How to NOT get scammed


A few months ago, a girl named Julia, who just bought 100 ETH with her savings, invested in an ICO because everyone told her she could make some money and eventually save horses thanks to that great decentralized stable app. Unfortunately, she followed a bad link heavily broadcasted on Slack and lost them all. She borrowed 100 more ETH from her friends to invest anyway and recover from her loss, but it appeared that the decentralized stable app was a vaporware. Consequently, the total price of her 100 000 COCK tokens slowly went down until they reached 2 ETH worth on the market.

Even if I just made up that story, many unfortunate people recently experienced similar journeys by rushing the ICO market without having a single clue about what is going on out there. Some of them got lucky and were compensated (Coindash and Enigma did a good job on that matter) but too many definitely lost their money. We don’t have the cure for scams yet, but if you read this article carefully, it will drastically reduce the odds that you end up like Julia.

Before the ICO

You’ve probably heard about that guy who made XX millions from nothing just by betting on ICOs, or about that token who saw its price multiplied by 25 in about a month. First of all, those past events should never influence your decisions when it comes to invest in an upcoming ICO. You are free to take risks and to go all-in rather than safely allocate a small percentage of your portfolio to your flipping habits, but the first rule here is to consider each ICO as a completely new event that may or may not be successful.

Rule #1: Relax and read about the projects you’ve heard of.

Now that you are relaxed, here are some things that we, at FLIPHODL, are looking for when we want to know if it is a go or a no go.

The website

It may sounds futile, but it is not. You often can tell how much the team behind a project care by just looking at their website. It is not about judging a book by its cover, but rather more about rigor: if they don’t care about details at early stages of the development of their project, why would they care at the more advanced ones? Don’t get me wrong though, many projects come from non-English speaking countries and you may find misspellings here and there, but maybe you need to think twice if you find something like the example below.

The team

Not everyone can have Bill Gates on his advisory board, and there is no doubt that cryptocurrencies is a wonderful opportunity for unknown geniuses to make their way through this technological revolution. However, background is important. We, of course, tend to prefer when big names are involved, but we also like when some members of the core team were already working in the field prior to the current project.

What has already been done & the promises

ICO are usually full of promises and it is quite normal. Actually, skill and enthusiasm can achieve great things with millions of dollars! When analyzing an ICO, it is important to look for what is already available though. It is far more secure to invest in a project which relies on something working (like a beta or some sort of app/protocol that is already used in some way) than a project that promises to disrupt an entire industry out of thin air.

During the ICO

Now the ICO is approaching and you’ve read a detailed and insightful analysis on Fliphodl that you agree with. You are ready to spend your ETH to get that precious token. It is indeed a critical moment, because it is also the moment when all the scammers in the world popup to steal your money. Here are the common trickeries scammers use to fool the unwise.

Slack

By far the most common scams come from Slack. Someone will push an Ethereum address on the public channels or in private and will advertise it as being the official one. First, you need to know that nobody gives any official ICO address on Slack anymore. You have to check on the official website if you want to get the real one. When you do this, make sure that you actually are on the official website. Check twice if needed. Compare it with the one given on websites like us. Scammers are used to make complete copy of crowdsales on alternative websites with similar addresses, like thebestico.co instead of thebestico.com, things like that.

In the worst case scenario, the official website may have been hacked. So you need to check on Etherscan that the Ethereum address is actually a valid ERC20 smart contract address and not a regular Ethereum address.

Email

Another common scam is old like the email, it is called the scam by the use of emails. So you will receive an email that looks like it is sent by the official team of a project. It will ask you to go on the “official website” to send your ETH. Never trust an email that asks you to send money. As already said above, double check everything if you are nevertheless willing to send your money following that kind of invitation.

Private key

The most absurd is the private key scam. Never give any of your private keys to anyone, ever.

Summary

  1. Don’t trust anyone: verify everything by eventually crossing sources.
  2. Send your ETH to a smart contract address, not a regular Ethereum address.
  3. Never give away your private key.

Conclusion

Participating to an ICO is definitely not like subscribing to a Walmart contest. There is a lot of money involved, which attracts a lot of very talented and well prepared scammers. Be aware and don’t send your money to anyone until you made sure that the transaction is legit.

In the next guides, we will go deeper into ICO investments and try to answer the following questions: How much should you invest in an ICO ? Is there any timing and what could they be? When do I choose between FLIPPING and HODLING?


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