Valuable tips to avoid ICO scam

ICO or an Initial Coin Offering is the latest trend in the world of cryptocurrency that defines the application of token sales. The process involves a ‘crowdsale’ to fund a new startup which might yield significantly greater investments than a Kickstarter campaign.

ICO’s provide organizations with the possibility of holding crowdsale that elevates the interest of investors and the crypto community.

A major downside of an Initial Coin Offering is the lack of legitimate guidelines and government regulations when in operation, allowing for the possibility of scams to occur.

This makes it hard for investors to distinguish between projects that are potentially good and money grabbing schemes.

There is no solid filter which can be applied to picking out great ICOs.

The uncertainty behind the success of a project itself can make people reluctant to invest.

This does not mean all ICO’s are bad investments.

By gaining experience in investing through good practices and patience, one can learn to avoid ICO scams.

There are several best-practices that should be followed in judging an ICO.

Scope of Product

Most of the ICO projects cannot guarantee a working product during the ICO phase. A cryptocurrency based startup can be somewhat judged based upon the past success or reputation of the team members or the company itself. However, it’s important to consider that because the startup might have a completely different setup than from what it operated under in the past.

Also, the product quality by no means have a direct relationship with the amount investments received through the ICO.

Also, the quality of the product should not have a relationship with the amount of funds raised through an ICO. It’s programming, it’s technology, it’s skill. You shouldn’t really use the excuse of not gaining millions as the reason for your team failed to deliver a decent product.

Product based categorization of ICO projects:

Scope of Coins

The sale of “application coins” was the result of a long-term process to help “coinify” a project. This led to coin variations getting introduced to the market, that could be exchanged for crypto currencies like bitcoins and others.

Coin based categorization of ICO projects:

Outcome of ICO scope analysis

Analyzing the reliability of a project, based on the above two concepts should give you a good idea as to which ICO projects to invest in.

One should completely avoid projects that fall into the low category of either scope.

The risk of investing in projects with undelivered products or questionable app coins, increase in proportion to the amount invested in the project.

The larger an ICO grows the more unstable it will become due to the complexities raised and other factors, including human ones.

Investing in projects with high or medium categorization in both product and coin based scopes will open up the opportunity for a pleasant ROI.

This analysis on ICO’s should help readers be more careful when investing and hopefully give some insight as to how they can avoid being scammed.