HOW TO RESEARCH ALTCOINS
By Teddy Cleps
How to Research Altcoins
Many still underestimate the value in thoroughly researching cryptocurrencies before investing. It is often ignored that you are actually investing in a real company, with real people and that their hard work is responsible for its success – there is so much more than just an icon and a name!
You will not become a shareholder nor will you own any equity of the project that you invested in, however you should still research cryptocurrency projects the same way as if you were buying share of a company.
This process is just the introduction and structure of researching cryptocurrency projects, it can take you anywhere from 20 minutes to a couple of weeks / months depending on how thoroughly you will analyse the information.
Let’s get started!
Coin Market Cap
I like to start from this website as it provides you with loads of valuable information at one glance, simply type your project in the top right search bar and you will find the following information.
It will tell you the current valuation of the project. The size of it will also suggest the potential available growth; a smaller market cap has a higher percentage of doubling as supposed to a very big one.
Higher probability of a project doubling its valuation from 10 to 20 million, as supposed to doubling its valuation from 200 to 400 million.
Suggests how much buying and selling occurred within the last 24h, you can assume that with very low volume it will be difficult for you to buy and sell relatively big amounts, whilst high volume will imply that it is actively being traded and that it will be easier for your to trade higher quantities.
How many coins exists and how many are in circulation today? A project that has a very small circulating supply may have its individual tokens lose value over time due to possible inflation, as more tokens will be added from the total circulation to the market.
You will not make technical decisions based on the chart below. But at first glance you can identify at what stage of the market cycle it currently is; what was the all time high? What was the all time low? Is it accumulating?
Is the project trading on respectable and trustworthy exchanges like Binance, Bittrex and Kucoin or do you need to make an account on a much smaller exchange in order to acquire it?
The official website is a great place to start your research, as you will often find basic introduction videos to more technical content, press and social media to detailed information of the team behind the project.
Additionally the website will reveal the branding of the project, which unfortunately plays a significant role within this new industry.
Download their wallet or try their service!
Would you invest in Facebook without ever making an account or knowing how the website even looks like? Absolutely not! Don’t forget that you are investing in a company, it is vital that you get familiar with their product / service.
There have been countless scenarios where the project was promoting itself as the leading “xxxx on the blockchain” – but they don’t tell you that it takes you multiple days to solely download their software, or that the interface is so complicated that you need a diploma in Computer Science to use it.
If you are planning to actually invest in a project, make sure that their actual product is great and easy to use!
The information on the website will only reach a certain level of depth. On the other hand, the whitepaper’s purpose is to cover every single inch of the project – technically, commercially and financially.
It is an absolute must to read before investing in any cryptocurrency project.
The roadmap is a representation of the project’s milestones and goals. You will be able to see what the project achieved, what the project aims to achieve and where progress is currently being done.
Always worth checking if the project achieved all of its “big” goals, or if there is still exciting stuff to happen in the future. Additionally the roadmap may be useful to understand how well the team accomplishes their workload within a set deadline; it is a red flag for me to see a project continuously failing to deliver within the due date.
The team is the core of the project, there would be no project without it. A strong, experienced and motivated team is the foundation of a successful project; this is probably the most important step of this entire guide – and definitely the most time consuming one!
Every project’s website will have a team page with an outline of who the team is, and what they did before.
Will provide you with information regarding the education and previous work experience; this will allow you to understand the degree of his or her experience within a specific field.
A great place to get information is across forums. You will be surprised how much information you can find there; especially if they did something wrong.
Have they accomplished something that’s worth talking about? I find it very valuable to watch interviews, talks and debates with the person I’m researching. A great way to get a feel for the individual as well as measuring the level of commitment and passion for the industry.
A project is only as good as its team and its community, it is vital for me to see that a project is actively informing and engaging with its supporters across multiple social platforms.
This is where I would typically start my social research. Twitter became a core element of the cryptocurrency community, you would expect every project to have an account and to regularly update it with progress, press and relevant activities.
These are a great sources of information, as you will have the opportunity of seeing what the community actually thinks of the project. Forums enable community members to have enough space to write long threads on what they think of the project, allowing a healthy communication and debate on individual topics.
Many of these threads may be extremely valuable for your research, as they can be written by individuals that have researched the project for months before you. A couple of websites that I regularly check are Reddit and BitcoinTalk.
This is a chat owned and managed by the team filled with community members. Important to see real engagement and constructive conversations offering value to all of its members as supposed to a chat filled with spam and GIFs.
This could be a great place to get information for your research, as you will be able to get immediate responses from both the team and the community.
Not an essential element of a cryptocurrency project, but I always like to see them leveraging every platform in order to inform the community, as it shows that the project is at least trying to create valuable content in order to keep everyone updated with what is going on.
Additionally it may add a layer of transparency and thus trust towards the team, something that many projects underestimate.
Once you have gathered enough information, it is always wise to compare it to similar projects within the same industry.
You will discover unique selling points that other people may have not considered, you may discover that your project is actually very average or you might find a project that is actually a lot better and that you want to focus your research there instead.
There are endless comparison sheets online, they provide tremendous value!
If you finished researching your project and you are still thrilled with it, as you liked everything that you saw including their actual product / service you may start looking at the chart and place buy orders on key support levels – don’t FOMO!
As I’ve mentioned at the beginning of this guide, this process can take anywhere from a couple of minutes to a couple of weeks/months depending on how throughly you decide to research each topic. We obviously recommend to spend as much time as possible, as you are investing your own money and you want to know exactly what you are investing in.
This is just a basic outline of what you should do, you can focus your research on a technical, economical or social aspect with techniques not mentioned here.
If you think that you could add value to this article please feel free to email us: [email protected], and we will improve it together!