It’s easy to get swept up into blockchain bliss these days. With news stories abounding of people who have struck it rich during this modern day gold rush, many people have fallen prey to some get-rich-quick Initial Coin Offerings (ICOs) that rob them of their time and money. There was a recent crackdown on fraudulent cryptocurrency investment products, and according to the North American Securities Administrators Association (NASAA), several investigations are underway with more cases pending. Luckily, there are a few rigorous steps you can follow to ensure that you do not become the victim of an ICO scam
Although this gold rush is different than the wild west, one of the ways in which it is similar is that people are purchasing “junk coins” that aren’t worth the blockchain they’re recorded on. Even some high-profile, respected people have been swindled, posting about certain tokens on social media and then driving the prices up. Of course, they are usually notified of their error before it becomes an egregious mistake, which is why they sell off. Unfortunately, it is often the average blockchain newbie who pays the price at the end of the day.
With tales of coins moving at a rapid-fire pace, it can be easy to get caught up in the maelstrom and buy quickly. However, a bit of research goes a long way when it comes to making blockchain buys. Think about what you would do if this were a stock market situation. Chances are that you wouldn’t just throw caution to the wind and buy whatever came your way. You would invest ample time into your project, carefully evaluating its prospects. When it comes to blockchains, you’ll want to do the same. ICO Alert is a great resource that shows all active and upcoming Initial Coin Offerings, token sales, and crowdsales. There are also coin scam lists available online.
The best protection is to thoroughly research the individual team members of a project before you invest. For example, it’s a bad sign if there is no LinkedIn page or other social media about the developer or founder. In addition to checking for an online presence, make sure their activity seems to match up with the number of followers and likes they accumulate. Individuals who rarely engage with their followers yet seem to have thousands of fans may not be real people. One you’re determined whether the development team is real, check their qualifications. Do they have the experience they claim to have? Is their experience relevant to the current project?
Although many people become enthralled by all the possibilities of blockchain technology, and there are many reasons to get excited, it’s crucial to think about crypto investments as just another part of your portfolio. Do not allow your mind to become clouded by emotion, which is often the factor that can drive good judgment away when someone is talking your ear off about the latest and greatest ICO. Even though we are in the infancy of ICOs and blockchains, many people have already lost a lot of hard-earned cash.