We are familiar with ICO's and how many people have made a lot of money through them.

For people who do not know, ICO is Initial Coin Offering. ICO is pre-order for cryptocurrencies.

ICO is basically when a cryptocurrency has not gone public and the developers need funding to complete it or to create a demand for the new currency they will be launching.

The first team of people who hosted an ICO were the developers of Mastercoin. They managed to get 5 million worth of Bitcoins by exchanging them for their tokens. Waves, Ethereum and many other cryptocurrencies have started with ICO's and have been quite successful with it.

A lot of people have benefited from ICO's but then there is a dark side to everything: ICO Scams!

So how does a ICO Scam work?

The "developers" create an amazing website with professional graphics.

They build hype for it.

When the people pay up, they give nothing to the people, and run away forever.

There are different ways they can scam and the ponzi scheme is one of the most favoured way to scam.

Some of the ICO scams that I know of include: MMM GLOBAL, Pipcoin, COINOMIA, ONELIFE / ONECOIN, TBC / THE BILLION COIN

So, how can you avoid an ICO Scam?

Not de centralised - This should be a red flag.

No specific goal/business model.

Shady website

Shady graphics

Too good is definitely fake. (Stuff like: "By investing 1 BTC you could buy 1 million coins of our currency" OR "Only 1% left! Hurry up!"

Does not solve a real problem in the real world.

Has a target audience.

Read their whitepaper

Find the background of the founders and their reputation.

Most of the ICO scams can be avoided by using common sense but then the way these scams advertise their "product" its really difficult to make out if its a scam or no.

Feel free to leave your views and experiences with ICO's and also any other questions you may have in the reply section below.

Happy investing!