Did you know it is estimated that 98% of ICO’s are considered scams?
Did you know that most mining is not profitable?
Did you know that most new coins are nothing more than pump and dump schemes?
With all the fraud in the cryptocurrency market, is there really any opportunity to profit? Yes, as long as you do your research and stop listening to all the “experts” who are nothing more than the latest generation of snake oil salesmen.
Protect yourself and others with these 10 tips to reduce your risk:
Does the new coin or opportunity guarantee you a return? Any opportunity that can guarantee any type of a return is probably a ponzi scheme. Stay Away.
Is the management team clearly listed on the website? Go to LinkedIn and type in their names. Are they part time? How long have they been in cryptocurrency? Does the team have a mix of developers and business people? Was their last venture profitable? Check Google as well.
Are they focused on developing a single solution or does it list a hodge podge of random ideas? Most teams have finite resources, so you want to find ones that are solely focused on bringing one good idea to market.
Do they have a clear roadmap of deliverables and have they met the timelines established? Also, make sure the deliverables are more than a website and white paper.
Is the website well thought out and informational? Be wary of ones with quotes about cryptocurrency from famous investors, entrepreneurs or technologist, unless it specifically mentions the company by name.
Does the white paper provide project details or is it mainly high minded ideals and sales copy?
Does it solve a real world problem where decentralization makes sense? Not every business needs a blockchain.
Look at their GitHub. Is there activity on it? Have they made any commits? You don't need to be a technology expert to determine if there is real effort being put into development.
Join their Telegram, Reddit and Discord groups. If they don't have them, stay away. In the groups: first, ignore the hypesters, you want to find the FUDsters (Fear, Uncertainty, Doubt). There will be two types of them: 1) the baseless claims: ignore them 2) the ones who present rationale arguments against the project. Study those more closely to see if they are accurate. When Bitconnect was at its peak, there were plenty of people says it was a ponzi scheme, but they were ignored or chided for missing a great opportunity. What happened? Head of Bitconnect arrested in Dubai. This is just one of thousands of stories, but the most recent arrest.
Lastly, listen to people who have been in the market for more than a year or two. Real cryptocurrency people are not trying to sell you an opportunity to get rich. They will educate you on it, so you can make good decisions for yourself and will probably give you an unbiased opinion based on their experience. They have seen the cycle repeat itself too many times. We want to see cryptocurrency succeed and the best way to do that is by educating people to avoid the scams that give it a bad rap.
Bonus: if you are considering mining ask the following: what is the hash rate of the pool, where is it located (looking for cheap electricity), what has been the historical number of blocks found per day? These are basic questions any of them should be able to answer.
Remember, never invest more than you are comfortable losing even if you think it has potential and meets the criteria. The technological landscape is evolving quickly and even a good idea could be obsolete tomorrow. Good luck and welcome to the exciting world of cryptocurrency.
Let me know your thoughts? Any tips I missed?