1. The team is unknown
Even before you read into the technical details of a project, you should take a closer look at the team and the consultants of the ICO. If there is no personality among them who already has a certain level of awareness in the industry, the project should be researched more closely. Because building a blockchain-based project is very complicated and hardly possible without sufficient experience.
2. The white paper has gaps
Many projects present their own cryptocurrency with a so-called white paper. It usually describes what the founders want to achieve and what technology they want to use to do it. Such a document is usually around 20 to 40 pages long. If it falls short of this length, this is often the first sign of a poorly developed idea.
3. The roadmap is unrealistic
With a professional ICO, the founders present in detail what they have already achieved, what stage of development they are currently in and what they want to achieve. All of this is entered on a roadmap. A kind of timetable that should show how the project should be developed further.
4. There is a lack of transparency
Anyone looking to financially support an ICO should see if the project already has an enthusiastic and active community. A look at the Twitter presence or the associated Reddit board of the project is usually sufficient. If the team responds openly and transparently to questions from investors and interested parties, this speaks against a scam. Authentic ICOs also make their program code public on the developer portal GitHub.
5. The niche is way too small
Even if the first four points do not indicate a scam, a cryptocurrency can quickly be abandoned by its creators or fail. That’s why you always have to ask yourself: is there even a market for this currency or this blockchain technology?