How to Avoid Being Scammed by a Cryptocurrency ICO
With cryptocurrency ICOs taking center stage lately, there will be more attempts to scam people as well. It can be difficult to protect oneself against these scams, but some basic precautions will keep most people safe. This new digital craze will need to be regulated somehow, as the amount of scams can get out of hand pretty quickly. Below are some basic tips to avoid getting scammed by a cryptocurrency ICO.
- DUE DILIGENCE
The first step investors always need to take is conducting due diligence on a project. Randomly investing in cryptocurrency ICOs can pay off in the long run, but it also greatly increases one’s chances of investing in a bogus project. Any ICO that does not have a detailed whitepaper should be avoided, as that is a basic requirement for any serious project. If the company or project cannot convince you of its use cases, you should not give them your money.
Any project that does not want to make the names of its team members public should also raise red flags. If the names and identities are made public, do some research on the people involved in the project. Do not be fooled by big names working as an “adviser” for a project either. These roles often lack real influence over the direction and execution of projects. Fancy names mean nothing these days, as a lot of information found on the internet is either doctored or utterly fake.
- AVOID FAKE WALLET ADDRESSES
On multiple occasions, we see people spreading fake Ethereum wallet addresses to participate in a specific cryptocurrency ICO. This mostly occurs on Telegram, but Slack can suffer from the same problem. Never trust an Ethereum wallet address given to you by strangers on the internet. Do not ask for these addresses either, as you are only asking to be scammed by doing so. Only use the information provided by the team itself and the address shown on the legitimate ICO website.
- AVOID PHISHING SITES
Perhaps the biggest threat to cryptocurrency ICOs and potential investors comes in the form of phishing sites. More often than not, we see clone websites for upcoming ICOs appear on the internet. This can affect both CIO and pre-ICO campaigns, which makes it very difficult for novice users to determine which site is legitimate and which one is not. The best course of action is to links spread on Telegram or Slack, other than the ones provided by the moderators and team members.
Since phishing sites look exactly like the real ICO site, investors would almost need to know the official site before it launches. That is very hard to achieve, as most ICO projects want to keep pre-ICO and ICO links undisclosed until the campaign starts. Keeping tabs on projects through platforms such as Tokenmarket will guarantee users will always find the correct URL for a cryptocurrency ICO. It is by far one of the most trusted ICO websites out there.
WE NEED A DECENTRALIZED REGISTRY OF ICOS
Even though TokenMarket does a good job to keep track of cryptocurrency ICOs, we will ultimately need a decentralized registry for these types of projects. A decentralized registry can provide whitelist services to cull the phishing sites from the real platforms. Ensuring people provide the correct information in the first place can be a challenge, though. For some reason, virtually all cryptocurrency ICOs rely on centralized technology, which is problematic to any such efforts.