Scammers like the crypto industry since there are a lot of technical and difficult to understand details plus a lot of hype that everyone can become a millionaire after making an investment in a promising project. Meanwhile, recent research found that crypto scams have even more risks than online payment fraud which is on the rise as well. Are there ways to protect yourself? Let’s find it out.
Potential Threat of ICO Projects
Many novice investors are interested in investing money expecting that in the future the cryptocurrency will be as successful as Bitcoin or at least ETH. With such hopes, they are investing in “promising” projects. However, there is always the risk of deception. How to know if a cryptocurrency is legit?
When choosing a reliable project, you should pay attention to such decisive factors as:
- The composition of the team, the members of which should be real.
- Qualification of specialists, which will determine the success of the project.
It would seem that everything is obvious. But how to identify scammers? Below you will find a guide on how to choose a reliable ICO project.
Top 5 Tips How to Determine That an ICO Project Is Not a Scam
If you do not want to stumble upon the crypto scam, then the following recommendations will help you secure your financial investments.
1. Get to Know the Team Members and Explore Site
Before deciding to cooperate or invest in a project, analyze the team. Real projects leave links to the social networks of each participant. Your task is to browse social media. It often happens that fake profiles with stolen photos are created. Check out the profiles and make sure of their reality.
Also, pay attention to LinkedIn. A lot of technical specialists and novice startupers have LinkedIn profiles so be sure to monitor if there are project representatives in this place. If you are unable to find their profiles with the one-click, then this is the first alarm!
As for the site, today it is a popular situation when scammers make a twin of a real project. So be sure to check the site, see if there is a lock near the URL.
2. Contact the Team
When it comes to large investments, you need to be extremely careful. Crypto industry experts do not recommend using social media and forums as the only way to communicate but find out as much as possible about the startup creators.
Ask where the project team is located. If possible, schedule a real meeting. If there is no opportunity to meet, then organize a web conference. If the company refuses, this is one more reason to be on alert. Real and serious companies are not afraid to communicate with potential investors in any possible way. So this is a good way to identify who you are dealing with.
3. Ask to Send You a White Paper
A promising project has no chances of getting funded without White Paper. Even if an entire site is devoted to the project but this is not an indicator. But why the White Paper is so important for both ICO project initiators and potential investors? Using the WP, you can get the following information about the project:
- disclosure of ideas;
- target market;
- technical implementation of the project.
The White Paper is a business card of any ICO project since it is the first thing a potential contributor will interact with. For this reason, it is necessary to pay attention to the quality of this document and, of course, to the main aspects of the project.
“We are often asked to help with a White Paper writing, and all the projects were real. Fraudsters create such documents independently, and most often they don’t write more than 5 pages. However, a real Write Paper should be much longer, since only one technical part will take up many more pages.”- says the founder of Online Writers Rating.
Let’s go back to how WP can benefit. According to industry gurus, you can use WP to understand whether a project is a scam or not. You need to pay special attention to the last stages of investing that are described in the WP!
4. Check the List of Advisor But Don’t Believe It 100%
You should never make a decision about a project because of who the advisor is. Famous and professional specialists are not an indicator of a company’s reputation and professionalism. There are also a few more significant nuances that do not make the list of advisors a reliable point for making a positive decision.
For example, specialists can be paid to post information about their participation in a project. Often, cryptocurrency scammers simply use this information without notifying the advisor himself. This is done to actively promote the project and create reliability among potential investors.
You can directly ask the advisor if he is related to the project, but remember that this could be advertising. So don’t rely on the list of advisers only when deciding to invest. Also, remember that sometimes experienced professionals really contribute to the development of the new but promising project.
5. Meet the Founders of the Project
It is not difficult to get to know the founders of the project, but this acquaintance will give you a good understanding not only as to whether the founders are fraudsters, but also an understanding of the real prospects of the project.
Be sure to ask how they got into this industry and what they did before. Perhaps a founder with a pizza peddler’s past can be a genius, but if the entire team has no experience in the IT and crypto industry, think once more whether your future investment is safe.
However, if the project creators and their team have experience with technical developments, talk to former partners who have collaborated with them before and discover their experience. Good reputation and experience can serve as a guarantee that you will not be fooled and left without money.
The Final Verdict
It may seem that these tips are trivial, but this does not mean that they are ineffective. With the increase in the number of scammers in the field of cryptocurrency and blockchain, there are more and more “are cryptocurrencies safe” and “how to determine the safe one” questions. That is why, everyone who is going to invest, should know and apply the above recommendations. In this case, you can save your finances and eliminate crypto investment risks.
Author Name: Ana Mayer
This article was written by Ana Mayer, a project manager with 3+ years of experience. While projects can do without her participation (which means almost never), she likes to read and create expert academic materials for the Best Writers Online review website. Such work gives her the opportunity to write articles on the most relevant topics of today.
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