Four Simple Indicators of a Trustworthy Coin Project
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Last 2017, many projects benefited from the ICO as an alternative method of raising funds to develop their projects. ICO became an attractive fundraising method due to its unregulated nature. Yet, this unregulated nature also became the reason many lost their money to scams and useless coin projects.
Today, we would like to think that people are smarter since the market has shown a fearful sentiment. However, whatever goes down eventually goes up in the market so you better be prepared when the next wave of coin projects come. When that time comes, you should be able to differentiate good projects from bad so that your investments may actually be placed on something promising.
Here are 10 simple indicators of a remarkable coin project.
1 – A Good Team
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In cryptocurrency, there is no centralized body that determines whether a project qualifies or not. It’s the community that does that, paving the way to the DYOR (do your own research) maxim as the number one reminder to any crypto investor.
You have to have an eye for a good project team. A good project team is mostly composed of people who have been working in cryptocurrency and blockchain during its early days. If they are new, they should have a good software development background.
Since crypto is digital money, the team’s programmers and developers will determine the realization of a crypto idea. They are the lifeblood of the team.
The team should be composed of at least 10 developers since creating a blockchain network from scratch is no easy thing. The more personnel with programming experience you have, the better.
Marketers, community managers, and business developers must be included in the team as well since they will be the one to attract the press, early followers, and private investors. These people must know the project in and out, as much as the developers do.
A good team is also transparent about their professional activities and their projects. If they try to dodge questions or refuse the disclosure of their business activities, start doubting.
If the team has more advisers than core members, it is most likely a bad project. A team needs only needs three quality advisers at most. Emphasis on quality. If an adviser possesses truly profound knowledge in money and computer programming, you won’t need ten of him.
Finally, a good team is led by a good CEO. A good CEO cares about growing a consistent demand for the team’s product or service the most. If a CEO is dodgy, dispassionate, or detached from the project, the project will not last.
2 – Media and Community
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As mentioned above, a good project does not shy away from media exposure and community engagement.
By itself, the crypto community is already judged by mainstream institutions so working on branding, marketing, and community in crypto is more important. If there are no media outlets who are willing to talk about the project, it is either the project is not worth talking about or the project does not spend for media exposure or want it at all.
If a project is not willing to invest in exposure or want it at all, it implies that they don’t want all eyes on them, making them come off as scams. Scams don’t want to be exposed to watchdogs and prefer to isolated or one-to-one conversations with investors and short-term communication.
A good project is willing to spend and interact with interested followers for a long time. It gives out frequent updates, requests for feedback, and helps people who struggle in crypto.
Finally, exposure to third-party media outlets can offer a less biased opinion on coin projects.
3 – Real and Remarkable Use Case
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A good coin project actually requires the use of tokens and decentralized immutable ledgers (like blockchain) to function.
Some projects want to employ the use of blockchain for decentralized security but they don’t necessarily need the token feature.
Other projects, on the other hand, aim to be the cryptocurrency for specific financial services, but basically functions as a currency and nothing more, then it’s a pointless project.
The very good projects with real use cases have the potential to be applied and used everywhere in the world. Most of these projects have roadmaps that go on for years and expansive lists of objectives.
The best of these are the ones that actually perform better than existing alternatives and are not created just for the sake of using blockchain and crypto.
4 – Fair Distribution and Circulating Supply
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Unlike in the traditional markets, coin projects are expected to keep only a small percent of the token supply for themselves. Majority of it is expected to be sold in the public token sale.
A certain chunk of the tokens is also sold at a discount to private wholesale buyers during the private sale and wealthier individual buyers during the presale.
This is done to prevent a single party from selling massive amounts of tokens all at once.
Unlike in traditional markets, there are no lockup periods or circuit breakers that stop wholesale investors from mass-selling cryptocurrencies. That’s what happens in illiquid, unregulated markets. Therefore, when you notice that there’s a small amount to be sold during the public token sale, stay away from the project.
The worst kinds of scams like this are pump-and-dump schemes where whales and influencers hype up a token so that people buy the small circulating supply, then sell more than half the supply on the market. This pushes the price so terribly down (lower than the price the victims bought) that the price never breaks highs ever again.
Here is a sample of a good token supply distribution: 60% Public Sale, 20 Presale, 10% Private Sale, 5% Airdrop Rewards, 5% Founding Team. As you notice, more than half of the supply is distributed publicly at the same price.
The collective majority has to act unanimously to even have a chance to manipulate price, which is by itself is already hard to do especially if the collective majority are hardcore followers of the coin.
It is very easy to spot which coin projects are worth your trust, especially when you can recognize which things actually matter above all else. Marketing and community, strong team, sensible token distribution, and real use are four of the fundamental requirements of any good cryptocurrency project. There other signs of good projects but they are less easy to determine if you are not that experienced in crypto.
One piece of advice we can give our readers is to trust your reasoning: If something is too good to be true, it probably is. There is no truly riskless investment, and crypto investments are no exception.