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How to avoid scam ICOs

28 august 2017, 19:53

Just like with any new idea of making money, there immediately appear people that want to profit as much as possible of it, not necessarily in a fair way. ICO (Initial Coin Offering) can be really susceptible to such bad situations, as it basically works on the trust that the project that hasn't even been fully developed will indeed succeed and not disappear with all your money.

There are in fact not many regulations that could be put on these companies and there are yet no laws that could protect an investor in case of loss of his hard earned bitcoins that he'd invested. From more significant things that happened in this matter, we could bring up the Singapore Central Bank issuing an official warning to encourage safety and caution when investing in any ICO project. They tried to warn the possible ICO scammers that there are laws protecting the consumer that can be used against them and anyone suspecting an ongoing fraud should inform the police. There were also a similar situation in the US, where SEC said that these tokens can be considered as a securities and taken care of as such with existing laws.

But still it is very important to look for genuine projects with solid developers or companies working on them. It's good to support small start ups, but don't trust too much that random guy from the Internet who wants to create a multi-billion company with no programming skills and poor idea.

Here are things to look for that may indicate that particular ICO feels a bit shady.

1. No real names.

When there is no section devoted to team members or they look like random people taken from Google Images, it's better to research them a bit more. They often state that they have worked on other projects before and have a few year experience, so they must appear somewhere in the Internet already. Always check the members and look if there are any programmers or developers at all as I've encountered many projects that wanted to develop this new revolutionary technology but there were only CEOs and advisors on the board.

2. No whitepapers.

If all the information that's provided is a short few sentence description and there are no technical detailed information about the whole process of developing the technology in whitepapers it's a sign they are not to be trusted.

3. Unrealistic promises.

Random project that starts with "Our coin will make you rich in few months with 1000% growth" is a big turn off. In fact any project that claims there will be profit without providing any market research or analytic data, looks like they won't have much to offer despite big words.

4. Poor design.

I know that looks are not everything, but when you enter the website to look for some information and you are welcomed by an awfully designed amateur looking site that has a vibe of being done in 5 minutes, I'd say it is a red flag.

So to sum up, when while looking for interesting investment options you come across a very basic site that has been probably set up in few minutes with not much information and only an address for money donations, stay away from this project. Before investing it's also always good to check reviews that are made by investors here on our site as they are also often very good at spotting shady businesses.

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