We often hear “do your own research” from crypto enthusiasts talking about promising projects. It became a substitute for financial advice allowing experts to abstain from actually providing any tips to not be blamed for any misfortune their listeners and followers may experience due to using their words to make investment decisions. While a little bit disingenuous, it carries a piece of very important advice to learn about any asset as much as possible.
How can you conduct your research? Here are several tips.
Read the whitepaper
It is crucial to understand the technology and purpose driving a project you are interested in. While many bloggers and tiktokers will try to sell you on the next “mooning” coin, you should remember that any information transmitted through third parties will be altered, intentionally or not. Reading the foundational statement of any project is a good way to learn more about it.
Test the utility
Most blockchain projects claim that they add more utility and solve unique problems in the world of finance. While you cannot test such claims when they are related to specific industries (for example, if a blockchain product aims to increase the efficiency of logistics), you can easily test the financial feasibility of any project by using it. Invest a small amount of money, and try it out. Decide for yourself after experiencing the product without any intermediaries.
Explore the history
Any project has founders and frontrunners. Make sure to check their credibility. It is not enough to have a page on LinkedIn to be a good developer and an even better manager. You should not believe no-names without any experience. Trusting them to build the next Bitcoin is a far reach that should not be the foundation of any financial advice.
Account for macroeconomic relations
We want to believe that crypto projects are very special and should not be affected by external factors, but they do. If an asset does not have any utility that can be used by the economy of real things and commodities, it may not be sustainable in the long run.