Last Updated on October 13, 2022 by Bitfinsider
It is important to conduct independent research before putting money into any cryptocurrency project. Do Your Own Research (DYOR). You are going to hear it once more, even if you have already heard it.
To be a good cryptocurrency trader, the most important thing you can do is to devote sufficient time and energy to gaining an understanding of the cryptocurrencies in which you have invested. But things aren’t always as simple as they seem. You will find this guide to be of assistance to you throughout the process of conducting research.
Finding the best digital currency to invest in
People conduct their own research in cryptocurrency for a variety of reasons, the most important of which is to ensure that they invest their money wisely. This post will focus on how to conduct research in the most time- and effort-effective manner possible, despite the fact that we have already developed a straightforward and helpful guide that explains how to determine whether or not a cryptocurrency investment will be profitable.
To give you a better idea of how your study fits into the wider picture, when evaluating a potential investment in cryptocurrency, the most important factors to take into consideration are as follows:
- The Benefits and Possible Applications
- The Group or Community
- Its Members (developers, advisors, partners)
- Market Cap
- The Website, in Addition to the White Paper
- The Detailed Plan and Long-Term Vision for Trading Volume and Liquidity
- Comparing the Total Supply to the Circulating Supply
Identifying reliable resources from which to obtain information.
There is no point in devoting a significant amount of time to study if the information coming from your sources is inaccurate. Because everyone, including those who have no power, seems to have an opinion regarding crypto, it is essential to exercise discretion regarding who you listen to and who you take seriously in this space.
When analyzing a source, there are a few things to keep in mind:
Are they well-known in the sector where they operate? What can we infer about them based on their track record?
How significant of a fanbase do they have? If they have a sizable audience, there is a good possibility that the information they share is accurate because they have a lot to lose if they promote false information.
Is the website that you are currently reading a reliable and trustworthy source? Even if you limit yourself to the most well-known news websites, you still shouldn’t put too much stock in everything you read because advertisements are not a credible source of information.
Are you receiving compensation for listening to this person? Never make the assumption that advice you have to pay for is honest advice. Look for people who are forthright and honest about their own biases and ideas, as many crypto personalities are sponsored by exchanges or have investments in projects.
Is the person’s recommendation or point of view well-rounded? Do they present arguments from both sides of the issue? Things are rarely as black and white as they appear, and the greatest sources for information about cryptocurrencies will provide both the benefits and drawbacks of each given project.
Find out a variety of perspectives and arguments.
You will probably develop a few favorite Twitter and YouTube personalities over the course of time. Even while it’s a good thing to discover someone you can relate to and trust, you should be aware that collecting all of your information from a single source is a surefire method to make some poor choices regarding your investments. Nobody has access to ALL of the facts, and everybody makes mistakes every once in a while.
DYOR is all about utilizing a range of sources and methods (news, social media, Youtube, community forums, mainstream media, and so on) to extend your perspective. DYOR is an acronym for “do your own research.” When you expose yourself to a wider variety of points of view and sources of information, you will feel more capable of drawing your own conclusions about a subject. In the following, we provide a list of some of the top locations worldwide where traders of all levels can conduct research.
Research on one’s competitors
If there is already an existing project that is comparable but superior in some way, such as being more well-known or established, there may be little opportunity for your potential coin to thrive. There are often only a few industry leaders in any given utility, solution, or sector within an ecosystem. This is true even if numerous different initiatives have the potential to all achieve success at the same time by providing the same kinds of functions.
You should think about a cryptocurrency’s development team, track record, and history before investing in it because many companies speak a big game but have no actual product. Although there are many projects with promising technology, being the first-to-market is a huge benefit. When deciding whether or not to invest in a project, it is important to consider the value that the project adds to the ecosystem, as well as whether or not there is a genuine need for it and whether or not it has what it takes to overtake similar projects.
White paper and the official webpage
If you are considering making an investment, it is essential that you investigate the official website of the enterprise. Coins that have real potential for the future will undoubtedly have websites that are both functional and attractively constructed, despite the fact that it is now rather simple to create a website that appears to be reasonably convincing.
Additionally, information about the people that are driving this initiative should be freely shared on the website. Inadequate websites, misspelled words, and a lack of transparency around the team are all red flags that point to a questionable investment or an outright pump-and-dump operation.
