The rate at which new cryptocurrencies launch each month is on the rise. Along with these come new tokens and coins and also a series of Initial Coin Offerings (ICO).There is also many ICO Scams and we will discuss the best ways to detect cryptocurrency and ICO scams in this article. The appetite among a broad pool of investors for these opportunities has doubled even in spite of the fact that cryptocurrencies suffered a setback in 2018.
The combination of all these factors entices scammers. This is due to the fact that if investors have proven that they are willing to throw money toward a highly speculative cryptocurrency, they seem to be equally likely to invest in fraudulent tokens or ICOs.
There are however certain ways to identify cryptocurrency and ICO scams that could come in handy for potential investors and those who trade in cryptocurrency at the moment
Three Ways To Detect Cryptocurrency and ICO Scams
1. Ascertain the Team
Knowing the developers and administrative team behind the project you want to invest in is perhaps the single most important success factor for any ICO or cryptocurrency. The cryptocurrency space is clearly dominated by major names that are capable of either making or breaking new projects simply by having their names on a development team.
As a result of this, it is increasingly common for scammers to invent fake founders and biographies for their projects, and every investor should look out for this and thoroughly research the individual team members of a project before you invest. This beginner’s guide to digital currencies is a good place to start.
2. Examine the Whitepaper Thoroughly
A cryptocurrency or ICO whitepaper is the foundational document for that project. It should clearly lay out the background, goals, strategy, concerns, and timeline for implementation for a blockchain-related project.
The whitepaper reveals a whole lot, investors must ensure to read carefully to check if it has complimentary resources. Companies that do not offer whitepapers should be avoided at all costs.
It is quite possible for a fraudulent company to put forward a convincing whitepaper, which is why before you invest, you must necessarily see to it that the whitepaper clears all your doubts about how it aims to be successful, stand out and the measures it hopes to apply to achieve its goals.
3. Checkout the Token Sale
Oftentimes, ICOs depend upon a token or currency system in order to facilitate the crowdfunding process. Legitimate companies make the system itself and the progress of the token sale figures as the ICO is ongoing.
However, investors must watch the token sale over time to see its progression. In a situation where a company makes it difficult to chart the progress of its ICO, chances are that there is fraudulence involved. Go through tutorials and smart guides to cryptocurrency trading to help you out.
Some scam ICOs hide under their token sale progress under the pretense of individual contribution addresses to protect potential investors from seeing the truth.
On a final note, the idea of getting rich quickly on an investment in a new project is tempting enough to draw seasoned investors and beginners into risky areas. The overall precaution to take is to be extremely cautious and take time to scrutinize every detail and verify thoroughly as you look for new investment opportunities in the ICO and cryptocurrency space.
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