How To Find The Gems
A Comprehensive Guide
In the crypto space, you have two types of retail investors: Those who wait to be spoon fed information, and those that grab their own spoons and feed themselves. The favor of the market has always rewarded those that have been willing to dig in and do their own research. Just a few hours of research can be the difference between you capitalizing on the opportunity of a lifetime or diving head first into financial ruin. The mission of this article is to put together a comprehensive guide that will help you on your hunt for the true gems of the industry.
Know Where To Find The Alpha
Research is not difficult. It's just a little time consuming. However, it’s well worth the effort when you think about the ROI that can come from making the right choice.
There is no shortage of projects to research. Almost everyday, a new altcoin or NFT launches. Some of these projects are fairly good as well. Obviously, you want to find the best.
The question is, where do you go to find the best projects?
There are a number of resources that I use when I’m searching for alpha. These include, but are not limited to:
ICO/IDO websites: ICO Drops
Social Sites: Twitter, Discord, Telegram
Exclusive Groups (unfortunately, most of these groups are members only): Wall Street Kongz, Metakey
Crypto Calendars: CoinMarketCal
This site and the EllioTrades YouTube Channel (shameless plug)
Firemane and Mr. Tigger discusses the importance of hunting for your own alpha.
Review The Use Case/Utility
Believe it or not, most things don't require the use of blockchain technology, and it does not have to be tokenized.
Whenever you're analyzing a project, always ask yourself, "is there a need for this on the blockchain? Does the founder's vision make sense?" Of course, you would need to understand the purpose of the blockchain and tokenization to properly assess this.
If you don’t know what a blockchain is, or you need a refresher, I’ve linked a great resource below:
Read The Whitepaper
Reading the whitepaper is the Golden Rule of researching any project (for NFTs, it’s the roadmap). It’s also the number one rule that people don’t follow.
Whether it’s because of laziness or lack of understanding, some people refuse to sit down and read.
When you read a project’s white paper or roadmap, you gain exposure to the mindset of the founders and team in written form.
Two great things to pay attention to when reviewing the white paper are:
Planning/Vision: This is basically you looking at the project’s roadmap, and judging the progress according to that roadmap. It is to be noted that when building a company, sh*# happens, and there will be a few hiccups. However, a company should not be 2 years behind schedule on a milestone/deliverable that was documented on their roadmap.
Laws & Usage Of Terms/Spelling: This may seem trivial, but if a team doesn't think enough of their project to make sure words are used in the right context and spelled correctly, then that carelessness will probably reflect in their performance. You will be surprised how many white papers I've combed through only to find a word salad of sentences that barely made any sense. Sure enough, these projects turned out to be either shitcoins, scams, or both. The only way you will catch these errors, is to sit down and actually READ the whitepaper and the website.
Review The Tokenomics
This is a big one. Tokenomics refers to the coin/token metrics. What is the max supply? What is the circulating supply?
A good rule of thumb to go by is that the circulating supply of coins/tokens should be at least 50% of the max supply (unless the company has a very good reason to keep the majority of tokens/coins locked up).
You need to know how the tokens will be distributed. How many tokens will the founders keep? How many tokens goes to early investors? How long must the founders keep their tokens locked up before they can start to liquidate them (the lockup period)? Will there ever be a token burn? You get the point.
Also, be wary of projects that have huge fundraising rounds in the beginning. You want to support a company that asks only for what they need, then works their way up from that point.
Research The Team
This can be tricky. A lot of people are wowed by the glitz and glamour of a fancy resume. That only tells a piece of the story.
Try to learn as much as you can about the founders. Reach out to them directly with questions. Most founders will take the time to at least answer a few questions about their company. If not, take it as a red flag.
Ask about plans for the future. Ask about the company culture. Watch interviews that they've had. This will give you a sense of who they are.
In the end, you never really know if the team is as good as they portray themselves to be, but it is better to have some data to judge than none.
Also, Anon teams are a no-go in most cases.
Check The Socials
You should always pull up to a project team’s socials (Twitter, Discord, Telegram).
You want to see if they engage with the community.
If the admins are slow to respond or are unresponsive in general, it should be taken as a red flag.
Gauge The Community
This is a very important criteria (especially for NFTs). The community is not only the external heart and spirit of a project, this is also the project's customer base.
You should always join the Discord or Telegram group and interact with or observe the community.
You want to see an engaged and enthusiastic community that is having thoughtful discussions about the project and the crypto space.
Every community will have its fair share of moonboys, and it’s fine. You just don’t want them to represent the majority of the community.
Check The Beta/MVP
I used to be a little lenient when it comes to this. However, we have reached the point in crypto where most projects are only a few steps away from delivering actual products to market.
So, when searching for an absolute winner, it's always good to be able to see an Alpha or Beta version of a product.
If this is not possible, you should at least be able to visit the company's github repository and see if the team regularly updates the project.
It is to be noted that if a project is developing in stealth or deems their code as proprietary, none of the former suggestions may be possible. In this case, you have to use your better judgment and a bit of discernment to determine if it is worth supporting.
Personally, I tend to hold off until I can see more...but this is your choice to make.
There you have it. These are the tools you need to cast your own nets into the ocean of crypto with the intention of harvesting pearls.
You can always sit and wait for someone to guide you to the treasure. Just don’t be surprised if you’re guided to an empty treasure chest.
Be proactive. Be diligent. Do your due diligence. Take control of your own success.
As some of you may have noticed, I enjoy leaving you all with a solid quote that will help you along your crypto journey. So, I will leave you with some words of wisdom from DCinvestor.