How to research any cryptocurrency, token, or ICO

How to research any crypto project

There are nowadays over 5.000 cryptocurrencies in the crypto space.

Most of these crypto projects are scams. However, you can prevent scams and find crypto gems with huge potential by following my research strategy.

To help you with your research, I created a professional PDF sheet that helps you to research cryptocurrencies or altcoins.

You can also use this PDF to research ICOs or tokens.

Click here to download the PDF: Download PDF

I am not a financial advisor. However, I’m in the crypto space since 2016 and researched a bunch of coins and used my experience to craft and update a template to research crypto projects. If you want to, you can adjust the template. I tag the PDF template with versions and you can always come back and check if I updated the template to a newer version.

I also want to credit Chris Haroun, who was a Hedge fund manager and created the Udemy-course “The complete cryptocurrency course” where he offered a cryptocurrency research sheet to the subscribers of the course. I used certain elements of this research sheets and added some additional information. I highly recommend this Udemy course if you want to learn more about crypto (not affiliated in any way).

One more thing before we start. If you are at a point where you think the project is not worth your time or the project is bad, stop the research process and look for another project. There are hundreds of great project in the crypto space, you just have to find them and you will not find them if you research a project you already know it’s not worth it.

Instructions for template version: 1.4

Okay, let’s do some research (Every section of this site describes one section of the PDF file).

#1 Basic information

Year founded: Now you know how old the cryptocurrency is. This information is important when you research circulation supply, inflation, or community growth.

For instance, the inflation of younger crypto projects is much higher than older ones because younger projects want to distribute as many coins/tokens to as many people in the early phases of the project.

The first date traded: There is the possibility that a cryptocurrency is founded a year or two before it traded publicly.

Maybe the development team collected funds, published the coin one year later and the coin was traded after one year. It gives you information about the quality/quantity of a project.

Ticker symbol: The symbol used to track the asset. Usually 3-4 characters long.

Block time: A significant factor to estimate the transaction speed and the scalability of a project.

For example, if the block time is the 30s, the blockchain will grow fast, therefore, the project needs good scalability strategies and if the block time is 10min, the transaction processing time would be higher. The TPS (Transaction per second) rate depends heavily on the block time and the block size.

#2 Price, market capitalization, current, and max. supply

Tip: You can get the most information about the coin price, supply, etc. from a site like coinmarketcap or coingecko.

Price: In this field, you fill out the current price for the cryptocurrency/token/ICO (This is used to get an idea if the asset is overpriced/underpriced. Makes more sense when you analyze more price indicators).

52 week low/high: These indicators in combination with the current price show if the current asset is currently overpriced/oversold. Sometimes, the price of an asset increases in a short period because the project got an update/new partnerships, etc.

Exchange count: In this field, you could insert an estimation of exchanges that support this currency. If you can, don’t count duplicate trading pairs. For example, BTC/CoinX and ETH/CoinX that trade on the same exchange count as one exchange. This indicator gives you the following information.

  • Will the price drop drastically if one exchange delists the asset (For instance, if only three exchanges support this asset and one delists it, the price of this asset would probably follow.)
  • Is there a dominating exchange
  • If more exchanges support an asset, it is an indicator of how popular the project is

What is the current supply of the asset: The current supply is the main factor of a price from an asset. For instance, if an asset got the same market capitalization, but asset A has 1 million supply and asset B has 1 billion, asset A would have a higher price.

Usually, crypto assets have a supply of millions. However, projects like XRP have a supply of billions.

Price = Market capitalization / Supply

If there is more supply, the price is lower. You should always look at the price in combination with the supply.

Will, there be a maximum supply of Coin/Token: This tells you if the asset is inflation-protected. Inflation means, that the value of the existing asset decreases because new assets are generated.

For instance, there will be only 21 million Bitcoins mined someday. Not more.

This doesn’t indicate that one asset is worse than another if it has an infinite supply. It depends on the use case. For example, if you want a store of value, the asset should have a low inflation rate nor none.

