We had an hour-long call with seven other people who either have an interest in the concept, done an ICO or invested in some. After a brief introduction and getting to know everyone, we discussed a number of questions around the concept of ICOs. One question that came up was this one:
What is a good way to assess whether a team behind an ICO is legit and can be trusted?
With so much money flowing in the space, there’s no shortage of people trying to make a quick buck. It’s important to have systems or at least clear strategies to weed out which projects are actually providing value.
We’ve all agreed that there are a few things that can indicate a legitimate team and purpose:
- There’s substantial research and the team knows what they are talking about. Most projects publish a white paper describing their project and the research behind it. Looking at the team page and understanding how much experience these people have in the cryptocurrency space also makes sense.
- Does the blockchain really enhance this project? Do any of the qualities that the blockchain bring with it make this project better? Some of these qualities are transparency, immutability, and no central authority. If these qualities inherently improve the project, it has a good chance at succeeding.
- How do the downsides of using blockchain affect the project? Some of the downsides include less computation power and speed, limited data storage and higher complexity compared to traditional infrastructure like AWS (Amazon Web Services).
Answering these three questions can help you weed out a majority of the bad guys who are just trying to make a quick buck.