Guides to Cryptocurrency and Blockchain Investment
Beginner's Guide to Investment Best Practices
1. Read the White Paper
Read up the white paper of the project or product that you are interested in and study its idea, vision, development roadmap and strategy. A product and project that will become successful have a strong, professional business plan both short and long term consisting of at least a detailed work plan for the next 12-24 months. Investors generally look at the white paper of blockchain projects to decide if they should invest and grow the business, hence it is very important.
2. Research the Team
The most important consideration of a blockchain technology investment is to know the team who is leading the project. You may invest in a cryptocurrency or blockchain project that makes the most business sense in the world but it will fail if the team is not committed or is inefficient. A detailed white paper and website will contain information of the team. A good team will consist of a Decision Committee, R&D department, Marketing Department etc. with strong committed leaders instead of only a handful of staff running the show. Leaders and developers that have a history and resume of finishing their projects with success should obviously be favorably considered, especially if they have experience in blockchain development.
3. Invest in a Project with a Society Solution
A cryptocurrency or blockchain service that will solve an existing problem or fulfill a gap for the society is more likely a safer product for investment, since it will be difficult for a crypto project to be popular if there are many existing services (be it crypto or non-crypto) already serving the targeted group of consumers or purposes well.
4. Be Wary of Scams
Always remember that there are many crypto scams around. One way that helps in ruling out scams, is to research on the founder or top ranking leader of the crypto project. Founders and leaders with successful businesses will less likely create scam products to risk their existing well-to-do businesses and reputations. An example is Tron’s founder, Justin Sun, owns a successful app business in Peiwo before he founded Tron Blockchain.
5. Evaluate the Marketing Plan of the Project
A product that will become commercially successful needs a good marketing team, hence investors should put in time to evaluate the project marketing plan. Marketing efforts from the team will reveal their marketing commitments and expertise, go ahead to ensure that they have strong, positive social media presence, for example, Facebook, Twitter, Telegram, Reddit and best of all, regular news coverage. Even if a cryptocurrency is superior in technology, without decent marketing budget, plan and efforts, it will not be commercially successful.
6. Stay away from product with a Silent TeamA team who provides regular progress updates and reports is more likely to be doing more work to develop a product, as compared to one with a silent team. Majority of blockchain projects out there are scams and do not provide status updates. Do not take the chance, invest in a project with a team that is obviously working and progressing.
7. Evaluate its Business Partnership
Projects that have backing or partnership with big organizations, for example, American Express, Microsoft, banks, are good indicators of a product with bright future since big organizations will not invest in a project that they do not believe will succeed.
8. Research on its Scalability
Scalability is one of the key considerations for investors, since that is the toughest challenge most cryptocurrencies and blockchains in the market are facing. Ideally, the cryptocurrency and blockchain that you invest, should be able to scale sufficiently for global adoptions with fast transactions.
9. Analyze its Growth Potential
Investors look at cryptocurrency and blockchain projects that can grow, much more than those that have grown, became stagnant or have no development progress for ages. Invest in the future of a crypto product instead of investing in its present state.
10. Do Regular News Search & Visit Team's Social Media Pages
Visit the social media profiles (eg. Twitter, Telegram) of the founder or organization head and the product's official website to follow their development and marketing updates. Regularly search (eg. via Google search engine) for news of the product that you are interested in. Be mindful and vigilant while reading news, use common sense to identify fake news or messages. Search for more than 1 reputable news sites to confirm specific news of interests. If a founder or team leader suddenly makes a U-turn, started criticizing his own cryptocurrency and asking public to sell it, then it looks very suspicious to be coming from a hacked account which happened numerous times before. If there is no account hack, the regular comments and updates provided from these leaders are very valuable for investors to understand and know the potential/progress of the project.