When it comes to cryptocurrency there is probably nothing more important than “Do your own research“.
Do Your Own Research, say English speakers. DYOR.
There is a lot of information out there and it can be difficult to understand what is real and has potential, what is real and doesn’t have much potential, or what is there just waiting to rip you off. However, if you really want to commit, you need to learn how to do your research – let’s see how you figure out if it’s a crypto to stay away from or perhaps worth holding.
But I’m not a financial advisor. I don’t advise you how to invest your money. I don’t help anyone use this majestic network of blockchains and dapps. Investing your money and making it bear fruit is everyone’s dream, and if it becomes a path that you want to take, the only advice I give is to do it with extreme caution.
1st Phase: Market activity
The first step in starting a research on the best cryptocurrency X100 will do in two weeks is to ask yourself: this coin is economically active? I’ve seen so many promising cryptocurrency projects, only to then verify how active a currency is within the market and… it’s been dead for months or even years.
What to do?
Go to a site like coinmarketcap.com or coingeko.com to see if it is a live currency, if there is any activity, transactions made with it, be sure to check the trading volume and how the price is moving.
Not only should that token be listed within an Exchange with a good reputation, but the trading volume in that market should also be quite high, I would say significant: if it wasn’t, you might find yourself paying a ‘premium option since the order book they did not circulate liquidity enough.
If the token you’re looking at is an ERC20 protocol token, which is traded almost exclusively on DEX like Uniswap, be sure to proceed with caution, as DEXs don’t have unsurpassed pricing criteria or requirements. All of this isn’t THE reason to leave a project out, but it’s something to keep in mind as you move forward.
Price is key, but that’s not all. Let’s assume that the cryptocurrency you have chosen has a legitimate economic boost. It’s time to get an idea of what it is and how it works.
2nd Phase: The initial research
Youtube is definitely a good place to start. But there is a lot of chaos. That’s why my advice is to switch by Messaria, Binance Research, and from an ICO monitoring site such as Icodrops. Pretend Going Back To School: When using these resources be sure to take notes and jot down any questions you may have. Now you won’t need them, you won’t find the answers. But right now you are not trying to get those answers but you are starting a journey.
Messari is a powerful tool that you can use to analyze cryptocurrencies. The section that I think you should be interested in is that of the crypto profile you are interested in. Messari guys do a comprehensive analysis that includes cryptocurrency history, tokenomics, and token allocations. They come to an incredibly detailed level and even a timeline of past development and fundraising as well as a roadmap for the future of the project.
Write down the names of all the key people involved in the project, ie the founder and the CEO (assuming they are not the same person) .. you will need them later.
Research done by Binance instead they take a more technical approach to analyzing any token. It is extremely helpful to have research with this cut, to understand the main components of crypto and how it works.
The great thing about the research generated by Messari and Binance is that because they are the Hollywood stars in the crypto space, a high degree of professionalism is expected of them. They are not just fat cows: the information on Messari and Binance is not up to date. You can’t really blame them: they’re doing so much more… but that’s okay too. It is already a first slap that is telling you: do not take anything written by a third party as pure gold, as an excuse to put an end to all your research, even if that source is very well known.
ICO tracking sites, like Icodrops, are a kind of time machine: for certain crypto they have made available old images and documentation that is no longer available on the website. So it’s easy to spot if a cryptocurrency project has changed the direction it was going, or if it’s simply trying to bury the past. Unfortunately the total amount of money raised that is reported by Icodrops and similar sites is not always accurate, and tends to include all funds raised both in private funding rounds and through multiple ICOs. Remember to always look for pictures or charts where you can clearly see the breakdown of the token, how the money was collected and where the tokens were assigned.
Messari does a good job of tracking token funding and allocations – you can cross this information with Icodrops to get clear on how a given crypto project has increased its capital. What you are looking for here is a token allocation that doesn’t make you want to run away .. specifically you want to make sure that most of the tokens that have been issued or will be issued are in the hands of the community and not in the pockets of the people who founded the project! Holders of most tokens could potentially sell when the price starts to rise, which would prevent the coin from growing in value organically.
As before, it is not that if this condition is lost, the whole project is a project to be discarded. But you have to be very careful when you see an image like this, checking the tokenomics of a crypto on Binance Research or Messari:
Now that you’ve checked everything out, it’s time to head back to Youtube. Since you trust that crypto, now that you have a good understanding of it, let’s hear what those who created it have to say. Pick up the names you remembered to write, the names of the key people involved in the project. Your next task will be to find the most recent interviews they’ve done. Arrange them in chronological order and watch as many as you can!
3rd Phase: Research the Sources
Seeing is believing: Watching interviews with key members of the crypto project you follow offers a treasure trove of information you won’t find anywhere else. Furthermore, these interviews often help me a lot to understand the technical elements of a project that I might have a hard time understanding simply by reading the documentation, almost often found on the crypto site. While you’re at it, check LinkedIn profiles to see if they have good credentials. If they worked in Google or Microsoft is it good? Yes, if the hiring did not last a few months. If they were fired because they were mining crypto, then gimme five! Search the Youtube channel of the crypto currency you are interested in! If you are good at researching, you will find short videos explaining the main components of the project.
This adds two more steps to the search: fact check, always, everything you have learned so far, and try to understand what is in store in the future of this cryptocurrency.
