Since Initial Coin Offerings are a relatively new thing, people are not always sure whether to trust them completely or not. If you are interested in ICOs and not sure how to determine whether they are true or fake, this article will help you to distinguish scams from the real ones.
Avoid Flashy Numbers in the Whitepaper
Some scam ICOs tend to set unrealistic projections when it comes to the potential income in the future. When you take a look at their roadmap and it is neither detailed nor long, you should ask yourself whether their income projections are possible when compared to the roadmap.
Recognize Empty Promises in the Whitepaper
Another problem with scam whitepapers is that they usually promise a lot and do not provide a detailed overview of how they plan to achieve such success. Read the whitepaper carefully to spot any possible illogical trails.
Carefully Research the Team and Advisors
The team and advisors on the project need to be completely transparent. It is not uncommon for the ICO to list people who are completely unrelated to the project or even to completely make up profiles on LinkedIn and other social media.
Always check every team member and advisor on LinkedIn and take a look at their work history. If they have the current project listed there, check for their past jobs and see whether those jobs are in any way related to the ICO. If you stumble upon someone who as a photographer in the past and suddenly became a CTO on the project, you are on a good path to tell a scam ICO.
Check Thoroughly the Use Cases of the Coins
The coins that startups offer to distribute in their ICO always need to have a clear use case. If you fail to see the clear way in which these tokens will be used, you are probably looking at the possible scam.
Check the Forums for the Particular ICO
It is always a good idea to check the opinions of other people on ICO-related forums. People who had experience with scams know the little details that gave the fakes away. If you are not sure whether a particular ICO is a scam, it is always a good idea to open a new thread and ask.
Borg DAO is one of the scam ICOs which is often discussed in forums. They simply collected the money and disappeared.
Check Addresses and E-mails
Addresses and e-mails can often be found on the website. However, not all of the websites will provide such information. If they don’t – that should certainly raise the level of suspicion but if they do, you should probably check the address on Google Maps and see where it leads.
To sum up, some scam ICOs are really easy to spot as they do not even have the proper whitepaper and just literally beg for money. However, there are those whose creators had put in some effort to make them look more eligible. If you happen to stumble upon the former, you will not have trouble identifying it. On the other hand, the latter should require you to make a checklist with the actions aforementioned in this piece of text and go through all of them.