Crypto is a volatile space – so, there are a few questions you should ask before investing in cryptocurrency projects. This article provides a quick framework for the same – so that you could verify if a cryptocurrency project is legit and worth investing in.
A lot of people do not understand the fundamentals of investing in new tech. It is too early to act as if we’ve already made correct bets and that nothing can happen to change the path of our favorite project – because what we’re talking about This is not a really a sports team or a passing fad. Crypto is a new asset class that can change our society.
So, there are a few questions you should ask yourself before supporting, or investing in any cryptocurrency project:
1. Does it even solve a problem?
2. How does the technology work? Is their whitepaper really a ‘whitepaper’, or does it just give out token details?
3. How is the dev team? Have they worked on something related to the industry of the cryptocurrency project you’re investing in?
4. Do they have a funding scheme? If yes, of what kind? Is it from venture capital, ICO, institutional investment, or community donation?
5. How are they organized?
6. How is the team’s track record?
7. Do they have any institutional backing?
8. How much competition does it face? Where does it stand in the competitive sphere?
9. How close to ready is it? Is there a POC?
10. What are its plans to create, stimulate, and maintain adoption?
11. Does it have a good media presence?
12. How is its mainstream visibility?
13. How about accessibility and liquidity?
14. What is its growth potential based on current price and supply?
15. Can it survive the regulatory hammer?
Regardless of how strong you feel the cryptocurrency you’re investing in is, these are the things you must know. This is because each of these questions is important in determining the value potential and sustainability of your coin.
On the other end of things, cryptocurrency projects should think about answering these questions for their backers. It is important for an investor to know about the project they’re investing in – and you should definitely work on it. If you need any help with this, drop your email here and we’ll contact you soon.