With the massive adoption of cryptocurrency investment in recent times, everybody is excited to be part of the game. Investing in cryptocurrency is a great idea if you are looking to diversify your investment in other currencies. Cryptocurrency investments can fetch you good yields but it has to be a well-researched move.
Today, we will be looking at five factors and information you need to consider before investing in a blockchain-based project. By knowing these tricks you can potentially lower the risk of losing your funds, and avoid possible scams.
Read the Whitepaper
Read the whitepaper, which is an in-depth informational report that explains the project in detail and provides information about the token’s or coin’s functionality, purpose, supply, team, roadmap. The whitepaper could be a long read but it is highly recommended to read and understand the utility of the currency as this will tell you if the project could be profitable. You can analyse factors like supply and future demands and revolutionary aspect of the project. A well-designed whitepaper also reflects on the standard and quality of the project. You can read iOWN Token‘s white paper to know more.
Red flag: Stay away from considering the currencies which have a 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, if there is no breakdown of major milestones to be achieved in a certain date or quarter, your investment in this currency might be risky.
The Team
“Behind a solid team, there is a solid project” goes the saying and it stands true in the crypto world. A strong experienced team backing a basic project concept 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, showcasing their experience and educational background. Their profiles must be searchable on social platforms such as LinkedIn, where you can align the person’s identity and information with the project’s team page. For instance, check out iOWN Token’s Team page.
Red flag: If the project’s website has no information about the team, 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 best of all, you can ask any token related questions directly to the team or administrator for clarification. 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 get the information 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.
Pre-Investment Check
There are several places where you can invest in cryptos, typically during private sales, public sales 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 vice-versa. Exchanges are the doors where fiat enters and crypto exits and are responsible for 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 about exchanges. Reliable projects will assure that their coin or token is listed on a reputable exchange in the top 100. 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 fake exchange websites that have cloned or duplicated all the information of a popular exchange to dupe investors. So, always double-check and make sure you are on the official website and use a popular exchange.
Research
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 importantly, 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.
Final Word
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 are worth investing in after analysing the factors mentioned above. Join the project’s 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.