There is a lot of information out there on the cryptocurrency industry, some of it is great, while most of it isn’t.

Because the crypto industry is still a largely unregulated one, there are a lot of people out there trying to scam you out of your hard earned investment. Shame on them!

In this article, I want to list a few research tips you can use when looking into what cryptocurrencies you want to add to your portfolio.

I’ve already done the “running around like a headless chicken” part, so what I share here is a simple guide on how to get into crypto with a level head so you can avoid all the scams and “shit coins” out there.

1: Don’t be caught up in the hype or FOMO🙄

So, there is no doubt that cryptocurrency is the new kid on the block. It is here and despite some push against it, I don’t see it going anywhere.

If you follow crypto news carefully, more and more governments are opening up to it and even more businesses are starting to adopt it.

I mean, its the future, so you either be a part of it or remain behind.

But with all this excitement comes a multitude of scammers who will either try to show you how to do this and that in the crypto space or you will get people try to sell you their worthless coin projects (also known as “shit coins” in the crypto space).

So before you get into the space there are a couple of things you should know:

  • Most of the time, you will not get rich overnight. Unless you are trading, crypto investments pay in the long run if you store up a good enough investment.
  • A lot of passwords and secret phrases are given, don’t lose them, don’t give them to anyone. You can share a wallet address to receive money but do not share a password or passphrase.
  • Don’t believe everything you hear, stick to a few well supported resources.
  • Hype isn’t everything. Always look to understand the problem a crypto project is trying to solve or the value it is trying to offer.
  • Stay calm, don’t make rash decisions. The market is very volatile at the moment.

Another thing to be weary of is knowing the difference between a “crypto project” and a “cryptocurrency”.

Crypto projects usually have a mission, goal or problem they try to address whereas a cryptocurrency is the actually currency tied to a project. For example, Ethereum is a crypto project and the “ether” (ETH) is the cryptocurrency tied to it.

So basically, if you’re looking to invest in a particular cryptocurrency, do some research on the project its tied to.

2: Read whitepapers and do industry research🤓

A whitepaper will be the document a crypto project releases that will outline everything they’re about. It will typically mention their mission, the problem they are trying to solve, tokenomics and more.

On top of that you want to be able to research on what real-world industry or sector that the project is trying to disrupt. The project has to either seek to do something new or improve on what is already being done.

3: Track record📈

Usually, the longer the crypto project has been around the better. You want to be able to do some research on their past performance, how well they stick to their deadlines and how well they are doing now.

Look for any shady behaviour. In the industry, a lot of promises are made, but only the solid projects stick to them.

4: Know the token type🪙

Its crucial to understand the function of the cryptocurrency you’re thinking about investing in. Cryptocurrencies gain value in different ways. Understanding how will help you invest more wisely.

You want to determine whether the crypto you want to invest in is a work token, a utility token or a cryptocurrency you can make transactions with like bitcoin or Litecoin.

5: Sources of funding and partnerships🏦

Look into whether the company behind the crypto project has raised venture capital and how they do it.

Have experienced investors backed the project? If so, this may be a good sign. Are the projects funded by government backed finance or non-equity grants? All these can be good reasons to continue researching a crypto project.

Also, what organizations have partnered with the project? Look at whether the partnerships they form are outside of the crypto space, this can be a very good thing.

Always be sure to verify that the partnerships a project claims to have actually exist.

6: Team size and experience🧠

Look to see whether the teams size and experience would be able to fulfil the promises made in the whitepaper. A bigger team with a solid group of experienced developers and the like is a good sign.

7: Blockchain technology use cases👩🏾‍💻

Look into what blockchain the project chooses to build on and find out why they deem that blockchain important to their projects existence.

These are details that should be mentioned in their whitepaper and on the projects blog.

8: Community size🧑🏾‍🦰

Even though this should by no means be the main thing you look at, you want to do some research on how many people are adopting the crypto project or currency. The bigger the community the better and the more reputable people (preferably those knowledgeable in the tech or finance industry), the better.

Take a lot at their social media platforms and see how they engage with their community. How busy is this project? What new partnerships are being made and what is the news saying about them?

 

As mentioned earlier, the crypto world is very busy. There are a lot of people trying to either scam you of your hard earned investment or projects that are trying to on-board you with hype.

Keep calm and collected, do your own research, be a part of trusted communities, trust few people and you’ll be just fine.

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