You’ve most probably heard that it’s absolutely essential to Do Your Own Research (DYOR), but what exactly does this entail?
When conducting research, your approach and mindset are critical, and while it’s very easy to approve of a project, a wholesome approach would be to consider potential investment opportunities with the intent of invalidating them. If the crypto project checks all the boxes and you find it difficult to dismiss it, chances are you’ve found a good one. Based on this, let’s find out the easy ways to compare cryptocurrency online.
Check Market Performance on Cryptocurrency Aggregators
To kick off, it is important to research the project using a cryptocurrency aggregator. CoinMarketCap and Coingecko are the two largest cryptocurrency aggregators. CMC is the more popular of the two, whereas CoinGecko is more suitable for smaller-cap cryptos.
These websites provide high-level information on cryptos, including trading history, current crypto standings, short descriptions of the projects, links to the project website, and social media links.
The project ranking provides a simple evaluation of its position in relation to all other cryptocurrencies.The Market Cap, which is derived by calculating the current price of the coin/token with the total number of coins/tokens in circulation, determines the project ranking. On a general note, how high the market capitalization of a token is greatly determines its level of risk and safety of that investment.
It is also crucial to differentiate between a project’s circulating supply and total supply. The circulating supply is the amount of coins/tokens that are currently in circulation, whereas the total supply is a fixed value representing the total number of coins/tokens that can ever exist.
When calculating a project’s circulating supply and total supply, Bitcoin is a good starting point. There are only 21 million Bitcoins in total supply, with approximately 19 million currently in circulation
For projects such as XRP (Ripple), which has a total supply of 100 billion and a circulating supply of around 47 million, the scarcity of Bitcoin coins is easily visible (thus the higher value for one Bitcoin). You can buy Ripple Australia through verified exchanges for very little transaction fees.
Compare their White Papers
White papers are documents created by cryptocurrency projects that provide investors with technical info, such as the concept, the roadmap, and how the project intends to grow and succeed.
The white papers for projects can provide perspective into the projects’ internal dynamics. Although many white papers could be highly technical, it is a significant data point in evaluating the project quality and the team behind it.
If no White Paper for a project exists, this is usually perceived as a red flag.
A well-defined and straightforward use case is essential for a project’s long-term sustainability and should be clearly outlined in their white papers.
Is the project addressing a critical issue? If you intend to invest in a project for the long term, the answer must be a resounding YES.
The success of a project is closely attributed to what its users will require (or want). Even as gaming and Metaverse projects may not appear to solve a significant problem, they do provide something that people desire. Whatever the niche or project, it must be able to solve a significant problem (or need).
Online Scam Reports on the Projects
There are numerous scams in crypto, and these scams are becoming extremely advanced, such as fraudulent contracts and rug pulls, which are difficult for the average investor to identify.
There are many free online tools that can help prevent these probable scams as well as provide supplementary (technical) analysis of the projects.
It’s up to an average crypto trader to run these security checks on projects before committing funds into them. Fortunately, information about projects on this issue are available for free online – one of the many benefits of the decentralization of the Blockchain.
Some of these tools are: ScamSniper, BSCheck, RugDoc, Token Sniffer etc.
Activeness of their Social Media Community
It’s probably been said before, but it’s worth repeating: No community, No future. It is the community’s support for the project that ensures its success!
The optimism and size of the community serve an important role in the project’s initial and sustained success.
The project’s Twitter account is the first to be visited. Twitter is a quick way to find out how socially involved the project is and what the most recent tweets are. The interaction between tweets is also worth noting. Another important indicator to take note of is the amount of Twitter followers the projects have.
Telegram and Discord are discussion platforms that can provide additional insight into the project, team, and community. Furthermore, platforms like Reddit are a valuable resource of ‘street knowledge’ on the projects that in normal circumstances won’t be available to the general public.
Bottom Line
It’s always a good idea to have a streamlined method for comparing cryptocurrencies online, and your method can be tweaked after a while. A systematic approach will help you avoid emotional buys and become a better statistically inclined investor.
Although every investor wants to get in on the next ‘Bitcoin,’ it is more pertinent that you buy into projects that are legitimate (if you intend holding long term) so that you can capitalize on the project’s success and growth over time.
For a fact, the skills required to assess and compare cryptocurrencies must be perfected and applied. If you intend to be active in the crypto space, this is likely one of the most important skills you can learn.
If you succeed, this could become a highly lucrative and profitable skill set in your crypto career.
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