How to Analyze a New Crypto Project Before Investing

Cryptocurrency has no meaning to me the first time I heard about it. The crowd around me discussed Bitcoin, Ethereum and other coins. Others claimed that they earned by far a lot of money by it. Other people claimed to have lost all. I grew to be interested.

I was wondering how this thing has been functioning and how individuals earn money out of them. Among the first few things was that prior to investing your money in any crypto project, you ought to do your research concerning the project. Otherwise you can regret it.

I have witnessed how most people in Nigeria, even my close friends, have jumped in the presumably easy money crypto projects thinking they would get rich overnight. Even borrowed money was taken to invest in a coin that the people never understood. I was doing it as well. I have once got into a Telegram group in which they were discussing a new coin. I did not know a lot, yet they told me that the coin would reach the moon. I invest my money.

A couple of weeks later the project vanished. The web site went down. The group on Telegram was removed. I lost my "cash". On that day, I shed tears. However, it gave me a lesson: not studying a crypto project can cost me all my money. Now each time I see a new crypto project, I do not rush. I question. I am thorough. There are a lot of things that I look at before making the decision whether to invest or not. Now I want to tell you what I do at present that you might benefit also by my experience.

The first one is that I endeavor to learn about the project. What is the purpose it is attempting to address? Is it a reality story or a sugar coated one? As an example, when the project claims that it aims to assist farmers to track their produce using the blockchain, I say: How? I will see whether it is objective. Unless I am able to describe how the project works in simple terms, then I do not invest. There are those projects which utilize big grammar to mislead the people. However, I no longer am fooled by that.

Next, I check the force behind the project. What are the individuals who came up with it? Do they display their true names and photos? Is there an account in LinkedIn? What was done by them previously? I become concerned when I do not find the presence of actual people, or their account is fake or has no content.

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There was once an occasion when I as an observer spotted a project and the supposed CEO of the project had used a stole photo of a model based in the US. I would not have known had I not material checked. The minute I spotted that I gave up on the project. When the team is concealing their identity they most likely plan to escape.

The other thing that I have started verifying is the whitepaper. The whitepaper resembles the detailed description of the project. It reveals how the coin will operate, what the project aims at doing, how they will utilise the sum they get, etc. My reading is leisurely.

In some cases, I do not comprehend everything, but I attempt. When the whitesheet is way too brief or filled with spelling errors, or resembles a copy-paste job, I avoid it. It is going to be a serious project when it comes to writing a good whitepaper.

The other thing I also look at is whether the project being touted has a working product or only an idea. A lot of crypto projects are mere fantasies. They lack an app, an effective web-site, or anything tangible. I now attempt to become a user of the product. As an example, in case they claim that they are having a wallet, I download it and test it. When we see that nothing goes, I get to understand that they are not ready and I do not invest my money there.

The main lesson that I have learned is to review the tokenomics. This implies the distribution of the coin or token. What is the number of tokens in total, I query? Who owns much of it? In case the team itself is in possession of a massive share of the token, it can simply sell and crash the price. I do not go into projects in which the majority of the token is concentrated on the hands of a small number of people. I also verify whether the token is required in the project or it is simply there to obtain money of people.

I never fail to verify whether the smart contract is audited or not. The project is functioning with the help of a smart contract. In case of application error in the code, the hackers might also steal the money. Those who have a good project will pay a professional company to audit their smart contract and post the outcome. I get wary when I do not see any form of audit.

The other thing I have done is to look up the community. I use the Telegram, Twitter (X), or Discord chat. I monitor other individuals as they speak. Are the group an excessive hype and talk? Or do they discuss it in reality? Are the admins here to answer questions or they get banned them because they asked too many questions? When the group just talks about buying now and did not miss the opportunity I know the project is no serious. Real projects allow questions and feedbacks.

In some cases, I make sure the project has collaboration with known firms. The fact that crypto venture is collaborating with a real bank, a tech corporation, or a large crypto trading platform indicates that they are more credible.

Yet, I also ensure that the partnerships are genuine. A project once lied that they were collaborating with Binance yet this was not the case. I visited the web of Binance, and there was nothing about them. so, I did not invest.

Another thing I attempt to do is verify that the coin is on a major exchange such as Binance, Coinbase, or KuCoin. When it is not there yet, I can say: is it on the plans to list? The fact that the coin is exclusively on unverified sites or “DEX” where no one uses it, does not make me feel safe. My most terrible loss was through one of the tokens that I bought in a site which I had never applied before. It had a good price but I was not able to sell it afterwards. It was a lesson hard learnt.

I also question myself; before I spend my money; is this something I do believe in or do I just want profit? I realized that whenever I lost money most of the time, all I was thinking of was a quick money. I was avaricious. However, I now only put my money in those projects which I am confident in. Unless I shall be proud to tell a person about

People should not also invest in one or put all their money in a project, I also advise. I did it and I paid with pains. These days I will put into a project only what I can lose even after I like the project. To me, crypto is a risky business. Maybe if it works, that is OK. In case I fail, there will be no crying on a daily basis.

Finally, it is extremely essential to analyze a new crypto project prior making an investment. I used to err a lot. I lost funds. I did not resist hype. I took unrealistic promises. Now I am slow about it. I do inquiry. I am a researcher. I observe the development of the project. I consult with fellow investors.

All this helps me not to become a victim of a scam and to make better decisions. Make sure not to make a bad investment in a new crypto project when you plan to do it as it harms much more. Don’t rush. Never Mind Crowd. Use your eyes, your brain and your heart. That is the way that I am doing it now - and it is helping me to stay safe.