The crypto space has been constantly developing with new coins being launched on a regular basis. While Bitcoin and Ethereum are the most popular cryptocurrencies there are thousands of other coins that are flooding the market. At the time of writing, there are around 5,833 cryptocurrencies in 23,949 markets and a total market cap of ~$327 billion (Info: CoinMarketCap). There are a large number of media outlets and individuals who write articles and discuss cryptocurrency prices daily. With the passage of time, people have gradually taken interest in this space.
There are many people who still do not understand the concept of cryptocurrencies and end up buying Bitcoins or Ethereum based on recommendations or simply due to FOMO. People do not know much about the alternatives to Bitcoin or altcoins as they do not know where to look for their information or how to purchase them. In fact not all cryptocurrencies are listed on one particular exchange. Moreover, there are many scams that keep happening in this space. Especially because of the insufficient knowledge that people have. Many scammers develop fake cryptocurrencies for not so worthy blockchain projects. Investors put in their money in these projects in return for the unique coin/token for that project. Once these developers get the money, the project is discarded and the money of the investors is lost forever and the value of those coins/tokens gets reduced to zero.
It is crucial you research as much as you can about the asset you would like to invest in. Picking coins for investing is also a highly subjective matter. To ease your burden, this guide provides you with a list of things you need to consider before investing in any cryptocurrency.
Questions You Must Ask
You might come across a new coin or wish to learn more about a coin that has been on the news for some announcements or price movement. It is very important for you to know about the history of the coin — its founders and development team, the characteristics of the coin and why it was created, the project and technology associated with it, the vision of the founder (can be understood through the whitepaper), the value you give to the coin, its uses on a daily/weekly/monthly basis, investors backing it, its presence on social media and the project website. These are some of the standard questions people must ask when they are interested in a cryptocurrency.
For example, you must ask yourself how is Bitcoin different from Monero or how is Ethereum different from EOS. DO NOT blindly buy a coin simply because your friends are buying it or because some report on that coin suggests that its price will rise in the long term. Always conduct your own due diligence. It helps a lot. Let us now talk about the resources where you could find your answers.
Resources for Information
The most commonly visited and coherent site to look at is CoinMarketCap. It consists of a list of almost all the cryptocurrencies that are present in the market. Alongside tracking the price of each cryptocurrency, the website also mentions the circulating supply of the coin and its price action in the past 24 hours. But this is not it.
The website mentions the rank of the coin based on its market capitalization.
An alternative for CoinMarketCap is CoinGecko. It is one of the largest and earliest crypto data aggregators, operating since early 2014 and currently tracks nearly 7728 tokens from more than 374 cryptocurrency exchanges. In addition to the information provided on CoinMarketCap, CoinGecko also provides fundamental analysis for cryptocurrencies. This could be helpful to the beginners in this space.
All the information that will be gathered from the resources will help you decide if the cryptocurrency has a competitive advantage over other cryptocurrencies that have a similar vision. It is imperative that the coin you are interested in is scalable, secured, and less controversial. This will help the network of the project and hence the value of the cryptocurrency grows.
Clicking on any cryptocurrency opens a new page that has got more information about it. Clicking on Bitcoin gives us the following webpage.
These price-tracking websites also give a brief introduction of the coin and and the relevant links related to a cryptocurrency project. As seen in the image, there are lots of resources available for a cryptocurrency. Let us take a look at them one by one.
The official website link takes you to the official page for that cryptocurrency and the blockchain project (if any) it is associated with. This website could provide you with information about the team and its developers, their goals, use of the project and a lot more. In case the official website link is not available or the website is incomplete/has grammatical errors/does not have a blog section to inform its investors, etc. this means that the founders are not serious about their project and it would not be a wise decision for you to invest in it. Moreover, it is important for you to look at the educational qualification and the experience of the team that is behind the project. Many people do not prefer investing in projects created by inexperienced developers.
Check for the transparency of the project. How much information do they share with the public. Are there means to access the information or speak to someone who works on building a community for the project. Take a look at the investors of that project and their partnerships. Big names usually imply that the project is legitimate and has got support in the community.
The Explorer link provides you with interesting analytics about the blockchain associated with the project. This includes but is not limited to data on the hash rate, price, block height, transactions and a lot more. This helps users understand how active the network is and estimate the liquidity as every investor would prefer to invest in an asset that has got high liquidity.
While for Bitcoin it is a Message Board that directly connects users to another discussion forum i.e Bitcoin Forum — Index where people discuss their views on the crypto and everything related to it. Bitcoin Forum — Index not only provides a platform to people to discuss Bitcoin, it is used as a community space for people from different countries to discuss in their own country groups or in separate groups for specific altcoins. Some cryptocurrencies have their own discussion channels on Telegram too.
There are various other platforms that could be used to communicate with traders and crypto enthusiasts. You could find such groups on Telegram, Discord and Reddit. Traders and Blockchain enthusiasts have created various channels on these platforms to share latest news and their thoughts about various cryptocurrencies. You may ask your doubts on these channels too. Since anyone can write on these platforms, users must very discreet and not trust anyone blindly. Unlike CoinDCX’s telegram channel which is monitored 24*7, many channels on these platforms are not. Beware of scammers too! Another suggestion is to be a part of those channels that have many members/subscribers. The most serious ones are going to be very active. For example, this channel on Bitcoin has got more than 1.5 million people where people discuss Bitcoin.
While the source code is for all the people who can understand the technicalities of the coin, it is not necessary for each and every individual to understand them. People can instead click on the technical documentation link to gain access to the whitepaper of that cryptocurrency. Whitepapers are usually easy to understand and must definitely be read as these are created by the team to give investors details of what their token will be used for, the economic model of the token, the technical details and more. Token economics is important to understand the purpose of the coin and how the cryptocurrency derives its value. How much of it will be supplied in the market, the limitations, whether it is inflationary, etc.
This page of CoinMarketCap acts as an aggregator of the social media content that has been posted related to that crypto, the on-chain analysis for the coin, the news articles that have been written by various media outlets and a lot more. Few media outlets you must follow are CoinDesk and Cointelegraph. CoinMarketCap is therefore a good place for people to begin learning about a cryptocurrency they are interested in.
For educational purposes, there are many Youtube channels that share information about cryptocurrencies and knowledge about Blockchain Technology. You can also take a look at CoinDCX’s Youtube Channel to learn about crypto trading and different concepts about cryptocurrencies.
Lastly and most importantly do check out CoinDCX’s academy — DCX Learn. We have launched a one stop platform for all cryptocurrency and trading enthusiasts to learn about topics ranging from cryptocurrency fundamentals and blockchain technology concepts to trading strategies and indicators used for them. We also provide interesting reports on the daily market activity and the impact of governments and companies in the blockchain space.
Doing your own research can be very tasking and rewarding at the same time. Investing money in cryptocurrencies is no joke. So, you must be glad that almost all the information is available in the websites mentioned in this article. There is always more to learn so keep exploring other places. Search for the basic content of the projects before moving on to Youtube and other platforms. Remember to ask questions and get your doubts cleared. Even if it makes you feel dumb. No question is stupid or illogical especially when you are investing money. After proper research has been conducted, follow the price charts and do some technical analysis before investing.