2017 and 2018 were VERY great times for the ICO boys after a very extended period in which ICOs were coming out left right and centre. Each day came with new projects all begging for them to be your cryptocurrency of choice. Many projects had some great concepts with great teams and were valid propositions. However, a large proportion of these projects are now nowhere to be seen and the investment poured in by the public has long disappeared. It was for this reason that I completely changed my investment approach to a more thorough investigation before placing any of my hard-earned money (or crypto) into them.
Following are a series of questions and points that I ALWAYS consider before entering into any new cryptocurrency project today. These questions are all to be answered AFTER I have decided that I like the overall concept that the project is trying to develop.
1. Screen the team
The first and most important thing to do is to screen the team. Do the founders have the experience to be able to pull off their concept? Does the team have any full-time developers that have experience in actually coding their own changes to the blockchain or are they simply copy/paste developers?
These are very important questions to ask yourself because a team with little to no experience is destined to fail due to the harsh realities in the cryptocurrency industry. A team without an active developer is also one that has no progress in its future as blockchain projects revolve around very good sound code.
How about the community leaders within the team? Do they seem to care about the concerns of the community or are they just mouthpieces for the team to relay messages to their investors?
A great method of researching the experience in the team is by searching each individual name on LinkedIn. This will be step 1 in cutting out the projects that have no future scope due to a lack of experience. If a large proportion of the team actually has a LinkedIn profile it is a good sign. This positive sign is increased when the founders and developers have extensive experience in previous projects. A great tool to use is the “team strength” table in the “score” section of the “analysis” tab on coincheckup.com, on the particular coin of choice. Coinchekup will assign a score on the team based on executive experience regarding running previous million Dollar projects (if applicable). It will also compare the strength of the marketing team relative to other coins and even makes a score based on the age of the overall team.
The next question that I explore is if the roadmap is good enough. Does the project have a clear distinct roadmap set for the following years ahead? Typically, great projects will lay out their foundation and let their investors know what they can expect and when to expect it. However, if the roadmap just states milestones such as “wallet updates”, “testnets” or “mainnets” I will not touch this project as it shows that the team are not far enough into the development of the project.
The further a team is into developing their product the safer the investment is likely to be. If a team is just starting out, there is no guarantee that they could even possibly achieve what they have set out to do. On the other hand, if the project has already released working products with new clear and distinct upcoming additional features, this is generally a good sign.
3. Are They Hiring?
Although this is not a very pertinent question, if the team is hiring this is often a good sign. It shows that the founders are willing to sink further costs into the business to make it work. In my opinion, if the project is paying in either cash or 1 of the big cryptos (such as Bitcoin or Ethereum) this is a very good sign. However, if the project is paying its employees in its own token this is generally a bad sign these employees will need to constantly dump their earnings on the market to get the cash they need for everyday living.
4. Guaranteeing Profits?
This next question starts to explore if the project is involved in very suspect and (possibly) illegal marketing. One of the biggest red flags that a project could make it the guarantee that you will make profits if you invest. In this industry, NOTHING can be guaranteed by any means and these projects are usually scams that are happy to take the money from uninformed individuals that are desperate to make some profit to turn their lives around.
One of the most high profile cases that had guaranteed profits to investors was that of BitConnect. They had suggested to their investors that they would receive a guarantee of 10% profit on their total investment....PER MONTH. We all know how this project turned out.
5. Suspect Marketing?
The next question continues to further explore the idea of suspect marketing. If the project is teasing that you will become a millionaire and start to live a great lifestyle after investing, this should be raising sirens. Another tactic that projects use is the “chance” to win high-ticketed luxury prizes by owning the coin and taking part in things such as lotteries. These marketing tactics (or scams) have long been used outside of the cryptocurrency industry and are widely known to be very deceiving.
One case that sticks to my mind was this poster that was shared with CloudToken supporters showing the prices of luxury vehicles according to their token value;
Obviously this is an extreme case and I am sure the majority of readers over here at Publish0x will NOT fall for something of this nature, however, this type of deception can come in muted forms so be cautious about any potential “prizes” available for investors.
So there you have it! I hope this list helps an unsuspecting investor from easily entering a scam project in the future. Hopefully, we can wipe them out as much as possible so investors can actually focus on the positive projects in the crypto space.