Just as huge gains can be made from an ICO, huge risks can also be incurred. If you want to know what kind of risks I'm talking about and how you can minimize them, this is an excellent insight into this.
The cryptocurrency market is still under-regulated. This means that investors could be legally discovered if an ICO turns out to be a fraud or if the whole project fails. On the other hand, even the developers of an ICO can end up trapped in financial regulations.
It is clear, therefore, that both ICO developers and investors face many potential risks. As for buyers, the risks include:
Right now, ICO developers are taking risks due to:
Therefore, both parties should make a careful risk assessment.
If you see an ICO project in which you want to invest and want to minimize the risk of loss, look for potential alarm bells:
– The people behind the project are anonymous, use fake identities or have fake accounts on social networks.
– The team is missing professionals with experience relevant to the project.
– There is no legal person behind the ICO.
– The white paper and the business plan seem unrealistic and / or lack a detailed analysis of the market and competitors.
– The authors of the project do not provide an example of their blockchain code.
– There is no working prototype.
– There is no escrow portfolio for the delivery of investor money to developers (preferably in portions) only when certain criteria are met.
– The project does not commit any code to Github.
– The project does not have a clear roadmap.
– There is little or no credible PR or media activity or positive mentions of the project.
– The token or blockchain does not seem necessary to achieve the objectives of the project.
Try to avoid projects with numerous alarm bells or that are in uncertain regulatory environments. This way your ICO investment should be safe.
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