It is important to do some due-dilligence before investing in crypto since we are in a 'gold-rush', 'wild-west' phase of the space, there are many cowboys out there pushing scam coins.
With that said, here are some points to think about before buying - in no particular order.
USP (Unique Selling Proposition):
Does the coin or token have something unique to offer to the world or is it yet another fork of an existing project? The project should be at least intriguing and keep drawing us back for more.
MVP (Minimum Viable Product):
Ensure that the project has a functioning product. Testnet, beta, working prototype, something should really be built rather than simply promises by the team that they will deliver.
Founders:
The founding team is very important, perhaps more so than the product(coin/protocol/token) itself, since a great team with high-level contacts and a stellar track record will be far more able to execute on their vision.
Development Team:
Beyond the founders, a sure sign of success is technical strength in depth. Do the members have all-star LinkedIn profiles? Does the team have an active GitHub page?
Community:
A somewhat overlooked aspect of investing is whether the project has an active community of early adopters, fan boys, evangelists etc. The nurturing of a good social media presence through a website, forum, slack, twitter etc. is vital for mass adoption.
Investors:
One way to gain further confidence in a project is to look at who their major investors are, and whether these investors are highly respected within the industry with a track record of success.
Valuation:
Of course, putting a value towards a start-up is very difficult and highly speculative but we can still have a good attempt at setting upper and lower bounds which we would be happy to invest, from a market capitalization stand point. Try to compare the future value of the asset with assets that currently exist.
Conclusion:
Aim to develop a clear conclusion to bring together the above points to make a clear yes or no decision on whether to invest.
Allocation:
Once we have the green light to invest, the next decision is how much capital to allocate. As a guide, 2% of available funds is a good place to start with high risk assets, 20% is a sensible maximum for any asset within the portfolio.
Disclaimer:
Investing is speculation.
Thanks for reading
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