Posted on

Investing like a pro: how to do your own research in crypto

This rarity imbues BTC with significant value, particularly as a store of wealth. Here, we break down four baseline factors to consider when looking to buy a coin, token, NFT, or any other stakes in a crypto project. Of course, that doesn’t mean that anyone who hypes up their project is a scammer. If the project is legitimate but weak, it might fail to deliver either way. They engage in aggressive marketing called shilling, which is meant to excite you.

do your own research crypto

The process involves scrutinizing various facets of a project, from its team and strategic partnerships to its tokenomics and value proposition. It’s just as important to assess the project’s technology, scalability, community involvement, and possible competition. These platforms also allow for real-time communication with voice, video, or text, meaning you can have more direct access to experts or members of a project team while doing your research. Formerly known as Twitter, X is often first and fast with crypto-related news and information. Whether it’s listing new coins, unveiling a new project, or updating an existing blockchain, X is where most of the news breaks. Producing BTC demands substantial energy and computational power, and its total supply is limited.

Related articles

BitVM, or Bitcoin Virtual Machine, is a proposed system described in a whitepaper by Robin Linus that allow… Leased Proof of Stake (LPoS) is a consensus mechanism that allows cryptocurrency holders to lease their coi… Most blockchains record all transactions publicly, and anyone can view them using block explorers. On-chain data aggregators such as Glassnode and IntoTheBlock can also help reveal additional information about asset metrics.

Many scam projects can be hard to spot at first, and it’s not uncommon to see new or inexperienced traders lose significant assets because they were drawn in by marketing tactics. On the other hand, when a cryptocurrency’s stock-to-flow ratio increases, so does its value. A high stock-to-flow ratio, such as Bitcoin’s 59, indicates extreme relative scarcity, meaning that prices will most likely rise in the future. Gauging the general mood of a community can also give you a fair idea of the prevailing sentiment toward a specific cryptocurrency or the market in general.

Know team supporting the project

You can also use the traditional SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis to find the project’s strengths and weaknesses. Piling on a lot of trendy terminology doesn’t necessarily mean the project is promising. DYOR (Do Your Own Research) is a buzzword in the crypto world that means doing your own research and analysis of crypto projects. For anyone eager to join the market, it is crucial to learn about how to do your own research.In this article, we will explain why DYOR is so important and how to do your own research. A liquidity pool is a collection of digital assets or tokens supplied by platform users and locked in a smart contract to facilitate faster transactions. If you don’t do your own research as an investor, you risk trusting an unverified source and losing all of your capital.

do your own research crypto

In 2023, the cryptocurrency market saw a dramatic upturn in institutional players, indicating a major change in market conditions. The acronym of Do Your Own Research — encouraging investors to complete due diligence into a project before investing. When you DYOR and find a project that’s received this sort of funding, it’s generally not a bad idea to further research the project—along with its native cryptocurrency. Also, sometimes you’ll find that projects have received non-equity grants through accelerator programmes.

It’s wise to understand the asset’s features and how it fits into the current market ecosystem, as well as whether you think the project has advantages over its competitors. It’s equally important to research whether or not existing technologies would make this project’s technical foundation irrelevant in the near future. By embracing the DYOR ethos, you can understand an asset’s potential for growth.

Why Is There a Need for DYOR?

Let’s look at some of the main reasons that investors are advised to DYOR. So it’s important to know what sources can be trusted and which ones you should avoid. When purchasing any cryptocurrency, it is advised to decide on your own before investing, and not just because someone else has said it is worth it. DYOR is a commonly used phrase by crypto enthusiasts and as you might have already gathered it stands for Do Your Own Research.

  • If you find one without one, it doesn’t necessarily mean that it’s not worth investing in.
  • Furthermore, while S2F’s methodology centers on predicting an asset’s future price, it disregards critical elements such as demand dynamics and the impact of volatility.
  • A lot of people have lost money, and there are many more who have been scared away from the market because of that.
  • Projects that have received a large amount of institutional investment tend to be more reliable.A whale refers to the address that holds a large number of certain tokens.

You’ll start to identify any red flags, such as a lack of transparency, low liquidity, or weak security protocols, all of which can hurt your funds. And, you’ll grow as a trader through the knowledge gained simply by reading about a market participant. Examining the quality of a project’s partners can be a great way to figure out how promising their solution—and thus the potential value of its cryptocurrency—is. “Do your own research.” Or, simply, “DYOR.” It’s an acronym you see a lot in the crypto and overall investment space. The main reason for doing research is to practice responsible trading and disciplined thinking to minimize risk. It would be akin to gambling if one were to invest a lot of money in a product without knowing anything about it.

Additionally, joining such communities on platforms like Reddit, Telegram, or Discord can enrich your research. Uncovering insights about the team, developers, and any influential partners is a pivotal undertaking in gauging the potential success of a project. However, remember that while an elaborate website doesn’t automatically denote a legitimate project, it’s likely that legitimate projects will boast well-designed websites.

The term is also often used as a disclaimer when cryptocurrency traders and enthusiasts make public posts or share their market analyses on social media platforms. The first step in researching a crypto coin or token is to determine what you want to find out about it. Do you need a quick overview of the market, or do you need more in-depth information? If you want a quick overview, then CoinDesk and CoinTelegraph are good sources because they have an excellent guide to cryptocurrencies. If you want more in-depth information, then Bitcoin Magazine and the Bitcoin Talk Forum are good places to start.

It’s usually written by the developers of the project, and it can be very technical. Doing your own research allows you to make more informed decisions and plan your investments according to your own specific circumstances. One of the best practices you can do before jumping into crypto, or any investments is to do your own research and make more informed decisions. It can be easy to get confused or even intimidated by all the different coins, tokens, and jargons out there. Some even have professional analysts and advisors who can offer tips on investing, trading, and using cryptocurrencies safely and effectively. Most are good sources of information and can help you better understand market dynamics, technical aspects, and the social and regulatory implications of cryptocurrencies.

These can outline how the project’s tokens will be distributed and what incentives exist to reward the community’s activity. Tokenomics can also feature compelling details such as founder and team vesting. Shilling is a common practice in cryptocurrency where people tend to advertise the coins that they own in hopes of positively affecting the price. Quite often, dyor meaning it can be difficult to distinguish the difference between a shill or an unbiased post. When purchasing any cryptocurrency, it is advised to make the decision on your own before investing, and not just because someone else has said it is worth it. It is important for investors to clearly distinguish between a shill and the authentic momentum of a project.

A Sybil attack is an attempt by malicious actors to gain influence over a network through an onslaught of fake identities. This type of attack can apply to a few areas of crypto, but in this example, we’ll focus on how it could sway investor decisions. But many of these so-called experts are simply shills, who often have their own motives for discussing, or indirectly promoting, a certain digital asset. Cryptocurrencies, and topics related to cryptocurrencies, can get very technical and be complex to understand. Investing fixed dollar amounts over regular periods of time regardless of the price of the asset. A cryptocurrency created by the pseudonymous developer(s) Satoshi Nakamoto.

It goes without saying, doing your own research is important to do before proceeding into any investment endeavors, not just cryptocurrencies. To help protect you from this kind of cryptocurrency scams, try some free tools that you can use like Scamsnipper, BSCheck, or RugDoc. Now this can be easier said than done, especially if you’re someone new to crypto or investing in general.

Asset price, market capitalization, circulating supply, total supply, daily active users, token holder distribution, and 24-hour trading volume can all provide great insights. By researching these numbers, you can evaluate other investors’ and users’ activity over time. You can also combine these with elements such as roadmap milestones and marketing plans to get a broader perspective.