Eight (8) Smart Ways To Analyze Crypto Token Before Investing in It

The cryptocurrency world is vast and does not revolve around you. According to crypto market capitalization aggregators, there are over 5,000 cryptocurrencies on the market today, with more being launched every day, making it difficult for investors to decide which to invest in.

There are a lot of them out there that aren’t genuine. Scammers have recognized the potential opportunities in the cryptocurrency space and have created tokens to steal people’s money. Whether you’re a novice looking to enter the crypto market or a seasoned investor, the techniques listed below will help you analyze any token.

Note: Scammers are cunning, and they’re always looking for a way to cash in on the endless opportunity that surrounds crypto tokens. As a result, there are no foolproof methods for analyzing crypto tokens. The following are simply precautionary measures to assist you in analyzing any crypto token — whether it is a currency token, utility token, or asset token — and making a safe decision.

1. Examine the whitepaper for the token.

The whitepaper for a token contains the team’s goals for the project and the token’s use cases. As a result, you’ll be able to tell if your objectives are realistic.

Even if you’ve found reasonable objectives, double-check that they weren’t plucked from the pages of another project’s whitepaper. Because let’s be honest, the latter has happened numerous times.

2. Examine the project’s leadership.

Following a thorough understanding of the project’s offering, the next step is to evaluate the team behind it. Has anyone ever worked on a reputable project? Are they trustworthy participants in the blockchain ecosystem? What are their credentials?

The purpose of this evaluation is to ensure that you’re investing in a token that’s backed by people who know what they’re doing. Consider this a fundamental analysis that will help you avoid investing in a company that is only interested in making money. However, keep in mind that images can be easily copied from the internet.

3. Take a look at the project’s social media pages.

Keeping a close eye on the token’s community on social media is a surefire way to invest in an ICO. This is where you’ll find out if the project has a large community behind it. And it’s a good place to begin.

On the same note, you’ll learn what others are saying about the project and will be able to make more informed decisions as a result. There are, of course, bounties available, in which people are rewarded for making positive statements about the project. As a result, such reviews may be skewed.

4. Determine the legality of the situation

So you’ve found a great token’s ICO to invest in, but your jurisdiction prevents you from doing so. If you went ahead and invested anyway, you’d be breaking the law.

However, you must ensure that your country’s regulators have not imposed any restrictions on participation in such offerings. ICOs are still unregulated in several jurisdictions, though regulators in some are working on more user-friendly regulations.

5. Check to see if the token’s project is addressing a major issue.

Verifying this is another important factor to consider when evaluating a token you are considering investing in, as it determines the utility value of a token’s market value. As a wise investor, one question you should consider answering before investing in a token is: What unique problem is this token solving?

Consider the case of Atayen Inc. With its SaTT solution; it is redefining the advertising industry, particularly the influencer sector, by allowing anyone to be compensated for their social media posts on a cutting-edge platform. Another is Vinchain, which is building a global blockchain database of used vehicle data that is 100 percent secure, transparent, and open to all, among other things.

In practice, blockchain projects that solve a major problem uniquely will see higher demand, boosting the tradable value of their token.

6. Find people you can trust.

True, you may have a lot on your plate and may not always have the time to review each project thoroughly. If that is the case, it should not be done at your expense.

Following trusted people in the cryptocurrency space will be beneficial. These should be seasoned professionals with a thorough understanding of the ecosystem and provide sound advice. It will save you from sitting in front of the computer for hours analyzing a project.

Read: Three (3) Points To Consider For Creatives Trying To Break Into The NFT Industry

7. Keep up to date with the token’s project announcements.

When your money is on the line, you don’t want to invest in a token and then fall asleep. As a result, it’s good to keep up with the project on various social media platforms. These channels will keep you up to date with the most recent announcements.

There’s also a Bitcoin Talk Forum and several other forums where most projects post announcements. And, because anyone can comment, you’ll get a sense of how people feel about the news. It’s also a good time to use the Forum to ask any questions you might have.

Find Out: What Is Bitcoin And Why Should You Care? A Beginner’s Guide To Investing

8. Timing is everything.

It’s all about the timing. It may be last on the list, but it’s just as important because the best time to invest can have a significant impact on your return on investment. As a result, given the bear and bull markets, you must determine when is the best time to invest in cryptocurrencies.

At this time, it is possible to say that the market is booming in general. The same logic applies to determining whether the ICO industry is booming.

Analyzing any crypto token is a difficult task. However, keeping these pointers in mind will help you choose coins that will stand the test of time and yield huge profits in the short and long term.


Leave a Comment