Are ICOs a danger for the cryptocurrency community?

The opinions regarding ICOs have always been split in two camps, those who believe in them, and those who don’t.. In time, these two camps have influenced the smart contract created by Ethereum. Of course, there are investors that claim the smart contracts to be an area of scammers, not entirely but mostly. The regulations applied lately are legitimate, especially because of the hacking scandals and with the scams of binary solutions platforms. Some exchanges have even become ‘masked banks’ or some sort of mediatory institution and ICOs might even become valuable titles with private capital funds.

What is interesting and in the same time doubtful about an ICO is that they smartly sometimes avoid the thorough legislation and the financial organisations.

How is a scam going?

Basically, a new project is beginning from a fund raise depending on their information displayed on their website. After the target amount has been hit, the token value will start to grow. If an ICO is a scam, it will disappear right before the token value will start to increase its value and will delete every trace of its existence – platform, social media, token from exchanges. ICO scams are multiplying every day and that is why SEC has enforcened the way of verifying each platforms’ documents. Ethereum has been the first honest ICO that haven’t encountered any sorts of problems. Ethereum has issued almost 4 billion unities, even if it has been described as useless many times.

In September 2017, China has banned ICOs because they were disrupting the financial stability and the government and regulations were unable to keep them under control. After a short time, this law was canceled and ICOs were back to the Chinese Internet.

As a conclusion, ICOs started as an easy way to invest in something but the danger of scams was right at the corner and many newbies have been fooled by startups created exclusively to scam people.