<html> <p>For those of you who are unaware, a new trend has developed as of late in the cryptocurrency world. This trend is known as the initial coin offering (ICO). These are, more or less, cryptocurrency versions of an IPO (initial public offering). There have been a lot of ICOs lately, and some have had incredible results. Gnosis, an ethereum-based prediction market, raised $12 million in just 10 minutes! This $12 million represented 5% of all available tokens, giving Gnosis a valuation of $300 million! The Gnosis ICO has certainly not been the only one recently, however.</p> <p><img src="http://bitcoinwiki.co/wp-content/uploads/Gnosis.png" width="1265" height="648"/></p> <p><br></p> <h2>Ok, so how exactly does an ICO work?</h2> <p><br></p> <p>The ICO itself consists of a certain available of all amount tokens being auctioned off. The tokens which will be provided and given value in the near future are offered in exchange for a cryptocurrency that already has liquid value (usually bitcoin or ethereum). While this platform offers a great method to distribute new cryptocurrencies and other blockchain based projects, it also offers a way for fake "moneygrab" schemes to, well, grab a lot of money. This is what a lot of ICO's are, on varying levels of scam.</p> <p>The Financial Times referred to ICOs as: "<strong>unregulated</strong> issuances of cryptocoins where investors can raise money in bitcoin or other [cryptocurrencies]". The key word here is unregulated. In the ICO game, there are no rules (at least not yet), which makes them extremely risky and extremely easy to exploit.</p> <p><br></p> <h2>How can I avoid these "moneygrab" scheme ICOs?</h2> <p>There are a number of indicators and signs that will tip off a project that is planning to have an ICO as a scam. The first of these can be found in the white paper. Here are some questions that you should be asking yourself when you read it:</p> <ul> <li><strong>Does the white paper provide actual technical details about the project?</strong></li> <li><strong>Does the white paper provide a roadmap of the future plans for the project?</strong></li> <li><strong>If the white paper does provide this roadmap, are the goals realistic? </strong></li> <li><strong>Does the white paper provide a detailed explanation of how the funds from the ICO will be spent to benefit the project? Is this spending plan realistic?</strong></li> </ul> <p><br></p> <p>An example of a white paper that answers all of these questions well and is overall a strong document about the project is the Gnosis whitepaper: https://gnosis.pm/resources/default/pdf/gnosis_whitepaper.pdf</p> <p>If the white paper does not answer these questions, or provides unrealistic or not well thought out answers, this is a suggestion that the ICO could be a scam.</p> <p>Another factor that should be looked into is the developers:</p> <ul> <li><strong>Who are they? </strong></li> <li><strong>Are they well known community members who have been involved in similar blockchain projects in the past? </strong></li> <li><strong>Are they unknown characters who bought a twitter account to promote their new project? </strong></li> <li><strong>If the developers aren't already big players in the community, do they at least provide detailed information about who they are and what other past experience they have?</strong></li> </ul> <p><br></p> <p>Some other things to ask:</p> <ul> <li><strong>Does the ICO process seem rushed?</strong></li> <li><strong>Is there any interesting new tech involved in the project? Or is it just a project with nothing new to bring to the table trying to raise loads of money?</strong></li> <li><strong>Has any kind of beta demonstration, video, code snippets, etc. been provided for the project? </strong></li> </ul> <p><br></p> <h2>In conclusion:</h2> <p>The ICO is a great way for blockchain-based projects to raise money for the project. However, the lack of regulation makes them very risky and susceptible to exploitation. If you are willing to take the large risk of investing in an ICO, be sure to do your homework (use this post as a list of guidelines) before you invest. Buying into an ICO can provide great rewards, but this comes at the cost of extremely high risk. Before you invest in any ICO, determine if the project brings new tech and useful features to the table, or if it is likely to be a "moneygrab" scheme created by anonymous developers looking to get rich quickly.</p> <p><del> </del></p> <h1><em><strong>If you found this post interesting or helpful, please upvote and resteem! This would be greatly appreciated!</strong></em></h1> <p><img src="https://steemit.com/images/steemit-share.png" width="1200" height="628"/></p> </html>
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Hi! I am a robot. I just upvoted you! Readers might be interested in similar content by the same author: https://steemit.com/cryptocurrency/@zcgolf16/why-most-icos-are-scams-and-how-to-spot-an-ico-scam
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Thanks cheetah robot! Unfortunately, that post had a lot of errors and I also gave it the wrong tags, so I decided to repost. That post is blank now, if any human is managing your account.
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Excellent article, specially for people like me who are not an specialist in blockchain technology. I recently invested in VIVA but not before I read carefully the white paper and talked with the founders and friends, thought this can't give me guarantees I believe it's a risk to be taken in order to build this new 'virtual economy' that will be in a future an established reality. What's your opinion about VIVA?
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I looked at it briefly and it seems like an interesting idea. What I will say is that all ICOs are risky, but if you have done your homework, feel confident about the future of the project, and it passes the test I've outlined in this article, it's likely to be a solid investment.
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Very well put together and thought out ! My only comment/like for day! Great job Zach! Resteeming!
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Thank you so much for the support @syrne!
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Congratulations @zcgolf16! You have completed some achievement on Steemit and have been rewarded with new badge(s) : [](http://steemitboard.com/@zcgolf16) Award for the total payout received Click on any badge to view your own Board of Honnor on SteemitBoard. For more information about SteemitBoard, click [here](https://steemit.com/@steemitboard) If you no longer want to receive notifications, reply to this comment with the word `STOP` If you want to support the SteemitBoard project, your upvote for this notification is welcome!
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Hello ~:) Thank you for visiting Steam It ~ Follow me! I just want to share the coin information and share it. In addition to the NeverDai ICO information posted today, I would like to ask you for ICO information frequently. https://steemit.com/ico/@maxtill94/nevedie-ico-full-analysus-why-you-should-buy-neverdie-coin-gaming-cryptocurrency-coin-comparision-with-gamecredit-mobilego-first
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Thanks for the post on ICO moneygrab scams.
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Solid article. I was about to post a similair post. Only invest in cryptos if you did the best possible research you can do and really believe in the future of the project. Wetter you're a short- or long term holder you should know what you put your money in. Besides coinmarketcap.com there is: https://www.coincheckup.com For a complete crypto analysis on every single tradable crypto out there.
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