I would like to preface this article with the following: Never seek information & come to a conclusion from one source. Don’t strictly watch Ivan on Tech for all of your crypto information. Most media influencers have an agenda, and it’s not to help you. Gather information from as many sources as possible.
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Read the Whitepaper!
No really, take 15-30 minutes out of your day to read the whitepaper. It’s overwhelming how many people don’t even try to read the whitepaper. What problem is does this project solving? What bridge is the project building? What’s the projects value proposition? These are the questions you should be seeking to answer.
Whitepapers are a great source of both high and low level information. Don’t just skim over it! If you’re investing money into these crypto projects, you owe it to yourself to fully read the project’s whitepaper.
Look up the Team
While researching your crypto project of choice, you should be searching for obvious red flags. Projects that hide their developers present a red flag to me. In the same breath, crypto is an anonymous space to begin with. However, projects that come out and showcase their team & skill set bodes well. Look for obvious fake profiles on the projects site. Dig into who these people are, and what kind of technical background they possess.
For a new project this is one area I’m always interested in understanding. Here are some of the questions I ask when approaching a crypto project: What’s the inflation schedule? How many coins are circulating vs total supply? How many coins are locked away in vesting schedules? Was there an IEO/ICO that unfairly changed the playing field?
Of course you will have to answer these questions as well as understand how the answers impact you.
Coins fluctuate – we know this. The hard part is approaching market sentiment objectively. Don’t let your personal interest or favoritism cloud your judgement. Go on Reddit, 4chan, and any other site and search for your project of choice. Is there blood in the streets? Or is everyone euphoric and over the moon?
It goes without saying, preferred entry is when others are extremely fearful. This concept is easy to understand, but difficult to master. Emotions are a bitch.
Putting It All Together
Ideally, with all of the information you’ve gathered above, you want to formulate a risk profile. Red flags like a fake team should present a risk profile not worth the reward. Project’s that solve a problem or provide a bridge should capture your attention. Researching, fact checking, digging on developers, and so on, can reduce the risk profile drastically.