The sole interest of investors trooping into the crypto space is to make profits. History has shown that investing in crypto is a profitable business, especially when you consider the return on investment generated by successful crypto projects. However, it is crucial to also mention that regardless of the promise of success, allocating funds to crypto projects has its risks. And since the crypto space is an emerging market and a breeding ground for startups, the risk factor is quite high.
Hence, there is a need for crypto investors to diligently analyze the myriad of projects springing up in this space before allocating their funds to one. This approach is the only way investors can minimize the risks of doing business in the crypto industry. So, the question is: What are the fundamentals of identifying profitable crypto projects?
In this guide, you will find answers to this burning question and facts to back them up.
Research the Project
It will amaze you the number of irrelevant projects finding their way to the crypto industry. A large percentage of startups will cook up a coin with little to no utility, disguise it as the next big thing, and invite investors to throw money at it. More alarming is the fact that a majority of investors are guilty of relying on luck, rather than taking the time to do quality research. For investors that are serious about increasing their success rates, they must identify the true purpose of the coin and the problem it is tackling. From there, it is easy to determine its prospects.
To identify the use case of a crypto project, an investor must dissect its whitepaper and see through all the technicalities that might hide its flaws. In essence, you must ensure that you do not get carried away with the fluffs that startups commonly use to distract investors from the vital information. Focus on the functionalities of the solution and dig out the key points that will help you make an informed decision.
Track the Progress of The Project
From what we have learned so far from the ICO hype of 2017, investors must allocate their funds to startups with working products. Do not make the mistake of subjecting your time and money to crypto firms that have nothing to offer apart from their well-detailed plan.
A serious startup should at least have a prototype or a proof that the company had done an in-depth investigation on its target market. The result gathered from analyzing the product should feature in your decision-making process.
By investing in any start-up you have to be sure that their team is able to spread words about a project widely. Even if they will create the best quality project, but fail to PR and market it, then everything was meaningless, and you will not get your returns. Regarding BTC Peers research there are at least 146 English crypto news resources. And words about a project should be published at least somewhere, but preferably on the top 30 ones.
Nonetheless, some firms are yet to implement their designs but are no less promising. If you must give these startups a trial, you should track its road map, and ensure that the team is committed to what it has started. You can judge the commitment level of a team by checking its success rate at releasing updates and meeting deadlines.
However, you should verify that there exists an architecture for the product that the team is executing.
Rely on Information Disseminating Channels That Focus on Crypto Investments
While nothing beats personal research, it is advantageous to consider the sentiments emanating from the crypto community and investment experts. Doing this will help you cover every possibility, as you might have missed one or two details that could serve as insights on the viability or flaws of the project. We have various channels dedicated to informing investors about the prospects of ICOs, IEOs, and STOs. That said, you should verify the authenticity of a channel and its track record before relying on it for investment advice.
A good way to start is to do a quick research on the top telegram channels for crypto investment tidbits. Some of these channels, like ICO Speaks, interview the team behind featured projects, which brings investors closer to the developers. Another benefit of joining such groups is that they give you insights into the perception of the crypto community. As such, you can access first-hand sentiments of fellow investors and utilize it in your research.
Analyze the Target Market
With over 5,000 projects released through the popular ICO funding mechanism, and the growing number of projects capitalizing on the buzzing IEO, there are enough case studies accessible to investors. All you need do is review products that have similar functionalities with the one you are considering and check for telling signs. You could verify whether the target market has an affinity for existing crypto projects. If this is not the case, chances are that the product will have a hard time establishing its viability.
Secondly, you can quickly identify the relevance of a product by comparing its functionalities with established projects. With this, it becomes easy to determine the innovative capacity of the product under analysis. This assertion is more potent for crypto projects targeting saturated markets.
For example, Dreamr creating a new age social network that is targeted not on feeding users with content, but empowering their dreams.
Check for Partnerships
Partnership and adoption are buzzwords in the crypto space. Therefore, every startup is looking to close deals that will keep them in the headlines. Although sealing partnerships suggest that the project is making strides, yet you should not base your decisions solely on them. Most of the partnerships publicized in the space add little or no value to the businesses of crypto startups. Hence, you should analyze the duration of the partnership, the exposure that it gives the project, and the main entity benefitting from it.
No one said that investing in crypto is an easy task. Just as it is with other markets, you have to do extensive work to find the gems. This will entail that when you research projects, ask questions, find the obscured truth, and swiftly make decisions. Herein lies the responsibilities of every crypto investor.