Cryptocurrency has become a ‘gold mine’ investment for people all around the world. For years now, people have turned all their attention to the cryptocurrency space and are reaping great rewards from it. The growing number of success stories has made cryptocurrency increasingly attractive to many people.
However, the crypto space can be challenging for beginners to grasp. One of the basic pieces of advice that people give to beginners is to ‘do your own research’ (DYOR). This advice leaves some beginners more confused as most don’t even know where to start. To help you out, here is the ultimate due diligence guide for every beginner in the crypto space:
What Are The Laws Guarding Crypto In Your Locale?
Before you start doing any measure research around any cryptocurrency, it’s pertinent that you first find out the laws regulating crypto in your locality. This will help you know exactly what to expect when you go fully immerse yourself into the crypto space. If you’re in a country like the United States or Canada, you can find useful information about the laws guarding cryptocurrency on the Netcoins blog. Knowing all these will guide you as you navigate your crypto journey.
What About The Team Of Creators?
If you want to find out about any cryptocurrency, one of the first things you should check out is the team involved in the creation of the cryptocurrency. The reason you should check this out is simple—the cryptocurrency can’t perform better than the potential of the team behind its creation. If they have something to offer individually, then it’s likely the cryptocurrency will fare well in the future. If you check and fail to find a clearly defined team behind the currency, that’s a huge red flag that you shouldn’t ignore. You should be wary about an unknown team.
Also, you can check the website of cryptocurrency as you would regularly find the team members listed there. If you can’t find the team members properly introduced, you can check on LinkedIn using the company name to make more targeted searches.
What Are The Risks Involved?
One of the ways you can make the right decisions when it comes to cryptocurrency is that you must consider the risks involved. This will help you think for yourself as a beginner. Take your time to carefully go through all of the information you can find online. Go through the white paper and also check out what experts are saying about the project. This will help you ascertain the risk involved in the project and also know how much you are willing to commit to it.
What About Adoption?
If you’re looking at the prospects of a cryptocurrency, you should consider the adoption rate of the currency. This refers to how accepted the cryptocurrency is. Here are some things that indicate that a currency is generally accepted around the world:
- The number of applications built on the protocol
- The percentage staked
- The value of the cryptocurrency locked
- The number of wallet users on the project
- GitHub contributions to the project
- Social media figures from sites like Reddit, Discord, Twitter, and many others
What Is The Competitive Landscape?
One thing that makes cryptocurrency-related investments very daunting for a beginner is the vastness of the space. Narrowing down your preference can greatly help you get some leverage. If, for example, you decide to focus on cryptos from gaming projects, it helps you make better decisions.
With that in mind, if you’re focusing on a space within crypto, you should look into the competitive landscape. This would include the top five projects in that space. Focus on them as they would be the ones to boom soon. One of the ways to know the best projects in a space is to check their consistency during your research. For instance, a consistent platform would pop up repeatedly as you do your research.
How Do You Research The Price Predictions?
This is one of the most important things that you must do. If you want to do a deep dive research on a coin, the price prediction would most likely be your endpoint. The question that should be answered here is simple. Aside from looking through charts and other data representation, you should ask these questions about the market value of the project: What do you think it’s worth? How would its worth compare to other projects out there? These questions will help you in making decisions about buying into a project or not.
Conclusion
A deep dive analysis into various cryptocurrencies is usually a challenging task to undertake. But if you follow this guide, you’re surely on your way to making the right decisions after a process of due diligence.
