There are a lot of initial coin offerings out there. The phenomenon that began about three years ago is now more accessible as a result of the Ethereum-based ERC-20 tokens. Learning how to spot a good ICO is one thing, and learning how to identify a bad one is another. In this article, you will be exposed to five signs to indicate that you are making a bad initial coin offering investment.
Signs of Bad ICO
An Inexperienced Team in the Crypto Industry
You should not invest in any ICO if they don’t have a well-known and experienced crypto advisor. Watching interviews with the key members of the team will help you to determine if they are trustworthy.
Bonuses for Everyone
The more they raise funds with bonuses, the higher the chances of the price to be traded close to the level of that discount. A more severe case is when pre-sale investors have no vesting.
No Real Need for the Tokens
The entire ecosystem is created around the token of the project. If the token still works after being replaced with Bitcoin or Ethereum, there isn’t a real need for tokens. Therefore, there is also no real need for an initial coin offering.
When you notice a lot of Google and Facebook Remarketing ads and banners, especially when they have made a lot of nice and profitable promises, it’s a red light. It is a clear indication that you should not put your hard-earned money into that system.
Market Cap is Already Large
Assuming the firm is marketing just 10 percent of the tokens in circulation for $100 million, the initial market cap of the token is beginning from one billion, without making any 5x or even 3x that’ll boost the value of the market cap before the trading even starts. Suspect the following: if the number of tokens is not definite, the public will get a very small percentage of the tokens, and no lockup will be reserved for the team.
There are many other important Signs of Bad ICO that needs to be reviewed thoroughly including roadmap, whitepaper, management quality, github code and advisory team.