Over the last 6 months I’ve had an interesting opportunity to first start writing about blockchain oriented companies and their ICO’s and then participate in my own ICO. I’d found the concept of Bitcoin interesting for years, but it was the concept of smart contracts with Ethereum that really got me interested, as there was now something of value that I could more easily build on top of the technology. This lead me down my path to doing an ICO as it seemed to make sense for the project I was doing. What I found as interesting and disappointing in a lot of ways and led me to write a couple of other articles here and here.
So where is the irony? The cryptocurrency community is so overrun with scams, scammers and suckers that the vast majority of people in the ecosystem will now jump all over a legit company and ICO in a negative way and embrace the scams. Take the following screenshot for example:
You will see nearly that exact same post all over facebook crypto groups from different people, constantly, all day long. In response you will see a bunch of people ask for details, every time. On the Bitcointalk forum, the bigger and gaudier your announcement, the more they like it, but those tend to be the scammy ones. If you just post a 1 page informational announcement that is legit, you with either get no interest or you will get disdain from the community that you aren’t doing it right.
Another side to this is the shady ICO’s that have referral links. There is nothing wrong with a referral link per se, they are a good way to help spread the word, but when you see a bunch of facebook profiles from Nigeria pushing the same ICO with a referral link all over social media, that is usually a red flag. One laughable feature is when you tweet an innocuous question to a company and then we see all these twitter bots that like and retweet it constantly for the next month. It just lends to the whole scammy appearance of it all.
One of the most nefarious things going on is sites that provide ratings of ICO’s. Almost every one of them that I came across has the rating tied to whether you paid them money or not. There are sites that mark ICO’s as scams or suspicious as well, the problem is that they are not disclosing that they charge for any placement on their sites, so is this “helpful” bit of information real or is it retaliation for declining to pay for positive coverage? Since the sites don’t disclose what content is and is not paid for, you have no idea when you read it, thus rendering all of this information useless.
Finally, the infamous “pre-ICO”; by it’s very nature an ICO is “pre”, but what often happens and is rarely disclosed in the white paper (another red flag) is the discounting and whales involved. You’ll often see as much as an 80% discount to special people during the pre-ICO with much of the inventory disappearing during that time. Then you need to look at the vesting, this would be almost acceptable if the vesting period is far in the future, but I’ve seen many examples where the timeline shows a delivery 4 months out with vesting in just 3 months. The whole notion of the pre-ICO is a big warning sign to me.
Much of the social media community is their own worst enemy in what is happening with the current ICO environment. They foster a system of promotion and interaction that almost guarantees that they will be inundated with scams and scammers, and then that same energy is also used to shout down the legitimate projects.