If you haven't heard, a recent report published by Ernst & Young has found that more than 10% of ICO funding was stolen.

Even though the ICO mania of 2017 is slowly subsiding, a huge portion of ICO's coming out are still not worth the white paper they are printed on.

It's easy to hate on these scams and blame them for the bad reputation crypto has in the wider community. However, let's not forget the swarms of people that have, over the last 13 months, turned the crypto markets into a giant casino.

Is it the scammer's fault or the idiots who get scammed?

The knee-jerk reaction is to cry for stern regulations to clean the streets of all the bad guys. Personally, I think it would be better to educate new investors and keep the regulators away.

So, here's three things anybody can do, with just two minutes of research, to spot bullshit ICO's:

Buzzwords Over Substance

Nowadays, people love to talk themselves up using buzzwords. Have you heard about my new ICO GYcoin?

Greek Yoghurt Coin is being developed by a diverse team of passionate free thinkers. Leveraging blockchain technology, we plan to build a decentralized eco-system of Greek Yoghurt. By simplifying supply chain processes, the Greek Yoghurt blockchain will be able to streamline the entire Yoghurt network. This will ensure transparency on the Greek Yoghurt network from cow to spoon.

The above quote is obviously a load of crap. However, GYcoin is no worse than some of the white papers and PR releases these ICO companies are putting out.

An easy way to spot a scam ICO is to read their marketing materials and identify the ratio of buzzwords to substance.

Substance includes things like real-world applications, a working example of the product, and a detailed development plan.

If you read a PR release from a company with 1% substance and 99% buzzword fluff, you can be sure this company isn't going to have a happy ending.

Yesterday I revealed how the latest scam ICO, Benebit, was able to fool investors out of 2 million dollars. Let's take a look at some Benebit marketing:

Source

If you think there is a shred of substance there, or a spell check, then I have an exciting new project you can invest in which aims to leverage blockchain technology to revolutionize the Greek Yoghurt Industry.

CEO Public Appearances

Have you heard of Brendan Eich? He's the founder of the Basic Attention Token. If you do a Google, YouTube, or podcast app search for Brendan Eich, you will find numerous interviews and public appearances made by the man himself.

This is one way to know BAT is a legitimate project. The founder is showing his face and communicating with the community.

Brendan Eich Giving a TedX Talk (YouTube)

To find out if an ICO is a scam, simply run the CEO's name through Google, YouTube, Podcast searches, and Social Media. This person should be all over the place conducting interviews, attending seminars, and giving talks at conventions. If they are not, for all you know they could be some neckbeard in a basement that's about to buy a new gaming rig with your money.

If I'm going to invest in an ICO, I want to see the CEO's face. I want to hear them talk and see their body language. Also, I want to know they have what it takes to stand on stage in front of a large group of people and communicate their idea with conviction. If they can't do that, they aren't getting my money.

Does the Company Even Make Sense?

December last year saw legions of people pouring money into crypto. How many of these people even had a basic understanding of what a cryptocurrency is? Let's be honest, most of this money came from people whose only knowledge was: “I read on Facebook you can make money buying Bitcoin. What you do is buy Bitcoin and it goes up in value then you make money. Oh, and Ripple!”

These people are now realizing that that's not how this works. Some of them are now panic selling making the prices drop even more.

Don't be one of these people.

When you invest in an ICO, make sure you understand what the company is about. If you can't make any sense of what these people are trying to do, then it's probably a bunch of buzzword fluff or something you have no business getting involved with.

Having an understanding of the industry the ICO is entering will enable you to ascertain if what they are proposing is possible, or if they are a bunch of scamming assholes.

When you know the industry, it's easy to ride the dips. If you believe in the tech, and understand the real world impact the tech will have, then a short-term drop in price will mean nothing to you.

If you have no idea what a coin is about, when the price dips, it's going to be very difficult to keep a cool head and hodl.

Making uninformed investment decisions is a surefire way to get scammed and lose money.

Conclusion

These three tips are not a foolproof way to avoid ICO scams. Rather, they should serve as a quick method to weed out the bad from the good.

By checking the marketing material for substance, watching a few interviews of the CEO, and making sure you understand the industry the ICO is “revolutionizing”, you will know which ICO's not to waste any more time on. 

Remember, all someone needs to do an ICO is a pocket full of buzzwords, an internet connection, and a big load of shit.