Estimating some of the factors deciding the legitimacy of an ICO and keep yourself safe from ICO Scams
The Initial Coin Offering is the digital online counterpart of the Initial Public Offering. It is also a method of crowdfunding in order to raise huge amounts of money for a particular project. An Initial Coin Offering has been proved very powerful when compared to the Initial Public Offering because it reaches a wide number of investors and the process is also very instant and easy. However, there are a number of Initial Coin Offerings which are being made these days most of them are just a fraud or scam. Since they have the potential to raise a large amount of money in a small duration of time, the fraudsters are taking advantage out of it. Hence before making any kind of investment in the ICOs here are the six guidelines that one might consider in order to safeguard themselves from being scammed.
1. The team of the ICO
A good team of developers working on the project provides a good credibility to the Initial Coin Offering. The ICO must have a very clear cut information about their team members along with the crucial information such as specialization field, experience, previously worked projects and so on. It would also be very helpful if the website can provide links to the social media profiles of the developers so that the investors might be very sure about the authenticity of the team members. A LinkedIn and GitHub profile of the developers can give direct information about their expertise in the field.
2. The role of the token (security or utility) in the project
The most common question asked in the crypto field is that “The blockchain is the solution, but what is the actual problem?” In a similar fashion, one must ask that the tokens which are being issued “Are they any of real use?” Does the project really require the Initial Coin Offering to have this particular token? Does it fulfill the requirements that the project demands?
On getting legitimate answers to such questions, the investors can gain enough insights about the project, and the investment can be taken ahead.
3. The terms of the ICO: Read to be safe from ICO Scams
The new surprising terms and conditions which come out of nowhere during the Initial Coin Offering is the most unpleasant thing that an investor can never imagine. Hence it is important for the investors to go through the complete terms and conditions of the Initial Coin Offering prior to the open date.
4. The roadmap of the ICO
A roadmap or a proposed timeline is a very crucial factor in deciding the transparency as well as the seriousness of the developers towards the project. It is very important for an investor to know about the steps that the project would be taking after the ICO and the same must be publicly posted on the website.
5. The code and the community of the ICO
As the whole concept of the cryptocurrency world revolves around the “Code”, it is the most important factor to be considered and also the most difficult one to evaluate. The code of the project must be public on maybe GitHub and to verify, it must have been audited by a trusted third party. An efficient code reflects the confidence of the developers and thus the ICO success.
Also, the community surrounding the project must be very dynamic at the time of ICO. If there is a lot of slackness among the people then ICO may not be robust enough to sustain.
6. Reputation and legal aspects.
The views and the public opinion about the project can be gained from a number of discussion forums such as Bitcointalk.org, Reddit, also at various Blockchain meetups. The review of comments related to the project can give an overall picture of the attitude and beliefs of the public towards it.
An Initial Coin Offering with legal specialization tends to gain a lot more seriousness than the ones without it. If not, having a legal expert externally is necessary.
This article is not a complete and final strategy for an ICO investment. Keep yourself secure from ICO Scams. The conditions might differ from person to person. All the risks related to the market condition must be kept in mind prior to any investment and a consultation with the expert is highly recommended.
Read the Top 10 ICO Scams here. Also check the top 12 ones that raised the maximum funds during their offering. We also covered top ICO listing platforms in an article.
