How To Research Cryptocurrencies? A Step-by-Step Guide

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Part 1 — Start With the Basics

If you are new to crypto, I strongly recommend that you start your journey with big and established currencies such as Bitcoin and Ethereum. That’s because there are lots of resources on the internet to explore and most of them are free.

Part 2 — Look Up Information on the Project Website and Read the Whitepaper

For a majority of new or smaller coins in the crypto space, information is not as conveniently accessible as with the big and established platforms. For this reason, it is paramount that you do proper research.

1. Does the project’s website look legit?

This is a first sniffing test to check for any obvious weaknesses.

Click me.

2. Search for a general introduction of the project and its branch of industry.

You need a clear understanding of what this crypto project is about, the industry it is aiming for, and what issues it tries to solve.

3. What does the coin or project do and what problem does it aim to solve?

Dig deeper and find out why the people behind the project think that what they do will help to solve an existing problem.

4. What is the actual use of the cryptocurrency or token issued by the people behind the project?

This is very important from the perspective of an investor. A crypto project might have a very good use case.

5. Do more research about the cryptocurrency or token behind a project.

As a potential investor, you should know as much about a token or currency, as possible. Here are a few more things to look out for:

6. What is the consensus algorithm of the chain a crypto project uses?

The consensus algorithm is a vital part when it comes to how decentralized a project is. This way you will know how centralized or decentralized it is. The more decentralized, the better.

7. Find out whatever you can about the team behind a coin.

Doing research about the team behind a cryptocurrency or project is very important. You only want to invest in something if you know that the team is qualified to handle all the challenges that might come its way.

8. What does the project’s road map say?

Road maps help you to understand what a crypto project wants to achieve in a given timeframe. Keep in mind that software projects are often very complex so delays happen frequently.

9. Who are the strategic partners?

Established partners are vital for any crypto project because they help the team to tap into additional resources, get publicity, and learn from their experiences.

Part 3 — Adding Other Sources Into Your Crypto Research

After you have covered the above points about the project, you need to take a step back and look at the bigger picture.

10. Research a cryptocurrency’s competitors.

While points 2 and 3 are meant to give you an understanding of general market conditions and how the crypto project you are researching is fitting into that, it is also important to look at other existing projects.

11. Search for more information in external sources.

This connects to points 7 and 9 in this crypto research guide. As important as it is that developers do proper marketing to get the message out, from your perspective it is even more important what others have to say.

12. Social media are a very rich source for finding information about a crypto project.

Check whether the project is active on social media and if users are creating content about it. You can learn multiple things from doing so:

13. Check out Github.

Many crypto projects claim to be open source. As a result, they should have posted their code on Github. Check it out. While you probably cannot understand the code, you can still see on the insight page how many contributors there are.

Part 4 — Researching Ways to Buy a Cryptocurrency or Token

The fundamentals are looking good. You think you found a potential crypto gem.

14. Find out how and where to buy a project’s token or cryptocurrency.

· How can you buy the token or coin? Can you buy them from an exchange or do you have to send money to a contract? In the latter case, there is a risk that your investment might get lost due to technical issues or fraudulent activities.

15. How high is the market cap?

If the market cap of a coin or token is very small, it means the price can be easily manipulated by the people who accumulated a lot. As a result, various pump and dump schemes may play out.

16. Is the currency supported by hardware wallets such as Ledger or Trezor?

This will influence how you can store your coins/ tokens. Usually, only well-established cryptocurrencies are supported by hardware wallets. For smaller projects, you can usually use dedicated wallets or keep your coins in an exchange. Both come with risks so make sure to inform yourself in order to find the best solution.

Part 5 — Wrapping Things Up

By now you should have a lot of information at your hands. Now it’s time to evaluate all the data you gathered.

Final Words

Bear in mind that this kind of research can take a long time to complete. While in some cases it might not be necessary or possible to cover all of the points, I listed up in this guide about how to research cryptocurrencies and projects, your aim should be to cover as many of them as possible.

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Ren & Heinrich

Ren & Heinrich

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Garbage man turned millionaire who writes about crypto and economics. Teaching you how to research & invest 🔬🔑📈 Follow me on Twitter: @ren_heinrich