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Investing in a new ICO crypto can sometimes want to walk through a mined field. The possible reward on the other side of the field is huge, but there are hidden dangers everywhere. If you take a wrong step, I could lose everything.
To transmit a mining field safely, you need a special map that shows you where all mines are buried. This guide will be that map for you. It will provide a clear and honest vision of the most dangerous problems in the world of cryptographic funds. We will break down the 5 main risks associated with cryptographic ICO so that I can learn to navigate this exciting but dangerous territory with more confidence.
Risk #1: The risk of fraud
This is the best known and most malicious risk. These are projects created by bad people with the specific objective of stealing their money.
The “carpet” or the exit scam
This is the most common type of fraud in the cryptographic world. A false team will create a very professional website. They will also create a lot of false exaggeration in social networks to deceive people.
After raising a lot of money from hopeful investors during the ICO, they simply disappear. They take all the money and then eliminate their website and all their social media accounts. This leaves all investors that support tokens that have no value.
Phishing and false websites
Even if the project that interests you is real, scammers often create false “imitators” websites. These fake sites are seen exactly as the ICO Real page. They will try to deceive him to send their money to their own wallet instead of the royal project wallet.
Risk #2: Project risk
It is important to know that not all projects that fail are a scam. Many teams are honest and have very good intentions. But, they still fail for normal commercial reasons. The final result for your investment is the same: it goes to zero.
Incompetence or inexperience of the equipment
A great idea is nothing without a great team to build it. The project team can be very honest people, but they may not have the right commercial skills or the technical experience. They can lack the necessary experience to administer a successful company.
A bad idea
Sometimes a project is created to solve a problem that does not really exist. If nobody wants or needs the product you are building, the project will eventually fail. When he fails, his token will become useless. This is another of the main risks associated with cryptographic ICOs.
Risk #3: Technical risk
This next risk category covers the dangers that are hidden within project technology itself.
Intelligent contract errors and hacks
The intelligent contract of a project is the computer code that manages all the money. If this code has an error or a security hole, an expert hacker can find it. The hacker can exploit this error to steal all projects of the project.
Lack of professional security audit
A security audit is when a professional company verifies the project code for these errors. A project that has not paid for a high quality audit is to assume a massive and unnecessary risk with the money of its investors. This is a large red flag for any investor.
Risk #4: Market risk
Even if the project is legitimate and technology is safe, it can still lose money. This is due to market forces that are out of project control.
Extreme prices volatility
The price of a new token is incredibly volatile. This means that you can go up and down very quickly. It can increase by 500% in one day and then block by 80% the next day. You must be prepared for these wild price changes.
“Landfills” after the launch of the first experts
Often, there are private investors who could buy tokens even cheaper than you in the ICO. They could “turn” or sell, all your tokens in the market as soon as you are launched to receive a quick gain. This can block the price of all ICO investors.
The general crypto market cycle
There is no project in a bubble. If the entire cryptographic market is in a “bear market”, which is when all prices are falling, it is very difficult for a new project to succeed.
The history of the initial offers of coins (ICO) shows us that the new projects are launched with much more success during a “bullish market”, when prices are increasing.
How to manage and mitigate these risks
Now that he knows where the “mines” are buried, let’s talk about the security team that can be used to protect.
1. Start your search on a safer platform
The first and most important step is to avoid the most dangerous areas. You should not start your search for new projects on social networks. Instead, you must use a reliable platform that lists new cryptography presales.
These websites act as a top -level filter. They help you avoid the most obvious scams and provide official and verified links to the website of a project.
2. Become a research master’s degree (Dyor)
The best protection you have is your own brain. You must do your own research on each project before investing.
His research must focus on the key risks we have talked about. Is the team public? Is the idea good? Is the code audited? And the tokens distribution is fair?
3. Understand the market context
Before investing, you should always try to have an idea of the general mood of the market. You can do this by reviewing current cryptography market. This will help you understand if it is a good time or a bad time to make high -risk investments.
4. Follow the golden rule
Never invest more money than you are willing to lose completely. This is the most important rule of all. It is your best financial security network.
Let’s make a quick summary. The world of cryptocurrencies is full of many different types of risks. There are scams, project failures, technical errors and market volatility.
However, knowing what these dangers are, you can take measures to protect yourself. By using a safe discovery platform, doing your own deep research and following intelligent investment rules, you can drastically reduce your risk.
Understanding the risks associated with cryptographic ICO is the most important ability you can learn on your trip to become a successful investor. If you ever need help to analyze the risk profile of a project, it is always a good idea to contact a team of experts for a deeper aspect.