#3 Sources

Whitepaper for coin/token + thoughts on whitepaper: The whitepaper is a good source of information to get started with researching crypto projects. Read it thoroughly and research certain technical terms that are mentioned in the whitepaper if you don’t know them. Keep in mind that you can’t always know everything and every project is different, so there could be new technical terms in every whitepaper.

Official website + thoughts on the website: This gives you an idea of if the project is serious and reliable. Projects that are low quality usually have a bad website because they don’t want to invest a lot of time/afford on the website.

However, the official website should represent projects as well as possible.

Also, analyze the content of the website.

For example:

  • Does the website offer a good site structure?
  • Is the site user-friendly?
  • Is there a link to download the latest version of the wallet
  • Are there guides to set up a wallet, buy coins, use the wallet, …

Official development platform: Here, you insert the official development platform for your project you want to research (Usually, this link is from a platform like GitHub or Bitbucket).

  • Check out this platform regularly to never miss a project update
  • You can check the development status and the past development progress on this site

#4 Features, Roadmap

Roadmap: Here you insert a link to the roadmap. It has an overview of project features, upcoming features, and features that the development team is currently working on.

Mentionable features: In this field, you insert project-specific features. For instance, privacy features, Masternode support, scalability features, transaction speed, etc.

Currently working on features: In this field, you insert features that the development team is currently working on.

Upcoming features: Insert features that are planned for the future. You don’t have to insert features that are planned for the next 10 years, but you do want an overview at least of the next features from this and the next year.

#5 Restriction, purpose

Restrictions: If there are restrictions for this project, you want to know it. If you want to go in-depth, you research restrictions not only in your country but in others too.

Purpose: This field represents the purpose of the crypto project. It can help decide if you think that this project has a future or not. However, it is just an overview.

For instance, Ethereums purpose is to be faster and cheaper than Bitcoin. In addition to that, Ethereum is more developer-friendly.

#6 Background, Pros & Cons

What is <asset>: Is it a cryptocurrency or a type of a token or something different?

Why does <asset> exist: This has similarities to the “purpose of the project” but you should know why a project exists.

For instance, Ethereum exists because it gives developers great tools to develop dApps (decentralized applications) on top of the Ethereum blockchain.

What are the pros of <project>: In this field, you can insert great features, but also points like big or helpful community, great development process, etc.

What are the cons of <project>: In this field, insert negative points about a project. There are not only positive things about a project and a great investor (you) should know that.

For instance, slow development, another project has similar features, bad user experience, project running low on funding, etc.

#7 Blockchain analysis

How much percentage of the total supply hold the top 10 addresses + thoughts on the rich list: Are there big crypto addresses (whales) that hold a lot of coins. If there is an address that holds a lot of coins, ask yourself these questions.

  • What would happen if this address would dump all his coins on the market
  • Who owns this address (exchange, development team, private user, …)
  • Has this address incentive of selling all his coins

Tip: Search for “<project> rich list” in your favorite search engine to get an overview of the richest addresses from a crypto project.

How many transactions go through the blockchain | How many people us this project: You get this information by searching “<project> block explorer” in your favorite search engine. Have a look at how many transactions are included in one block. It gives you an idea of how many people are active on the network and if people are using this project.

Tip: There is always one transaction that goes to the address that generated a new block. For instance, if a project has always one transaction in the last 100 blocks, it means that nobody did a transaction on this network in the last 100 blocks.

Sometimes, block explorers exclude the address who generated the block.

#8 Management team, investors, developers, partners, customers, business model, funding

What is the management team like for <Coin>: In this field, you analyze the management team of the project.

What is the development team like for <Coin>: In this field, you analyze the development team of the project.

Project partners: Here, you insert mentionable partners with the project.

Business model: In this field, you analyze the business model of the project. The following points should be covered.

  • How does the team make money?
  • Will the team ever run out of money?
  • How high is the risk that the project will run out of money?

#9 Security, Differentiation

Strength and security: How secure is the project? Where are its strengths?

Differentiation: What is the USP (Unique selling point) of the project? Is it faster? Does it use different protocols? etc.

#10 Exchanges, Wallets

Exchanges: Here, you insert a list of exchanges and links to these exchanges. You can use this list to buy/sell/trade this asset.

