With cryptocurrencies becoming mainstream these days, most people are looking at them as a potential for investments. Despite the growth, the decision to buy crypto is not to be taken lightly. So, before jumping into the crypto market, investors must do their research to stay safe without falling prey to fraudsters. Here are some of the mandatory checks to do before investing.
READ THROUGH WHITEPAPER
It is vital to know all the details, such as the underlying blockchain, what problem the crypto intends to solve, the coin’s progress, the tokenomics, and its competitors before investing in it. Investors can get all these details by reading through the whitepaper. It can help them better understand the project in which they will invest their hard-earned money to decide better.
KNOW WHO THE FOUNDERS ARE
Once investors know all the details about the project, the next step is understanding the people behind the particular project. Most of the information regarding the founders is already present in the whitepaper, but if that information is missing, it is a red flag.
Moreover, the profile of the founders are usually available on the project website. It is vital to ensure that the profiles are genuine. Investors should learn about the founder or founders’ background, experience in the field, and what crucial part they played in building the project.
SOCIAL MEDIA COMMUNITIES
Community plays a vital role in backing a particular cryptocurrency during market movements. So, investors should research the communities on social media networks such as Twitter, Discord, and Reddit of the crypto. An involved community indicates interest in the project. Besides, one can get regular updates regarding the project in these communities.
Tokenomics is the most vital part that helps investors understand cryptocurrency’s supply and demand characteristics. For instance, Bitcoin has a limited supply of tokens, while Ethereum has an unlimited supply of tokens. So before investing in any of the cryptos, it is important to know about the project’s tokenomics. Try to know about the details such as, the vesting period and whether the project has locked some supply for its founders or not. It will help you better understand whether to invest or not in that particular token.
(The article is written by Edul Patel, CEO and Co-founder of Mudrex)
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