There are opportunities far and wide in the crypto markets in 2025, but with these opportunities come risks. With thousands of projects being launched every year, it is important to make sure that you conduct thorough research into any project you are considering investing in.
Through researching a project, any investor can distinguish between a promising project and a potential scam. In todays blog we will walk you through the key factors to consider before making an investment in any crypto project.
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What problem does the project solve?
Every successful cryptocurrency has one thing in common. They all address a real-world problem and provide a solution. When looking at a new project ask yourself the following questions;
– What problem does this cryptocurrency aim to solve?
– Is there a way for this problem to have a blockchain based solution?
– Does the project have any competition? If so, how is it different from its competitors?
Every project needs a clear value and a practical use and application. Without these, the projects chances of succeeding are greatly reduced in the long-term.
Always read the whitepaper.
A whitepaper is the backbone of all crypto projects. In the whitepaper the creator/creators of the crypto will outline the projects purpose, the technology behind the project, the tokenomics, the roadmap for the launch and future of the crypto and just as importantly, details about the team that are involved.
A good whitepaper should contain the following;
– A clear explanation of the projects vision and purpose.
– Provide a technical breakdown of how the blockchain and how the technology within the crypto is used.
– Include detailed tokenomics, amount of supple and distribution mechanisms.
– A full list of all team members related to the project, including any advisors or partnerships.
One thing to always beware of when reading whitepapers is any projects with vague, overly technical whitepapers. Throwing a load of “buzzwords” into a paragraph doesn’t mean the project can deliver on anything that it is promising. Recently we have seen this a lot with the inclusion of A.I. (Artificial Intelligence).
Do your research on the team.
A crypto project can succeed of fail purely based on the team involved with it. Every project needs a team with the expertise and experience to drive the project forward and avoid making mistakes that can be the beginning of the end. When looking into the team you should always consider the following;
– Review the team members LinkedIn profiles to see their previous experience and other projects they may be credited for taking part in.
– Check if the person in question has any history of working within the blockchain, finance or tech industries.
– Ensure that the person has been involved in previously successful projects, or if they are associated with any scam projects.
– Make sure that the team is transparent and accessible to the community. Nothing says “red flag” like anonymous team members.
Analysing the tokenomics.
Tokenomics is simply the economic model behind the cryptocurrency. You can learn a lot from reading the details on a new project related to its tokenomics. When reading these you should looking out for the following information;
– Total supply and circulating supply: A high total supply with limited demand can quite easily lead to inflation.
– Utility: What is the primary use case of the token? What real-world problem is it hoping to address? Is there a need for it in the crypto eco-system?
– Distribution: Who is going to be holding the majority of the tokens? If there are likely to be a few wallets that will control a significant amount of the currency, it will be easier for the price of the token to be manipulated.
– Staking and rewards: Is the project going to offer incentives for holding and use of the token?
For a token to be successful in the long-term it needs to ensure that it is well balanced. This helps ensure long-term growth and sustainability.
Check out the projects socials.
When doing your research on a project, the social platforms of the project are always a great place to go and have a look around. A strong and engaged community is often the sign of a healthy project. Users being “banned” on their chosen platform for asking questions relating to the team or the project can often signal a bad team with worse intentions.
– Check all social media platforms like X (formerly Twitter), Reddit, Discord and Telegram.
– See how the developers of the project respond to community questions.
– Watch out for the signs of fake engagement or promotion.
A healthy project with have an organic feel to all discussions, with users constantly in contact with each other regarding the process and future of the cryptocurrency.
Has the project been audited?
Security is one of the most important talking points in the cryptocurrency world. Before investing in any project, check if it has undergone third-part security audits. Good, reliable projects will;
– Publish their audit reports from a reputable firm sick as CertiK, Quantstamp or Trail of Bits.
– Implement the best security practises possible to prevent hacks and exploits.
Watch out for the red flags.
There are often similar warning signs across projects that are not quite what they seem. Things you should look out for include;
– Unrealistic promises: Claiming high returns or a monthly share of profits are often scams.
– Anonymous team members: The lack of transparency with the community is a quick way to raise trust issues.
– Lack of a working product: A lot of scams “launch” while they are still developing the prototype and have nothing currently to show potential investors.
– Excessive “hype” or advertising: Marketing should be backed up by actual development progress that can be shown off to the community.
Crypto Analyst‘s Final Thoughts.
Investing in the crypto markets requires a person to put plenty of time into doing research. By carefully analysing a projects team, tokenomics and community you are then able to make an informed decision and minimise the risks of investing.
Make sure you are always doing your own research and not relying on someone else’s views on a project and ensure you never invest more than you can afford to lose.
Following the simple steps outlined above, you can increase your chances of investing in a good, healthy crypto project while avoid the scams and rug-pulls.