With the sentiment around bitcoin and cryptocurrency increasing everyday, there will also be an increase in scam projects trying to capitalize off the next bull run. I have gathered a list of a few ways to distinguish between SCAM projects and the REAL McCoy.
Low/No Activity on Github
Most new cryptocurrencies are touting transformative ideas that will supposedly revolutionize their chosen market. This can be exciting and enticing to potential investors. If a cryptocurrency is going to be successful in the future and bring its ideas into fruition, it needs to have continuous development. If the project you are considering investing in has not been actively pushing commits into their public repository for large amounts of time, this should be a huge red flag to potential investors, as any SERIOUS project will have constant updates, they do not have to be everyday but not 2 years either.
Anonymous Team
When Satoshi anonymously introduced Bitcoin to the world, the space has prided itself on privacy and anonymity ever since.Privacy and anonymity are good for the users of the cryptocurrency but that equation does not fair so well when the creators of these projects are unknown, as there is no one to hold accountable if they were to run off with investor's money. This feeling is well felt as the space continues to expand and become more popular,we as the users should want to know whose behind the curtains.
Low/No Community Engagement
Developers should be actively engaging with the community frequently. Granted that at times they are busy and may not be able to regularly give updates but someone from the team can be delegated this authority to keep a inform community. No activity from the team or developers to the community is a big red flag in my eyes and should be taken into consideration when making any investment decision.
No White Paper
If a project does not have a white paper, how can investors understand the vision for the project. There are many projects that launch without a whitepaper and have them slated for release on the road map(if they have one), but any serious project would have this all ready to go if they are indeed serious about the ideas. Having the vision written down not only helps us as investors grasp the vision but also shows us they have thought out their vision and goal before going public, have no white paper upon releasing a token or coin shows disorganization and maybe a sign of what the project is really about.
Plagiarized White Paper (Cough, Cough, Tron, LOL)
In all seriousness, a plagiarized white paper is a HUGE red flag in my book. This would to be obvious to those who research thoroughly but there are still tons of new projects with huge sections of their whitepapers taken from other well known or upcoming serious projects. This could easily be missed by an overzealous investor who does not want to take the time to read through the white papers which can be lengthy and filled with technical jargon. If your project has plagiarized another project's whitepaper , how can you as an investor take them serious or believe anything that they say if they have already shown dishonesty and lack of originality by plagiarizing.
No Standardized Road map/Timeline
A project without a timeline or road map lacks direction and accountability. The road map helps investors get an idea of what to expect from a project as time goes on, and without one, how can one know where they are headed and what is to be expected in the future.
Too Much Hype
Over-hyped projects are gaining traction everyday in the cryptosphere. Many of these are more hype than actual functionality or accomplishments. If you are having a project you never heard of shoved down your throat by randoms on YouTube, Twitter, etc., you should definitely spit it out and reexamine what they are feeding you. A lot of investors FOMO into projects believing the hype that this is the next big thing to come, only to find out the hard way that maybe it is not.
Conclusion
These are just some of the ways to distinguish real projects worth investing in, from scam projects you should stay far away from. Even with these tips, scams are getting harder to detect and are sometimes indistinguishable from the real deal. I in no way intend this list to be a fool proof way of detecting such projects. Ultimately this boils down to the diligence, research and scrutiny of investors to help them make the choice.
Happy Trading, and Stay Safe.