How To Research Your Crypto Coin

Are you one of the people around the world that has heard of cryptocurrency, heard of all the benefits and yet hasn’t made that first buy? Maybe you’re not sure where to start, or you’ve heard of a crypto coin to invest in, but you don’t know if it’ll be worth the risk. Maybe you just don’t know how to tell the difference between coins that will thrive and coins that will sink.

Cryptocurrency as a concept lives and dies on hype. If a coin isn’t getting any attention, no one is buying it. It can be hard to decide what coins are entirely hype and what coins have potential. Some could be scams and some can simply be coins that won’t last long enough to make money. Read our guide for tips on crypto investing for beginners:

Look into the purpose of the coin

Trading and buying cryptocurrency can often sound like buying and selling for the sake of buying and selling. You’re simply trading a small bit of money for a bigger chunk. This usually isn’t the case.

Like traditional stocks before it, a lot of cryptocurrencies are designed to back a business venture. Every coin should come with their own white paper that will outline the purpose and team behind the coin. Read it carefully to establish whether you’re about to make a good investment or not.

Some tips to reading the white paper come down to the same things you would see when looking for an online scam website or business: professionalism. If the white paper is vague, full of typos, broken, almost empty of content, etc. the team behind it clearly isn’t taking it seriously and isn’t serious about enticing you to the coin.

From there, look at the purpose of the coin. Like any business venture, it should aim to solve a problem, not simply make the creators money. If the writing comes off as a get-rich-quick venture with very little detail disclosed beyond “I want to make money”, chances are that’s all they’re interested in.

If you’re satisfied with the intended end use or utility of the coin, consider the venture itself. You’ll have to weigh up if you think it’s a viable option and if it will last a long time. The longer you keep the money in the coin, the more it will grow, so businesses that have a short lifetime aren’t suitable for your investment. Look at their business plan. Is it ambitious? Do they have plans for the next 3-5 years?

Look into the coin’s history

If the coin has been around for a considerable amount of time, you can look back over its history to see how stable it is. The main difference between cryptocurrency and stocks is that the crypto environment can be very volatile. Their highs are very high, and lows are very low, so don’t be too alarmed when you look at the coin’s history. If it has a habit of stabilising itself, you will have a promising coin.

If you are looking around the emerging cryptos during Alt Season, you will see a lot of undervalued coins with unseen potential. Looking over these coins’ history can be a quick way to gauge if it’s something you want to pursue before doing further research.

There is also social media. No, really. One of the defining characteristics about crypto is that it’s “The People’s Currency”, which means the people are often online in groups on Facebook and Reddit sharing information on cryptocurrency and various coins. Ask around the forums about your potential coin investment for some insight or reviews on working with the coin and learn all the jargon online. For example, in finance, ACH payment means Automated Clearing House and is a US network used for digital money transfers.

Look into the team

The white paper of any coin should also give you details of the team behind it – their background and vision for the future utility of the coin. If it doesn’t, that’s already a red flag. Even with the decentralization nature of crypto allowing everyone to invest in and create cryptocurrency, there is something fishy about someone who wants to keep their face hidden. Is that a chance you want to take with your money?

The more legitimate crypto projects are going to have their board of directors and even partner organizations listed within their white paper. Even if you don’t recognise any of the board members, look up the companies enabling the blockchain. They should be readily recognizable and available for a quick search on Google.

As for the team themselves, take a look at their qualifications. And, no, being famous isn’t a qualification. If you are to believe YouTubers and celebrities caught promoting cryptocurrency scams, they don’t have the expertise to tell a legitimate investment from a scam, and if you don’t believe them, then shut any white paper that drops a name.

Look for qualifications in the industry in question, as well as expertise in cryptocurrency. If you’re not satisfied with the paper, look them up on LinkedIn and Twitter to get a better idea of their business history. Take note of how active they are, or if their profiles have been left for dead.

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