- July 2, 2020
- Posted by: Lara Tlass
- Category: Blog
With the massive hype and adoption into cryptocurrency investment in the last 5 years accessible to billions of people globally, everyone was a beginner in the crypto-sphere at one stage, some with experience in traditional stock trade and some with no experience in trading or investing at all. With a diverse outcome in investing, many people made 10x and up to 500x or more and some have lost all their investment. We will be looking at five factors and information to consider before investing into a blockchain based project that can potential lower the risk of losing your funds and how to look out for red flags, even avoiding possible scams.
Read the Whitepaper
Reading the Whitepaper which is an in-depth informational report that explains the project in details and provides information about the token’s or coin’s functionality, purpose, supply, team, roadmap and how it can resolve a problem. The whitepaper could be a long read but it is highly recommended to read and understand what the utility of the token or coin is which allows you to analyse if investing in the project could be profitable based on supply and future demands, uniqueness and revolutionary aspect of the project. A well-designed whitepaper also reflects on the standard and quality of the project.
Red flag: Lack of details, lack of information of the team behind the project, unclear explanation on the mechanism of the coin/token use purpose and no proper breakdown on the roadmap timeline, for instance there is no breakdown of major milestones to be achieved in a certain date or quarter (e.g. “Token listing on exchanges during the 3rd quarter of 2020”)
The saying “Behind a solid team there is a solid project” goes a long way in the crypto world. It’s a simple logic that a strong experienced team even with a basic project concept or idea will have a higher success rate than a weak inexperienced team with a revolutionary idea. So, it is important to evaluate and form an opinion on the team before you invest in the project. The founders and team information should always be available on the coin or token’s website, showing their experience and educational background and to go a step forward in team research, the names should be searchable on social platforms such as Linkden where you can align the person’s identity and information with the project’s team page. You can also check out their social media posts and check if the faces and names match the team page. Check out iOWN Token’s Team page.
Red flag: If the project’s website has no information about the team behind the project then you would probably need to think twice before investing. History taught us that projects with “ghost teams” or projects with no names attached tend to fail or turn out to be scams. Every investor deserves to know where their funds are going and who is behind the project.
Join the Community
Communication is key. Before you invest in a coin or token you are new to, make sure you join their community. Projects will most likely have an official social media account on platforms like twitter, facebook and telegram which you can join and follow, engage with fellow members and discuss the token’s roadmap, milestones, mechanism, utility and potential. You will also receive major announcements, updates, and crypto educational information from the team behind the token and the best of all, you can ask any token related questions directly to the team or administrator that they can clarify. You can join and follow the growing iOWN Token community on Telegram, Twitter and Facebook. If you are new or interested in the crypto space, there are many “General Crypto” discussion groups you can join that focuses on blockchain, trading, education and news
Red flag: Two way communication is important to clarify and information that you might need and communities are the backbone of any upcoming or running project, if you can’t reach a team member or an admin of the project then maybe avoiding such projects is the smart choice, projects that have no social media channels and no community typically tend to fail.
There are several places where you can invest in cryptos, typically during the private sale, public sale or exchanges.
Exchanges are probably the most important platforms in the cryptosphere. It’s a hub where people buy, sell and swap coins with tokens and vis-versa, Exchanges are the doors where fiat enters and crypto exits and are responsible to 90% of crypto purchases so it is crucial to find a reputable exchange. There are thousands of exchanges online, it’s always recommended to use an exchange that is listed in the top 100. You can use coinmarketcap which is a great tool that provides detailed information exchanges. Great projects will assure that their coin or token is listed on a reputable exchange in the top 100, that is a good sign of a solid project. Always do your research on the exchange before signing up with them, check out their communities, reviews, and their customer service.
Red flag: There are many exchange websites that have cloned or duplicated all the information of a popular exchange to the exact detail that you would not know that you are on a fake exchange. There are many stories out there of people losing all their funds in this scam where they mistyped the exchange name or domain, example: (latoken.com with latoken.net, latoken.com being the official exchange website) and purchasing thousands of dollars’ worth of coins and tokens that vanished. So always double check and make sure you are on the official website and use a popular exchange.
Never blindly invest because of FOMO, research is always vital and by asking yourself the following questions, you can make smart investment decisions. Does the project have a real use case? Is there a demand for such a project? Is the project unique or a copy of an existing project? and most important of all, are you familiar with the project’s industry and sector? (e.g. retail, technology, real-estate, finance…) it’s important to be well-acquainted with the industry you invest in as you may relate to the needs and can be attracted to the ground-breaking project that could bring financial success to your investment.
Red flag: Try to avoid projects that have low use cases or demand as it might not gather any traction and steer clear of industries you might not associate with or understand and never invest in something that you can’t explain yourself.
In conclusion, do not invest in coins or tokens you don’t know anything about. Read the project’s whitepaper and decide if the token or coins is worth investing in after analysing the factors mentioned above. Join the projects community where you can engage with other members and investors or even communicate directly with the project’s founders and team. Make sure you learn more about the team and validate that they exist and are not just a ghost team and finally ensure that you use a top trustworthy exchange and confirm that you are on the official website before investing a single dollar.
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