Crypto Trove

How To Do A Good Crypto Research As A Beginner ( Step-By-Step )



When it comes to crypto, doing your homework isn't just suggested—it's essential. With the crypto space bursting at the seams with thousands of coins and scams lurking around every corner, research is your best defense.

But how do you navigate this tangled web of projects, jargon, and FOMO-induced anxiety? Fear not, I've been there, and I've got your back.

In this section, we'll unpack the art of researching crypto. From deciphering complex terminology to sifting through endless projects, I'll walk you through the process step by step. So, buckle up and let's dive in!

Table of Contents

Do’s And Don’t Of Crypto Researching

Alright, let's break it down into bite-sized pieces:

Do’s Includes;

Step 1: Get your crypto vocab down. Understand the basics like blockchain, alt-coins, and DeFi. If you're not there yet, hit the books and maybe even dive into it’s whitepapers.

Step 2: Once you've got familiar, it's time to hit the crypto project. Read, watch, and fact-check like there's no tomorrow. Oh, and don't forget to size up the competition—compare your chosen crypto with its rivals.

Step 3: Look for the flaws, not just the shiny bits. Is adoption lacking? Is the tech incomplete? Drill down into the nitty-gritty. Look at what's wrong with the coin you're looking at and understand its weaknesses, not just the strengths that the weird minions tell you about all the time.

Does it lack adoption? How long will that adoption take to come? What are the barriers regarding that?

Is the technical protocol incomplete? What are the plans regarding that? How long will it take to have a version that fulfills the project's goals?

Is it decentralized? If not, is there a plan to make it so? When will that plan be complete and what will the protocol sacrifice in order to get there?

Is the project liquid? Will the developers lose interest if the price does not increase and move on to another project?

I find it's always best to consider the bad things about the project rather than the good things. It's easy to sell someone on the good of a project, and much harder to talk about the bad and how to fix that.

Step 4: When in doubt, Google it. Search for any whiffs of scammy business surrounding your crypto of interest. If something smells fishy, investigate further. Google “[insert coin name] scam” just to make sure nothing serious comes up. If you happen to find something that might indicate your researched crypto is a scam, make sure to get to the bottom of it.

Step 5: Sherlock Holmes mode: activate. Dig into the backgrounds of the development team. Are they real folks or just digital ghosts? Can you find them on social media? Are these real people? (Real photos, real posts, real connections, etc.)

Step 6: Scope out the community vibe. Are they genuine enthusiasts or just obsessed with price? Opt for the former. Do research on people who're already invested in the project.

Step 7: Last but not least, check the Nakamoto Coefficient to gauge decentralization levels. Because in the world of crypto, decentralization is king.

Don’ts Include;

#1: Don't fall for flashy YouTubers promising the moon with their hyped-up videos. They often pump up low-value coins, then bail once their viewers jump in, leaving everyone else holding the bag. It's a classic rinse-and-repeat cycle.

#2: Never rely on just one source when making investment decisions. Always cross-check information and take opinions with a grain of salt. Trust, but verify.

#3: Watch out for Pump and Dump schemes. They're like wolves in sheep's clothing, hyping up coins with promises of riches, only to leave investors high and dry when they cash out. Don't get caught in their web of deception.

#4: Don't ignore the numbers. Many newcomers make the mistake of banking on a coin's low price without considering its market cap potential. Check out resources like The Coin Perspective to crunch the numbers and make informed decisions.

Remember, in the crypto world, skepticism is your best friend. Stay vigilant, do your homework, and you'll be better equipped to navigate the murky waters of cryptocurrency.

How to Research Crypto?

When I first dipped my toes into crypto investing, I made a rookie mistake that cost me dearly—I didn't do my homework. Instead, I threw money at whatever coins seemed hot at the moment, hoping for a quick win. But as luck would have it, I ended up flushing away several thousand of my hard-earned dollars.

Since then, I've learned from my mistakes and taken matters into my own hands. I rolled up my sleeves and dove headfirst into researching over 100 cryptocurrencies and projects. It was a steep learning curve, but it taught me lessons about navigating the crypto market.

Now, I'm paying it forward by sharing my hard-earned knowledge with others. In this article, I'll walk you through a step-by-step guide to doing your own research and uncovering crypto gems. And the best part? You don't need any fancy degrees or specialized skills—just patience and a healthy dose of determination.

So, let's get started on your crypto journey together.

Start With the Basics

If you're new to crypto, it's wise to start with the big players like Bitcoin,Solana and Ethereum. Why? Because there's a wealth of free resources available online to help you learn the ropes.

So, where to begin? I recommend diving into Satoshi Nakamoto's original Bitcoin Whitepaper. It's like the crypto bible, offering insights into the fundamentals of Bitcoin. You can skip the technical bits if they're not your thing, but soak up everything else to grasp the basics of Bitcoin and blockchain tech.

By doing this, you'll gain a solid understanding of concepts like wallets, addresses, private and public keys, and how transactions work on the Bitcoin blockchain.

Once you feel comfortable and have some experience under your belt (don't forget to try buying and selling small amounts), you can start exploring smaller projects in the crypto space. Just remember, Rome wasn't built in a day—take your time, absorb the knowledge, and enjoy the journey.

Direct Project Information Gathering

Navigating the world of smaller cryptocurrencies can feel like diving into the unknown. With less information readily available, thorough research becomes your best friend. Here's how I approach it:

  1. Start with the basics: Check out the project's website and whitepaper. Look for signs of legitimacy, like clear contact info and updated content. And keep an eye out for broken links or sketchy grammar.


