7 Red Flags to Watch For When Investing in ICOs 0 2187

investing in icos

For many people thinking about investing in ICOs, it may be their first time investing. When traditional opportunities are only open to a selective few with a high net worth, cryptocurrency has democratized investing for all. But it also means that there are a lot of first timers out there not sure of what to look for when they part with their cash.

81 percent of ICOs end up becoming scams. That’s a pretty grim panorama. You have to have an iron cast stomach to want to continue investing in ICOs. But, if do you want to try your luck and see if you can back a winner, here are seven red flags to watch out for first.

1. Too Many Buzzwords

“Decentralized,” “immutable,” “distributed,” may all sound like very important words, but you need to make sure you understand what they really mean. And even more importantly, that your ICO team does as well. There’s been so much marketing hype surrounding Bitcoin and the blockchain, that many people have fallen victim to it, including the ICO startups themselves.

They may be in love with the idea of no regulation or centralized authorities, but how important is it to their actual business? And can they demonstrate a clear way of using the technology? In short, is it more than a fluffy concept on a white paper?

2. Is Their Token Really Needed?

It may be hard for a layman investing in ICOs to assess whether an ICO’s token is really needed. But, try to examine the business proposal. Could it be carried out without using cryptocurrency? What function does the token have within the actual business? Is it being built on a new platform, when it could really be built on Ether? If the ICO has a useless token it’s chances of failure are close to 100 percent.

3. An Unconvincing Management Team

This is pretty much investing 101 in any kind of area. Most top investors in IPOs will study the management team to make sure it has the right balance of passion, leadership, and technical knowhow. While an individual investor may not be able to assess this, be sure that the ICO actually has team members on their site.

If the people don’t even appear on their page, it’s quite possible that they are scam artists. And if they do appear, be sure to run a quick background check. LinkedIn or Google should be enough to at least make sure you’re on the right track.

4. Ultra High Reserves

It could be a good thing that your prospective ICO team has a high amount of reserves. But this depends on their plans to use them. If the funds are allocated to use throughout the roadmap, and not just in the early stages, that’s a good sign of intent. But, if there’s no explanation in the white paper or anywhere else about how these funds will be spent, you could consider ultra high reserves to be a red flag when investing in ICOs.

5. No Code

If there’s no code to support the idea behind the ICO, it may never materialize into something more than an idea on a piece of paper, or a fancy website. At the very least, your ICO should be able to display some technical knowledge. This means demonstrating their ideas with some working code. Being able to write the code required is a basic prerequisite and no company should be asking for finances before showing that they can translate their ideas to code.

6. A Long and Confusing Roadmap

There may be no hard-and-fast rule when it comes to how long a roadmap should be. But make sure that it makes sense and is coherent. Generally speaking when investing in ICOs, you want to get behind something that’s aiming for about two years to get off ground. If it’s longer than that, consider it carefully and ask a lot of questions.

An ICO with a five-year long roadmap may not have a plan for solving problems should it flounder after six months. And that’s the point at which they could easily run with investor money before the project ends.

7. The Same Old Faces investing in ICOs

If you’re flicking through ICOs and you see the same faces appearing on the advisory board, that could be a red flag. While it could be genuine, there’s also a possibility that the advisors are trying to profit from as many projects as they can. Don’t give them your money, too.

ICO investing isn’t for the faint-hearted and it shouldn’t be done on a whim or an instinct. Take some time to do your research, watch out for these seven red flags, and you may just come out on top.

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Christina is a technology and business communicator who has worked with high profile ICOs and blockchain influencers to break industry news.

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Theft, Hacking & Scams – Oh My! Is It Safe to Invest in Crypto? 0 472

is it safe to invest in crypto

According to figures released by Crypto Aware, a staggering $1.7 billion of cryptocurrency has been stolen since 2011. But what does that mean? Let’s give that number some context. When you consider that cyber crime in general cost the world some $600 billion in 2017 alone, the figure seems a little easier to swallow. But it still begs the question–is it safe to invest in crypto?

It would be a fool who followed the advice of even the most bearish of investors when it comes to the crypto markets, since investing in crypto is extremely problematic. With nine in ten ICOs floundering soon after launch and a recent study reporting that 81 percent of them end up as scams–the question is it safe to invest in crypto seems to be already answered.

Blockchain – The Most Secure Technology?

Paul Brody, global innovation blockchain leader at EY rather succinctly said, “If blockchains are so secure, it’s reasonable to wonder why you keep reading about all these big hacks and thefts and criminal activities… While blockchains are themselves very secure, they operate in an ecosystem that still has many weaknesses, including human error.”

