There appears to be an ICO frenzy across the Blockchain industry. Everywhere you look, a new product is created with a corresponding ICO launch.
While there are genuine products and judiciously executed ICOs, there have been reports of insincere setups that only succeed in reaping the masses of their wealth.
Industrial stage of development
Despite noting this as an unfortunate development, Helium co-founder, Jason Cassidy identifies the ICO scenario to be common with other developing industries.
According to Cassidy, whenever a new industry reaches a certain level of market penetration, the floodgates open up and a host of actors enter into the space. While many of these individuals have good products or services backed by good intentions, human nature dictates we will see a mix of participants.
Cassidy notes that the bad actors take advantage of the illiteracy of their victims to exploit them and steal their resources.
“Not every one of these people will act in good faith, and whenever there exists a collection of uneducated investors you can be sure the charlatans are lurking close by.”
In order to be safe from bad actors, Cassidy advises new investors to ICOs to keep three things in mind when contemplating investing:
1. What is the technology/platform/currency addressing?
There must be a clear 'need' that is being fulfilled, a market for the solution and ideally the long term vision to get it there. Read the whitepaper, look at the roadmap and research the industry the currency and Blockchain are addressing.
2. Who makes up the team?
At the end of the day, the project will go as well as the team that is behind it giving leadership. Background check the team, look for transparency, previous work experience and signs of emotional maturity. If there is a lack of business experience on the core team, how will they handle adversity or a large increase of wealth (emotional maturity is needed here).
3. Listen to your gut
At the end of the day, one can pour over hours upon hours of research. Smart investors will learn to trust their gut instinct. If it looks like a risky investment, it likely is. This is the Wild West 2.0 right now and one of the emotions such as fear and greed, vet the team and the technologies and you should position yourself for success.