Within this segment, we will delve into the art of investigating cryptocurrency!
Cryptocurrency has evolved from a mere trend into an integral part of tomorrow's financial system. However, gaining access to the crypto world has become increasingly challenging. With an abundance of crypto coins and a continuous influx of fraudulent activities, the task of navigating this landscape can be daunting.
So, the crucial inquiry emerges: How does one conduct crypto research without becoming ensnared in the labyrinth of new ventures, complex terminology, and the overwhelming fear of missing out? Fear not, as in this section, we'll unravel the mystery.
In this segment, we'll explore the ins and outs of cryptocurrency research, the essential facets to scrutinize during the procurement of cryptocurrencies, the correct approach to this process, and the significant focal points to consider during your research journey.
Crash Course on Cryptocurrency Research
Paradoxically, even the term ‘research' demands some research before delving into its realms. Here's what I mean.
Suppose you're embarking on the exploration of a new crypto project. Where do you commence? These projects possess numerous layers, necessitating research on tokenomics, airdrops, DeFi, NFTs, and more. It can appear daunting initially, but breaking it down will illuminate the path for you.
Let's start by elucidating these diverse research methods.
Unpacking Tokenomics
What entails ‘tokenomics research'?
In this context, ‘tokenomics' refers to scrutinizing the economic principles and construct of cryptocurrencies. Essentially, tokenomics research entails assessing the coin's fundamental attributes, such as supply, distribution, utility, and in numerous cases, governance.
Should you feel the need to refresh your comprehension of these pivotal indicators, be sure to peruse this section where I delve into detailed explanations of these terms!
Returning to tokenomics research, this analysis empowers users to evaluate the functionality of a crypto coin and discern its coherence. In many instances, potential red flags are discernible immediately. Let's consider a notorious example.
The tokenomics of the infamous BitConnect scam were a dead giveaway that this venture was dubious from the outset. The promise of high returns lacked transparency regarding their generation, and the token only served as an investment in the Bitconnect lending platform.
Unquestionably, such a predicament is suspect, to say the least. Engaging in tokenomics research was sufficient to avoid falling prey to this ruse.
Exploring Airdrops
Next, let's delve into the analysis of airdrops. Imagine stumbling upon a compelling project boasting about airdrops.
An airdrop entails the distribution of crypto issued by the project of interest. Once again, there's an entire section dedicated to this topic, so be sure to explore it!
When a project orchestrates an airdrop, it's imperative to determine whether it's a sound maneuver rather than a mere publicity stunt. Savvy users assess the potential impact on the coin's tokenomics and its role in the DeFi ecosystem.
This encompasses evaluating the airdrop's influence on the coin's supply, demand, and the potential for a substantial devaluation. Envision a scenario where an airdrop quadruples the coin's circulating supply. The ensuing inflation would be drastic.
Deep-dive into DeFi
I mentioned prior that experienced traders contemplate a project's standing in the broader DeFi domain. How is this yardstick calibrated? Through DeFi research.
In essence, this entails probing the fundamental queries and appraising a project's role in the entire DeFi ecosystem. Does the project proffer a solution to an unresolved quandary? Does it present a practical use case?
Assessing crypto projects based on their utility may seem self-evident. Nevertheless, it's astonishing how many ventures are launched purely to entice investors' funds. They succeed simply because their creators adeptly mask the vacuity of their endeavors with trendy, alluring jargon.
Consider the case of Coinye, introduced in 2014, inspired by Kanye West. It was glaringly devoid of any utility and was conceived solely for the sake of a pun. Coinye swiftly met its demise at the hands of West's legal team, leaving its investors as the sole casualties.
Examining NFTs
Numerous projects captivate attention through the release of NFT collections. If you seek further enlightenment on NFTs, peruse this section. Nonetheless, today we're deciphering the art of researching crypto projects, specifically their NFT collections.
When encountering a project and its NFT collection, evaluating the following aspects is pivotal for a thorough inspection.
Primarily, assess the blockchain network hosting the NFT collection. A robust, reputable blockchain serves as an encouraging sign. Moreover, it allows scrutiny of potential scalability and security concerns.
Other facets encompass scrutinizing the project's personnel, ensuring they are industry-insiders and not novices. Additionally, evaluating the strength of the community assumes significance. How widespread is engagement with the project? How vibrant is the community? Greater community participation correlates with enhanced accountability on the part of the project developers.
Similar to crypto projects in general, it's crucial to assess the market potential of the collection. Does it boast unique attributes or functionality that can catapult it to the forefront of the NFT realm? Assessing the long-term implications of these collections is paramount for prudent decision-making.What sets this collection apart from others? Is it a unique endeavor or just a cheap bid to capitalize on the naivety of newcomers?
