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We all remember when China officially blocked all ICOs. The price of Bitcoin dropped dramatically during that time. China declared that ICOs, which were completely free to operate, should be immediately controlled. We thought it was influenced by communism, but the fact is that China wanted to protect itself from ICOs. The Chinese government calls today's ICOs "chaos", and China is right.
More than 90% of all ICOs running today are pure scams and frauds. Blockchain culture allows people to get money anonymously and without any control. This leads to thousands of scammers and deceivers from all over the world entering ICOs. 9 out of 10 projects, the funds raised through tokens will never be repaid. The token market should be regulated to some extent. Otherwise, the market will be full of scams.
However, Bitcoin culture itself is the most convenient way to invest in emerging companies and talents. ICOs will never disappear, and neither will blockchain startups. The market will one day heal itself and get rid of all the fraud, but this process will take time. Until these problems are solved, every novice investor must learn to distinguish high-quality ICO products from the sea of fraud. You need to see through the scammers at a glance.
Therefore, I will share my ULTIMATE guide to help new investors to discover truly promising ICOs. If a project meets the following checklist - it is undoubtedly a good investment.
The first problem that every ICO startup faces is that they cannot show a complete product. Only a few ICOs can prove to show at least a product or an alpha version of a product. In most cases, you will be investing in the idea or concept of the company. The only way to predict the project is through the ICO website (which is most of the time set up for the purpose of raising funds).
Tip: If you invest in projects that have a real product (already have a product or at least a prototype), it can help you avoid most scammers. More importantly, ICOs with real products and audiences are more likely to be invested in.
For example, the recent popular ICO BitJob, which allowed alpha testing of its platform, has raised 6,000 ETH (with a minimum target of 2,250 ETH). This is a great result for a “less well-known” product that has just entered the market. New investors usually start their ICO research directly from the whitepaper, thinking that the content is not that important. This view is wrong. The first thing newbies should do is to check the project’s website. There should be at least 7 to 10 sentences on the website describing the company’s philosophy. The website should use common words to describe the main idea and basic content of the product. When the team of a product cannot express the importance and prospects of the product – then they cannot do PR and marketing activities either! I mean, if they can’t convince you, how can they convince others? Without a good marketing strategy, there can be no good operation. If the product doesn’t sell itself, don’t invest.
Tip: The website should clearly inform the readers - the role blockchain technology plays in the company's product structure, why the technology can change the world, why the company will be competitive, etc. Products that run ICOs but do not use blockchain technology in their product structure are not trustworthy. Their only purpose is to raise funds (not to change the world). I will never invest in such a company.
For example, the popular ICO Verifyy provides readers with easy-to-understand content so users can understand how their solution works. Their white paper is also easy to understand, so they are more likely to raise funds when their ICO starts. Mature businessmen understand that the success of a business is not just determined by the amount of investment. Success is 10% the idea and 90% the team that can make it happen. You should know the team you invested in, so anyone who is related to the product should be on the website (and add links to the social media accounts, emails, blogs, etc. of the above people).
More importantly, you need to have a brief meeting with the team before investing. Many fraudulent ICOs use fake people and accounts. In addition, there are also ICOs that pay some well-known figures in the industry to be consultants for these fraudulent projects.
Tip: Don’t hesitate to ask about the project. I check every document. 90% of the teams have blank accounts on social media. If these people don’t reply, or are particularly rude, or they send you white papers instead of answering your questions – it’s a sign that this ICO is not trustworthy.
For example, the BitComo ICO aims to create a CPA alliance network based on blockchain technology, which doesn’t seem to be a very good project, but after researching it, I found that it is not the case. I found the idea of the company interesting, but the team members’ accounts on Facebook are blank accounts. They don’t have a ready-made CPA platform, and the website doesn’t look very formal. So I contacted their Russian consultants - Oleg, the CEO of AdCombo Affiliate Network and another Russian. I asked if their project is real, what they think about ICOs, etc. The two replied and gave me a lot of valuable information about Bitcomo. I also searched a lot of photos of Adcombo CPA on the Internet and found photos of its CEO auctioning a blue Ferrari. They think this project is very experimental and not a scam project. This project seems to be real. Now, I am waiting for their ICO to start (but I am still not sure whether to invest). So my advice is: do a Google search before investing. Another very important thing is the ICO roadmap, because without a good roadmap, the idea and team are not worth mentioning.
It can be interesting when you see a startup with a shady website or a poor whitepaper, but they claim to have started developing products in 2015 (I believe that in 2015, most people didn’t know anything about blockchain technology and cryptocurrencies). If the company is not honest with you – they are not worth investing in. Those who modify the numbers to make them look better, will not be honest with you. So avoid them at any cost.
Tip: Many project companies are very optimistic about their plans. But most companies don’t have enough experience to make a correct plan. So check their roadmap, because the roadmap reflects whether the company is really great, and you can see the company’s actual situation. If the roadmap is all fantasy – then the company is a rookie or a scam company. Many fraudulent ICOs make money by deceiving lazy investors. If you are too lazy and don’t do your research, you will get scammed. A common mistake is: investing in a promising project, and later realizing that it competes with dozens of the same type of products (and those other products are more competitive and mature). So, google before investing. One more thing: if you find that the project is just a clone of other products – it is better not to invest.
Token distribution is the next potential market. If a team’s project is ready to distribute more than 80% of the initial tokens, then the team obviously does not care about its future. On the contrary, if the team retains most of the tokens – the team is more likely not to be a scam.
Tip: Understand the role of tokens in the business economy. Depending on the project, the value of the tokens received through the ICO can be completely different. The value of the tokens and their distribution should be clearly stated in the white paper. You should be confident in your investment.
The whitepaper should detail everything about the project development, expansion, budget allocation, audience, marketing and PR strategies. It should all be logical and clear to the reader. The more details in the whitepaper, the better. This is true even for readers who have no expertise in digital marketing. The company should be able to sell itself, otherwise the company is not competitive. For example, the pass-through scheme of the AdEx ICO looks simple, but it does not answer the question of how the platform works. Moreover, the company gives far fewer answers than unanswered questions: Tip: Open source projects are of course the best choice. If the description is full of jargon and the terminology dictionary is difficult to understand, it means that the developer does not want you to know the details. This is very suspicious and you should be careful.
There is a lot to be said about the management of bounty campaigns and marketing of ICO projects. Good projects are carefully managed by responsible people. Bad projects are full of complaints, negative feedback and poor communication. Low-quality management is a sign that the project is not ready to run an ICO.
Instead, bounty campaigns should be considered budget-wise. Typically, mature projects spend 2% of their overall budget on bounty campaigns. If more than 2% (5 or more) of the budget is spent, the product is not suitable for investment. Tip: Check google and forums before investing. People who run blockchain startups usually have some background in digital marketing. They know how to promote projects, so each ICO buys a lot of posts in the media. While posts in the media are easy to buy, it is difficult to buy reputation in forums. A startup's reputable homepage in the bitcointalks forum is much more trustworthy than a website with many small blogs and new website links.
This is my opinion. In the end, if you follow the above points one by one and connect them to the whole. By considering all factors, you will see the whole picture of how the ICO project will conquer the market. If you see the prospects – then there is no need to hesitate to invest. If you still have doubts, start again from the first point.
Remember: This is not how you make money, it is how you change the world. You have to believe in the project you support. You have to believe that it will succeed.
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