Every day, new ICOs are announced by companies which are looking for investors so they can develop their blockchain or cryptocurrency based products and services. Unfortunately, not all of these ICOs are legit. But how do you spot a scam ICO? Read on to find out more.

The developers are anonymous

The number one warning sign that an ICO may not be 100% safe is if the development team are anonymous. The vast majority of ICOs will provide detailed information about the people who are working on the project. If the developers behind an ICO wish to remain anonymous, this is a red flag which suggests they may be planning to disappear with any money which is invested.

There isn’t any clear use for the token

The fear of missing out on the next bitcoin means that lots of investors are willing to invest in tokens which have a low value. The investors hope that by buying large quantities of low price tokens during an ICO, they will be able to cash out later when the price rockets. However, the price of a token will only increase if it has a clear use case. If the token serves no useful purpose, then it is unlikely to increase in or hold any value.

The promotional material contains unrealistic targets

While optimism is a good thing, when reading the promotional material which details what the ICO hopes to achieve, you should be aware of unrealistic targets. If an ICO promises massive returns on your investment or predicts that the coin will overtake bitcoin in the next 12 months, this is highly unlikely, and it could be a target to draw investors into a scam. Remember, if it sounds too good to be true, it probably is.