3 ways to pick crypto projects with the best chance to succeed

A successful cryptocurrency project often relies on the team being able to fulfill their promises to build and create adoption.

As cryptocurrencies rely mostly on network effects, adoption has to grow for them to gain popularity. To illustrate network effects, let’s take the example of social media or chat apps. You would adopt the use of Facebook if your friend was using it, and vice versa. The more of your friends use it, the more other friends would use it. That is essentially a network effect.

This means real work needs to be done by the founding team (of the project) before the project achieves any form of adoption. As adoption grows, the increasing popularity of the project begets increased trading interest, which hopefully would reflect on the cryptocurrency’s value (that’s right, even good projects might experience undervaluation of their tokens).

In bitcoin’s early days, bitcoin evangelists were gifting bitcoins away to anyone who wanted it. If you were too young to remember: there were literally “bitcoin faucets” who gave away bitcoins if you asked for them! The culmination of years of work, resulted in bitcoin “the digital gold standard” as you see it today. Obviously, it has come quite far for it to be valued at more than US$40,000 recently.

To our point: fundamentals are clearly important for any cryptocurrency to succeed. So, how do you spot great projects in the first place?

1. Hear it from the horse’s mouth

Social media is no doubt the best place to start learning about cryptocurrency! You read it right. Think Twitter, Youtube, Discord, and even Reddit! Of course, one must be able to filter through the noise to see what people are posting about a particular cryptocurrency you are thinking of owning.

The cryptocurrency community basically “hangs out” on social media. It can be a super-exclusive (and elusive) community and open at the same time. You just need to be dialed in. A few people I’d recommend to start following:

https://twitter.com/APompliano
https://twitter.com/aantonop
https://twitter.com/zhusu

And of course, our very own channel https://twitter.com/bitazzaofficial

2. Investigative work still counts for something

After finding out that your favorite pick sounds interesting enough, with hopefully a vibrant community; it’s now down to the real investigative work. That means reading the whitepaper, researching the team members, and even tracking their GitHub (or any site that tracks their project development).

You should also not forget to compare your favorite pick to existing projects in the market. The crypto space is known to be highly competitive, and it’s worth noting that the best technology does not always win. The community darling token, Dogecoin is a fine example!

Talking about drawing comparisons, Coin Market Cap and Coin Gecko offer access to more detailed information on your favorite project pick. Another favorite Messari also comes highly recommended.

3. Follow the money

The cryptocurrency market is a fast-growing one. Having broken US$1 Trillion in total market capitalization is beginning to attract an increasing amount of capital from fund managers and institutions.

It therefore makes perfect sense to also track the investors of your favorite project, to see what other projects they have invested in, and how are those projects doing – i.e. where are they listed? What is their trading volume and price activity?

The common belief is that projects with strong backers are more likely to succeed and have better token price liquidity – but, don’t quote me on this!

Conclusion

Despite a few nuggets of wisdom you might have learned today, don’t ever neglect the importance of prudent capital management. Do not over-parlay, and certainly do not be afraid to cut loss. If you cannot stomach volatility (which is all but too common), perhaps it’s prudent to stay away.

For those OGs who have been in this market for a long time, we know that a huge price drop could precede a bull run, and vice versa. Where did you think the term HODL came from? Stick to fundamentally sound projects and see you on the other side!

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The website and the information contained herein is not intended to be a source of advice or financial analysis with respect to the material presented, and the information and/or documents contained in this website do not constitute investment advice.

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