At the end of 2017, the share of failed ICOs was 80%. Projects were blown away at the launch stage, could not provide a finished product or even turned out to be empty to collect money. Has the situation changed now? Is it worth investing in topical ICOs or is the probability of cheating too high? Are there any signs by which failure ICOs can be identified in advance? We will describe in this article!
How is the ICO market today?
A profit is considered a good indicator even at 10-15% in classical investing. The return on cryptocurrency investment often amounts to hundreds, and sometimes thousands of percent. Not surprisingly, in recent years, more and more investors have begun to look closely at cryptocurrency start-ups and actively invest in the ICO.
Over the past year, several hundred ICOs worth about $ 4 billion were held. Many startups ended the year with a solid profit, which cannot be said about ordinary investors.
At the end of last year, many experts predicted that in 2018 cryptocurrency startups will be less, but their quality will be higher. They have faced too big disappointment last year.
The United States, Canada, Singapore and some European countries have decided that an ICO should be regulated by law if tokens fall under the category of stocks or securities. And China, India and South Korea have banned ICO altogether.
Now, in order to promote ICO in the same America, startups will have to be officially registered, get permission from the Securities and Exchange Commission, and then pay taxes to the state treasury. The same will have to do and exchanges selling tokens issued during the ICO.
It would seem that now investing should become more secure. So it is, but with one reservation – so far only projects oriented to large corporate investors are registered and get permissions.
Moreover, according to experts, market is still overloaded. Only in the first quarter of 2018, more than a hundred ICOs are scheduled for release. And, in order not to miss the choice, you need to know how to distinguish a successful project from a failure.
Fortunately, there is an easy way to protect your investment from unintentional scam – to invest only in ICO with connected smart contracts. Ideally, the contract should state that in case of failure the investor gets his money back.
This rule helps protect against intentional scam. However, very often fraudsters create such attractive offers that many novice investors simply give them their money in the hope of the notorious “perhaps lucky”.
The failing ICO: how to identify scammers?
First you need to evaluate the prospects of the idea of ICO. If you are not an expert, this will be difficult. However, it is possible to detect signs of fraud without deep knowledge in the blockchain sphere.
Here it is even more difficult – it is necessary to evaluate the prospects not of the idea itself, but of the technology created for its implementation. Even a well-written roadmap or White Paper will not help you objectively assess the strengths and weaknesses of the technology being promoted.
In this case, experts advise to pay attention to feedback. Conscientious developers are actively communicating, answering questions from potential investors and even creating thematic communities to discuss the project.
After all, developers who are planning not only to raise money, but also to launch a project, are themselves interested in potential investors getting as much information as possible about a startup.
Many experts generally put this item at the top of the list. After all, even the most promising idea or unique technology can fail because of the incompetence of the people who promote it.
Therefore, always look for team information on the ICO website. Most often, it is placed in a separate section (“Team”) or is placed at the bottom of the page in the format “photo name of the position in the project”.
Good teams tell about themselves. On their sites you will find brief biographies of developers, information about their education, career achievements and experience with blockchain projects.
On fraudulent sites such information may not be available at all. For example, there was no data about the team on the official page of the Tether project, until November of last year.
And be sure to pay attention to the main snag, because of which many investors have lost their money. Is there no information on the site that the issued tokens are not digital currency and do not carry any real value, and the developers do not undertake to change them for cryptocurrency or fiat money?