Step 4: Double check: double check
Have you already been to a crypto website to be overwhelmed by tons of information? You only want to read the home page and the information section. Most of the information about a particular crypto site tends to be a bunch of trivia. Obviously, banking and non-banking transactions or some other noble cause they claim to support. Most of the content in general is useless and won’t be helpful in figuring out if the project deserves your attention. Most importantly, you risk wasting a lot of time browsing their site if you don’t know what you are looking for. But since you remembered to write down the names of the key components of this project and you wrote down all the questions you wanted an answer to … well then it’s time to verify that everything you learned still applies and solves your questions that they have arisen since you began your research.
You can find many of the answers by digging into the section dedicated to Documentation .. maybe you are lucky and there is also a search bar and you can enter terms such as tokenomics, inflation, ICO, consent mechanisms, mining, staking and any other topic where you want to get more clarification. Is there no search? Search by hand.
Don’t be scared if you don’t understand anything right away – crypto documentation is usually developer-oriented. Many of the pages will have lines of code. Forget the code, read what is written just before and after. It is usually the most potable written code.
Another document to look for on a crypto site is the white paper: search for a section related to tokenomics. Look for a blockchain explorer of that crypto. Is it an ERC20 Token? Then go to Etherscan. Is it BEP20? Go to the Bscscan.
Here you can quickly check who are the largest holders of a particular token, you can even see it in a pie chart!
We have already said it: be careful if there are wallets that hold 90% of the tokens in circulation. But that’s not always the case: it often happens that the wallet you see at the top of the list, the one that holds the majority of the token, is a Smart Contract, which is used for things like staking.
If your crypto is not an ERC20 token, hopefully their blockchain explorer will also allow you to see an exhaustive list of who holds the token. Don’t they? RED FLAG.
Now that you have done a great research on the crypto you want to invest in, there is only one thing missing: to look for important updates of the project, whether they are coming, planned, or have already taken place.
5th Phase: News and the RoadMap
For the last part of your crypto search you will need three things: one Roadmap, for an blog and recent news .. I recommend, in this order: usually the news is a summary of what they write in the blog.
Take advantage of the news you read in even small publications: they can come in handy if the blog post they refer to is too long or complicated to digest.
Let’s talk now about RoadMap.
In my experience, cryptocurrency RoadMaps tend to be vague and don’t provide the information we’re actually looking for. Watching interviews with founders and CEOs will provide far more insight into the future of their project than its RoadMap. In a good crypto, you will find a nice roadmap that contains realistic goals, which can be achieved before the project runs out of funds or is destroyed by the competition. If you don’t find any RoadMaps and if the interviews you’ve watched don’t give you the feeling that the project will last a very long time… maybe you’re looking at the wrong investment.
The future is not all that matters: find out if they have achieved what they have promised to do to date .. and here comes the blog.
If you’re having a hard time finding a blog on a crypto’s website, chances are you’ll find it on their Medium. Other times you will have to go and browse theirs GitHub to see their progress .. from that you can really ask yourself if the project is progressing in the desired direction.
Browsing through the blog headlines of a crypto project is just more than enough to get an idea of whether it was true to its word and the direction it is headed. It’s good to go then actually read the whole article if that update talks about significant updates like those related to changes in tokenomics or any announcement that talks about big partnership.
As a last resort, open a new tab and open some cryptocurrency news sites such as Cointelegraph, Coindesk or Decrypt and try to find some headlines dedicated to the project you are looking for. Can’t find anything? That’s not necessarily a bad sign as compared to traditional media, the crypto world media does things their own way, and they don’t always like to tell big headlines about important things that happen.
At this point you should have all the information you need to make a good judgment that a cryptocurrency has real value and is tied by a legitimate project. If you don’t have a good judgment of it, you are probably dealing with a project to watch out for, or even stay away from. It’s bad to think about it, but it could also mean you’ll have to go back, back to the drawing board, and check the resources you used in your research.
Researching crypto is a lot of work. But ask yourself: is a few hours of research worth it for a 100x return on your investment?
Primo: I go to coinmarketcap or coingecko to see if the token is actively trading, preferably on reliable exchanges. Is the coin dead or dying? I don’t waste time.
Second: I go to Youtube and see what other people have said about the project, and take a few notes if it’s worth it.
Third: check Messari and Binance research, to get a clearer idea of what and what the project is and how it works. I keep taking notes, and I also start jotting down a few questions and the names of the founders.
Room: check Icodrops to see how much funds the project managed to raise and how the tokens were awarded. I use the sources that show together with Messari to double check that the details listed are correct.
Fifth: I go back to Youtube and watch all the interviews I can, among the most recent, made with the CEO or the founder of the project. Very often what they say answers many of the questions I wrote in the second passage: they also tend to clarify many components that I thought were confusing about the technology used. I am also looking for a Youtube channel of the crypto, and if it is present it often offers insights and additional explanations. Assuming that everything I discovered hasn’t dampened my enthusiasm,
Sixth: dig into the project documentation. I look for any additional details to the technology used by that crypto, consensus mechanisms, tokenomics, staking rewards, mining requirements, and any other key components that I have learned so far.
Seventh: I sift through their RoadMap and blog to see if they have made the progress they promised and if they can realistically build and deliver whatever they need to move their project forward.
Eighth: check if their business has made headlines in the crypto space with big and exciting headlines in major crypto publishers. If there are no big headlines, watch out! Maybe we are in a critical moment of the project, and we got there before the others.
This strategy of mine for doing effective cryptocurrency research is certainly not bulletproof. But for me it is a perfect blend of observation, reading and repetition.
It is easy to forget that the world of cryptocurrencies is a very new field, much is still in its infancy. So, if you learn how to get good at doing your crypto research right now you will become one of the few people who really knows what’s going on when FOMO hits a bullish market.