Investing in Bitcoin is a slippery slope if you are not cautious about it. And with Mt. Gox CEO being just out of the prison, we want to give a reminder to people what NOT to do to safeguard your money.
Even though you can’t be certain if a project is a scam or not, there are a few red flags that you should be looking out for. Here’s a quick rundown of points you need to remember.
This is a pretty vague thing and applies to everything be it the technology or their goals. However, one of the MOST important ones to look out for is unrealistic returns. No company will be willing to give you more than what you deserve, and why should they?
Even when it comes down to traditional investment, no one will ever guarantee you any profit. There is no certainty on how the future unfolds and if they are claiming that their token will increase in value, highly likely they are lying. Cryptocurrencies are still a volatile asset so no if Satoshi couldn’t claim this, then no company can either.
It is very easy to get impressed by big names and people so this tip is in second in line because it is again, very important. Most scam projects use online pictures and list them as their team members. There have been reports of Ryan Gosling working as a designer for a project.
But not all are this dumb so they hire people to pose for them as CEOs, CFOs, etc. Sometimes they even go one step ahead and hire homeless people to play pretend. This one can be harder to bust so you might wanna hire a girl that can run a background check since we are so great at stalking!
Or, if that doesn’t help, you can use TinEye or Google Images to see if the person is who they really claim to be.
White Paper Could Be the Biggest Red Flag
And, that’s true. It could be the biggest giveaway to a scam project. White paper tells you what the company is up to. A good white paper will have the following:
- Market research
- Design work
- Proper calculations
- Conceptual development
Hence, writing a white paper takes time and effort. Something the scammers cannot afford.
So if you happen to stumble upon a sloppy, generalized, miscalculated, unrealistic roadmap, it’s a no go for sure!
Project’s Funding Plan
We call this PFP for very obvious reasons.
An honest ICO will indulge you in the nitty-gritty of it’s spending. Funds are generally allocated to the developmental area, marketing, and advisors, etc. However, if they have prioritized their lawyers, experts, or their own team then… RUN. Don’t walk, don’t strut, we say RUN.
This one’s fairly obvious but a decent ICO will show you something before they ask for your money. This could include MVP (minimum viable product), some strings of code, or at least some partnership with a respectable company.
These rules aren’t your ticket to a good, working project but they can come in handy. One last golden rule that is everlasting is; be sure to use your common sense, don’t invest more than you can afford!