Hey, have you ever felt confused while investing in cryptocurrency projects? There are thousands of coins/tokens out there in the market and we’re so confused while picking our multibagger crypto token. Today let me help you summarise the fundamentals of judging cryptocurrency projects before investing our hard-earned money into them. This article has been written at a very basic level considering the ease of reading for all kinds of readers.
Judging by the hype of social media posts’s isn’t something that we’re going to talk about in this article. In fact, some projects even pay people to spam the social media feeds of genuine users & those must be avoided at all costs.
In crypto, we don’t have traditional balance sheets like the stock market companies. Instead, what we have is a WhitePaper which is designed and written by the core team members for any project. The WhitePaper primarily consists of the idea and vision of the team members. The main aim of a WhitePaper is to pitch the idea for any product to new investors which can be private funding companies or individuals.
While looking at the WhitePaper, you must be aware of a few things can be the target audience for the product, the market for the same, its utilities, the tokenomics & unlock schedule, the allocation for team members, marketing & launches, etc.
If we take an example of a WhitePaper, let’s talk of Swipe (SXP). This isn’t sponsored by Swipe so don’t think we’re making a paid integration.
Swipe WhitePaper can be found here. The thing which I wanted to justify is that the project tries to elaborate everything in their WhitePaper. If you feel it’s clumsy and doesn’t quite resonate with your own thoughts, it’s actually better to stay away from Investing in it. A project with low fundamentals won’t survive the bear market.
To look up for WhitePaper you can simply search on Google “XYZ project WhitePaper” .
When you look at the market cycles in Crypto, you’ll see that in 2017, Ethereum Crashed from over $1500 to $80. That was shocking for most newbies back then, but today Ethereum is trading above $2000. This is what brings me to the second point to look for while investing in any project.
Since no one can do short-term price predictions, the ideal way to make money is by holding long-term profitable projects. That starts from running a background check on the core team members who’re working on it. If you genuinely feel that the folks who’re behind the project have reputable backgrounds, you can move on to the next step. If you feel that the claims they are making about their coin are just too true to believe, it’s safer to assume that it’s a scam.
Words like Bitcoin Killer/Ethereum Killer, etc should raise big question marks as they sound fishy. We’ve various incidents of coins in the past who claimed to be the next Bitcoin, eventually duping people & investors of millions of dollars. You don’t want that right?
Here’s an example if you’ve forgot or aren’t aware of.
Perhaps, this one is another important part to look at while buying crypto tokens. It’s a game of supply & demand which comes to play. The higher the number of tokens in circulation, the lower is its price & vice-versa. Although, there are a few exceptions to these like Ethereum which doesn’t have any maximum supply yet it’s valuable for its wide array of use-cases as a global decentralized computing network.
We’ll try to understand this one with an example, let’s start with some ShitCoin.
Popularly known as dogecoin killer, this coin has practically a quadrillion supply. That’s massive, recently it was announced ShibaSwap, I don’t count it in as a token to look for since the market it’s trying to overrun doesn’t exist at least. What I mean is that Dogecoin is already a shit-coin with 90% of its supply being held by 28 wallets. And UniSwap or 1Inch are already far superior that ShibaSwap.
Nobody would like to invest in a dead project. Most of the crypto tokens have their code publicly available in GitHub which makes it visible for anyone to visit and look over it. Try to invest in a coin for which work has been going on in background and not on something that’s dead for months or years.
Finally, if you’re starting out investing in Crypto the basic step should be to do your own research and try to learn as much as possible before investing. The most undervalued tokens aren’t certainly the ones which are spending millions in marketing. Look for solid long term projects.
If you need any help, you can reach out using the Comments below.