Example:

  • Exchange A
  • Exchange B

Wallets: Here, you insert wallets and links to these wallets. You can use this list to store your coins securely on your favorite device.

  • Wallet A
  • Wallet B

#11 Country, Accounting, Bug risks

Auditor: Try to find out who the auditor(s) of the project/whitepaper/documents are/is.

Bugs: Are there mentionable bugs in the project that could have a bad influence on the user/network?

#12 What would make you more or less positive, risks

What would make you more positive about the project: Thinking about this could be an indicator when you have to buy more coins/tokens.

What would make you less positive: This could be an indicator when you should sell your coins.

What are the risks and concerns about the project: In this field, insert risks and concerns that you think about this project. Do only a few exchanges support this coin, is the market too competitive, is there already a coin which brings a similar result?

#13 Staking or Mining incentives

How high is the inflation + thoughts on inflation: Following points should be covered:

  • Does the inflation decrease/increase
  • What is the overall inflation / personal inflation: For instance, a POS coin could have 5% overall inflation but people could get 10% because only 50% of all coins are staking. With POW, it’s much easier. Just have a look at how many blocks are mined in one year and how high the block rewards are.

#14 Social media

In this section, insert links to social media accounts. In my research sheet, I analyze Reddit and Twitter, because they are the most used platforms for a crypto project. However, there are hundreds of social media platforms out there and you can add further social media accounts in this section.

Afterward, compare the size of one social media account with other crypto projects.

Note 1: In this research sheet, we don’t analyze the growth or the activity of these crypto communities/social media accounts.

Note 2: Follow these accounts/social media platforms and check their activity once a day or once a week to never miss updates.

#15 Investment strategy & Price target

How much are you going to invest: Now we have a detailed view of the project. It’s now time to decide how much you are going to invest in the project.

You can do it these ways.

  • in %: For instance, 5% of my portfolio go into this project
  • in $, €, or another national currency: For example, I invest $1.000 in this project

Reinvestment strategy: If your crypto pays for instance POS (Proof of stake) rewards or rewards you in any way, set up a reinvestment strategy. It could look something like this.

  • 50% Reinvesting to get more rewards
  • 50% Selling for FIAT or to trade for other cryptocurrencies/tokens

Also, decide which coins you will buy if you decide to swap 50% of your profits for other cryptocurrencies. For instance, invest 50% of the profits into BTC and ETH. You could diversify your portfolio even more if you consider using this strategy and reduce the risk of a complete loss.

#16 Volume, highs, lows

Now, we analyze if it’s a good time to buy your asset. By analyzing the 52 weeks low/high, 50 days moving average and 100-day moving average, you get a better understanding of the project is currently oversold/overbought.

In the field ‘Is it a good time to buy <asset> now‘, you insert your opinion why it is a good time to buy the asset. You can always come back later and check if you were right or wrong in the past and learn from it.

#17 Ratings

Now it’s time to rate the project.

You could rank every section or even every question. I would recommend giving up to 10 points. I rank sections, for instance, social media or security and differentiation.

You could also include in your ranking a ranking weight. For instance, social media gets x/5, and security and differentiation get x/10 because you think that the category security and differentiation is more important than social media.

You can also skip sections when it comes to the rating, but why would you analyze a certain category, when it’s not important to you. Just delete the section and don’t waste your time.

That’s it. I hope this helped you with your research. Feel free to share this piece of content to help others researching great crypto projects.

FAQ

What if I can’t fill out the field because I’m researching an ICO or token sale?

Just leave the field blank. However, the more field is empty, the less you know about the project. Therefore, the risk of losing money increases if you have less information about a project.

What if I can’t find the information for one field?

It doesn’t matter if it’s a low-rank field. For instance, let’s say you don’t care about the auditor so much and rank this question/section x/1 points. Therefore, it would not matter that much if you skip the field.

However, the fewer answers you find, the less you know. Therefore, the risk increases.

Maximilian Groß

I'm a software engineer. I'm the owner of FireStake.com and know the crypto space since 2016. Furthermore, I share everything I learn about crypto on this blog.

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