With so many initial coin offering (ICO) events launching in the market, a lot of investors are attracted to them. Unfortunately, the individuals and companies that hold ICO events, have many tactics to fool the investors and turn the events into scams.
Identifying the possible threat of such events is very important to avoid cryptocurrency scams. If you are familiar with joining the ICO events then you may not need much assistance to tell them apart.
However, initial coin offering events are not regulated by any central repository or organization. Making it vulnerable and less trustworthy for people to invest their money in such events.
What are ICOs? How to Stay Safe from a Crypto ICO Scam?
What are ICOs?
If you are not familiar with the term ICO, it stands for Initial Coin Offerings. Initial coin offerings are a kind of marketing activity. Companies often hold ICO events to encourage new investments in their projects.
Whenever a new crypto startup needs money they often lean to holding ICO events. Offering their new currencies in the form of tokens. They are known as popular fundraising methods. That is useful when a company or individual wishes to launch a new app, cryptocurrency, or similar project.
How to spot a Crypto ICO scam in 2021?
Spotting crypto scams in 2021 can be very difficult, in case you don’t have enough prior experience. In fact, the majority of people who experience crypto scams are beginners. As they don’t have enough information on how cryptocurrency and airdrops work.
In fact, there are many cases where even experienced traders are victimized by cryptocurrency scams. The main reason behind the increasing number of cryptocurrency scams is the constantly growing blockchain technology.
Despite the circumstances, there are many methods to track an ICO scam easily. Let’s go through some of the easy ones that you can use before investing in an ICO event.
1. Enough research is necessary
Not performing enough research before staking your money anywhere isn’t a wise decision at all. The same way ICO events also require enough research if you are looking forward to getting the most out from them.
2. Lack of a roadmap
Legitimate companies always have everything in place. So whenever they announce any huge event like an ICO, providing the roadmap proves the transparency of the event.
You can think of roadmaps as a blueprint for the entire project. As roadmaps are a kind of infographic published by the company to allow potential investors to get a brief idea about the event and how it works.
3. Go through the ICO team data properly
Before joining any initial coin offering events make sure to gather enough information. The information can consist of members’ detail, their personal information, and their financial background. It can help you find out whether this project is worth investing in or not.
4. Importance of whitepaper
The whitepaper is an essential document for passing out valuable information about the company. Being the foundational project for the entire project, it lays out the goals, objectives, strategies, and project details for public disclosure.
Companies that hold legitimate events provide this document to build a bond with their future consumers.
5. Get help from the crypto community
If you’re completely new in the cryptocurrency industry, you may not know that there are tons of people out there within the crypto community. They will be more than happy to help you with anything.
Thankfully you can get in touch with them on a variety of platforms like telegram, Reddit, Twitter, Linkedin, and Facebook. The cryptocurrency community is huge and full of experienced people.
Investing in ICO projects is not easy without any prior experience. Because there is a high possibility that you may lose your money when the company abandons the project. So we highly recommend taking necessary precautions before jumping into such events.
You can use the methods mentioned in this article to prevent any loss. The majority of them are easy to implement so don’t worry if you’re a beginner. keep your eyes on the community changes and announcements, because they are really quick when it comes to finding an ICO scam.