Dawn of the ICO exit scam
I’m sure almost all of us have been roped into the hype of an ICO at some point. You’re surfing the internet and out of nowhere, you see the most disruptive and ingenious idea of all time. “This is the one”, you think to yourself. “This is the idea of a century. How has no one thought of this before?”
Before you know it, you’re buying up the newfound assets in your head, thanking God for showing you the next Bitcoin, and grabbing your card out of your wallet. Then, you snap out of it. You sober up from all the euphoria before parting with any cash.
You begin to take a sceptical, level-headed, and non-emotional approach; investigating your potential investment. What are you actually investing in? Suddenly, you feel stupid for rushing to your wallet and you shamefully deposit your credit card back into its safe place.
So what was wrong with the product?
You see, that’s what was wrong. The fact that it’s a product, and you were looking for a dream. An ICO is a product that someone is trying very hard to sell to you. If they can’t sell you the product, then they’ll happily sell you the dream.
If we’re really honest with ourselves, we’d recognize that somewhere around 95% of ICOs are either outright scams, or scams yet to be seen. They have either already departed from social media and gone dark, or they will do so eventually. When they think that the time is right and they’ll have the best chance of ‘getting away with it’, they will disappear off the face of the map.
That bright, pioneering, and proficient team you had once put your money and faith into has disappeared…
All that being said, there has been the odd exception to the rule. Some projects turn out to be legit and deliver on their promises. These projects occasionally end up being highly successful, bringing immense value to both investors and the world alike. But how can you tell these diamonds from the dirt?
There is no perfect ‘ICO Formula’. But there are some positive things you can look for in a project, as well as some big negatives to be wary of. Boiled down and condensed as much as possible below, we have;
Professional, experienced, competent, confident, passionate, and approachable. You should be able to get in direct contact with at least one member of the core team with enough determination.
Achievable, understandable, marketable, and realistic. You should be able to explain the idea and value proposition to someone without feeling embarrassed.
Solid existing platform(s):
All social media pages & profiles, websites, channels, products and services should be clean. I repeat, all clean. There should not be a single ‘Insert ICO name here’ branded anything that makes you raise an eyebrow.
Unapproachable, inexperienced, belligerent, arrogant, incoherent, ridiculously young, overconfident, vapid, non-existent… (do these people wanting my money even exist?) I should stress the last point, are these people on the team even real entities? Or are they just random people’s Facebook photos and made up bio’s?
Simply put; if it’s too good to be true, then it probably is. If it sounds scammy, then it almost certainly is. If it is a really obvious idea, yet no one has done it before, maybe that’s because it’s not actually doable. Pick the idea apart savagely before you even consider putting your hard-earned money into it.
If the website is rubbish, that’s probably because the project leader and devs are rubbish. If the community engagement on social media is rubbish, then… you get the idea. You should always be able to get support within 24 hours and complain or make suggestions to the project fairly easily. This is your money that they’re sitting on, after all.
This is nothing new. People have been scamming each other since the dawn of time. As new technology comes out, it’s often criminals who are the most ingenious in adopting it. This creates a new and sexy criminal economy that thrives until regulation falls into place to combat it.
Until cryptocurrency goes mainstream and ICOs get regulated, we’re going to see plenty of people lose a lot more money. But it’s only really half the scammer’s fault. If we’re stupid enough to forgo our own due diligence and not properly research a project before we throw money at it, aren’t we at least partly to blame?
Bitcoin was always about freedom. Freedom from overzealous authorities, regulations and institutions. If we are to take responsibility for our own finances and grab the future by the horns, let’s at least make sure that we don’t lose everything in the process.