In cryptocoin investing the reality is that many (if not most) of the coins either are scamcoin or won’t make it despite people buying them. Investing early is a great way to really earn money quickly, but you also want to know if a digital coin is actual real Cryptocurrency.
There are many people entering the cryptomarket every day. Here is a tip that will keep you safe with how you use your money when you decide to put it into the best cryptocurrency coin.
How To Spot ICO Scams
There are several different ways to spot ICO scams. The first way you will learn about is how to look deeper than just the hype.
Take a look at their team. Search for their online presence.
- Are they on LinkedIn?
- Do they have relevant experience?
- Are they part of a team that has prior blockchain startup experience?
- Have they engaged with the community before hyping their coin?
Look to see if they have a Slack channel. Most of the legit Cryptocurrency are very active in their community or on their Reddit page. If you can’t find out much about them or don’t see much interaction, that’s a red flag.
The next second thing to do is to dive into the standard online material that all of these ICO startups will be putting out. You can find the code on github.
If you can understand code, try to see if it’s cloned from another existing project. If it is, it’s likely a scam.
Read their white paper, which is where you’ll find the technical specifications. If you can’t understand what is in the white paper, check on Reddit because someone will probably have broken it down in a thread over there.
Look at the token characteristics and then research whether it’s inflationary or deflationary. This is determined if the amount of tokens out there constantly increases over time. In this case, the coins will be worth less over time.
- Is there a cap on total number of coins ever created like Bitcoin?
Take a look at the purpose of the coins. Look at the legality of using the coins. If the coins are for something that is generally illegal, you may not even be able to use them.
Are you looking to learn the ins and outs of crypto investing? Look at CryptoReview for more information.
What are the ICO Terms?
- Make sure the ICO terms fit your needs.
- Is it uncapped?
- How long does it last for you to buy in?
- Is there a max limit on the amount of money that’s going to be raised?
- How many days are they going to keep this open before they shut it and people can’t buy into the ICO anymore?
Pay attention to how much money =they looking for because a lot of criticism out there is that people set their ICO caps to be really high and they raise hundreds of millions of dollars for an idea stage software startup. Many feel that this is a sign of greed.
Distribution of Cryptocoins
How much cryptocurrency are the founding members keeping for themselves? How much of it is going to be bought by big back holders of coins? How much is it spread to smaller accounts, which is the general public?
This matters because the founders can manipulate the price or do what is called pump-and-dump. A pump and dump is increasing the price greatly and then sell it all and disappear.
You also might want to see if this IPO offers an escrow. An escrow is where an intermediate party holds your money or your Bitcoin or Ethereum that you send to the ICO team. The team only receives the funds if they reach certain milestones.
This is a good way of making sure the founders don’t just look at all their brand-new money, sell it all, and then buy a private island where they are never heard rom again.
Not every new coin will offer escrow but it is something to ask about.
The Benefits of Blockchain
Having a coin on Blockchain technology can help you to feel more secure. Not all coins that will make it big will be Blockchain. Sometimes is may make sense to not have a Blockchain. It just depends on the purpose of the coin.
If being able to see ledgers are important to you, make sure that any coin that you invest in is backed with Blockchain technology. Most of the scamcoins are distributing in house instead of on the blockchain.
No matter how you feel about the Securities and Exchange Commission, this is illegal in their eyes. It is also an easy way to get scammed out of your money.
Cryptocurrency is not just a digital currency that you can buy and sell online. It is actually a system. The blockchain technology has a public ledger, which is accessible to everyone through the internet.
The Blockchain Technology
If I buy something from you in the crypto landscape, it’s anonymous. It doesn’t have your name or my name on it. But it does have the size of the transaction and that’s kept in what’s called the blockchain. And it’s public so everyone sees the transaction but they don’t know who did it.
The blockchain gives you access to all the transactions that have ever happened on that blockchain with a specific coin. It has a real, open ledger that you can view.
Blockchain Explorers – Identifying Scamcoins
To see if a coin you are interested in has blockchain technology, go to http://chainz.cryptoid.info.
From this website, you have access to the blockchain explorer of all the cryptocurrencies that are legitimate. A few of the most popular coins: Litecoin, Capricoin and Rubycoin can be found easily.
If you are looking for a certain coin, type it in the search bar up in the right corner. This will help prevent your from browsing through the long list of coins to find the one you are looking for. This will help you quickly determine if the coin you are looking at is real.
To navigate through this and see any wallet that is in the blockchain and the transactions that have been made with these wallets, simply click on the coin.
Capricoin Blockchain Explorer
Capricoin was used for the demonstration. Once clicked, it will show you the most recent blocks that have been developed in the blockchain.
Blocks are developed when transactions happen.
I’m going to click into the most recent block by clicking that number.
You can see the transaction. The transaction was a transfer of Capricoin from this wallet. The string of letters and numbers is actually a wallet address that transferred 1,223 CPC (Capricoins) to the other wallet (String of numbers).
You can look further into this information and click the wallet to show you every single transaction that wallet has been involved in.
This is one way that you can determine if your cryptocurrency is a real functioning cryptocurrency. If it doesn’t have a blockchain behind it and you can’t find it in a blockchain explorer, then this is probably not a real cryptocurrency.
The dangers of not using a cryptocurrency is the chance to lose your money because there is no guarantee that the transaction is going to make it onto an exchange. There is no guarantee that the company is not going to get shut down, before they can make their cryptocurrency legal.
You might want to bookmark this site https://chainz.cryptoid.info and use this before you make any decisions to put money into a cryptocurrency.