Official website
Cryptocurrency exists exclusively online as an entry in a decentralized ledger. It cannot be touched, chemically analyzed or otherwise physically examined..
Therefore, it is worth studying the official website of the project in the first place.. Why him?
Because, by and large, it is a kind of passport of a particular platform. All the basic information is concentrated there, which will allow an investor or enthusiast to weed out many altcoins.
What should you pay attention to when studying the site?
- Firstly, to the information, general information and news that are presented there. All this should be up-to-date and constantly updated.
- Secondly, the site must work correctly and stably, not contain many spelling errors and not request your personal data for dubious purposes.
- Thirdly, the site should provide detailed information about who created a particular cryptocurrency, who is the project partner and investor.
- Fourthly, a clear system of tokens should be presented: which tokens are needed and what for, what tasks they perform.
- Well, and finally, fifthly, you need a white paper.
White paper
The white paper is the heart of any cryptocurrency, its technical documentation. All information about the goals and objectives of the cryptocurrency, as well as options for achieving and solving them, should be provided here.
This document should contain detailed information about the “project tokenomics”. This includes not only how the coins will be issued (and how limited issuance), but also how they will be distributed or burned.
It is worth noting that the white paper is often written in complex technical language.. It is understandable: experts write not only in the field of information technology, but also in cryptography.
Therefore, if you do not understand something, this does not mean that the project is a scam. On the other hand, the absence of any technical details about the structure of the “decentralized project” should alert you..
The presence of grammatical, punctuation or semantic errors should lead to some thoughts.
Creators, investors, partners
This item is not 100% decisive, but it can add reputation to the cryptocurrency.
After all, would you rather go to a doctor with 30 years of experience and recommendations, plus excellent reviews from healthy clients, or to a newcomer who has just graduated from university?
Fastest to the first. So here too.If there are famous people and developers in the team of cryptocurrency creators, then this adds credibility (but does not guarantee success).
For example, Charles Hoskinson worked with Vitalik Buterin on Ethereum before Cardano..
Was it a plus for Cardano at the time? For many investors, definitely yes.
Well, if some unknown developers are listed on the site (or not listed at all!), then doubts are justified.
Of course, some projects are developed by absolutely anonymous people, like Bitcoin, but there are only a few such successful projects..
Whereas there are an incredible number of scammers who want to create a legend of success like BTC.
Same with investors.. If big business trusts this or that cryptocurrency, why not believe in it for a retail investor?
Surely so many thought when the Avalanche project announced a collaboration with Amazon. What else can you pay attention to besides the information from the site?
Representation in social networks
As a rule, really high-quality projects have a lot of accounts/channels in various social networks.. Try to visit each one and see what’s going on there.
If the channels are maintained actively, fresh information is posted, moderation responds in a timely manner and to the point, then this is in favor of the cryptocurrency.
And if there is only an overabundance of advertising in the social networks of the project, then most likely you have a scam. Well, or the goals of the developers may differ from those stated.
Also, to determine whether it is possible to invest in cryptocurrency, it is worth studying other data.
Market Characteristics of Cryptocurrency
When evaluating a particular coin, take a look at its market capitalization. The more, the less volatile the price will be and the more liquidity there will be.
On the other hand, the potential for price growth may turn out to be lower, but here already evaluate the acceptable risks. As a result, it is easier to buy such a cryptocurrency.
You can look at the price chart. This will give you an idea of how the price has changed over time.. If something grew quickly, and then fell and does not grow, then this is a bad signal.
Purpose of cryptocurrency
Curious: why was this or that cryptocurrency created at all?
Some coins are used on platforms for payment for transactions and management (SOL in Solana), some are an analogue of a particular product (stablecoins), and some are just comic / memetic and generally not tied to any purpose .
Coins that have practical value look more attractive.. Here it is only necessary to clarify that if your goal is to make money, then this can be done on something that is not useful in practice..
It should be remembered that memcoins are fundamentally nothing, but are a speculative asset with great risks and great opportunities for enrichment.
In short, to determine whether this or that cryptocurrency is good or not, you need to take into account many factors: the official website, social networks, statistical metrics, technical analysis indicators.
At the same time, you can earn money on what looks like a scam, and often much more.