Over the past few years, blockchain and cryptocurrency are growing at the fastest pace. Each month, we see the launch of several new cryptocurrencies, which brings along a series of ICOs (Initial Coin Offerings).
Due to technical innovations and the rapid development of a new trading paradigm, large crowds are readily adopting these technologies to invest their money.
However, all of this together has had some consequences. Although people are investing in cryptocurrencies to make profit(https://steemexperts.com/5-best-ways-to-make-money-with-steemit/), some scammers in the market are seeking to steal their investments. With numerous cryptocurrency fraudulent and sketchy tokens and coins, it is daunting for investors to remain safe. It is difficult to figure out whether your prospective cryptocurrency startup is legitimate or not. Below, we have outlined some of the possible ways to identify ICO and cryptocurrency scams.
• Research about the team
A team of highly-qualified developers and other administrating individuals is behind the success of every ICO or cryptocurrency. The world of cryptocurrency or blockchain is dominated by some prominent names such as Vitalik Buterin, the founder of Ethereum. Having these names on a developer and administrative team is enough to break new projects. As a result, most scammers are using fake founders’ ID and biographies to bag more projects.
Thus, the best way to prevent yourself from falling into scammer’s trap is to perform thorough research about team members before investing your hard-earned money. For example, if you fail to find any information about the developer on LinkedIn or any other social network platform, then it’s a big no-no.
• Analyze the whitepaper
An ICO or cryptocurrency whitepaper is a document that has all the information about the project. This document is the company’s business plan, which outlines its products, background, mission, structure, strategy, team, and plans. Thus, whitepaper helps in revealing if any company has a flashy website or lack a rock-solid concept.
When it comes to analyzing a whitepaper, the first step involves reading it thoroughly. Also, check if the whitepaper contains complementary resources such as legal concerns, financial models, a roadmap of application, and SWOT analysis. It is a bad sign if your potential company fails to offer whitepaper.
• Watch for token sale figures
ICO or cryptocurrency depends entirely on the token to ease the process of crowd funding. Legal companies allow their potential investors to easily view the currency system and the progress of the token sale. Therefore, to confirm whether your preferred company is legitimate or not, look for token sale figures over time to see its progress. If a company doesn’t allow anyone to view how its ICO is progressing, then should never invest in such companies at all cost.
• Check the feasibility of the project
Another important step towards identifying the ICO and crypto scams is to know how feasible the project is. Needless to say that cryptocurrencies and ICOs with the fundamental structure to outshine their competitors have the greatest chances for success. However, there have been instances when even highly-publicized launches experienced a hit back after dimming the initial interest. Therefore, you should choose a company that has a feasible set of goals.
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