Mastering Crypto Research
In the vast realm of crypto research, numerous avenues and perspectives await exploration. However, each offers only a fragmentary glimpse of a specific crypto project and its true solidity.
Thus, let’s delve into the process of conducting comprehensive research that enables evaluating the overall crypto project. While telling individuals to Do Your Own Research (DYOR) is simple, presenting a coherent system of actually accomplishing it is far more challenging. That's precisely why I am here.
Imagine a fresh crypto project captures your attention. It seems promising, perhaps even revolutionary. The temptation to invest in it beckons. But… is it trustworthy? Time to embark on some in-depth exploration.
Where to begin? Should you visit the project’s website to gauge its reliability, thoroughness, and a lack of shadiness? Wrong. Numerous users follow this approach, and scammers are well-aware of that. At times, they create websites that appear more legitimate and credible than those of actual value-creating companies.
Step 1: Engage with Telegram and Reddit
Instead of heading to the company’s website, begin by immersing yourself in Telegram and Reddit. These platforms function as hubs for crypto research, serving as the arenas where candid discussions take place.
Whether it's the project’s official Telegram channel or discussions unfolding on a technology-centric forum, this is precisely where initial indications of the project's legitimacy can be discovered.
The term “social signals” carries immense significance in crypto research. It denotes various cues that reveal whether a project is genuinely under consideration. Social signals mirror the dominant market sentiment, public opinion, and sentiments surrounding the specific crypto project.
The absence of social signals concerning a crypto project indicates that hasty decisions regarding financial undertakings should be avoided. But, how does monitoring social signals unfold?
The good news is that platforms specifically designed for this purpose exist. One such tool is the BitDegree Social Signals & Traffic Tracker. Upon accessing it, you can select a crypto project, and it presents you with the most recent data related to social signals. This encompasses statistics from Twitter, Reddit, Telegram, trending posts, and website traffic.
Bear in mind that many fledgling projects may not yet possess enough data for presentation through the social signal tracker. Nevertheless, scrutinizing well-established projects via the tracker can offer insights into the attributes of a robust and dependable crypto project.
Now, what can be done when a project is so nascent that the social signal tracker proves inadequate for assessing its potential? Prepare to initiate the research expedition, with the first stop being scrutinizing their social media presence.
Step 2: Delve into Twitter
I've emphasized the significance of delving into Telegram and Reddit, as they are primary sources for judiciously evaluated information concerning specific crypto projects.
Next, it's time to enter the terrain of Twitter. After all, this platform is a bustling hive of activity. However, focusing solely on Twitter could potentially lead to overlooking substantial, technically-oriented projects. Many such projects lack a substantial following or an excessively active social media presence.
Conversely, numerous new low-volume projects excessively amplify the significance of their Twitter performance, inundating your feed with self-promotional content. Thus, it's crucial to bear in mind that an adept Twitter following and the creation of appealing content does not necessarily validate a project.
Step 3: Scrutinize the Whitepaper and Funding
Now, having ascertained that a project is the subject of discussions across diverse forums and possesses a credible presence on Twitter, it's less perilous to visit their website.
This is where you will likely encounter two pivotal elements that will facilitate continuing your research. The first is the company's whitepaper.
A whitepaper is adocument that underscores the technical facets of the project, its features, objectives, and potential. Typically authored by the core members of the project's team, whitepapers can unveil numerous insights into the project's seriousness. In this context, whitepapers are akin to crypto research reports.
An exemplary instance is the renowned Bitcoin whitepaper. Penned in 2008 by the enigmatic Satoshi Nakamoto and titled “Bitcoin: A Peer-to-Peer Electronic Cash System,” this document introduced an idea that ultimately birthed the foundation of the entire DeFi system.
Those who perused it and recognized its potential were the ones who did not hesitate to acquire a substantial quantity of Bitcoin when its price was still in the mere cents.
Apart from the technical intricacies, whitepapers empower users to accurately evaluate the product's utilization case and the likelihood of demand for it. This, in turn, provides answers to the earlier queries of “why?” and “how?” the project is under development. If the responses fail to satisfy, it serves as a clear indication that the project likely does not merit attention.
The second element is funding.
Typically, this information is available on the project’s website, within the “funding” segment. Here, you can discern which investors and financial supporters have already expressed their confidence in the project. Notably, prominent names among them signify a positive indicator.
Closing Remarks
And this brings us to the conclusion of this segment. Hopefully, the process of how to research crypto is now clearer. It constitutes a pivotal facet of achieving success in this realm. Consequently, it's imperative for traders, particularly beginners, to comprehend where to commence and evade becoming prey to scammers and value-deficient projects.
