If you have read some of our previous articles, you have probably come across our main advice: “Always do proper research before investing in cryptocurrencies”. Well, today we will provide you with more information about how to do this research and how to make informed decisions regarding your crypto investments.
If you have spent some time in the crypto market, this information probably isn’t new to you. However, if you are a newbie, the following lines will be useful for you.
Well, proper research is required for every big decision and investment you make, especially when it comes to digital assets. As we know, the crypto market hides many risks. In fact, not every crypto coin is legitimate, and if you do some simple research online, you will find a lot of information about scams on the crypto market. That is why you should be informed before buying crypto.
We’ve prepared a list of the things you need to look at before investing in crypto.
The Whitepaper
The whitepaper is the first thing to look at when considering a crypto investment. This is the main document, outlining the purpose, vision, and philosophy of a project. In this document, you will find everything you need regarding the project’s goals, tokenomics, products, features, information about the team, etc.
Actually, the whitepaper should include almost everything we are talking about in this article.
The purpose
The truth is, not every coin on the market has a real purpose, and this should be considered a major red flag. However, when reading the whitepaper, you should find information about the coin’s purpose and the problems it aims to solve.
If we take Bitcoin, for example, it came out as a solution to the flaws of the traditional financial system.
To find a coin worth investing in, it must solve a problem, and if you can’t find a clear purpose, you should probably stay away from this project.
The use case
Moreover, it is important to find a coin with one or more use cases. Ethereum, for example, is used to power a blockchain.
Maximum supply
Another piece of information that should be available in the whitepaper is the total supply of the coin. Moreover, you should be aware of how much supply of the coin is in circulation.
The roadmap
To get clearer information about the project, you can look at its roadmap. It will help you understand what it is going to achieve in a given timeframe. When looking at the roadmap, think about whether it is realistic or not.
The project must have a good whitepaper. If not, consider it a big red flag. However, a whitepaper is not enough. There are other things you need to check before investing in a crypto project.
What else?
The team
Crypto projects, like anything else, are created by a team. When choosing a crypto to invest in, you should understand who is standing behind the project. Research their professional experience not only in the whitepaper but also outside of it. Do deeper research on social media like LinkedIn, Twitter, etc. to make sure they are exactly who they claim to be.
The community
You probably already know that cryptocurrency is mostly community-driven. So, when looking for a successful crypto project to invest in, take a look at the community behind it. Of course, a lack of an active and strong community is always a red flag.
Exchanges
As part of your research, we suggest you also check which exchanges the coins are listed on. If the project is listed on some of the major exchanges, this could indicate its legitimacy.
Before making an investment, you should consider how and where you can sell the coin when the time comes.
As we already said, investing in cryptocurrencies can be a risky process, which is why you should always do proper research before making any big decisions. However, keep in mind that the internet is an open space where everyone can put out any information. So, make sure you trust only legitimate sources and verify the information you see before trusting it.
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