One of the most exciting events on the coin market is the release of new coins. If you are into cryptocurrency trading, an initial coin offering, or ICO, seems like the greatest thing to invest it.

One of the most exciting events on the coin market is the release of new coins. If you are into cryptocurrency trading, an initial coin offering, or ICO, seems like the greatest thing to invest it. The ICOs have slick marketing websites, cool videos, and the promise to change the world. However, as you can see in this video, wise investors are cautious around ICOs.

So, just to backtrack a minute, an ICO, or initial coin offering, is like an initial public offering with a new stock. A company launches a new coin, which promises to fulfill a major need in the market. Investors who are into cryptocurrency trading want to get in on the ground floor and buy the coin while it is still in its infancy.

The main reason for the caution for people involved in cryptocurrency trading is that there are no regulations around initial coin offerings. That means that there is no government agency looking underneath the slick marketing campaign. An ICO could be led by scammers, or a group of 18 year old kids who know how to program and work the blockchain. Having a scam ICO falls somewhere in a legal grey area. On the one hand, you bought a worthless coin, but you did get the coin.

If you are into cryptocurrency trading, how can you protect yourself from throwing your money after fraudulent ICOs?

The Cryptocurrency Trading Guide to Checking Out ICOs

Start with the ICO whitepaper. The whitepaper tells you everything that the coin is going to do. It is a detailed document, and includes their business model, team members, and other important information. If the ICO you are interested in is missing that information, or lists people as anonymous, this is one cryptocurrency trading opportunity that you are going to want to avoid. It may be legit, but it’s not worth the risk.

Next, start to look at the promises that the project is making. Do they seem unrealistic to you, especially in terms of return on investment? If the project is overpromising and claiming to bring you untold riches, this is another cryptocurrency trading opportunity to avoid.

Some ICOs are legitimate, but scammers try to take advantage of people with phishing websites. They recreate a copy of the page you are interested in online, but it is fake. One way for cryptocurrency trading investors to know if they are on a phishing site is to look at the URL. Most ICOs are based on a dot com or .IO domain. Most phishing sites are built on lesser known domains, and often don’t have an SSL certificate.

If you’re still not sure if the ICO you are interested in is real, you can go to a trusted ICO listing site. While they may not have every single legitimate ICO project, if the ICO you are interested in is not listed on Coinschedule or ICOalert, it is a real red flag.

Cryptocurrency Trading is a great investment opportunity, but like the stock market, traders need to exercise caution,

Avoid unsavory ICOs and start cryptocurrency trading. Learn how on our weekly webinar series.

dmfxuser

View all posts