Cryptocurrencies are in demand these days as their popularity soars, but unfortunately, some people are taking advantage of the sought-after digital currency to dupe people into scams. If you aren't careful, you too could fall victim to deception and not only lose your money, but also have your private data breached.
Satis Group Crypto Research recently announced findings that a whopping 81% of total initial coin offerings (ICOs) since 2017 have been scams. The risk comes from cryptocurrency startups creating initial coin offerings, with some of them knowingly overestimating their value and encouraging investors, artificially inflating the price before dumping their own currency (a pump-and-dump scheme).
Here are some warning signs to be aware of when considering an initial coin offering. Pay attention, because these tips can help safeguard your financial future!
It Sounds Too Good to Be True
If the ICO is making unrealistic promises, turn around and run. There are no guarantees when it comes to cryptocurrencies, so how can you be promised profits? If it sounds too good to be true, it usually is.
If you think you may be dealing with a fraudulent ICO, look into the backgrounds of everyone on their team using a trusted background search site. It may turn out that the team members have a history of fraud, or perhaps don't even actually exist at all. You should also be on the lookout for plagiarized whitepapers, unprofessional sites full of spelling errors, being unable to actually speak with developers, as well as other red flags.
An Undeveloped Plan
A real ICO should have a well-developed roadmap for expansion and advancement with thorough explanations. If the plan doesn't exist at all, seems unrealistic, or is not well-thought out, take your business elsewhere.
A cryptocurrency project that is not a scam should obviously feature supporting code. Check for a GitHub repository. If there is no link to it or a link to just empty code, it's time to cut off contact.
Premining is when a developer takes a certain amount of currency for themselves, and if it seems unbalanced and unfair, it could be a sign that they are planning on taking the money and running. Don't believe a scammer when he says that things will change and balance out later on down the road. Fairness should exist from the start.
While there are a lot of ICO scams out there, only 11% of the money raised by ICOs have gone to these cons. Always do your research before getting involved with an ICO. These tips will help to keep you and your money safe from deceptive swindlers. Even if you can't find anything concrete, if something just doesn't feel right, you're better off trusting your gut than making a bad investment.