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Analysing ICOS and Doing Your Own Research

Analysing ICOS and Doing Your Own Research

Many things have shaken the cryptocurrency world between the event of Bitcoin mooning (growing in value exponentially) and Bitconnect scamming thousands of people to the tune of 2.6 billion dollars.

Market sentiment is erratic, nearing scepticism while scam ICOS create havoc and make investors even more nervous and tense about participating.

As a general rule of thumb we have seen that about 7 out of 10 ICOS will turn out to be scams or ponzi schemes. Some very obvious and some smartly crafted and disguised.

Even today we see a number of ICOS that look sketchy and on the same note are raising millions of dollars. For those who have been stung before or those who are experienced professionals in the cryptocurrency industry it’s a bit easier to spot scams or ponzis and stay away from them. But for those who are new it can tend to be difficult, especially when they see promises of turning dust to gold.

Coindatalog looks deeper into this subject and analyses how to spot these scams and possibly protect your money.

Do Your Own Research is a common term you will see thrown around. But what does doing your own research really mean? What are you looking for exactly? How do you know that the information provided is legitimate?

Here are some key things to look for and the next step to take on each point.

1. The NAME of the Project
From a company’s point of view giving the ICO a really catchy and futuristic sounding name is important to create the hype they need to push through. As good as any name may be yoy have yo look beyond just the name. Type the name of the Project into Google and add the word review. Read the already existing reviews first. Here you are also looking at details like the name of the company, registration of the company and other legal information available.

Going a step further
Don’t make up your mind instantly. Know for a fact that there will be people shilling (promoting a project for money) or talking bad about it because they are paid to do so by the competitors of the ICO you are researching. Keep your mind open and read through the info you get. Then continue your own research.

2. Concept and Purpose
Any ICO that plans to raise money must have a concept in place. What is the company about, what is their vision?
So when we think about vision you are looking for something rational. When I say rational I mean that you need to be able to roughly analyse how much money they plan to raise and what they will be spending to get it done.
For example- an ICO planning to raise 20 million dollars in eth to create an app that will help a skill segment (musicians, teachers, doctors etc.) and tokenize it. The question you should be asking is how much money do they need to develop the app and the framework and for what how will the remaining money be used.

Going a step further
What are they trying to achieve? What do they plan to do? How will they use the money raised? Do they need that much money to achieve what they plan to do? Have they given a financial breakdown of associated costs and expenses? These are the questions you need to get answered and try to cross check on other sources to validate them.

3. Importance of Blockchain in the Project
Here you should be thinking, is it really necessary to create a separate token for this project? Why isn’t btc or eth good enough to run the project? Unless the token created for that project is the back bone and running force of the whole concept (for example Ripple) there isn’t any point for creating a token.

Going a step further
Try to find out how the token will be a crucial and ongoing part of the Project. Is it going to be used only to raise money? Or does it serve as a big piece of the mechanics of the Project. It is important that the token is used and traded by the Project even after the ICO ends. Many tokens that were just used to raise money still have value and volatility just because they are being traded regular on exchanges by people.

4. Whitepaper
Every ICO absolutely has to have a whitepaper. This important document outlines everything there is to the ICO in detail. What you are looking for here is the language (is it clear and professional or does it sound like a 5th grade boy put it together), presentation ( is there a proper flow to the paper or is it scattered all over), do you understand what is being said in the whitepaper or is it just a bunch of fancy jargon.

Going a step further
Check if the w.p mentions token distribution, financial allocations, detailed description of their plan- step by step
If anything is unclear ask questions via email or social media groups. Check if the response is quick and satisfies your doubts.

5. Product/Prototype
Just like any other business a company should have a product ready as a prototype or an idea in place for which they are raising money. The product can be a service, a physical product or even a process which solves an important issue. This should be clearly presented, stated, described and elaborated.

Going a step further
If this isn’t clear to you after going through their website or whitepaper you should be now contacting them via the contact us email ID on the website or via any of the social media links provided (Facebook, discord, telegram, Twitter, etc.)

6. Team
An ICO might put up a great looking team with lots of previous experience and a dazzling portfolio of projects under their belt. What you are looking for is to validate the information that is presented to you through the ICO website.
When it comes to teams things can get tedious but believe me. When you’re thinking of investing 1000, 2000, 5000 or 10,000 dollars of your hard earned money, every step counts and every hour of research is worth it.

Going a step further
Search each team members name individually on Google. Check out what search results you are getting. Do a cross reference with these results on the team member’s LinkedIn profile. Check the LinkedIn profile thoroughly. See when it was created. Check the past activities. If it was just created a few months ago and on the team page the ICO claims that the person has years of experience on different projects, it’s more likely that it’s a fake profile. Work history claimed by the ico should reflect onto his/her LinkedIn profile as well since LinkedIn has been around since many years and it’s highly unlikely for a professional not to have a profile there.

7. Road Map
A roadmap is important as it outlines the schedule of activities and progress. Take a good look at the road map. Try to see how much time they are allocating for which activity.

Going a step further
Does it make sense? Over how many years is it spread out? If its too short can they do it or will it be a scrambled effort.
Do they mention approximately when they plan to get listed on an exchange? This is important as this is when investors will start trading the asset and it will possibly yield returns.

8. Social Media Engagement
Make this a crucial part of your research. You want the Project team to be active on popular social media channels like Twitter, Facebook, Instagram, Telegram, Bitcointalk, Discord, etc.

Going a step further
When you participate in group chats try to see how fast an official representative responds to you. Ask your questions and doubts in public groups and check the response quality and speed. Check the soups and read what other participants are typing. On their Facebook page or group see if they are regularly posting updates. Keep a look out for negative comments and try to engage with those people privately and find out what made them upset or what the issue was and weather it got resolved or not.
Another thing you should be aware about is if the group admins are monitoring conversations and filtering spam and keeping wild people in check. This is a good sign as it shows that there are responsible and sane minded moderators in charge.

9. Company registration
For a fact it would be safe to assume that anyone who is plotting a scam won’t share their company registrations or legal information. So through your research you must try and find out a company address, company registration number, etc.

Going a step further
Track down the address on Google maps or in Google search engine. If the company office is located in a commercial building or a trade center try to find out the contact number of that specific place. More often than not they will have an office space reserved there with a sales department. When you call find out if there is indeed the company you are researching located in one of their spaces. Try to find out if the company has bought the office space or just rented. It should raise a red flag instantly if the sales department comes back to you saying “we do not have any company listed in that name with us”

10. Contact Details
On the website of the ICO or even in the whitepaper there should be a contact us section. Here you need to check if the ICO provides legitimate email addresses, phone numbers, company address etc.

Going a step further
Call on the number given by them. Have a conversation with one of the team members. Send an email to the address mentioned. See how fast they reply and what’s the quality of the response.

That’s my 10 pointer list for analysing ICOS and more details on how to DYOR. It seems like a lot of work but when it comes to protecting your money and making a wise decision every hour of research is worth it!

I hope you liked it and hope that this helps you the next time you look at an interesting project. Do share it with your friends and help me create awareness.


Jay is an experienced cryptocurrency trader who is well informed, knowledgeable and passionate about exposing scams in the cryptocurrency industry.

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