One of the notable problems of cryptocurrency is finding the place to start. It is not always easy to navigate through densely packed information and it can be difficult to understand the type of projects in the space. Considering how it is a new field to invest in, it is also very volatile and susceptible to “rug-pulls” or dishonest information. This tutorial will cover some tools and tips on research methods.
Short Introduction to A Philosophy of Method
Research methodology begins with the philosophy underlying how the research is conducted. The first thing to learn is how to develop critical-thinking skills and not taking things at face value until they have a proven track-record of success. For a very broad overview of this An Essay on Philosophical Method by R.G Collingwood provides detailed insight ways to think in nuanced terms and methods on how to raise and answer particular problems.
The logic of thought and approach will determine the answer you receive, especially if there are presuppositions within the model. Philosophy, aptly named the queen of the sciences, deals precisely with different methods that we can use to understand the world and enact change within it. It examines the logic, order, and connection of ideas in order to understand how to think rather than what to think and then arrive at conclusions on the human condition. Different methods of thought will lead to different approaches and conclusions.
Social science is by and large an inexact science due to the number of variables that underly them. Economics, similarly, must be thought of in its fluctuations, overlaps, the order and connection of ideas and things, paradoxes, and how all these objects come together. In order to fulfill this large task, it is necessary to question, unravel, and break down concepts. Once an action has been decided all that is left is commitment. Practices and disciplines, such as self-reflection and meditation, are some of the steps that could help on a path towards understanding.
Principal Research Tools
Aside from methodology, there are many tools to choose from which can help find different cryptocurrency projects, such as:
Websites that Track Market Cap Data
One of the more difficult parts of researching cryptocurrency is finding different projects. Over the course of the past few years, this has changed with the advent of forum-like websites such as CoinGecko, Nomics, and other sites that showcase different types of cryptocurrencies, their market cap, and other useful information. These places can lead to preliminary findings before more in-depth research is conducted.
After looking through the data on CoinGecko and nomics, which can be useful to identify existing projects, the next step is to find the website that relates to that particular cryptocurrency. If there is no website, it might not be the best idea to invest. Also be careful of downloadable links and other potential vulnerability threats unless you are comfortable enough in the project to take the risk. Asking basic questions and looking through website information could be helpful in determining whether or not a project is worth investing in.
The next step in this process would likely be to look into the cryptocurrency’s Telegram, Discord, Twitter page, and GitHub. This can lead to identifying how active moderators, developers, and other members of the team are. The number of people that are in these forums relative to other cryptocurrencies of similar value can also show how active the community is. This is a good indicator to judge sentiment. This can also create leads by following different channels or pages.
Some people who invest in cryptocurrencies have not read a single whitepaper in their life, but this isn’t an advisable approach to take. Reading the whitepaper can lead to a lot of benefits and comparative analysis of cryptocurrencies with the same categories. In riskier projects it can also give an indication on where the future of the project is headed and how it is managed.
Grouping cryptocurrency into categories
Cryptocurrencies have a far-reaching value proposition that exceeds exchange between two parties. With the advent of multiple L1s and new L2s and the number of different projects that are being onboarded, released, and developed is mind-boggling. Given that it is sometimes important to take a step back and categorize cryptocurrencies into different groups in order to take a step back.
Narratives and trends
Narratives and trends are your friends. Simply put, individual cryptocurrencies can and do perform similar functionalities. On aggregate, these form certain classes, or categories. These cryptocurrencies lead to mutually inclusive behavior between currencies which lead to categories or types of currency that perform similar functions. For example, cross-chain interoperability protocols, Layer 1 systems, liquidity pools, Proof of stake systems, NFTs, games that run on blockchains, digital property, and so on. In order to understand the narratives, one must first identify them and sort out which ones they wish to invest in, if at all. Once you have identified the narratives of the space, found cryptocurrencies for each one, and made a comparative analysis then it is simply time to stick to your decision and have enough conviction to stick through with it.
One of the advantages of a public ledger is the ability to see all previous data and use it in a way that is beneficial to identifying inflows and outflows of different cryptocurrency projects. This can help determine whether or not a particular asset is undervalued in comparison with other assets of the same category and provide more information than price data. This is especially important for the larger cryptocurrencies out there, but to a smaller extent seeing how often a cryptocurrency is used is also a good indicator. Examples include Messari, CryptoQuant, Nansen, and others. Generally, these are paid services however there is some of this type of data that is free online.
As we have seen, the first principles of research come from critical thinking skills and understanding different ways ideas and things interconnect with each other. These skills are developed over time once a person has experience in seeing the world through different viewpoints. Later, it's ideal to be able to vocalize them in such a way that they talk about the same concept through different lenses in order to arrive at a conclusion while understanding the drawbacks and benefits.
The amount of data for cryptocurrencies is vast despite being a new sector and can at times feel unwieldy. The tools listed above should help in determining the model and method that is right for each individual. With each worldview comes new methods of understanding and arranging data in order to make it intelligible.