Investing in a new crypto project is exciting, but you should do your own research first. Advice from Dmitry Mishunin, founder and CEO of HashEx†
Investing in a crypto project can be very profitable, but you should never rule out losing your money due to mismanagement, a well-crafted cyber attack, or other factors. So if you want to get a good return on your investment and protect your money from potential losses, you should do your own research before investing in any crypto project.
Let’s take a look together at the list of things to check before putting your money into a crypto project.
Investment: the steps to follow to choose the right crypto project
1- Study the project website, whitepaper and roadmap
First, you need to have a clear idea of the crypto project’s usefulness, scope, and long-term goals and plans.
2- Search for project partners
During this step, you need to find the funds and investors who have supported the project. You can find this information on the platform’s website, but don’t forget to check it again. If the project is not supported by credible and reputable partners, you may need to move on.
3- Read security audits
Then learn more about the project’s Minimum Viable Product (MVP) and security audits. If the crypto project has already completed one or more audits of its product, you should have no problem finding this information. Normally, smart contract security auditors publish the audit reports on their websites. Links to these reports are usually available on official project websites.
It is also important to pay attention to the choice of listeners. The latter are indeed not all as professional as each other. If you see that the audit was performed by an unknown company, ask yourself questions. However, if the audit was performed by a reputable major auditor, that is rather a good sign.
4- Follow the project on social networks
Here you need to analyze the project community on Twitter: how big is it and are the members involved? Also try browsing the subscriber list and see if any influential people are following the project.
Then check the project’s Medium account. In this way you can consult the published articles to assess the level of professionalism and involvement of the project team.
If you see that the project’s community on Twitter is active and growing, and that the team regularly shares news on Medium, that’s a good sign.
5- Check if the project has an ambassador program
This type of program allows community members to become ambassadors for the project and promote its mission and image. If the crypto project has no intention of developing in the long run, it probably won’t bother setting up an ambassador program.
6- Check test nodes
Next, you need to check if the project has its own test nodes. This allows you to test the product more efficiently, their availability means that the project is serious.
7- Study the project team
Browse the accounts of the project’s top management on Linkedin and Twitter. Indeed, most good projects have transparent teams that do not hide their social networks. Check their previous work experiences and compare this information with what they do within the project.
8- Research Competitors
Find the project’s competitors and try to make a comparison with the crypto project you are studying. Try to identify the strengths and weaknesses. This will help you determine if the project offers enough benefits to choose it.
9- Analyze the distribution of tokens
Try to find information about the distribution of the project’s tokens: the allocation and the blocking period imposed on the team members, the amounts spent on each of the investment cycles, as well as the initial price of the token. You should also have an idea of the minimum lockout period, the type and the platforms on which the sale will take place.
10- Choose the right financing cycle
If you have already chosen your crypto project, you now need to determine which funding round you want to participate in. Try to find the right balance between the initial price and the investment amount.
11- Think about the risks
If you want to invest some of your capital and diversify your portfolio, you need to determine how much you are willing to spend on the crypto project in question. This requires you to think about your investment strategy.
Investment: final advice
Finally, know that it all depends on your preferences and needs. Therefore, you should always do your own research on the projects you want to invest in and try to do it very carefully. Also, try to take a step back and don’t get carried away by the marketing campaigns of crypto projects.
In this article, we have shared with you the essential steps to follow before investing in a crypto project. That said, spending time researching will give you a better understanding of the utility and value of the project you’re interested in.
Of course, use common sense, stay disciplined and keep your risk/reward strategy in mind when making all your investment decisions. Finally, remember that the long-term success of any investment depends largely on the discipline with which you apply your investment strategy.
About the author
Dmitry Mishunin is the founder and CEO of smart contract audit firm HashEx† He specializes in cybersecurity and security audits, as well as product development on Ethereum, Bitcoin and Binance blockchains. Since its launch, HashEx has conducted more than 500 audits on projects of various levels and has helped secure more than $5 billion in investor funds.
All information on our website is published in good faith and for general information purposes only. Any action the reader takes based on information on our website is entirely at their own risk.