With the ever increasing number of white papers being released, ICO scams are on the rise and the trend shows no signs of slowing. To help protect yourself, we have compiled some tips on how to spot scams and how to avoid them.
Study the White Paper
If the promises are too good to be true, mostly likely it is. A product that offers unbelievable returns in a short amount of time or a shallow or incomplete white paper is a major red flag. The white paper should detail the working plan and the technology behind the ICO – and such technology or product should be viable and doable. ICOs that talk about “genius” idea but are lightyears away from execution should ring alarm bells.
Jared Psigoda, CEO at Bitguild, said that “Never invest in a project that talks about the potential future value or returns of their token. Ignore hype and look at actual progression on stated milestones.”
Study the Team
Do a detailed background check on the team to see if they are real people or if they are really connected to the ICO. Some scammers would use names of real ICO advisors so it is important to double check whether such ICO advisors are really connected to the project (a simple linkedin search on the advisor is a big help).
An anonymous group of team members is a sure fire way of knowing that an ICO is a scam.
Don’t believe everything you read in the web
Scammers know how to utilize social media to push fake reviews and recommendations so it would be wise to scrutinize every postive post about the ICO. To be safe, follow the recommendations of people and sites that you trust. In traditional investments, investors support the founders and members they personally know and believe in.
At the end of the day, if you are not 100% sure about an ICO, then do not go through with it. It is better be safe than sorry.