How to Spot a Scam Crypto Project – How does your favourite project score?

With so many crypto projects, tokens and coins out there, how do you separate the projects with potential from those that are likely to be a scam or rug pull? This article gives you a simple scoring system to help you separate the wheat from the chaff.

Firstly, we need to say that all crypto is extremely volatile and there are no guarantees. As a result, this article is not financial advice, it is simply a fun tool to be used for educational purposes only. Here we go…

Score 1 point – The Whitepaper.

Does your prospective project have a whitepaper? The whitepaper should identify how the project works and list the ‘Tokenomics’ i.e; how will the project tokens be split.

Deduct 5 points if your project has no whitepaper.

Add 1 point if your project has a whitepaper.

Score 1 point – The Founder(s).

It is important that you can identify the founders of the project. Are the founders anonymous? If so, this is not a good sign. If the project has a whitepaper, the founder(s) should be found there. A pseudonym does not count, you need to have the founder’s genuine full name.

Add 1 point if the founder(s) are not anonymous.

Deduct 1 point if the founder is anonymous.

Google and Bing the founders

Score 2 points – Founders History – Google and Bing.

Not only should the project have a visible founder but that founder should have some verifiable history as an entrepreneur. Yes, first-time entrepreneurs can be successful but a true entrepreneur should have some history in Google that indicates they have some knowledge in business. DO NOT rely on Linkedin, Twitter and Facebook to verify the founders! You really need to look at Google and probably an additional search engine like Bing to see what comes up when you type in the founder’s full name.

Also, be on the lookout for press articles or old search results of over two years or more that talk about the founder in question. If there are none then why? If there are some but they are negative i.e. convictions, history of scams, tons of negative reviews etc, then you need to seriously consider staying clear of this project.

Does the founder have a history before the start of the project in question? If the founder has no history of running a company or no projects are listed, at best you could have a first time entrepreneur at worst a scam project. If there are multiple founders you should check all of them.

Add 2 points if the founder has historical listings of at least 2 years old in Google and Bing.

Deduct 1 point if the founder has no historical listings of at least 2 years old in Google and Bing.

Deduct 1 point if the listings are negative.

Spot a scam crypto – evaluate the website

Score 3 points – The Website.

The website is a quick and easy way to see if the project in question can deliver what they say. Do not be tricked into thinking a fancy webpage means a genuine project. First things first you need to check the age of the website domain name.

Go to https://www.whois.com/

Type in the web address in the box and look at “Registered on” if the website is less than 6 months old you could have at best a brand new project that is about to burst on the scene or at worst a scam project that was quickly set up in order to vanish in a puff of smoke.

If the project is less than 6 months old deduct 1 point.

If the project is 6 months to a year old add 1 point.

If the project is 1 year to two years old add 2 points.

If the project is 2 years or more old add 3 points.

Genuine projects take time to build, if a project’s website has been rushed out quickly it may be a fly by night project.

Score 1 point – Website functionality.

The next thing to consider is, will the project deliver? If the website contains any kind of functionality, it may indicate the project has the skill to deliver on its promises. If the website is just a single splash page with no functionality, the project may be very early stage and speculative at best and a rug pull at worst.

Does the website do anything? Can you log in, register and perform any activity related to the project. Is the project website more than a single page?

If yes, (the website does something) add 1 point.

If the website is a single static page and offers no functionality deduct 1 point.

Spot a crypto scam – Is the promise reasonable?

Score 3 points – Reasonable promises.

Does the project make reasonable promises? Bogus projects will often over promise and under deliver. This can make it difficult to discern genuine projects from potential rug pulls.

A genuine project will NEVER guarantee gains. If your potential project is guaranteeing gains or yields then you need to be very, very cautious.

Is there a risk warning? If there is no risk warning and the project is simply hyping the project, this could be a red flag. A genuine project should alert the potential investor of the risks of cryptocurrency. This warning should appear prominently on the project’s website.

Does the project promise any gains? if so deduct 3 points.

Does the project have a risk warning, (warns you of potential losses)? If yes, add 3 points.

If no risk warning then deduct 3 points.

Score 1 point – is the Token or Coin genuine and on the blockchain?

Due to the nature of cryptocurrency, it may be possible for unscrupulous founders to set up duplicate tokens with the same or similarly named projects as genuine projects. They may also set up websites with similar domain names.

Always check the blockchain to ensure you are looking at the genuine project and the real token for that project. You should find the Policy ID of your project and compare it with that recorded on chain. If they don’t match you could have a scam token.

For Binance based tokens or assets.

https://www.bscscan.com/tokens

For Ethereum assets:

https://etherscan.io/tokens

For Cardano based assets:

https://cardanoscan.io/tokens

Add 1 point – You can verify your project’s Policy ID on the project website and blockchain.

Deduct 10 points – The project’s Policy ID cannot be verified on the project website and blockchain.

And there you have it! Add up your points, the maximum score is 12 points

Check your Score.

Negative score – You may need to stay away from this project – Very High Risk.

0-6Very risky project but maybe a first-time entrepreneur and early stage.

7-8A potentially good project with some warnings, be careful.

9-12The project shows great promise but you should be aware that all crypto is volatile.

Final Thoughts

Remember this is not financial advice. Hopefully, this article will give you an objective scoring system to evaluate projects.

If you enjoyed this article please remember to like and subscribe for regular entrepreneur news on Pop Up World. Feel free to visit us at https://www.popupworld.co.uk

Thanks!

It starts with an idea. Pop Up World is a platform that helps start-ups and small businesses reach for the stars. No matter what size you are. Use our start-up guide Business Zero to Superhero, Design your Logo. Connect with investors via our Investor Connector. You can start a Website and Domain name. You can Search for and promote your Premises. You can promote your idea for free on our Pop Up World Ads site, you can even form a Limited Company You can also join us on our journey via the Pop Up World Token (PUW).

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