crypto strategy

What to investigate before deciding to buy a crypto project?

When it comes to money, scams inevitably follow. And the same goes with cryptocurrency. Scammers know no bounds and people are constantly being scammed. This is nothing new under the sun.

Recently, we came across the FTX case, and its affiliate trading company Alameda Research was exposed. Sam Bankman-Fried clandestinely used client funds to bail out FTX’s sister company, Alameda Research. The FTX meltdown is certainly already unraveling as one of the most relentless crypto-related frauds in history.

2022 revealed that the FTX – Alameda Research case is unfortunately not special. This is why it is more important than ever for anyone in the crypto world to double-check their information before investing.

After arguably the most upsetting recent deception, we have identified some crucial questions you should always ask yourself before getting involved in any crypto investment.

Let’s see!

Is there legislation that could prevent the project from developing?

The basic feature of the crypto market is the lack of regulation. It is the most libertarian economic model to date. However, the risk of fraud and the vulnerability of infrastructures arise without regulation. Thus, some countries have created a body of laws or drafted rules to protect consumers.

So, before investing, do your research and check the crypto regulations in your area. Cryptocurrency regulations may differ from state to state. After that, check for any legal issues the project may have or has had.

Let’s look at the SEC lawsuit against Ripple: In December 2020, the SEC sued Ripple over several allegations, including that founders Brad Garlinghouse and Chris Larsen, sold XRP as an unregistered security between 2013 and 2020 and that XRP is not a security checked in. Even if Ripple may win the lawsuit, the SEC allegations have halted the growth of XRP.

The SEC lawsuit against Ripple reflects the perfect example of how legislation or legal issues prevent the project from developing.

Is the proposed goal attainable?

Each project has a proposed objective. While some projects seem futuristic, others focus on solving practical problems. Do your own research to understand how a project works and whether that project has an achievable goal or a SMART goal.

Sidenote. SMART is an acronym for Sspecific, Mmeasurable, Afeasible, Rrealistic, and Jtimely. Therefore, a SMART objective incorporates these criteria to help you understand where a project is heading.

If the goal seems unattainable, this may be a red flag for you and you should avoid this project.

To give you an idea, the Celsius Network’s promise of ridiculously high returns should have already been a warning sign that things were too good to be true. And he did. Celsius Network announced bankruptcy on July 13, 2022, after further reports showed Celsius was operating as a Ponzi scheme.

However, many projects have a concrete objective. Additionally, to see if a particular goal is achievable, you can also compare this project to another cryptocurrency or token.

We have to admit that investing in relatively impractical projects is always risky, especially if you are new to crypto. This is the most important reason to do your own research every time.

How does it compare to its competition?

As I mentioned above, check which competitors are still in the market. Today we are faced with many new crypto projects, which are no different from competitors.

Cardano aims to become the “Ethereum Killer”. The match between Cardano and Ethereum will ultimately be judged on the success of the proof-of-stake implementation.

Much like Cardano, FTX aimed to beat the supremacy of Binance. However, today we can only see a bankrupt FTX, which will be remembered as one of the most relentless crypto-related frauds in history.

Does the crypto project invest in marketing?

A reliable crypto project should keep an eye on marketing trends.

There is no point in having a substantial crypto project if it does not have a well thought out marketing strategy. But let’s be clear, in real world circumstances, a crypto marketing strategy cannot be perfect.

What you can do is see what marketing strategies the project seems to be using and how active they are in this business.

To help you, two essential models that should underpin a marketing strategy in the crypto market can be:

Use an advertising management solution. Coinzilla has built a massive network of cryptocurrency websites that generate over 1 billion monthly impressions from people familiar with the crypto industry.

Promote the project through NFT Gifts. Many people are looking for new NFT giveaways, and an NFT giveaway is something you should do.

Is the team experienced or reliable?

Finally, don’t forget to investigate the team behind a project. The team is vital. A crypto project’s team can offer you a general idea of ​​the internal experience and consider checking whether fake personas are being created to gain public trust.

For example, suppose Vitalik Buterin, the founder of Ethereum, wants to develop a new crypto project. In this case, it indicates that the team knows what it is doing and that the people who compose it have experience in the company.

If experienced veterans support the project, a profitable investment becomes possible.

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