With Bitcoin skyrocketing, people are rushing in hordes to join the bandwagon of dealing in cryptocurrencies and earning a profit from them. As a Decentralized token, with all the ignorance within the public surrounding cryptocurrencies, it sure has come out as a winner. As the market price of Bitcoin and other similar Alt Coins surges, there are many who are on the lookout for the next big thing in relation to Blockchain and Cryptos.
This rush to invest has led many companies to release ICOs (Initial Coin Offerings) of their companies. But, are all the ICOs that offered, real and hold any value in the future? Well, let’s first understand why ICOs are released.
Reason for Releasing ICOs
There is a saying, “Those who don’t know their history, tend to repeat it”. Guess that’s what is exactly happening. The Dot Com bubble in the 90’s is a testament to this. The Internet was new, everyone wanted to join the trend and hence there was a rush to create sites. Eventually when the traffic could not be sustained and the cost of maintaining a site couldn’t be met, the bubble burst and there were many cutbacks.
Similarly, people are rushing now to invest in Decentralized Applications (DApps) when half the crowd is in the dark on what they are investing in or the companies are so focused on cashing in on the craze that haven’t even developed their 20% of their product. All they have to show is a potential plan of action. Aka. Only Words!
ICO’s are released by many companies in the hope of crowdfunding their ventures. The motivational factor while asking for funds is to provide investors with coin offerings which shall hopefully giveback returns 10 folds (Much, Much more than 10 after looking at the market trend) in the future.
Though, there are many who have the potential of reaching great heights in the markets, there are few who are startups and shall eventually fizzle out and end in a fiasco. So, is it worth investing? Guess that’s subject to the market risk.
Ethereum is a favored platform for ICO trading. As more and more companies offer their ICOs, there are those who are out to scam people and make a quick buck. Ponzi scams of different types are abundant. They are easy to spot if all one does is, pay a little more attention to the details provided.
1) Verify the people involved: Many a times, the people whose names are displayed on a site don’t even exist on a social media let alone their claim to being big shots in this field. Just click on their profile. If they do not have a social media presence, they must have some Google pages dedicated to them that shall help you know more about them and their work in this particular field.
2) The tech that shall be used: Take the expertise of a friend if you are not a tech savvy person but an Ethereum code upon which the operation is supposed to be based needs to be confirmed of its existence. There are 7 different languages which are used on this platform. On hoax sites, a random code is placed which can be easily spotted by a person who knows computer languages. Read more about it here:
3) White paper: Every company has a set of their agendas, aims and future plan of action in place from the time of their start. All of this is usually presented as a White Paper. The claims that are mentioned, needs to be practical and realistic. With goals in place, the company shall be focused on achieving them. Content that mentions unrealistic goals of only profits and no losses wins over gullible individuals who do not know any better and they are soon separated from their money.
4) Escrow settings: When a company uses a wallet, it can be tracked back all the way through the beginning and its many different transactions. This is possible because of the Blockchain Technology on which the wallet exists. Escrow is basically a wallet and needs to be the top of the line category so that funds that were placed on it by you, return to just you in case of a fraud or if the transactions at hand are not completed. Be alert!
These are a few of the things that can help us be alert even before we actually invest in an ICO. Money is hard earned, make sure that you are investing in something that shall work towards giving you profits in return of your funds and won’t abscond to the Bahamas with your money! Constant Vigilance!
Next Read: Beware! Bitcoins Are Taxable