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How to Avoid ICO Scams

By Victor Hedman - January 14, 2018

 

If you are new to altcoins and ICO’s I recommend starting with reading this article I published earlier, it will give you a basic understanding of the subject.

 

Common pitfalls when investing in Altcoins

 

Beginners within the cryptocurrency space are easily blinded by fancy white papers and videos.

 

Looking at some ICO valuations, it almost seems like the market currently values an altcoin more by its web design and video graphics than its core technology and fundamentals.

 

Identifying an altcoin with true potential is not impossible however.

 

 

A basic understanding how blockchain technology and common sense can still go a long way in these early days of the market.

 

Remember a lot of people you are trading against get their information from CNBC Fast Money and other mainstream sources which completely lacks any form of basic knowledge about cryptocurrencies and why they are valuable.

  • See beyond the flashy white papers and videos! 

 

  • Attempt to create a simplified and objective opinion about the altcoin you are considering investing in.

 

  • If you believe it truly serves a purpose, chances are a lot higher that it will pump in the future.

 

 

In most cases investors will also find more than one altcoin attempting to serve the same purpose.

 

To the best of your abilities, compare their technology, adoption, how far in the development process they have come and current valuations to find the best coin to invest in for the specific purpose.

 

Avoid listening to the wrong people

 

As well as mainstream news channels, a lot of beginners in the cryptocurrency space offer advice about specific currencies posing as professionals.

 

They will hype “cheap” coins without any fundamental understanding of how market cap works.

 

Many youtube-investors will tell you Ripple (XRP) is cheap because it only costs $x while Bitcoin (BTC) costs $yyyyy. Those people fail to understand how that [Total Supply * Price = Value].

 

A coin with a 21 million supply, like Bitcoin, is going to be more expensive per coin than a coin like Ripple with a 100 billion supply.



And that’s not all.

 

You need to take into consideration how much is currently in circulation. How much is reserved for the developers? What is the inflation like?

 

Imagine X coin currently has a supply of 100. Tomorrow the developers increase the amount of coins to 200.

 

What would happen?

 

 

Avoiding scams

 

This might sound obvious but so many new investors in cryptocurrencies need to learn how to:



#DYORI know what you are thinking. But no, this is not the next hot ICO.



Do Your Own Research!


Do not get carried away by the FOMO reading shills on Twitter or “financial advice” from the “advisors” at mainstream news media. 


Many ICO’s pay crypto profiles on Twitter handsomely to shill and market their product.

This is generally a sign that you should stay away from a project because the developing team appears to care more about their tokens valuation than tech.  


Read the white paper and road map, investigate the team behind the product and make your own assessments, do not blindly follow the trades of traders that appear legitimate on Twitter.

 

In many scams, the teams have used stock photos on their biography pages. A simple google reverse image search would have saved many people a lot of money.

 

Most teams have Telegram chats or other ways of interacting with them. Join a group and see what they have to say, follow the updates closely. Teams with good communication and frequent updates on their project tend to be more legitimate and create better products.

 

Once you have decided to invest in an altcoin, you will be able to find almost all of them on either Binance.com or Cryptopia.co.nz. Stay tuned for our reviews coming up this week! 

 

 

Visit Cryptopia         Visit Binance

 

 

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