The advent of blockchain technology has brought with it some novel advancements, with one of them being the emergence of initial coin offerings (ICOs). This innovative mechanism for capital-financing has powerful consequences, for one, ICOs are challenging the commonly held view that investing in promising early stage start-ups is a right reserved exclusively for VC funds or high-net-worth individuals. Despite the immense promise that this novel fundraising tool possesses, its immaturity has resulted in fraudulent acts that are a stain on the overarching goals of the cryptocurrency community. Thus, avoiding such deceitful activity is a must.
Check out the 3 best ways to avoid fraudulent ICOs
1. Having the Right Mindset
The first step to avoiding fraudulent ICOs is to enter this subset of the community with the correct mentality. ICOs are portrayed as a mechanism that can result in instantaneous wealth. However, the first question one should ask is not: “how much return on investment an ICO can produce?” but: “What is this project attempting to do and is it viable?”. The problem with focusing solely upon the monetary element is that it can blind one to the obvious warning signs that an ICO is fraudulent. Which is why, even after high-profile ICO scams are documented, individuals still fall prey to future ones. Thus, the first step to avoiding fraudulent ICOs, in reality, begins with the individual.
2. Determine Project Viability
As alluded to in the preceding paragraph, the first course of action that one should embark on when looking to get involved in an ICO is to determine project viability. Is the problem that the project seeks to tackle really one that needs solving? If so, does the whitepaper do a good job of explaining, in detail, the technical
