Introduction
This article refers to my experiment “buy-and-hold” vs. “trading”. Nevertheless it will also benefit investors that are not interested in the experiment as this provides an in my opinion conclusive check list for the analysis of crypto-projects. Regarding the experiment and the connected transparency towards you I want to say, that it’s not possible for me, to explain every single decision I make for or against a crypto-project (there are more than one thousand right now!). For you to still be able to relate to why one project makes it into my Blockfolio while another one doesn’t I decided to make an excel table containing all my points of analysis. With projects that I will not invest into I can mark the points of analysis that made me put it onto my blacklist. That way you have a rough comprehension of what objections I have against one or another project.
Points of analysis
One question arises right at the beginning: How did I arrive at the following points of analysis? Very easy: Using another analysis. What?
Well, it is that simple: The future is a repetition of the past. At least if you look at it from further away. Thus I first took a look at the established crypto-projects like Bitcoin or Ethereum an then tried to analyze what these projects have in common. In essence finding out what makes them a success.
If another projects displays just those points there is a not to small probability, that they are going to be a success. In particular the following points of analysis have arisen out of my analysis. These will, in my opinion, make analyzing crypto-projects fast, efficient and safe. The importance of a particular point of analysis everyone will have to decide for themselves. But before investing one should have at least reflected about all of these points.
Points of analysis:
I. General stuff
1. Does the project have a good topic?
If the topic is unnecessary or if there is a suspicion of fraud I will exclude it from my Blockfolio right away. With this point, most crypto-projects will probably be disqualified. For example Monero gets disqualified due to this point as well as all the other coins concentrating on anonymity. Why? Because no government in the world will be okay with loosing taxes and will therefore want to have an overview over the finances of their citizens. These will be regulated strictly or completely forbidden in the long run. In general though I don't want to make a habit of explaining myself like this. If there is demand for more thorough explanations I am happy to make an extra article for that.
2. Does the project solve a small, medium or big problem?
3. Is the project the only one in the world solving this problem?
4. Is the target audience small, medium, big or intangible?
5. Does the project consist of an idea or does it have a real product that's already implemented?
6. Is there an acute danger of regulation?
7. Does the circulating supply correspond to the total supply?
8. Are there a lot of "Whales"?
9. Does the project have good partners?
10. How high is the market capitalization already? Meaning: Is there a possibility for a vast rise?
11. Is the project centralized or decentralized organized?
12. Did the project follow its roadmap so far?
13. Are there more interesting points in the roadmap for the future?
II. Technology and team
1. Does the technology behind the coin work and make sense or are there doubts about the functiohnality?
2. Was the money out of the ICO invested in a transparent and reasonable way?
3. What is the quality of the team? E.g. does it include experienced memebers?
4. Is the team big?
III. Quality of the whitepaper and the presentation on the Internet
1. Is there a whitepaper?
2. Is the whitepaper well-written? Are there, for example, a lot of marketing terms to manipulate investors?
IV. Community
1. Is the community involved in the projects and are they helped with problems (for example with problems withdrawing from exchanges)?
2. Is the community active?
For every point one should have an answer for before investing in order to keep risks and chances in balance. I will happily include points you suggest. If I can answer most of these points positively I will invest in the projects. According to the opportunity-risk-ratio the project will then occupy more or less space in my Blockfolio.
In the next Buy-and-hold article I will deal with the following problems: Buying, storing and possible dangers with this strategy. Afterwards - at the start of the project - I will publish the results of my analysis and my Blockfolio for this year.
As always I am looking forward for suggestions and constructive critique and hope that this check list can have some value for your next Investment.
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