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What is an "Exit Scam"? - Here is the most recent example of the phenomenon called exit scamming.
Here's the exit scam process in a nutshell:
- Think of a good name for your coin
- Make up a fake team
- Create a white paper full of awesome sounding promises
- Create a cheap website and social media accounts
- Create a road map going out at least 12 months
- Advertise a Pre-ICO sale
- Take people's ETH and BTC during the Pre-ICO
- Leave with the ETH and BTC and never run the ICO
- Replace your website with the word "Penis" (well this last one isn't necessary but these guys did it anyway).
I'm constantly emailed and PM's coins and tokens to watch out for as they may be the next best thing... In almost all cases I've reviewed the suggestion and find massive flaws in them almost immediately.
This isn't because I'm especially smart, or tech savvy. It's because I'm looking at this stuff with a critical eye rather than trying to seek out the next "moon coin".
I try to poke holes in any new project I find. I can poke holes in ALL of them but then it's easy to see the best ones. They're the ones with the least holes.
In statistical analysis, the approach is called a NULL Hypothesis. Basically you always seek to prove yourself wrong. That way you're not tempted to stop at the first good sign and call it a success. If you manage to prove to yourself the project is a likely failure, your hypothesis was correct, and if not, you've identified a good investment opportunity.
For example, in this case I would have taken one look at their proposal and noted the following:
Founding Members:
- First founder has no mention of this project on linked in
- Second Founder's "Prime Block Capital" website has zero content and contact button does nothing...
- No need to look beyond this for negative score re: founders
Proposed Token Use Case:
- Tracking every single piece of produce to a block chain via bar code stickers.
- This is not realistic as all current bar code scanners and PLU systems are designed to have one code per item TYPE not her individual item. For this to be used, producers (farmers), wholesalers, transport companies and retailers would need to be on board and update equipment, systems and processes accordingly.
- What problem is this solving? We already track all produce at a bulk level and then at a stock level in stores... Who would this really benefit and how?
My assessment would have been over at this point. There is no overcoming a fundamental issue with the use case. In this instance it is not solving any immediate and / or obvious problem, the benefits are unclear at best, and the cost to implement would be prohibitive for all participants in / stages of the value chain.
This is the trap of looking for the "next BTC or ETH" before it's released. Unless you're willing (and able) to be super critical and dig into the details of the "who, why, when, how and what if's", you're best off waiting for a more mature project, where you can get a balanced opinion from a wider group of people to base your initial assessment on.
2017 lulled us into a false sense of security in that even shitcoins made massive gains.
2018 will be the year we start seeing real projects go live (and mainstream) and these fake ICO's will begin to fade out. Until then, stay safe guys. Don't buy new ICO's out of FOMO or thinking if you get in on the ground floor you can't lose...
You can absolutely lose everything in an ICO.
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