Researchers Using AI To Fight Against The ICO Frauds

Initial Coin Offering or ICO has turned out to be a game-changer when it comes to raising funds for a cryptocurrency project by means of crowdfunding. The Cryptocurrency market is a flourishing industry which is highly leveraged by ICO development companies given it is expanding exponentially. Seeing this phenomenal growth, every other person wants to invest in this transpiring domain. While most people go after trading in cryptocurrencies, there are also many who intend to build their own cryptocurrency platform. Of course, it’s going cost you a fortune and you may fall into a financial crisis unless you are very rich. Thankfully, you can leverage the benefits of crowdfunding by running ICO campaigns. However, lately there have been many ICO-related scams and fraud attempts that questioned the authenticity of this so-called Initial Coin Offering.

As a matter of fact, there is no subtle way to know if an ICO token sale is real or fake. Most of the times, people just end up losing their money when they get into the trap. As it turns out, a team of researchers is working on making a Machine Learning based research system which could help in detecting whether an ICO is real or not.  

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Who’s Behind The Project

The project is initiated by a Chinese startup called Shannon.AI, an Artificial Intelligence-oriented company that focuses on creating smart AI algorithms to analyze and extract the information out of various financial resources. The company is working with the researchers from Stanford, University of California Santa Barbara and the University of Michigan. Lately, Shannon.AI released a white paper describing a new AI model that will focus on tracking down the cryptocurrency scams.

How These Incidents Take Place?

As it turns out, counterfeiting websites and white papers is not as difficult as it seems. There are plenty of scammers out there who can create an exact copy of a website with almost the same URL and you can’t tell which one is fake. This how scammers target the victims who plan to participate in a token sale. This generally happens when the investors don’t spend enough time in researching about the coin and end up losing their money. Since the payments are made in cryptocurrencies, you can’t even know who stealthily drained your money. The scammer doesn’t leave a stone unturned when it comes to counterfeiting. They make a fake coin look as legitimate as it can be. Consequently, it gets almost impossible to get a clear picture of the coin’s legitimacy.  

How Shannon.AI Aims To Fix This?

Shannon.AI released a White Paper which outlines a Machine Learning model that will help in identifying the authenticity of an ICO. The project is called ICO Rating and it talks of a Machine Learning model to automate the tasks of an investor by extracting the publicly available information. The company proclaims that the new AI powered system will offer the following benefits over the conventional rating systems.

First off, you need to feed in a lot of information to the ordinary rating systems which means it will have huge storage requirements. On the other hand, Machine Learning models are smarter and require less prior knowledge. They have the ability to automatically upgrade themselves based on user interaction. Plus, it can also help in reducing biasing.