Okay, so this is probably a million-dollar question and you will find a variety of answers if you google this. I actually wrote a similar post in 2018 but somehow I couldn't find a link to that post. I believe we have reached a point that is very similar to the 2017 ICO phase.
Source
After the success of ICOs in 2017, every other person in crypto wanted to run an ICO of their own to make some quick money. While some of the ICO coins were good but most of them either scammed people or eventually fell to the ground because their product wasn't good enough.
Fast forward to 2020 which has been a year of DeFi so far and I believe it will stay the year of DeFi in the coming months as well. There is a lot of hype behind DeFi and whenever people see a DeFi coin, they jump in, not caring about reading the whitepaper or taking a look at their website.
This doesn't stop here. I have been observing new ICOs and people are investing in every other ICO that has DeFi mentioned somewhere on the website or whitepaper. People just don't want to miss any DeFi coin that comes to the market.
As DeFi hype keeps building up, there will be some scammers who will try to scam people in the name of DeFi. Perhaps there are already some of them who have raised enough capital. In case you don't want to be a target of any scam, follow the below steps to check whether a project is legit or not. Bear in mind that this might not be enough, but by following these steps, you'll minimize the risk of being scammed.
1. Concept
This is the first thing that you should look for while doing research on a project. If the concept is good and has some real use cases, continue your research. Also, you need to find out if there are any competitors in the market already. If there is a competitor, see how well has it performed. Two similar projects can run side by side, that's not a problem.
2. Team
After looking at the concept, find out who is behind the project. If the team members are already well-known people with a good reputation, that's a green flag. But if you don't know who they are, open their Linkedin profiles and see their profession and achievements, if any. Some projects had celebrity pictures listed as their team members in 2017 ICOs. Make sure to check the team members thoroughly.
3. Investors
If a project is good and has a future, there is a strong possibility that it will have well-known investors. But don't just believe what you see on a website, check if they are really their investors or not. Twitter is a great source to check whether a company is investing in some startup.
4. Whitepaper
This is yet another important step in identifying a good project. If the project has a well-written whitepaper, it might also mean that the project is legit. Not many people read whitepapers but if you are an investor, you should.
These are some of the steps to identify a good crypto project. I hope you found some value in this post, if you did, don't hesitate to hit that like button.
This is not financial advice. These are personal thoughts and they are meant for information purposes only.DYOR before investing.
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Thanks for the valuable posts on your page
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This is what you get in this community.
I am glad that you are loving it here. :)
I didn't get it. I am not sure what you are talking about.
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Can I add one?
Early bird support from reputable start ups or companies is recomended. When a project supported by current and reliable companies, investors will have more trust in the ICO projects.
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Well, that comes under Investors section.
But you can add as many as you want. There are a lot of things that help.
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Hi @syedumair
These fraudulent projects do a lot of damage. Because it's well known that when good things come up you know, but when bad things happen like a scam, it's usually a much faster spread.
The bad thing about this is that some people will say I was swindled with cryptomones and it becomes generalised and affects the good projects as well.
They are good points only that it brings to discussion here.
You need to be very careful before you invest in anything.
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I know a few people who invested in some scam ICOs and then blamed cryptocurrencies as a whole.
While that is not fair, but we know that a few scams destroy image of whole market and we need to unite and eradicate these scams once and for all.
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Yes, that happened, there were those who took advantage of the situation to get money from others..
I live in Colombia, and here when you talk about crypto-currency people immediately relate it to money loss. And they don't go any further. They don't know what they're missing he he
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It's really bad for crypto.
Those people need to be educated but I know it is not an easy task. But once crypto gains adoption, they will learn themselves but I am afraid, they might have missed the moon mission. :D
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I think the new ico will have a money-back guarantee that will leave out a lot of scams
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That is DYCO.
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@tipu curate
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Upvoted 👌 (Mana: 0/20) Trade Steem <-> BTC from your Steem wallet :)
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I am curious to see if we will actually get a move like the ICO move in 2017. I still don't sit with the same feeling, but if the market goes bullish, then lots of people will be eager to make big money fast, and then the new projects can feel like a good solution for that. Great advice!
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The move might not be as big as it was in 2017 but right now we are in a bullish territory and good things are yet to come.
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It is a question of commonsense and an actual product you can use.
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And yet, many people fail to understand this.
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I don't know how many whitepapers I read without a product to show...
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Considering the team for a project before any investment is made is highly necessary and this brings me to the point of building a good reputation, one may be considered for an important and legit project in future and the bad reputation will make the honor uneffective.
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Yes, it is very important to look into investors. Bad investors might be a red flag.
Thanks for the value addition.
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This is really very educative and I must also agree with your point about investors and whitepaper. Investors tend to make the tokens more valuable with time due their financial support while the whitepaper shows the roadmap and detailed information and plan about the project.
Thanks for sharing this great post with love from @hardaeborla and I hope you have a great day ahead
💕❤️💖💕❤️💖💕❤️💖💕❤️
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Thanks.
If we follow, these simple steps, there is very little chance that we will be scammed.
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Thanks @syedumair for the expose of potential scams by their characters!
It will surely deter scams if the nuggets are complied to!
But the concept of DeFi seems not known to me ! Would you elucidate ??
Thanks!!
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DeFi simply means decentralized finance. You might be aware about traditional finance, DeFi is different from that in a sense that there is no third part involved here and you don't have to go through the hassle of filling up those lengthy forms. You don't even need KYC in DeFi.
You can google DeFi for more info.
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Thanks! You are explicit enough!!
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Great points. Those and the possible backing of an already legit project are very important when considering a possible investment opportunity.
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Muchas gracias por valiosa información feliz día.
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I have spoken to a few newbies who believe that as long as it is crypto currency related then they cannot get scammed so reading posts like this will further help them understand that there are very bad cryto projects, nice post.
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Thank you :)
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Hello friend thanks for sharing.
Surely these tips help us to minimize the risk when investing.
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Thank you :)
Since so many people have shown interest in this topic, I might write a few more in my next post.
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You are right. I even think number 3 and 2 are very important. Because when one has a good team it is good for a crypto project but it is not enough to have a good team when there are not willing investors' to invest in that project
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Yes, team and investors are two key factors for a project to look legit. Yet there are plenty of other factors as well that have to be taken into consideration.
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