5 Tips To Know How You Can Evaluate Your Crypto Project
The cryptoverse is expanding by leaps and bounds. From Elon Musk to the metaverse, cryptocurrency is a burning topic everywhere. Bitcoin’s price increased to a whopping $63,000 (12th April 2021) from just $0.09 in 2010. Cryptocurrencies are the new normal in the financial market. And now they’re flooded with all sorts of projects that want your money and investment. For that to be a successful experience though, you must know how to evaluate your crypto project.
The crypto market is highly volatile. Without adequate research, one wrong step and you will be left with nothing. This is why you must polish your knowledge and skills to stand out. Did you know there are more than 6,000 cryptocurrencies in the market today? Which one should you invest in? And how should you invest in it? How should you start your research?
Questions regarding the crypto sphere are many. The internet is filled with answers but you get nothing exquisite in the crowd of ubiquitous theories. However, in this article, we will take you through the exclusive crypto guide so that by the end of this article you get to know how you can evaluate your crypto project. So, let’s get started!
Is the Crypto Project Alive?
This question may confuse you. How can cryptocurrencies die? The reality is, cryptocurrencies are not sempiternal. There are over 1500+ dead coins. Dead coins are cryptocurrencies that are not traded anymore. Some reasons behind a crypto coin failing to survive in the crypto world are:
- They are fraudulent schemes
- They experienced a loss of traction
- They’re ultimately a failed business plan
Scammers often promote eye-catching crypto projects featuring soon to be dead coins. However, just because you see a cryptocurrency on any media platform, you must not fall for the scheme. Therefore, you need to do proper research on well-known and reliable crypto platforms to get a fair idea about the existing cryptocurrencies. If you see a lot of hype around a crypto coin on a reliable crypto exchange platform then you can give it a nod.
However, you must be aware of the cryptocurrencies listed on decentralized exchange or DEX platforms. Decentralized exchange platforms do not have any selection criteria to list crypto coins on their platforms. Therefore, anyone can list any coin on those platforms. The first thing to know about how you can evaluate your crypto project is to know if your preferred crypto coin is alive and has adequate trading volume.
- Research About Crypto Project from Reliable Sources
Once you make your mind about which crypto project to invest in, you must run a thorough background check of the project. You can do the preliminary technical research with any effective tool like Glassnode. These tools allow you to self-learn the basics of the crypto sphere including its history and detailed on-chain data. However, if you are going to invest in Initial Coin Offerings or ICOs then you must use a strong ICO Drop Tool to investigate the ICO project. Once you are done with preliminary research, you can jump into a more detailed analyzing platform like Binance Research to evaluate your crypto project.
With in-depth knowledge of the crypto market, you will find yourself understanding the project’s “tokenomics”. To invest in a coin or token you must evaluate if it has good “tokenomics”. A cryptocurrency with good tokenomics provide the users with:
- Significant advantages
- Incentives for early adopters
- Incentives for successful customer acquisition
- Stable traction
Therefore, before stepping into a crypto project you must conduct thorough research on it. Researching through reliable sources is inevitable to evaluate your crypto project properly.
Investigate About the Team to Properly Evaluate Your Crypto Project
How a project performs depends mostly on the team working behind it. Just like how a film runs depends a lot on the people behind the camera like directors, cameramen, etc. Similarly, to evaluate your crypto project you must first investigate the team behind it. Who are the people behind the project? Are they reputable in the crypto ecosystem? Have they had successful projects in the past? Finding answers to such questions will be your wherewithal to properly evaluate your crypto project. There are some pillars in the team behind every crypto project which you need to look out for:
- Tokenomics Designer
- Distributed System Engineer
- Smart Contract Engineer
In a roller-coaster market like cryptocurrencies, you must put forth your money with people who know exactly what they are supposed to do. Assessing the team behind any crypto project gives you the confidence that your investments will be put up to make the most of them. In this way, you can minimize the potential risks involved in any investment in the crypto sphere.
Check and Recheck Facts
Once you have done your preliminary research, background check and have become familiar with the crypto terms, it is essential to check and recheck the facts about your chosen crypto project. In the ocean of information available online it is hard to differentiate between the gem and garbage. Often the sheer information overload leads to hopium peddling, which ultimately turns out to be nothing substantial. However, you must know where to get the most up-to-date data about a project before proceeding with it.
Often the source of the exact data of a crypto project is their official website. Once you get the official data in hand, now cross-check it from reliable crypto exchange platforms like WazirX. Now, what official data should you collect to properly evaluate your crypto project? What you need here is, the documentation part of the crypto project including terms like “ICO”, “Tokenomics”, etc. If the official data matches the facts listed on popular crypto platforms then the crypto project is great to go.
Make Sure to Have a Long Vision
If you’re doing the previous four steps then surely you want to be cent percent sure before investing in a crypto project. That means, when you evaluate your crypto project so thoroughly, you are doing it as a hope of financial stability in the future. Once you are done with the previous four steps, you need to ask what the crypto project holds for you in the future? To know that you have to find the answers to 3 simple questions:
- What is the roadmap of the crypto project?
- What do reliable crypto news platforms say about the crypto project?
- How far has the crypto project come?
Even a feasible-looking roadmap may lack the potential to be a suitable crypto project for your investments. This is because making an enchanting road map in theory is easy but to understand the practicability of the crypto project you must upgrade your technical knowledge. Crypto-verse is notorious and you must have a strong plan in mind to properly evaluate your crypto project.
And It’s A Wrap
Every 3 seconds, a post about Bitcoin is circulated on various social media platforms. Ethereum recorded around 1 million daily transactions in 2020 alone. These statistics say a lot about the skyrocketed growth of the cryptocurrency market. 97% of crypto traders actively express their indomitable trust in crypto assets. However, such a volatile market can even leave you doomed with nothing.
In 2020 alone, due to ransomware attacks, crypto traders around the world lost over $400 million in ransoms. Therefore, it is essential to properly evaluate your crypto project before diving into the business. With the proper evaluation of your crypto project, you can stand out. No amount of evaluation cannot guarantee you no loss in the crypto sphere. However, if you evaluate your crypto project instead of just hopping around and investing anywhere randomly, then you can minimize the chance of losing your all.