cryptocurrency analysis

A list of basic things to consider when evaluating cryptocurrency.

I fundamentally believe in cryptocurrency and blockchain technology and promote it.  I invest in and trade cryptocurrency and blockchain technology.  Here are guidelines for analyzing a cryptocurrency.

  1. Technology

    1. Study the whitepaper of the blockchain.  Think critically about this technology’s necessity; determine if the technology is really needed and how badly.  The technology may be an old concept, digitized.  It may be speeding up a process.  It may be completely new technology.  The more necessary the technology the greater it’s value.
    2. Determine the integrity and stability of the application that is the blockchain itself and the cryptocurrency:
      1. hardware platform
      2. software efficiency
      3. Code
  2. Coin Usage

    1. What is the coin supposed to be used for in real life.  Is the coin being used for that purpose or for speculation.  They say the more the coin is used the better, but I’m not sure that’s always true.
    2. Is it being used – get an idea of if they are really using it to conduct transactions.
    3. Daily Trading Volume – Get communication from the exchanges about the trading volume over time of the trades.  Be careful to avoid faked volume.
    4. Social Media Activity – Find out how much the product is being talked about and used on social media.
  3. Mining

    1. Coins that can only be created by it’s developers pose a huge risk.  Avoid them.  The coins that can’t be mined have a “*” mark on coinmarketcap.com.
    2. You or others can’t mine it you should probably not invest in it.
  4. Backers

    1. Who is behind the project
      professional history.  Do you trust them to finish the project on time and on budget.
    2. Does the professional team have a future for this cryptocoin/product
  5. Roadmap

    What is the plan for the cryptocurrency.  Does it make sense to you?  Is it realistic?

  6. Price

    What is the fiat value of the currency.  While that matters the concept of self funded cryptocurrencies continues to take root.

  7. Value Proposition

    What  is it about this cryptocurrency that’s going to make it work as apposed to others.

    1. What makes them unique.  What are they doing that no one else is not. Is this uniqueness something that will work for future markets.
    2. What are you getting and what are you giving; is it worth.