Initial coin offering is a proven method to raise the required fund when initiating new cryptocurrency in the market. Such ICOs form part of crowdfunding, where funds are raised through public issue of coins.
Crowdfunding has given a new direction in bring future projects without the hassles of raising fund through venture capital or other financing options. Now you can raise funds directly from the public by offing what you got to offer.
ICO based on crowdfunding is a compelling method when it comes to blockchain space or says cryptocurrency in specific terms. ICO means the offering of token coins either in the form of bitcoins or any new currencies to be launched in the market. Such type of crowdfunding has become so prevalent that there is almost an ICO very week. But the critical part is to differentiate between the genuine and the fake.
Yes, a lot of fraud has happened and is happening on the pretext of fake ICOs. Therefore it is becoming foremost essential to pay attention to the authenticity of such ICO. Although technology has become so advanced that at times its hard to distinguish what’s right and what’s wrong, still there are loopholes that you can see to make out the difference.
So we are going to tell you how to mark out those scam ICOs and distinguish between fake and real. Although we can’t tell you about the profitability on the market of such projects, the least we can do is help you not to lose your hard earned on scams ICOs.
Look for these markers on each ICO to make out the real and scam difference.
- Unrealistic goals: If an ICO is a scam you will know it by the goals they may say to achieve. Unrealistic goals are the trademark of such scams. Although there won’t be anything new in their objectives by the way they will present it, it would sound extravagant and so dreamy. Even though they claim to change the cryptocurrency market and do better than bitcoins in future, still they are on scam list.
A genuine goal with the professional team backing their objectives will never flaunt. As they know, no matter how sure they are still the fate rest in how the market and algorithm does. So they just put it to you but not try to serve it on silver platter.
- Whitepaper: At times certain ICO use flamboyant language on the website to describe their venture, but they turn to more relevant and tech specific information on their whitepapers. Whitepapers are official papers that are used to offer authentic information with details both at ground level and at a technical level.
But if you come across a whitepaper that gives nothing but same flattering words like on their webpage is nothing but a scam. A scam as they have nothing technical to disclose, so beware of such fraudulent ICOs.
- No Code: If you need to check the genuineness of any ICO project then this is what you must look for. Even if the website or the whitepapers tell nothing significant the code of law or no code repository is something that can tell you the difference. If you find no code or mere a dummy code then that ICO is a scam and not worth your time.
- Team: The people behind the project are the key that will unlock the future of the venture. So you must look for the people behind the venture offering the ICO. If the people are professionally qualified and have relevant cryptocurrency market experience then, you still can take the chance to invest.
But if you see people that are not known or do not have any relevance to the industry then stay away from it. It may be possible that you see some anonymous names but that doesn’t mean unknown, look for their qualifications and check their background for relevance.
- Compromised Escrow: Checking the Escrow account is critical. It is the account or place where the investor’s coins will be kept until some deal is finalized. So, you can take it as an account where your initial investment will be kept safely until sometime.
Any genuine ICO will have an Escrow separate in its name with three key holders of which two will be members of the community. It is challenging to distinguish between a genuine Escrow and spot a fake one. But you at least know that no Escrow will release the entire fund money in one go, nor even a major portion of it. If any does it, it’s not genuine.
I hope now you will be able to make out the difference but if you require more information, consider ICObuffer.