Here is a staggering statistic – 46% of 2017's 902 ICO's have failed.
Not only that, but another 113 are all but dead too. Either because there has been no updates from the team or because the coin has no users. That brings the total up to 59%!
All this is documented in a recent article by Bitcoin.com, you can click the link to check it out.
Oh, and there are plenty of straight up SCAM ICO's to worry about too. Take Prodeum for example.
Lithuanian-based Prodeum was a token that planned to put fruit and vegetable tracking on the blockchain. This would enable consumers to track where and when their produce came from.
It is not exactly known how much Prodeum raised in its ICO, but estimates peg it at around $11 million.
Any backer that went to the projects website on January 28th ended up seeing a webpage with just one word - “Penis.”
No, they weren't hacked. The people behind it disappeared with the cash.
As part of their marketing campaign, they paid Fiverr models to write the tokens name on their body.
Guys, the mad coin rush is over. Only tokens with actual use and utility will have any chance to rise out of the pile of alt-coins. The token has to fill a need that can be better served on a blockchain – and there has to be a viable demand for it to happen.
Otherwise the token is destined to fail.
So that is why I have come up with a few questions to ask during your ICO research.
Questions To Ask Before Investing In An ICO
Does the coin have a defined purpose?
The purpose of the coin must be clear and laser-focused.Does it solve a NEED or have a large amount of people it can serve and will want it instead of what is already in use?
How many people would benefit from using the coin? The more people it can serve, the greater the customer base and the potential demand. If the coin is the first to solve or vastly improve a common problem it will have a strong advantage.Does it have clear information about what it will do exactly?
In other words, does it explain the technical details or is the info just a bunch of marketing hype without facts. If there is just a bunch of “feel-good” marketing phrases and precious little information, that can be a red flag.How strong is the whitepaper?
Is it well-written and explain the technical details in depth? How do other well-respected people view the whitepaper? Is it worthwhile and practical?Who are the founders?
Do you know their names and history? Are there actual media events that they attend?Is there a development timeline or plan?
Have they laid out a timetable that moves the project along at a reasonable pace?How much has the ICO raised already?
How much do they need to bring this project to life?What is the competition?
Is there another coin already solving the need that this project aims to fulfill?How widespread is the potential use?
The more people that have the need for the coin the bigger the market for growth. You don't want coins that aim to work within a tiny niche.What are the legal obstacles, if any?
What are the chances that governments will go after this coin?How open is the team and how often to they provide updates?
The more the team updates the community, the more they will appear to be committed to it. When questions are asked, are they answered or given the run-around?How many of these coins will there be?
Will all the coins exist at the start or will more be created as time goes on? Is there a hard cap to the amount of this coin?How many coins will be given to the founding developers?
How many coins are going to be given to the founding team? If most of the coins are to be held by the team then those people will be able to more easily manipulate the price.What exchanges will the coins be tradeable on?
While I don't expect them to be listed on Coinbase at the start, is there at least one reputable exchange that will trade it?The Crypto Market Is Maturing
If you ask and answer these questions before investing your money, you might just save yourself from a doomed project.
The crypto market is maturing and no longer can one just “shotgun” into many different cryptos and have them all go up. You need to start doing your due diligence and really do some deep research before you buy your coins.
In the long run, the coins with the highest demand will be the ones that do well. The demand will be created by the use and utility of the coin. The use and utility of the coin will be driven by the NEED that the coin satisfies.
Don't wake up one day to discover your money turned into a penis and vanished.
Thank you @getonthetrain. I really need a roadmap like these questions to ask when deciding on what and how to invest in ICO.
May be the angels that weep with me inspired you to put this up @getonthetrain
I shall no longer fall into the hands of SCAM ICO
Founders with the help of this article
Thank you very much @getonthetrain
Hope you do not mind me resteeming this post for my friends to see?
If you wish to do so, you may always resteem my posts.
Ok. Done
Thanks for the post, this is great information. I was thinking about investing in crypto and these are great questions to ask. Also, I was planning to create a crypto currency for my app and these questions make sure that we answer any concerns of our users and investors.