  1. Understand the project: Get a knowledge on what the crypto project is about and the industry it's targeting. Ask yourself if it's addressing a real need or just hopping on the blockchain bandwagon.


  1. Dig deeper: Figure out exactly what problem the project aims to solve and whether blockchain tech is the right solution. Conduct a SWOT analysis to weigh the pros and cons.


  1. Assess the coin's use case: Make sure the cryptocurrency has a real purpose beyond speculation. If it's just a fancy token with no utility, it's probably not worth your investment.


  1. Investigate the token: Look into details like token type, total supply, and distribution. Keep an eye out for pre-sales or whale accumulation that could skew the market.


  1. Check the consensus algorithm: Decentralization is key in blockchain, so make sure the project's algorithm reflects that. The more decentralized, the better.


  1. Research the team: Dive into the backgrounds of the people behind the project. Look beyond the website bios and see if you can find them on LinkedIn or Twitter.


  1. Review the roadmap: See what the project has planned and whether it seems realistic. Delays are common in software development, but consistent missed milestones could be a red flag.


  1. Consider strategic partners: Established partnerships can add credibility to a project. Look for quality over quantity and verify partnerships through external sources.

Remember, it's okay if you can't find every detail. Trustworthy projects are transparent about their goals and progress. So, the more information you can find, the better.

Indirect Research Strategies

Once you've delved into the specifics of a crypto project, it's time to zoom out and look at the bigger picture. Here's how to take your research to the next level:

  1. Scope out the competition: Look into other projects in the same industry to understand how your chosen crypto stacks up. Analyze differences and track records to gauge competitive advantage.


  1. Seek external insights: Don't rely solely on developer info. Explore news sites, analyst reports, and community discussions for a well-rounded perspective. Hunt for any red flags like past hacks or team departures.


  1. Tap into social media: Dive into the project's social channels to assess activity levels and community sentiment. A positive, engaged community is a good sign, but stay level-headed amidst the hype.


  1. Peek at Github: If the project claims to be open source, check out its Github page. Look for regular contributions and recent updates to gauge developer activity.

By casting a wide net and gathering insights from various sources, you'll paint a clearer picture of the crypto project you're researching. And remember, a balanced approach and a calm mindset are key to making informed decisions in the volatile world of cryptocurrency.

Also read; How to Yield Farm In DeFi 

Research Upcoming Events

Keeping an eye on upcoming events can provide valuable insights into the short-term movements of a cryptocurrency or the overall market. Understanding how similar events have influenced prices in the past can enhance the usefulness of this data.

For instance, events like a Bitcoin halving can significantly impact BTC's price and the broader market. As Bitcoin becomes scarcer, its value tends to rise, attracting new investors to the crypto space. This influx of capital often spills over into other digital assets, benefiting various altcoins.

To stay informed about upcoming events, consider using a crypto calendar app like CoinMarketCal. Such tools offer valuable data on events affecting specific coins, empowering you to anticipate and respond to potential market shifts effectively.

Project Trading Market Research

So, you've got your eye on a potential crypto gem, but before you dive in, it's crucial to check the financial aspects. Here's what to watch out for:

  1. Buying options: Figure out how and where you can purchase the project's token or cryptocurrency. Is it available on reputable exchanges, or do you need to navigate through less secure methods? Be wary of locking your funds in ICOs or dealing with tokens on small, illiquid exchanges.


  1. Market cap matters: Take a peek at the project's market cap. A small market cap makes the price susceptible to manipulation, inviting pump and dump schemes that could leave you at a loss.


  1. Wallet support: Check if the currency is supported by hardware wallets like Ledger or Trezor. While established cryptocurrencies usually enjoy this support, smaller projects might require you to use dedicated wallets or keep your coins on exchanges—each option comes with its own risks.

By considering these trading factors, you'll ensure that your potential crypto gem shines bright without any hidden flaws.

Now that you've gathered a wealth of information, it's time to sift through and evaluate it all.

Here's how to approach the task:

- Consider the source: Not all information carries the same weight. While a press release holds credibility, a random Reddit comment may not. Be discerning in assessing the reliability of each piece of data.

- Prioritize key details: Some information will be more crucial to your investment decision than others. Focus on aspects directly impacting the safety and potential of your investment, such as security breaches or planned developments.

- Organize your findings: Create a list with columns for positive and negative aspects of the crypto project. Summarize each piece of data as a bullet point and place it in the appropriate column. This structured format allows for easy comparison and analysis.

By methodically assessing your findings, you'll uncover well-founded arguments for or against investing in the crypto project, guiding you toward an informed decision.

Bottom Line

Conducting thorough research on cryptocurrencies and projects is a time-consuming process, but it's essential for safeguarding your investments. While you might not cover every point outlined in this guide, aim to address as many as possible to mitigate risks.

Reflecting on my own experiences, I've learned the hard way that overlooking due diligence can lead to significant losses. Investing without ensuring a project's legitimacy cost me dearly in the past.

I hope you find this guide valuable in navigating the crypto landscape. Feel free to share your thoughts and questions in the comments. I'm here to help and discuss further if needed. Also read 

Also read; What are the core concepts of DeFi Business? Beginner’s Guide( Learning the DeFi Slang)

Disclaimer:This is not financial advice. Mentioning coins and tokens is not a recommendation to buy, sell, or participate in the associated network. We would like to encourage you to do your own research and invest at your own risk.