In addition, the white paper that accompanies a coin ought to provide a full explanation of the project. The primary goal of white papers is to highlight the coin’s purpose, utility, future prospects, and underlying technology, which is something that all good projects will go into detail about. White papers can be quite technical for the average investor, which is something that they should be if they are legitimate.
Check out the hottest trends and the number of people searching for specific coins and exchanges.
Without a doubt, a technique that is neglected in bitcoin study. When it comes to doing an analysis of market sentiment, having an understanding of the amount of individuals searching for a particular subject can shed light on what is currently fashionable and likely to increase in value in the future.
Experiment with a variety of different search keywords to get a better idea of what is popular right now. Before putting money into something, people will typically conduct some research online first. If there has been a recent surge in demand for a cryptocurrency but the price has not yet experienced a significant increase, this could be a sign of things to come as the market continues its upward trend.
Conduct research about the developers
The people working behind the scenes who are going to be responsible for making things happen are called developers. It is possible to gain a lot of insight into a project’s potential for success by learning a lot about the people who are developing the project and serving as advisors.
Listed below are some questions that should be asked regarding the team:
- Are the people behind the project credible and well-known?
- What kind of results have they gotten with previous projects?
- How quick is the staff to respond when inquiries or concerns are raised?
- Is the team well-known to the general public?
- Do they already have a product that is fully functional? When is that anticipated to occur?
- Have they established the partnerships necessary to fulfill their commitments?
A significant portion of this research will be conducted through the official channels and website of a project; however, you can use social media and other community forums to determine whether or not there is a more in-depth conversation about any particular project.
Participate in cryptocurrency get-togethers and join a community.
Joining cryptocurrency groups is something that we feel strongly about. It is a wonderful opportunity to widen the scope of your studies, obtain some sound advice, meet others who share your interests, and keep up with all the most recent developments in the cryptocurrency industry.
It is also really helpful if you are uncertain about anything and want to get another view on it. You will unquestionably have an advantage over other traders who are attempting to conquer the world of cryptocurrency from the comfort of their bedrooms if you are able to locate a decent online or in-person community (there are some fantastic ones in Australia!).
You shouldn’t take everything you read at face value.
Especially in the world of cryptocurrency, not all pieces of advice are made equal. It’s important to remember that you shouldn’t automatically accept what you read as fact and that you shouldn’t act on any piece of advice or forecast that you come across on social media. There is a wealth of cryptocurrency trading advice available on the internet, the most of which consists of little more than false hype, coin hawking, and, in some instances, overt pump and dump operations.
However, keep in mind that a lot of these news items and overblown headlines are meant for the sole goal of generating traffic, excitement, controversies, and fear, uncertainty, and doubt (FUD). Major news sites also frequently broadcast material that is extremely unpleasant and dangerous (fear, uncertainty and doubt). Take everything with a grain of salt and make sure you have the opinion of knowledgeable people before making a decision. The media feeds off of outrage and controversies to stay in business.
DYOR is an ongoing and iterative process.
An ongoing examination and monitoring of a cryptocurrency project is a procedure that is currently underway. Investors need to stay informed about things such as project milestones, changes or additions to development teams, announcements and external threats from competing projects, or changes in the regulatory environment. Given how quickly things change in the world of cryptocurrency, investors need to stay informed about things such as these.
Staying current on the latest news and releases is essential for understanding why price swings occur and determining whether your coin is likely to pump or sink in the near future. This is especially true if you have invested in a cryptocurrency that is not as well-known as others.
Watch out for misleading information, frauds, and pretenders
The cardinal rule is that one should never put their faith in something that seems too wonderful to be true. Always be on the lookout for websites and material that could not be trustworthy. You will be able to get the knowledge necessary to trade crypto assets securely here.
Be patient & curious
Patience is a virtue. Especially when it comes to crypto. You should never be in a hurry to make an investment that you don’t fully comprehend, and you should be aware that there will always be another fantastic chance if you are willing to put the effort into learning about the cryptocurrency markets. Develop an interest in the projects that are being worked on as well as the technology and the area in general. It adds a great deal of excitement to the investigation process.
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Disclaimer: The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, legal, tax or other advice. Investing in or trading cryptocurrency or stocks comes with a risk of financial loss.