Initial Coin Offerings (ICO) is still fairly young in the crypto industry, and startup ventures are starting to engage in this late-bloomer. But what is the most common pitfall in ICO investment?
In a panel discussion last October 22 at Acceler8’s BlockchainSPACE, Carlo Cojuanco, Co-founder of Cryptocurrency PH and Christian Blanquera, Director of Technology at Monico, discussed a common problem when investing in ICO and how to avoid it.
The most common problem in investing is not seeing the companies that seek to scam their investors through fraud. It must be remembered that ICOs are issues in an unregulated environment, meaning regulatory bodies such as Securities Exchange Commission do not have the oversight over the processes that happen in these exchanges. Because of this, funds lost due to fraudulent transactions will never be recovered.
According to Blanquera, an easy way to avoid fraud is to look at the token design of the company. Looking at the purpose of the token, the blockchain accompanying it, and how these two work together will easily reveal if the ICO that you are investing on is legitimate or not. When investing, remember, well-designed, well-intentioned, and useful tokens retain long-term value.
If this still does not convince you, or if this still leaves you skeptical, Blanquera advises investors to read through Whitepaper. The Whitepaper outlines everything you need to know about the currency: the technical details, the problems it tries to solve, how it intends to solve it, and the strategy on the generation and distribution of the token. The token and the Whitepaper must go along cohesively to guarantee that the company you are investing is legitimate.
Besides looking at the technical aspects of the company and the product it offers, it helps to do your own research. Besides looking at the product, Carlo Cojuanco recommends taking a look at the background of the company. Look at what they do as a company and everything else they offer, besides ICO. Conduct an extensive research on the company and the people involved in running it. This might be tedious, but this ensures that the people you are transacting will not scam you.
After you have done your due diligence in researching and making sure you are not engaging in fraudulent activity, it is best to get a second opinion on it. Get input from reputable people you know who are also interested in cryptocurrency and blockchain. This will help you see loopholes you might have missed or technicalities that might have been overlooked in your research.
If you’re interested, Acceler8 regularly hosts these informative talks on the industry in their BlockchainSPACE in Acceler8 111 Paseo. Stay updated to these events and stay informed!
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