While ICOs are an ethical way of ‘crowdfunding’, the process is not without potential hiccups if you fail to do due diligence on the offering company, its backers and advisors. There are apparent signs that a seasoned trader can sense to evaluate whether an ICO is going to be profitable or not.
If you are keeping a keen watch on the crypto market and contemplating investing in an upcoming ICO, there are several factors that you need to consider to stay away from the scammers. Let’s find out 5 ominous signs that indicate a red flag – you should not proceed further.
- Unrealistic Promises
If promises sound too good to be true, then they probably are. While it’s true that the crypto market has the potential to offer fantastic ROI, it is unwise to expect unprecedented gains. Stay away from ICOs that promote unbelievable claims like “10X returns in ‘X’ months guaranteed”.
- Insufficient Information on Website/Whitepapers
A detailed whitepaper with clear roadmap highlights the viability of the ICO. If you find insufficient information on the whitepaper or the website, it is usually a sign of unprofessionalism. When someone is giving away the shallowest of details, the probability of it being a scam are higher. It should be enough to ring the warning bells that there’s a disaster waiting to happen.
- Credibility of Team Members
It is highly recommended to identify the acumen of individuals behind the project. Are there real people on the team? If yes, are the reliable and well-known? Even fake projects may use the names of reputed crypto advisors to enhance investor confidence. Make sure to do your research right as it can be the most important step in your due diligence.
- The Public Sale Lasts Too Long
When the public sale runs for a prolonged period of time, it usually means either of the two things – 1. the target cap is too high or 2. the demand is pretty low. In both the cases, it’s a clear sign of being uncompetitive/unattractive. You should better avoid such an ICO.
- Promotional Overdrive on Social Media
ICOs that has confidence in their products don’t resort to excessive hype on social media. When you see too many Facebook, Twitter and Google remarketing banners, that’s a red light. Do keep it in mind that it’s always better to err on the side of caution.