Since hearing about the “immutability” of blockchain and then realizing that there are certain circumstances in which it is not, in fact, immutable, some things have changed. Blockchain is still generally agreed to be the safest technology we have. However, it’s still in its infancy and the secondary software, like wallets and exchanges, that are used with it are vulnerable to attack.

Is it Safe to Invest in Crypto? Case in Point – Coinsecure

Oh, the irony. That Indian exchange, “Coinsecure,” should announce on its website, “We regret to inform you that our bitcoin funds have been exposed and seem to have been siphoned out to an address that is outside our control,” should be enough to make anyone think twice. Nearly $3 million were stolen from its bitcoin wallet this month, the biggest theft in India so far. This will do nothing for its floundering virtual currency market.

The exchange that has more than 200,000 users that trade daily on its platform lost more than 430 bitcoins, stolen from a password-protected wallet.

Not good news for users and not good news for the Indian cryptocurrency market, which is already on the verge of discussing a cryptocurrency ban. The Reserve Bank of India has forbidden banks to trade on cryptocurrency exchange sites and forced them to wind down all relationships over the next three months.

Other parts of Asia have also suffered damaging blows, particularly Japan, whose exchanges were subject to a colossal theft, equalling $530 million.

But if Losing Money is Scary – What About Data Theft?

If Equifax and Yahoo are anything to go by, we’ve already had a taste of what it’s like when data gets stolen. So, when we hear bold claims about blockchains holding all our information and being impossible to tamper with–what’s to stop the cyber criminals from stealing those blockchains and holding them hostage?

One thing is very clear in this new horizon. Storm clouds can descend at any moment and you have to be prepared. Is it safe to invest in crypto? Perhaps that’s not the right question anymore. “Is the technology behind it going to be regulated? And, if so, how?” may be more pertinent to ask.

Top 9 Crypto Buzzwords You Need to Know 0 3030

crypto buzzwords

The crypto world is in a constant state of flux. Innovative ICO after innovative ICO appears. Markets rise, markets crash. And as each day goes by, the crazy, hair-raising ride that is cryptocurrency becomes decidedly more interesting. Its abundant vocabulary becomes richer as well, and new crypto buzzwords crop up daily.

To really understand the ins and outs of this complex ecosystem (can anyone fully claim to do that?) you’d need an encyclopedia updating in real time. But, just to get you started, here’s how to hold your own in any cryptocurrency conversation.

These are the top 9 crypto buzzwords you need to know:

Bitcoin BTC 

Well, obviously, Bitcoin tops the list of crypto buzzwords. In fact, the vast majority of people automatically think of Bitcoin when they hear the word ‘cryptocurrency.’ Emerging shortly after the financial crisis, in 2009, you can read more about the ideology behind Bitcoin here. But, know this: If you don’t have this word down pat, you can’t even think about talking crypto.

Ethereum ETH 

The second largest cryptocurrency after Bitcoin, Ethereum in theory is not in competition with the world’s most famous digital currency. Running on its own blockchain, Ethereum supports apps and trade through a system of smart contracts.

Blockchain 

Dabble a little in crypto and it won’t be long before you’re hearing about the technology behind digital money–the blockchain. Actually, generating cryptocurrency is just one use case for blockchain, since the technology can record any information and keep it safe and immutable on its decentralized system.

We’re still discovering just how many uses this new technology has, but it’s widely considered the most disruptive technology since the internet.

Cryptography

This is the technology applied to all transactions in the blockchain. It’s essentially a process of scrambling information, making it unreadable, and allowing transactions to be kept anonymous.

Satoshi

While it sounds like a raw fish dish, Satoshi is actually the smallest fraction of a Bitcoin that you can buy. It’s also the first name of the suspected inventor of Bitcoin, Satoshi Nakamoto, (although this is something he denies).

Market Cap 

This term is used a lot and is a good indicator of how large a cryptocurrency is. You basically take the total supply and multiply it by the price to figure out its dollar value.

Mining

Beyond flashlights and hard caps, mining in the crypto world refers to the computational process of generating cryptocurrency on the blockchain. Each computer in the network uploads its power, and miners are rewarded for their efforts in digital currency.

Hashing

A “hash” is a computer program that basically takes any information and turns it into a set of numbers and letters of a certain length.

Forking 

Soft forks, hard forks, the concept is basically the same. Forking is when there is a split in the digital recordings on the blockchain, usually used to right a wrong, such as the hacking attack on Ether in 2016.

While you may not claim to be an expert after grasping these basic crypto buzzwords, at least you won’t look blank when you hear them thrown about in the office. From mining and hashing to forking and cryptography, little by little you’ll hold your own in the cryptocurrency world.

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