Fact-checking is vital during research. Each cryptocurrency has its own purpose. It’s crucial to spot scams. Ultimately, investing in crypto means deciding between quick gains, popular coins, or long-term investments.
Once you have picked a coin you’re interested in, you can now follow these steps:
Step 1. General Information
Step 2. Technical Data
Step 3. Markets & Community
Step 1. General Information
Project Website
Is the project unique or just a duplicate of an older one? What purpose does it have / Does the project solve a problem? Does it have smart new features that add value to it?
Roadmap / milestones
Do they have a roadmap with milestones they want to achieve? A legit project will have a comprehensible plan that makes sense. They should have milestones and goals.
Who’s the Founder?
Who’s behind the project? – what’s their qualifications / reputation? Does the data match up with the project?
Investors involved?
This shows trustworthiness if there are well known investors involved.
Partnerships?
Does the project have partnerships with other companies – If so, search deeper into what the purpose is, and what they are trying to achieve.
Step 2. Technical Data
All technical data is easy to find online, if it is hard to access or takes awhile to find, then there may be something off with it.
Market Capitalisation
It’s normal for new coins to have a low market cap and can only grow over time (if so). As an investor yourself, you will still have to know the difference between low or micro cap coins and middle to high market cap coins.
Supply
Does the entire supply already exist, or how much already exist in % and how much will still be mined / created and distributed in the future?
Circulating supply is in the coinmarketcap table.
Distribution of the Tokens
Do the initiators / founders hold the majority of the supply, or a high percentage already (30% – 40%) or even more? If they do hold more than the usual percentages, it could be considered a scam coin.
Emission Rate
How fast will the coins flood the market from the mining process? Is there inflation? It’s important to know how many coins will still be created and in what time how many of them will get on the market. Scarcity is one of the major factors long term holders look into.
Step 3. Markets & Community
Exchanges – can I trade it?
New coins have to start somewhere first and are not immediately available on many exchanges. In saying that, it can be useful to consider coins that are traded on exchanges that you use. Because the crypto space is growing with new coins, it’s best to still carry out your research. You can also become very lucky if you were an early investor and the coin becomes listed on exchanges platforms in the future.
Active Community
Is there an active community backing the coin. Check leading forums (reddit.com, etc.), is the discussion active. Any engagement from active developers and creators. Do they have active social media accounts. This will help you filter through “sh*t coins.
STAY ALERT
Unfortunately Scams in the crypto space is very common, by following this Step by Step Guide, this will help you stay alert before investing in crypto.