I have participated in various ICOs, IEOs and other forms of crypto-related crowdfunding events since 2017. However, I admit that I’ve lost a lot of money from them because of not “doing my homework”.
The first time that I’ve encountered ICOs was on Facebook Ads. Before Facebook restricts ads related to Bitcoin, cryptocurrencies and blockchain technology, there were tons of ICOs that keep popping up on my newsfeed while browsing.
I was so curious about ICOs, so I’ve decided to give them a try.
For those of you who don’t know about ICOs yet, I’m going to explain this a bit. ICO (Initial Coin Offering) is a crowdfunding opportunity where participants come together to invest in a certain cryptocurrency project in exchange for digital crypto tokens.
In other words, we call them digital assets. When the token sale event is over and successfully reached the targeted soft cap, you can trade them for Bitcoin, Ethereum, USDT or other pairings once the project lists their token in a cryptocurrency exchange platform.
It’s almost similar to IPO (Initial Public Offering) where only accredited investors can participate. As for ICOs, almost everyone can participate (depend on the country’s restrictions like the U.S.).
However, almost all of the Initial Coin Offerings in the past, present and future are potential exit scammers or likely going to fail due to numerous circumstances. Until now, this problem keeps developing and never goes away for good.
What is an ICO – This article explains different aspects of ICOs
Without further ado, I would like to share five critical tips before you invest in any ICO or crypto-related project.
Tip #1: Triple-check the legitimacy of each team member and advisor
This is one tip that most of the participants are ignoring because of the hype that they believed in.
I would say that an ICO is a potential scam if:
- The ICO doesn’t have a team page.
- The ICO doesn’t have a whitepaper.
- The ICO does have the names of team members but no photos.
- The ICO does have the names of team members but using fake photos.
- The ICO does reveal the names and photos of each team member and advisor, but with no verified LinkedIn accounts.
- The ICO does reveal the names, photos and LinkedIn accounts of each team member and advisor, but no profile background that they’re actually working with the company.
- The ICO does reveal the names, photos and LinkedIn accounts of each team member and advisor. However, the LinkedIn account wasn’t established and can be created as fake.
In order for me to deeply check them, this is what I do:
- I take one photo of a team member and save it as JPG or PNG. I go to Google Photos and upload the picture to see if there were any matches. This is what I called “reverse image search”. If there are search results with a different person, the company have committed identity theft and may consider as a scam.
- I go to ICOBench or any similar directory to check if the project’s team members and advisors passed KYC (Know Your Customer).
- I personally add and connect with them on LinkedIn and to ask if they’re indeed working with the company or not.
Tip #2: The CEO/founder and team members must have a video of themselves about the project
I had to admit that this is clearly one of the tips that I’ve failed before. Last year, I was recruited to be the main advisor of a Croatian-based project and I’ve checked the website.
Although the CEO is real because of our video calls, I find out that he has no video showing himself about the ICO. It was a video explainer but doesn’t show transparency at all.
Another scenario of mine is that my friends contacted me to be a part of their team. As I have checked everything, they didn’t have a video of their CEO/founder explaining the project.
I suggested this to them many times, but they didn’t listen to my advice. As a result, their token sale has failed and didn’t raise funds. They paid some Ethereum for the IEO, only ended up being put to waste.
There’s another project that is totally living up the hype of most community members who are supporting them no matter what. The project concept is superb, their token sale event was successful, and the token’s value keeps growing in various exchanges.
However, I just found out that their Youtube channel is empty. There are no videos of the CEO/founder or any other team member, which is something fishy for me. Not revealing themselves through videos represents a lack of transparency.
As a result, they’ve silently abandoned their project and the trading volume of the token got zero for the past several days.
In order to make sure that the ICO is legit, it’s essential for a CEO or founder of the company to show up at the front of the camera explaining the project. Not only that, but his core team members would also do the same to promote transparency.
Tip #3: Social media channels must show pictures of team members and their recent activities
Another critical tip that I want to share is that the ICO must have active social media channels. However, social media channels only showing fancy banners or video explainers is not enough for me to prove that they’re real.
For example, there’s one project that I’ve admired a lot. The project concept looks attractive, but all I see in their social media channels were a bunch of creative banners promoting the token sale.
I’ve browsed deeply in their social media pages, and I don’t see any team members posting pictures of themselves and their activities. As a result, they have a lack of transparency.
When I checked the social media pages, I would say that their team is real if they have pictures of themselves and the activities that they’re doing.
Activities like community meetups, team meetings, attending blockchain and crypto-related conferences or so. Not only that, but they should also have uploaded some videos in their social media pages about the progress of their projects and so on.
Tip #4: Having a live MVP and whitepaper during the token sale is a major plus
I have to be honest with all of you. Only a handful of projects that are doing ICOs are having live MVPs (Minimum Viable Prototype). In other words, it’s what we call as products.
Most of the ICOs nowadays are raising funds to develop their product to the community. Sad to say that lots of them didn’t reach their target amount to raise that amount of money. There’s just a handful of ICOs without live MVPs that are succeeding with their plans.
I believe that when those companies (whether new or established) already have a working product or MVP, they have a great chance to succeed (depends if their concept attracts enough participants).
One reason that they need to raise funds despite their working product is for them to enhance their company’s future developments that would benefit the community.
It is also essential that every ICO must have a legit whitepaper. It is where all of the project’s in-depth and technical details are revealed. Most of the participants are lazy to read or ignoring the whitepaper.
One scenario that I would like to share is coming from one of my long-time colleagues. He participated in an ICO and invited me to join. However, I’ve asked him about their whitepaper, and he had no idea about it.
When I checked the scam ICO’s website, there’s no whitepaper and team is anonymous. I concluded that when the right time comes, they will initiate an exit scam.
It is why when I participate in ICOs, I would highly prefer those with working MVPs or products and has detailed whitepaper.
Tip #5: Triple-check endorsements and partnerships from various influencers and companies
Lastly, this is another critical tip that you really need to care about. I have seen some ICOs who claimed that they have partnered with some certain legit companies and firms.
There are other projects who claimed that an influencer, celebrity or a well-known guy or gal in the crypto space have endorsed them for good.
However, not all of them are true.
If you know Ian Balina, he is a well-known blockchain entrepreneur, speaker and investor. There’s a company who created a customized attractive banner with Ian Balina’s picture with a fake quote.
Afterwards, Ian Balina ranted on Reddit telling his community that he did not endorse that ICO. He demanded that ICO company not to mislead their customers by putting his picture and fake quote on the banner without his consent.
If I see a similar ICO claiming that an influencer endorsed them, I would definitely search it on Google, Facebook or any other social media to look for some photos, videos, etc.
However, the easiest way for me to confirm if those influencers are indeed endorsing the ICO is to reach them out via social media.
Another scenario that I would like to share is all about company or entity partnerships. There’s a real estate firm who is running an ICO that claims to be partnered with various companies.
However, I cannot be sure if they have sealed an agreement or having an on-site contract signing between two parties.
In order for me to verify if they have actually signed partnership contracts, I must ask the partners directly by sending them an email to confirm.
However, if a certain partner confirms the contract signing through photo or video, that would claim that their partnership is not a fluke.
Final thoughts
Even if you follow all of these tips, there are no guarantees that ICOs would make you successful. It’s still considered risky to participate.
However, risks may lower a bit if an ICO meets or exceeds your expectations based on the tips that you have learned today. As I’ve advised my fellow newbies, invest at your own risk. Good luck!
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