the cryptocurrency space today (estimates suggesting 1 in 5 ICO are a complete scam while other reports suggestion 80%+ of ICO projects fail within 18 months of their inception). With this astonishingly high numbers, it’s easy to see why the public remains skeptical of cryptocurrency as a whole. Here is a top list of 5 best practices to increase your chances of spotting and thus avoiding any ICO scams. This can also apply to simply well-intentioned individuals who are operating an ICO and simply are not fit for the marketplace. Don’t think because they are real that the business model is destined to succeed, as this certainly isn’t the case.
1. Go beyond Checking LinkedIn
We have seen fake LinkedIn accounts being utilized in a variety of different manners. First, fake users are easily created on the free platform of LinkedIn. Furthermore, some ICO scams have even gone as far as utilizing real cryptocurrency industry players to trick investors. This is such a common fraud tactic, the heavy influencer Vital Buterin has changes his official twitter name to “Vitalik “Not giving away ETH” Buterin” just to help other players avoid scams.
2. Do the Name(s) Make Sense?
Do you notice a trend across their founder’s names? Do they seem odd or foreign? These are some easy signs the ICO can be a scam. Don’t use this rule in exclusivity. In general, if it seems too good to be true- it probably is. Make sure you go the extra mile here and check on LinkedIn profiles. If they have a profile look at their work history and other credentials, truly ask if they seem legitimate. When in doubt a great place to start is a skype call and clear up the confusion.
3. Actually, read the white paper
This is key. Take the time to read the white paper and see how well it is written. Does the core concept within the White paper make sense? These are great questions to start asking while reading a white paper from an initial coin offering.
4. Don’t Rely on Other Review Websites
Some may not like this point (in particular the ones operating review websites of ICO) but we find more often than not it’s a matter of incentives here. Many review sites are pay to play and simply getting an acquisition of a scam can lead to a delisting on the rating website. This isn’t always the case but with this, in mind, it’s easy to slip in under the radar with so many ICO reports and review sites. These days, it’s best to
5. When in Doubt, Get In Person / Video Confirmation
Last but certainly not least. This step should be taken seriously and although time-consuming- still a great piece of advice. The former (meeting in person) is certainly better than video confirmation but both are a step in the general right direction.
Stay diligent friends!