5 Tips on Detecting Scam ICOs
Initial Coin Offerings or ICOs is quite similar to crowdfunding whereas the company/team accepts BTC/ETH from the people in exchange for a certain amount of their coins/tokens, depending on how much you sent them.
ICOs aren’t really scams as some are definitely legitimate, but a good percentage of ICOs are indeed scams. The thing is, some well-made ICO scams are quite hard to detect as a scammer could create a legitimate well-thought project and simply just not deliver and run away with the money. Though there are some scam ICO characteristics that could be enough proof for you to stay away from certain ICOs. We are going to list out some things to watch out for when looking at ICOs.
Promises about price
Some ICO scams straight up claim that investing in their ICO will surely earn you profit in the hopes of getting people to invest in their ICO. This is definitely a huge red flag and automatically increases the chances of this certain ICO to be a scam up to 90% or even higher.
These ICOs are mostly advertised on sites like YouTube and on social media sites.
Fake team members
image source: /r/CryptoMarkets/
Most if not all scam ICOs make up names of their team members and simply take pictures of people off stock image sites. This is another huge red flag that makes it very very likely for the ICO to be a scam. To be completely sure, do research on most if not all the members of the ICO team. Make sure that they’re actually real people that has accounts that are reasonably old enough on some social media sites.
Some scammers are lazy enough to not even compose their own whitepaper, so they simply just copy the whitepapers of some projects then change the coin/token name in the hopes of fooling the readers. Unfortunately, even some of the top 100 coins have plagiarized whitepapers and some people don’t seem to care.
You can use free plagiarism checkers online to speed up this step.
Relevant article: TRON Plagiarized its Whitepaper, Community Claims
Buzzword-Heavy Website and Whitepaper
“Our coin/token will change the world.”
“We will disrupt the x industry just like how eMail technology killed snailmail”
“With our new decentralized platform, the world is no longer the way it used to be”
Scam ICOs tend to focus more on “buzzwords” that could potentially grab the attention of the newer, less educated investors; in contrary to actually focusing on the sort of technical stuff that could potentially answer the reader’s questions.
Sure, a project’s use of a few buzzwords would be fine; but a project that has a site/whitepaper that is buzzword-heavy is another red flag.
No Updates on their GitHub Repo
Most if not all cryptocurrency coins/tokens use GitHub as the team’s and community’s collaborative tool as it definitely makes development a lot easier and organized.
If the project’s GitHub repository has little to no commits, then chances are the project is not actually being worked on after all.
Take note that project developers can add random code to commit to their repository just to make people think that they’re actually working on the project.