Investing 101 : Crypto and Understanding it

With the sheer number of coins being pumped into the marketplace it is very easy to get lost trying to sort the diamonds from the scraps. Here are 4 steps which have helped me greatly and hoping will help all the newcomers as well in trying to pick a Token to buy into.

1) Read the projects whitepaper

I'm pretty sure majority of the coin holders haven't read into its coins whitepaper, even I never bothered reading into them until recently. To simplify things "Whitepapers explain the purpose and technology behind a project". By reading them you would get a fair understanding what a project behind a token is aimed towards, the value a coin is bringing into the ecosystem and helps you identify any red flags with the projects (be careful of coins that tend to market itself too much without publishing a whitepaper or is rather obscure in the project). Here is a link for compiled list of all whitepapers for you to download and go through :

https://cryptorating.eu/whitepapers/

2) What real world value is the coin bringing in

Bitcoin has helped bring about decentralization in Finance, Ethereum helped with the Smart Contracts. Each generation a new project is being developed to solve some real world problems. VeChain is shaping the Logistic industry, Monero is shaping privacy and security, there is even a Crypto that deals with the decentralization of Artificial Intelligence ecosphere. Have a real world problem? I'm pretty sure there is a coin out that is in the making to solve them in the coming years.

3) Evaluate the projects Tokenomics

William Mougayar has put up a pretty good chart that outlines a framework of a Token based on Three Principles : Role, Purpose and Features

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Credit : https://medium.com/@wmougayar

o how does the three principles help in evaluating it? The more roles it serves the more utility a token provides, hence the more value it brings into the ecosystem. If it has little to no utility you are safer finding another project.

4) Be wary of Scams and they are many out there!

Good coins have a transparent technical vision, an active development team, and a lively, enthusiastic community. Bad coins are not transparent, promote fuzzy technical advantages without explaining how to reach them. We've seen what happened recently to the Titan Token when it suffered from a Bank Run and lost it's entire value in a matter of hours leaving many stranded albeit not directly a scam it has shown what happens when a project isn't stable (In titans case it was mainly because it was partially collateralized). Find out about the projects owners and it's team members, hey even message them directly on social media there are project developers out there who would be willing for a open discussion.

It's soo easy to FOMO into a coin not reading the script and then blame the whales or the banks or billionaires when the price tanks. But understanding it paints a much clearer picture and also helps you take a long term approach to investing.

Just hope this helps newcomers and others alike.