114  Blockchain

that the security flaw has been fixed again by inflating the price. They then

do a massive sell-off to earn a massive margin. Developers use some of the

profit to move on to the next project.

• Recommendation: Do not react blindly to fake news or social media

messages from the developers of the project. Always do your research

before reacting to patriciate into a massive sell-off of the coins, impact-

ing the price to go rock bottom.

Massive Premine

Premining is an act of mining or creation of coins/tokens as part of the ICO

to reward the founders, developers and early investors.

Usually, in a standard and normal ICO, the ratio between investors and

developers is 80%–20%. For instance, 80%–90% of the tokens are shared

with early investors to raise initial money for the project. The founders or

developers of the project keep 10%–20% of the tokens/coins. There have

been some scam ICOs whereby 80%–90% of the coins are used to push the

price of the coin due to limited supply in the market. When the prices reach

very high, developers can sell the whole supply of the coin making the coin

worthless and ICO fail.

• Recommendations: Avoid coins or tokens where development teams

have a substantially large portion of the coins.

Scammers/Tricky People

This category is interesting. Developers of the project tend to launch a new

version (2.0) of the coin by forking it into two currencies. This can involve

moving all the money raised onto an online platform that might not be safe

or into the developer’s account.

Sometimes, an exchange whereby you are holding the coins can delist the

coins from their exchange platform after making an announcement. You

need to transfer it to another exchange or into your private wallet else you

can lose your coins altogether.

• Recommendation:

⚬

⚬Trade your coin holdings into a different coin till after the new

version (2.0) is out and stable, if possible. Always pay attention to

the announcements from the project.

⚬

⚬Always pay attention to the exchange announcement for delisting

of the coins and take timely action to avoid losing your crypto,

token and coins.