How Do You Spot A Cryptocurrency Scam

#1
Greetings,

Thousands of ICOs conducted in the end of last year. The marketplace suddenly expended 1,400 cryptocurrencies when the Bitcoin price rapidly increased. Most cryptocurrencies have failed in the competition and never become concerned again. The major reason is that some of them are scams — ICO scam has influenced the beliefs and investment preference of investors.

Most of ICO activities are actually defined as crowdfundings. Indeed, the investors take full risks sometimes. Basically there are 3 types of cryptocurrencies will lose your money:

1. Some are just born as scams.

2. Collapsed due to closure and rupture, etc. then turn into scams.

3. Have never been concerned by investors such as Coupecoin.

Thus to detect scams is the basic lesson that investors ought to learn. There are some 5 questions to figure out existing risks before you decide to invest:

1. How many coins does the developer own in percentage?

Usually the developers hold a slight amount for budgets. The investors should be aware with those cryptos that more than 55% are concentrated in developers’ money packets.

2. Does the whitepaper clarify what features the cryptocurrency have specifically?

Some whitepapers has insufficient information about their programs. These cryptos usually trap investors with apparent interests. SkinCoin is one of these. SkinCoin is in a dentistry related without announcement of whitepaper. Ironically, the official site lists in-game items for exchange to trap game players. On the other hand, those players trade hard mined crytos for a bunch of unexpected dentistry coupons instead of advantages they need in video game.

3. Is the program possible to come true? And how?

Mendacious cryptos picture perfect futures far beyond the reality. They promote a beautiful future of convenience in cryptocurrency, or will change entire marketplace, etc. For example, Comet coin. Who are they? A group of computer programming graduated folks about to structure the cryptocurrency future when a group of Satoshi cannot even do that.

4. Is it trustworthy?

By this question, investors should figure out by themselves:

  1. Seek for negative comments in related community.
  2. Seek for authoritative reviews.
  3. Analyze whether it has one of the features I mentioned above.
Aside the features of scam I mentioned above, some look reasonable and considerable to us. I suggest you keep reading to become a bit more advanced in potential crypto detection.

5. How is its price trending?

A scam usually doesn’t price normally. In this case, I consider the harmful finance activities as scams as well. For example, Useless Ethereum Token is just like the name shows, UET reached $26 before it’s announced. The R & D awkwardly failed to conduct a speculation in previous ICO.

6. Who are competitors?

This is based on what it is used for, such as wallet, exchanges or investment management, to find out the cryptos in the same functions. Then make a comparison by market capitalization, price and popularity.

7. The speed & frequency to distribute cryptos to investors is important.

If the time and frequency refueling blockchains are lost in control, the crypto would rather be collapsed such as Xenon. Timing should be accurate and frequency (how many coins obtainable in each blockchain) should be consistent in each round.

8. Background & Environment

Background and environment are significant factors to determine the competition strength in marketplace. Some cryptocurrencies are born superior among the others. Most of them are local policy promoted and even some of them are government backgrounded such as NEO.