HOW TO IDENTIFY SCAM CRYPTOCURRENCY PROJECTS AND AVOID BEING A VICTIM OF RUGPULLS.

For the cryptocurrency investor looking to make the most of the host of new investment opportunities while remaining safe from fraudulent ICOs and sketchy coins and tokens, the prospect can be daunting.

Blockchain and cryptocurrency technology is developing at a rapid pace, and even experienced investors may find it hard to keep up with the terminology.

While there’s no guarantee that any cryptocurrency or blockchain-related startup will be legitimate or successful, the steps outlined below can help you to be as sure as possible that you’re not falling for a scam.

Get to Know the?Team

Perhaps the single most important success factor for any ICO or cryptocurrency is the developers and administrative team behind the project.

If a major name like Ethereum Founder, Vitalik Buterin, is in on any project, then you are more comfortable with such a project as his name is associated with the development team.

For that reason, it’s increasingly common for scammers to invent fake founders and biographies for their projects.

Go Over the Whitepaper

A cryptocurrency or ICO (Initial Coin Offering) whitepaper is the foundational document for that project.

The whitepaper should lay out the foundation, goals, strategy, concerns, and timeline for implementation for any blockchain-related project.

The first step toward analyzing a whitepaper is to read it very thoroughly.

Check to see if the whitepaper has complimentary resources as well, including financial models, legal concerns, SWOT analysis, and a roadmap for implementation.

Companies that don’t offer whitepapers should be avoided at all costs.

Still, it’s possible for a fraudulent company to put forward a convincing whitepaper, as was the case with PlexCoin; this company managed to raise over $15 million before the U.S Securities and Exchange Commission (SEC) stepped in to shut it down.

A whitepaper should answer all of the questions a potential investor might have about what sets this particular project apart from its competitors, how it aims to be successful, and the measures it will take to achieve its goals.

Look to the Token?Sale

Any ICO will depend upon a token or currency system in order to facilitate the crowdfunding process. Legitimate companies and endeavors make the system itself and the progress of the token sale easy for potential investors to view.

Look for the token sale figures as the ICO is ongoing. Better yet, watch the token sale over time to see how it is progressing. If a company makes it difficult for anyone to chart the progress of its ICO, this is a major red flag.

How Feasible Is the?Project?

While it may seem obvious, ICOs, and cryptocurrencies with the greatest chances for success are those that have the fundamental structure to outlast their competitors

Going along with the question of feasibility is the issue of transparency.

Look for companies that aim to keep potential investors up to date with regular, detailed progress reports on a company website or on social media

Exercise Caution

Be aware that projects sounding too good to be true likely are. Spend time scrutinizing every detail, and assume that the absence of a piece of crucial information may be an attempt to hide an unsound model or concept.?

Look for outside sources to verify the legitimacy of any project before making an investment, and always ask questions that you can’t already find the answers to.

EndNote

Never forget that everyone is here for their own selfish gains. Hence, be very sure of what you intend to put your money into before you actually do.?

Liquidation respects no one. If you cannot see the liquidity, then you are the liquidity.

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