When assessing the prospects of a project working with cryptocurrency, it is worth paying attention to several factors in order to protect yourself from scammers and unsuccessful investments. Experts spoke about the signs of unscrupulous and risky blockchain projects.
Strategy

Usually, details of the strategy are contained in the documentation (White paper) or on the official website of the project, but sometimes information about its development plans has to be found on social networks or in interviews with its representatives in the media. Sometimes it is enough to evaluate the reality of the strategy from the point of view of common sense. If a project that has just launched its own website promises to become a global payment system in six months and calls Visa and Mastercard competitors, this is a reason to think about how realistic the team is in its goals.

Technical indicators

It is not always possible to evaluate a protocol, especially if its software code is not publicly available or there are no appropriate skills and education to test it. But any user can view user activity on the blockchain. Sudden bursts of activity or rate jumps against a generally quiet background may indicate attempts to manipulate the rate.

Promises of high returns

All investors would like to receive a high return on investment. In a highly volatile market, it is indeed not uncommon for a project to take off sharply, and its native token to increase in price severalfold. But no one can guarantee growth in the market. Such promises should immediately raise alarm bells.

Team

These could be developers who blog or actively write about technology on social networks, or top managers who talk about development strategies. Just by the way correspondence is conducted on social networks, what comments project representatives give in the media, or by the quality of expert articles, you can assess how professional the project team is. Statements by team representatives about supposedly dozens of successful projects of its members without mentioning their names can look very suspicious. This immediately raises suspicions that the names of successful projects have not been announced because they simply do not exist.

Anonymity and false promises
Co-founder of the ENCRY Foundation Roman Nekrasov

Anonymous creators

Many dishonest developers like to justify their privacy by saying that Bitcoin was created by an anonymous person - Satoshi Nakamoto. The problem is that Bitcoin is decentralized, but scam crypto projects are not. Control over them may be in the hands of a group of people who will happily spend the money of investors who have trusted anonymous people. At the same time, finding such shady businessmen will not be easy.

Secondary idea

Fraudsters love to pass off derivative ideas as innovations. It’s worth carefully studying all the ideas that the developers of the project you like are trying to push through. The likelihood that the idea will be far from new is extremely high.

Loud promises

If developers promise you a guaranteed high income, run. With such promises, scammers usually lure gullible users into the project.

Hidden code

An attempt by developers to hide the program code of their product should arouse suspicion among potential investors. It may contain critical vulnerabilities and other details that could cause you to lose money.

No technical documentation

Fraudsters don't like to work out details. Among other things, they often miss the point of creating carefully crafted technical documentation that reveals the potential of the project.

No detailed road map

Its absence suggests that the developers do not have set deadlines. If there are no deadlines, then the creation of the project and its commissioning may drag on indefinitely.

Not meeting deadlines

If, while studying a project, you find that developers miss deadlines, this is a reason to refuse investment. Failure to meet self-imposed deadlines is disrespectful to investors and can lead to loss of money.

Lie

Fraudsters love to take credit for the achievements of other teams. If you catch a project lying, you should refuse to invest in it.

Signs of a pyramid

If you are offered to involve your friends in a project for additional payments, you should think about whether it is a typical Ponzi scheme.

Content theft

Fraudsters love to steal content from other teams. For example, when studying such a project, you may come across borrowed White Paper or stolen graphic elements.