How to prevent yourself from fake ICOs and ICO Scams
How to prevent yourself from fake ICOs and ICO Scams:
By the emergence of blockchain technology with its unique features like decentralization and secure transactions, lots of new crypto currencies are introduced in different fields with different features. Most of the crypto coins raise their funds or crowdfund through the process - ICO. In ICO, they will carry out a sale of the new tokens and many investors buy these tokens if they prove to be worthy and if they are sure to have a good place and price in the market because of its individuality and purpose. But there are also a number of fake ICOs and ICO scams happening for different crypto coins. There is a need for the investors to identify such fake ICOs.
There is a platform called Wings for identifying such ICO scams and to find genuine projects. In Wings, they will forecast the success of a particular project or its funding campaign by analyzing its white paper and features. But Wings is under construction and even if the platform can identify the fake ones from genuine ICOs, many scam ICOs will not register for the platform so that data about those shady companies will not be available for checking.
There are some common red signals or markings that scam ICOs carry with them. You can identify them and can invest your hard-earned Bitcoins only on worthy genuine projects. But even honest projects sometimes fail due to many other reasons. So always remember not to invest more than what you can afford to lose on any projects.
Here are some of the red signals by which you can identify fake ICOs and ICO Scams:
Unrealistic goals of the ICO: This is the first and foremost sign that shows whether a crypto coin ICO is fake or genuine. Scam projects more often will make very bold claims about their product, even though that product offers no new and innovative features. It's not likely that the introduction of a cryptocurrency can end all the global crises. If some crypto coin development team claims that their cryptocurrency will replace Bitcoin or Ethereum, get an excessive amount of users, or increase by a large amount in the market price charts, you can add that project to the scam list. If the project is genuine and has that real potential, then its developers will never make such vague promises. They will tell you a clear idea about what all are the features and functionalities of that particular project. No serious team will make a prediction about their coin's future market price and success.
It consists of just buzzwords: Our decentralized blockchain-based platform will disrupt the landscape of cryptocurrency investment while building a trustless nation of pseudonymous users that leverage swarm intelligence technology to provide real world financial services in a tokenized ecosystem.
This is a typical example of creating a buzzword salad as the description of a crypto coin or its ICO. The scam project developers use many buzzwords and make a sentence that looks so great, but actually, it is just vague and full of empty promises. If you read a paragraph, and if you have learned nothing new from it, then the meaning of it is that they will not be genuine. Some people have the tendency to use buzzwords to enhance the quality of the text and to avoid the boredom of the readers. But if it's genuine, we can at least get some insight into the real information from the text. If there is no such real information you can obtain from a project or ICO description, then it is one of the signs that the project is fake.
Whitepapers also contain only buzzwords: When you read the common description of the ICO, if its just a buzzword salad, people will expect the project's white paper to be more precise and to provide more technical and real information. Many developers follow that strategy of giving more technical part or content of the project on its white paper and simplify their project on the website to get the hype for the project. But if even the white paper contains no real information, but just buzzwords arranged with no specific meaning, then the project is certainly a scam. Whitepapers usually explain how the new platform works both on the high-level descriptions and specifications. This basically includes charts, calculations, simulations, specifications, etc. If ICO project claims that it is building some sort of decentralized service or token with new features and actually provides no explanation of how it works specifically, then it is just a symbol that it may be a scam. A perfect example of such a scam ICO was the deClouds which had no real product but had claims that made no sense at all.
No Code Repository: The code is what matters in a project most. Even if the project announcement and white paper are complete uncertainties and nonsense, you can always count on the code of the project to know whether it is a scam or not. Codes of the project will be found from the repositories like Github or Sourceforge. If the ICO is providing no link to the code at all or if the project is just a clone with a few changed lines of an already existing code, then the project is not worth your time or money.
The team behind the project: The team behind a certain project is very much important. You have to find out whether the developers of the cryptocurrency are well established in the same field, or they have any past successful projects in the same field or are they known in other areas also, etc. If you can be sure of the above facts, then the project will be an interesting opportunity for profit making. But there also you have to make sure that the person or developer is actually aware of the project. Or else you may invest in a scam ICO, because some scammers may use famous names in order to get attention. You have to be careful about anonymous developers also. But all anonymous developers' projects are not fake. Some of the great projects Nxt and SuperNet are developed by anonymous developers. But if the developer has no history in the crypto coin community, then there is a good chance for the project to be fake. You have to clearly check the profiles of the developers in social media. Anyone even fake developers can create a decent account. So always try to find out their recent and past activities and the time when the account was created. There is a handy feature in BitcoinTalk which is a popular cryptocurrency forum where announcements of new crypto coins or ICOs are made. Whenever an account is reset, the details will be showed on the page for 30 days. So by checking whether the account was recently made active, we can find out if they are fake or not.
Compromised escrow: Escrow is basically a service or a wallet that holds coins for their customers until a certain deal is completed. The vendor gets the funds once the task for the client is finished. If the job is not finished, the money will be returned to the client. The funds during ICOs are usually stored and transferred through such Escrow system, which is commonly a multi-sig system. In this multi-sig wallet, the multi sig key owners are two or more trusted members of the community and one project team member. Let's consider a scenario where the project member has one key and two community members have two keys of a 2-out-of-3 multi sig wallet, then the team member requires permission from one of the other key holders in order to move the funds. This is why itâ€™s important that at least two of the escrow members are known community members and have confirmed their intent to be an escrow. deClouds scam ICO which was mentioned before had such a multi sig escrow system in which 2 of the 3 parties were the same person, one in disguise had the key so that they could move their funds. This is an extremely important way to understand whether an ICO is a scam or not.
Fake pictures: This is an uncommon symbol, which is not used by lots of scammers. Because Photoshopped images are very easy to distinguish from the real image and even if you have a professional way of editing, there is software (free and paid) that can easily detect a forgery. But there are scams which use such aids also for creating a scam. The example of using a photoshopped image also happened with the deClouds scam in which they have said about a partnership with the UBS Bank, which was fake. To prove the partnership, they photoshopped an image of the bank professionals with the deClouds founder which the bank found fake because they had the original image, thus recognizing deClouds as a scam ICO. (original source :firstname.lastname@example.org.) .