Castle in the air. How not to lose money when buying tokens
Chapter Playkey Egor Guriev tells how investors can distinguish promising blockchain project from the Scam and not to give their money to fraudsters
Only 8% of tokens after the ICO go public and only one in 10 is intended. How not to lose money when investing in cryptocurrencies in his newspaper column on RBC-Crypto explained the head of the Playkey Egor Guriev.
Because of fraud the participants of kriptonyte every day you lose about $9 million One of the most risky for investors of the spheres — purchase tokens, digital asset companies developing projects based on blockchain. Criminals are breaking into the exchanges and wallets, copy sites promising publishers of the token, hold the fake ICO and use dozens of other ways to usurp the money of cryptoendoliths. For some high-profile thefts reach into the millions of dollars — so $600 million collected fake ICO AriseBank (for that kind of money, for example, it is possible to buy the airline “Victory”). According to recent reports, 81% ICO turn out to be a Scam (fraud).
But to scare and stop token buyers difficult — despite the high risks, everyone wants to invest in the cryptocurrency, which will grow rapidly. On average, investors who buy tokens of projects at the stage of ICO, can get 82% yield, provided that within two months, the cryptocurrency will be on the exchange. How to distinguish the scams from the creators of promising tokens? Manual from cloud gaming service Playkey, which finished ICO last year.
Check the authenticity of the project
Regardless of what stage you are invested in a token — pre-ICO, during the ICO or after its completion — study, whether real project, tokens which you intend to buy. There are cases when fraudsters create a beautiful page, describe an attractive idea, and then disappear with the money collected.
For example, this happened with the scum-Benebit project, which promised to create a platform for increasing customer loyalty. Pre-ICO was in full swing when one of the potential investors found that in the section with the project team published the photos from one of the British schools. By this time, the team managed to collect at least $2.7 million Sometimes the scammers do not even hesitate even to use photos of celebrities — for example, Ryan Gosling the authors of Scam-project Miroskii issued for your designer.
Therefore, to verify the founders, advisors and their intentions is the first step as a responsible investor. The project site is able to suggest, did not create it for a Scam. Yes, there are prudent scammers who months are the profiles fake-project in social networks and tweaking every little detail in the white paper. More often, however, their less-scrupulous colleagues can write a non-existent legal address and contact phones, use illustrations without a license or even steal the logo (so did the scum-project Razormind, giving the emblem of one of the operating systems based on Linux).
If the project has already successfully raised money is not a reason to relax. Scammers on the stock market are able to act long-term and they do not necessarily disappear immediately after the ICO. While the project is allegedly being developed, they can continue to sell tokens and even put them on the exchange. A signal of fraud can be a fake news — for example, if it is declared cooperation with a specific company, not the fact that the company knows about it. So, World of Battles announces its partnership with Twitch, while the organizers of the ICO has not gone along with the collected funds.
Pay attention to the tools buy tokens
You have checked everything and are sure that the project is worth to invest in it tokens. But here come into play another kind of Scam that intercept monies on the way to the creators of the project.
Their favorite way to engage in a dialogue with users on behalf of the company and to provide false payment information. During the ICO distributed network Aragon scammers have created a fake Twitter account. Since around the project there was great excitement (for 15 minutes, he collected $25 million), people sought to buy tokens as soon as possible and transferred to swindlers from Twitter of around $10 000.
A more complex scheme — create an imaginary website ICO. Users are not always ready to understand and to go beyond the first tab in the search engine or links on the forum. In anticipation of the ICO Telegram fake web sites earning millions of dollars — the largest of them, Gramtoken.io has collected about $5 million, although neither Pavel Durov, Telegram no channels were not affiliated with the resource. Always check which addresses are published from the founders of the project, on their official channels and websites if your team has other projects or their own company.
Difficult not to get caught, being on a phishing site-clone. Recognize it is not always obvious: scammers simply copy the official ICO website project, changing the address on one letter (for example, p1aykey.io), and make only one difference — the number of purse to collect money. Companies usually monitor the emergence of sites-clones and block their domains, but if too many of them, we cannot do that — providers and hosting too needed time to understand the situation.
So even when the site is studied along and across, before depositing the money will not be superfluous to once again look at the address bar. Otherwise, you can send money to the attacker, as did the owners of $700 000 during the ICO Bankor.
Specify technical features of the collection and storage of money
Another common method of fraud — hacking the smart contract (computer algorithm designed for signing digital transactions), which is the collection of money. Now, many projects run ICO on the basis of a complete platform or surface. In this case it is necessary to study the experience of other ICO conducted using these tools. How are they safe? Were there any cases of hacking and leaks? Usually sites with critical vulnerabilities, do not use the popular but check it will not be superfluous.
More risk occurs when the team writes a smart contract to collect money when errors in the code, the scammers can easily get access to the money. It happened with the project DAO, which investors lost almost $44 million due to vulnerabilities in the algorithm. It is important that the project team conducted an audit of the smart contract in several stages — and internal, when review is made by the staff of the project, and external, when the security code is appreciated. Usually this service is offered by ICO-ratings and well, if the project is ready to provide a report of a reputable auditor or at least confirmed the news that the inspection is done.
After getting the money safely from the project developers, their safety is not guaranteed. Last year fraudsters stole about $34 million from three startups who kept the money in a special wallet for Ethereum Parity. To get this money back is practically impossible, even if we could find the thieves cryptocurrency ICO remains maregulirebeli.
Be careful with exchanges
Theft of money when trading to protect the hardest — in their hacking involves real professionals, and the attack is not insured by any one, even the big exchange. Moreover, the more authoritative it is, the more crooks will try to find vulnerabilities. Hacking these exchanges can affect the entire market and you will suffer even if your investment remains safe. For example, the recent attack on the South Korean stock exchange Coinrail, which was stolen up to $40 million, led to the fall of bitcoin exchange rate by 10%.
In this case can only be to diversify risks: trade on different exchanges, store products not only on them, but in individual wallets, and monitor the security of your account create unique passwords, not to go into it with third-party devices to inform about suspicious activity and to use two-factor authentication.
Don’t expect miracles
Only 8% of the projects derive their tokens to the exchange and only 1 of 10 created token is intended. Even if the project is not run by crooks and it is not subjected to hacker attacks, no one is immune from bad investments. Don’t forget that the fall of the cryptocurrency market any project, no matter how promising he may be, will not be able to achieve growth in the prices of the token. So follow the market in General, communicate with the community and learn the vending takeholders projects — the more the institutional investors and the backers who are determined to play a long-term Outlook, the more chances to profit from the purchased tokens.