Do you want to know one of the fastest ways to grow your money in the world of cryptocurrencies? If so, then you should investigate ICOs or initial coin offerings. These are like the initial public offerings in the stock market, but you should be more careful when choosing what ICOs to participate in. How can you spot a legitimate ICO from a scam? The following 10 tips should serve as your guide:
1 The team behind the project
Take a quick look at the team running the most successful cryptocurrency projects, and you’ll see that they’re some of the most respected names in their fields. Therefore, you should check who’s running the ICO and try to learn as much about them. If you can’t find any useful information, you better keep your money.
2 Reception on Bitcointalk.org
This forum is one of the best sources of information about the different cryptocurrency projects. An ICO that is about to launch will usually have a thread in this forum. Check it out and review the feedback of other people. You’ll see whether people are anticipating the launch of the ICO and the coin’s introduction to crypto trading software such as Bitcoin Trader, a good sign that the coin will increase in value soon after the ICO.
3 The progress of the project
What stage is the project currently at? Is the product still being developed? Or is there already a working product? Many ICOs begin with only a whitepaper. This is also why many people warn against investing in ICOs because everything seems to be theoretical. Figure out the development stages of the ICO and whether the team is on track to accomplish their goals.
4 The size of the community
Some of the most successful ICOs in history have had a huge community behind them. This is a sign that many people have seen the potential of the project and they’re ready to put their money into it to see future growth.
5 The applications of the project
What is the purpose of the project? Will the product be a mode of payment? Or is it a development platform such as Ethereum? Knowing the applications of the project will give you an idea of how it compares to similar cryptocurrencies already in the market.
6 Coin distribution
If the ICO distributes more than 50% of the total coin supply, then you may want to reconsider investing in the project. Most credible ICOs will only distribute a small percentage of the coins to avoid saturating the market.
7 The cap limit of the coin
The cap limit refers to the number of funds that the developers can accumulate. If the ICO allows most of these funds to be stored, then an increase in the supply of coins will be allotted for investors.
8 Code quality
It can be difficult to assess the code of any crypto project, but it’s an important step in vetting the legitimacy of an ICO. A messy code should always be taken as a red flag. If you don’t know anything about coding, do your research and look for information from knowledgeable people about their feedback on the project’s coding.
9 The number of commit logs
Commit logs are updates on the progress of the token. You’d always want to see a high number of commits because this shows that the coin is being developed quickly.
10 The activity of the developers
You should also take the time to check the activity of the developers themselves. In most cases, this information can be found on the official website of the ICO. Here you will see what each developer has completed and what updates will be implemented in the future.