Awesome! Glad you found value in this post.
It was obvious when these ICOs started popping up that most will just die. They tried it in 2014. They called it 100% premine, wasn't a big hit. Other than ripple.
Personally I think one should understand the code also to know if they should invest in ICOs. I don't, so I don't invest in any ICO. They can write whatever in the whitepaper, but ICOs by definition are things where you pay before you see anything happening.
And most have died. If you aren't able to perform deep research, then its best to stay away like you said here.
Nice post, one of the biggest criteria to ask is does the ICO have a working prototype, meaning does is have an existing operation that product a product or service in need and is that operation profitable.
Profitability is hard to achieve at the start, but the NEED has to be there for sure.
That's the beauty of investing, finding the lowest risk, highest reward opportunities.
Agreed, it is rumored that Hashgraph will announce an ico this Tuesday. Hashgraph already has several businesses that are already using or are about to use the technology. It would be like if ripple just came out w it's xrp coin today.
everyone wants to find ICO, thank you for giving knowledge to everyone, including me
I normally don't invest in icos because it's a high risk investment, i would rather wait for them to establish themselves a little and then do my own research to see if they are trying to solve an issues that others aren't, look at the people behind them, yada yada, basically the same "research topics you talked in the post" my latest 2 additions were NEO, VEN and EOS, i especially like EOS since it's from the same guy that built steem and it's trying to solve the ethereum scaling issues!
I prefer to do this then let my money turn into a penis xD those guys might be scammers but they had one hell of joke to finish :P
I do like the Dan Latimer chains a lot as well!
Yes, i really like his chains, and he said since the start that Ethereum would end up with scalability problems, but no one listened, and so he started working on EOS so fix some of those issues.
BTW did a post about investing, mentioned you at the end, hope you don't mind
So true, I would also add to the list of question that you so rightly raised:
Does it need to run on a blockchain?
Is it being developt in a pro-crypto country?
What added value can you clearly see by it being decentralised?
For the team, I found really useful to verify if they are on LinkedIn and to check GitHub and Reddit interaction.
Thanks for the input
Ico is big risk because after dumping many of the coin will die
Yea, you have to be careful. Asking the right questions can reduce the chance of losing your money.
Yeah...you're right. I do remember that day when you told me that time will come when the strong coin will have to stand. All of us can see it.
I personally feel like since cryptocurrencies are decentralised, there is a great risk of leading into a so called "black market" with the thousands hackers and scammers.
I would suggest the government to intervene, but then I remember that we are dealing with cryptocurrencies. Lol
Crypto puts the responsibility on the individual.
To remember their passcodes.
To protect their wallets.
To provide correct addresses (or lose it).
To avoid scams.
and more.
The individual has the responsibility. Unfortunately, individual responsibility is something that has been atrophied by governments. Time to strengthen those muscles.
Yeah... that's true. Those are the things that made me like cryptos. All depends on me and no one else on my behalf
To date, I have invested in exactly zero ICO's. Though I have bought some EOS through an exchange. And the reason why I haven't invested into any ICO's is that I do not have the time or energy to research them as thoroughly as you laid out here! Perhaps if someone I respect recommends one to me, I will make the time to do the research and decide if I want to buy in.
You are playing smartly. Don't jump into something you haven't researched unless it costs you nothing.
As long as the barrier to entry is so low, internet fraudsters will continue to happily take hard working people's money and disappear into the night.
For sure. Be careful out there!
I like the post, my sister if I can ask advice from my sister how, so I can develop please kak, please advice for me, for my sister's attention thank you, @getonthetrain
The penis thing might have hurt the investors real bad. A double burn I would call it.
Good questionnaire. Pretty helpful for the new comers.
Lol, turned into penis...
I've invested in zero ico's so far. Not even for fun. But my person favorite technology Hashgraph has a mysterious announcement on Tuesday that is rumored to be a coin.... soooo I might have to learn.