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Warning Signs of Crypto Startup Failure

There are different reasons for crypto startup failure. Use this list to pinpoint and address these little breakdowns—before they become blowouts.
be-in-the-loop - Warning Signs of Crypto Startup Failure

There are different reasons for crypto project failure. Of course, betting on the “winner of the race” is not so simple, but you can always determine the outsider. Here are seven signs that a cryptocurrency project will underperform. A couple of the signs in a crypto project that’s no reason to sound the alarm, but if there are 4 or 5 of the warning signs that is decidedly bad.

Project Schedule Overruns

If the team shifts the deadline from an early stage, it is a bad sign. The lag time overruns should be alarming, especially if the project exists only a couple of months. 

be-in-the-loop - Warning Signs of Crypto Startup Failure

The project  may have a well skilled team, but a lag behind the schedule in the early stages indicates only one thing: incompetence. This definitely makes the project a less suitable object for long-term investments.

Contradictory Information From the Project’s Leadership

Each cryptocurrency project may have a lot of faces and votes, but if you notice a difference of opinion among the leadership, then something went wrong. Of course, we are not talking about cases where one of the managers is not sufficiently informed; the main reason for concern is the divergence of opinion among the founders or key members of the team. This is a sign of an emerging conflict. If the disagreement is quickly eliminated, you cannot pay attention to it, but if such situations are taking place systematically or last a long time this is thing to worry about.

be-in-the-loop - Warning Signs of Crypto Startup Failure

Avoiding Answers to Critical Questions

When the founders and project managers dodge of critical questions, this is a sign of a secrecy — the last thing you want in decentralized project. If the question is trivial or concerns long-term prospects, a vague answer is quite acceptable. In all other cases, this is a bad sign. If the person who was asked the question really doesn’t know the answer, he should honestly say about this, say what is known and give a timeline for the question to be properly answered.

Too Many Conditions Required for the Project's Success

If for the project’s success it is necessary that 80% of the tasks be implemented in strict accordance with the idea, this is a bad sign — a sign of bad business model. The more factors that determine success, the higher the risk of failure. Life is unpredictable; circumstances are changing very rapidly. If the project does not have a significant safety margin, something will go wrong almost certain. If you understand that just one little thing can be a critical factor for the success of the project, it is better to stay away.

be-in-the-loop - Warning Signs of Crypto Startup Failure

Lack of a strong community

Having a community is a must-have for any decentralized project. That is why, many projects are excited to raise money through a large community. Lack of a strong community shows critical inability to go mainstream. If the project cannot go mainstream, it will not get to the moon.

It’s important that token holders are not just speculators. This is what makes a community strong. For example, strong community of any healthcare project must include lots of healthcare workers or employees in the healthcare industry.

Important Advise: your goal as an investor is to join the winners, not to inspire the losers. Leave the inspiration to the big funds and corporations.

Already existing successful centralized counterpart

Most crypto projects are unnecessary as they cannot compete with the centralized counterpart. If the centralized use case is already existing and doing well, it is a big challenge to the new project — it may not rise as expected. In addition, it doesn’t make any sense to make the project decentralized if it is doing well being centralized. So, you should beware a project with that kind of identity crisis.

be-in-the-loop - Warning Signs of Crypto Startup Failure

Abrupt change in rules of participation

It seems to be a trifle, but in fact it is a very huge sign. When a project is truly decentralized, no one can change the rules one fine day. If this happens with a decentralized project, it means that it is not really decentralized. So, they sold you a pig in a poke. Changing the rules of participation without consensus is a sign of lying. It may be an unintentional lie, but it is still a lie. Consensus is the foundation of decentralization. No decision must be forced on participants except the ones expressed in the White Paper. If this happens over a little thing, it is very likely it will happen over a big thing in the future.

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