How to DYOR for Potential Crypto Projects
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Introduction
The first step in analyzing any option is to conduct research; you should be familiar with and working on key parts of a project. With trade, investment, and asset acquisition, research becomes even more important.
Depending on your investments and positioning, cryptocurrency can make or break you. While most people will flock to the most well-known and highest-performing crypto projects, you should be aware of upcoming projects or “hidden gems” that can help you grow your profits exponentially. In this article, we’ll look at a few techniques you can use to make sure your money is in the right place and producing positive results.
Why is it critical to conduct your own research?
Shilling is a prevalent cryptocurrency practice in which people flaunt the coins they own in the hopes of positively influencing the price. It might be tough to tell the difference between a shill and an unbiased post. Before investing in any cryptocurrency, it is recommended that you make your own judgment, not just because someone else says it is worth it.
Sybil assaults are also popular on social media sites like Reddit, Twitter, and Facebook. People with evil intent can swiftly create a slew of phony accounts in order to dupe investors into acquiring a cryptocurrency based on a “popular” message on a social media network. However, it is not always easy to spot the fake accounts, so it is important to remain skeptical and do your own research.
Kickstarting Your Research
Several platforms have emerged as a result of the cryptocurrency market’s boom. Several coins and other digital assets are hosted on these sites. Many of these platforms do provide excellent investment opportunities for users. Binance, for example, has become a household name and is well-known in the crypto sector.
A concept that users must be aware of is the ICOs- Initial Coin Offerings. These platforms are used for fundraising mechanisms for crypto start-ups. While they appear at par with IEO, they are widely accepted as risky.
Because the ICOs are housed on the project’s website, they are vulnerable to being hacked, defrauded, or experiencing technical issues that could jeopardize the entire process. When it comes to IEOs, they are generally safer than ICOs. IEOs are launched on appropriately designated exchanges such as the ones mentioned above. Because the process for IEOs is more stringent, safety and authenticity are maintained. After start-ups submit their proposals to these exchanges, they are subjected to rigorous scrutiny and vetting; only after the exchanges undertake due diligence are the projects permitted to begin token sales.
This is an article to help you with your research, but it is vital to conduct your own research, independent of any views and biases. It is essential to stay updated and acquire information, but only you can decide what is best for you. Put your head down and go through the basics.
Evaluation Of a Blockchain Project
Here is a checklist you should have when considering a project:
Project’s Whitepaper
A whitepaper generally outlines a project’s technicalities, specifics, aims, solutions, and tokenomics. A whitepaper will be written unambiguously, not trying to phase through technicalities by complicating things for ordinary users. It will clearly lay out the problems that a project aims to solve. Act alert and intelligent if a project’s whitepaper is vague and too complex to understand. Take it as a green flag if a project’s whitepaper is easy to read and lays out its objectives and how it shall operate. If going through a lengthy piece is laborious for you, the abridged versions are as helpful.
Project’s Vision
When considering a project, it is essential that you ensure that the project has goals aligned and that the plans are attainable. Don’t fall for “too good to be true” projects because they don’t have a solid plan. Most such projects enter the arena with much pomp and glamour, but their launch never sees the light of day. Such projects are called “vaporware”. These projects are common in the crypto market, so it is advised to be wary of them.
Players That Are Running the Show
It is essential to research the people who are behind the project. In a start-up plan, the team play a vital role. And with millions of dollars at stake, reputation, background, and experience matter significantly. If the team behind the project is cohesive, harmonious, and has considerable expertise and experience, you can bet on the authenticity with relative ease and trust.
Market Potential and Test Cases
A problem can only be solved if there is actually a problem. When looking to stick to a project, pay heed to the problem it wishes to solve. Look if there is a problem, or if it is of the magnitude that makes sense, or if another project has already solved it. Talking of the magnitude of the problem, see if the problem only affects a small number of people. If that is the case, you can bet that the project’s potential for growth will be dwarfed. Unless you tell a principal to stand to invest in a project because it solves a problem you are sensitive about, it is advised to stay away from such projects.
Community Interest and Culture
The community associated with a project tells you a lot about the project. Suppose the project is strong enough to generate interest in the community, the project has sizeable social media followers, or active users have positive reviews about the project. In that case, you can be confident in making it a part of your portfolio.
Market Capitalization
The total value of all mined coins or tokens is commonly known as Market Cap. It is an excellent measure to gauge a project’s size and potential. Market Capitalization also refers to the total value of the project. It is a reliable indicator of the project’s stability. It is generally accepted that projects with high market capitalization are more stable.
The Bottom-Line
Research is vital when it comes to money or anything for that matter. Also, consider that encompassing and evaluating all factors and aspects isn’t humanly possible, nor is it plausible that your analysis will be a hundred percent on the dot. While it is difficult, the steps outlined above can help you. They can provide insight into the project’s direction and performance. Go out there, choose a project, and do extensive study on it. Place your trades, sit back, and wait for the outcomes to brighten your day.
Disclaimer
I am not your advisor, and you should not make a transaction based on my calculations. Before engaging in any financial transaction, always consult with an independent financial counselor. I suppose that no trades made by market participants resulted in any loss or damage.
