Have you found an interesting new token on binance, coinbase or nexo? Or just spotted a newly announced ICO? There are signs and indicators which can warn you before investing and protect you from losing your money with Crypto Scams.
ICOs have been the talk of the crypto community over the past years. Many people have made a lot of money by investing in ICOs, but there have also been many scams. So how can you protect your capital and make sure you’re not investing in a scam? In this blog post, we’ll go over a checklist you should look out for before investing in an ICO.
Before we start with the actual topic of this article, we’ll take a look at ICOs in general and explain what they are and how you can profit from them.
ICO stands for initial coin offering. It’s a type of crowdfunding where companies raise money by selling tokens or coins. ICOs have been very popular in recent years, and many companies have raised millions of dollars through them.
The most successful ICO of all time was Ethereum, which raised over $18 million in 2014. Today, Ethereum is one of the most popular cryptocurrencies with a market cap of over $30 billion. Imagine if you had learned about blockchain technology and cryptocurrencies these days and gathered the courage to invest.
ICOs offer a great opportunity for investors to make a lot of money by investing in the project when it goes public. On the other hand, being one of the first investors also has some risks. Since ICOs are often used to fund early-stage projects, there is a higher risk that they will fail.
But if you do your homework and educate yourself before investing, ICOs can be a great way to make money. If you’re unsure about an ICO and the project, don’t be afraid to consult a financial advisor or just say “No thanks”
ICOs are often announced on cryptocurrency forums or ICO listing websites. You can also follow companies on social media to find out about their ICOs.
When you find an ICO you want to invest in, you need to send the amount you want to invest to the company’s ICO wallet address. The ICO address is usually announced on the ICO website. After you send your initial investment to the project’s ICO wallet, you will receive in return the ICO tokens in your wallet. These tokens can be traded on cryptocurrency exchanges or used on the platform for which the ICO is intended.
Now that we have explained what ICOs are, let’s get to the main topic of this blog post: How to protect your capital from ICO scams.
Here are some things you should look out for before making an investment decision:
The team: look at the team behind the ICO.
A good project will usually have experienced entrepreneurs as founders, who won’t fall into the same traps as easily as newcomers. It’s worth checking carefully the people listed on the team. It may be that a team has inflated its qualifications and even created false relationships that don’t exist.
How can you find out if you can trust the team and the founders?
Check their LinkedIn and other social media pages, as well as as much information as you can about each of the ICO’s team members.
If you don’t spot a team member on the website or the project seems to be falsifying its members, you may have spotted your first warning sign not to put money into this ICO.
Maybe the team is listed, but they hide behind strange-looking avatars and refuse to show their faces — that’s often another warning sign.
The whitepaper: a good ICO has a well-written and detailed whitepaper.
The whitepaper is the most important source of information for you as an investor. The whitepaper should explain the problem the project is trying to solve and how it plans to do it. The whitepaper gives you all the information you need about the project to decide whether to invest or not. You should learn everything about the ICO project, such as why it is worth your money, the future applications, commercial use, revenue streams, and how the coin or token will be traded on exchanges.
In addition to the technical and business details, it should also include a detailed roadmap of the project and milestones. If an ICO doesn’t have a whitepaper or if the whitepaper is poorly written, that’s a warning sign.
They may have a whitepaper, but it’s horribly written and has grammar and spelling errors all over it. What do you think the project will look like if the author doesn’t value putting effort into writing a whitepaper?
Tokenomics:
Tokenomics is the study of the economic characteristics of a token, such as pricing mechanisms, velocity of circulation, and capital controls. A good ICO will have a detailed tokenomics section in its whitepaper, explaining how the ICO plans to create demand for its tokens and how it plans to control supply.
The future value of a cryptocurrency depends on how and why it is used. If there is a good reason for people to own and use the token, its price will most likely remain stable after a successful launch. The more users use the token, the greater the supply shock will be, eventually leading to a price increase.
There is a difference between believing in an idea and investing money because you think it will go up. If you can’t see why a token might be used in the future, or if it’s just speculative, you shouldn’t invest your money in it. Otherwise, it’s more of a gamble than an investment; your chances of winning are 50/50.
Community:
ICOs that have a large and engaged community are more likely to succeed than those without one.
The community is important for two reasons: first, because it creates demand for the token, and second because it can help spread the word about the ICO project and get people excited about it. You should check how active the community is on social media, such as Twitter, Reddit, and Telegram. ICO team members should be active in the community and interact with people on a regular basis. Most successful ICOs in the past also have a YouTube channel where they explain the project and introduce it to the community.
There are several online forums where you can learn about new cryptocurrencies and their ICOs, such as Bitcointalk.org and cryptocurrencytalk.com. Visit these sites and other blockchain community sites to see what people are saying about the new project and if they are discussing it at all.
If an ICO has no community or its community is inactive, that’s a warning sign. It could mean that the ICO project is not very popular and people are not interested in it.
Website:
A good ICO will have a professional-looking website with clear and concise information about the project. The website should have a user-friendly interface and be well designed. It should also be mobile-friendly as more and more people are browsing the internet on their smartphones.
The website should also include a link to the ICO’s whitepaper and the other checkpoints we have listed in this article.
When you look at the website, also look at the domain: Does the domain have a suspicious top-level domain like .biz, .tz or .xyz? Ask yourself why they don’t use a .com address or another more trustworthy top-level domain. Does the website have a certificate or is it an untrusted domain. The next point to check with the domain is who owns the domain. You can use websites like whois.com to check the owner of the domain.
Rating Websites:
There are websites that rate ICOs, such as icobench.com. This can be an excellent sign that a certain ICO is good. In addition, these sites offer lists of fresh and upcoming ICOs. You might wish to look into them further.
These are just some of the things you should look for before investing in an ICO. If you do your research and do your due diligence, you can protect your capital and avoid scams.
- Check out the team behind the ICO
- Check the whitepaper
- Check the tokennomics
- Check the website
- Check the community
- Check ratings
If you have checked all these points and still think that this is a good project that has the potential to gain value in the future, you can take a chance. If you have doubts or don’t understand what this ICO is all about, you’d better look for other opportunities, of which there are many, and take some distance from this ICO.
Once you have decided on an ICO, you can buy them directly during the offering phases. Or you can take a step back and wait until they launch on platforms like binance or coinbase, so you can buy them there. This might cost you a bit more, but you can monitor how the launch affects the token price or if it gets dumped immidiatly.
ICOs are a risky investment, but if you do thorough research, you can protect your capital and avoid scams. Check out the ICO’s website, whitepaper, tokenomics, community, and other factors before investing.
