This How To Crypto report is an update to one we release towards the end of 2020, but it is very important that we revisit the topic of DYOR, or Doing Your Own Research.
Many heartaches could have been avoided if more people would have read this blog last year. At the time of updating this blog, Coinmarketcap.com lists 11,084 cryptocurrencies and Coingecko.com lists 8,704. While many of us will agree that cryptocurrency will revolutionize the world, I am sure we can also all agree that most of those thousands of cryptocurrencies listed are crap and will be worthless in the future.
Many of the ones listed years ago are already hovering at price points that are down 90+% from their all-time highs years ago. In a market where most codes are open sourced, anyone can copy and paste a cryptocurrency or create their own from scratch. On the Binance Smart Chain alone this year, there have been thousands of cryptocurrency tokens launched, many designed as outright scams or pump and dump schemes. Hype and hope can pump any cryptocurrency in price for a short period of time. But if you want to see a cryptocurrency project truly succeed, there are things you need to look for when doing your research.
Criteria that shows that the project has potential and is unique. Nothing is a guarantee of success either. I have seen many solid cryptocurrency projects fail over the years. But being able to understand what to look for and how to research projects can help you make better decisions in your cryptocurrency trading and investing that will give you better chances at success.
Anyone who blindly invests in cryptocurrency just because they heard about it from someone they know or a celebrity is no better than a degenerative gambler that is just throwing money at a proverbial lottery ticket.
Sure, you hear about the success stories of someone who turned a few hundred dollars into millions, but those stories are very rare and most who throw money into any and every hype cryptocurrency project typically lose money.
People are blindly asking the masses what to buy, should I buy X or Y crypto, or even asking if they bought X crypto, will it give them 10x, 20x, or 100x gains. This is a recipe for disaster. Trading markets are a way to move money away from the ignorant and towards those that are educated and skilled in trading market cycles. The uneducated think it is as simple as picking the right one and it will make their dreams of Lambos and riches come true.
They believe the market must go up forever and that any dip in price results in doom and gloom. The educated know that no matter how much you believe in the technology and project behind a certain cryptocurrency, that is not always reflected in the price. Prices are merely a representation of a battle between buyers and sellers. Don’t get me wrong, to sell at the top of a market cycle, we need someone to buy, and to buy at the bottom of a market cycle, we need someone to sell. So before you fall victim to blindly buying or selling at the worst time for your portfolio, or before you blindly ask some random group of trolls on social media, I am going to show you some resources to DYOR, or Do Your Own Research. But what does that really mean? In this How-to Crypto report, we will dig in and show you what constitutes doing your own research, and what does not. So if you are new, this is your first assignment in the DYOR category, finish reading this completely.
As mentioned above, DYOR stands for Do Your Own Research and is commonly thrown around in crypto social media circles, usually when someone asks for advice on what to buy or on a specific cryptocurrency. Misinformation can spread faster than the speed of light sometimes so there are two sides to this that we will discuss. The first and most important is how to do your own research. What resources should you use or seek out that are best for this. Also, we will look at what types of resources to avoid. Secondly, I will give some tips on what to say for those who have the urge to just randomly comment “DYOR” on any comment asking for advice or help. We can do better at helping new people by at least directing them to the best resources so they can learn more about whatever cryptocurrency or other topic in question.
True DYOR can encourage investors and potential future traders to truly understand the major factors around why a cryptocurrency could or could not be a good investment instead of just taking a friend’s advice who told you to buy it because it is going to the moon. When I originally wrote this last year, I had a friend show me a text her husband received from a friend telling him to buy Bitcoin now at $18,000 because next year it is going to be $300,000. Although I believe in the long term potential to get there with Bticoin, there is a long road ahead and realistically we could see big dips and retracement along that road before hitting those types of highs. And we have seen just that.
Huge gains since that time and also a huge retracement. Not understanding the basics of cryptocurrency, blockchain, and why this type of technology can be so revolutionary will lead many to buy at the top of a market cycle when price is high and sell as the market price is crashing, even though long term it could lead to much higher prices than previously achieved. Now, DYOR can also help prevent you from buying a cryptocurrency as it is crashing in price if the project has no real substance and probably will not recover in the long run. Some cryptocurrencies that crashed in 2018 have continued to drop, rather than recover as the market has heated back up mainly because there is nothing special or ground-breaking about them. Thousands of cryptocurrencies are out there on the market and most will die.
But, selecting the right ones that have long term promise and potential can bring you solid gains on your investments. You must also learn to not get too attached to one project because as technology evolves, if a project fails to innovate or something better comes along, you may see a shift and what was once a solid project could wither away. Just remember pagers, also known as beepers, were great technology, until cell phones came along. Technically pagers still work, but why would someone still use it when there is much better technology available. Another reason DYOR is so important is due to the excess amounts of shilling by celebrities, “crypto influencers”, and others in the space that are either paid by a project to promote their cryptocurrency or are holding large amounts of the cryptocurrency they are trying to promote so they can then dump their bags for a large profit.
Being paid to promote a project is not always a bad thing, but must be disclosed if they are constantly sharing about a project. Be skeptical and make sure to research other sources rather than just an influencer telling you how X coin is going to be 100x in a year. Many promoters of past ICO’s, or Initial Coin Offerings, that have failed to gain traction from 2017 and 2018 are now facing legal repercussions for their shilling activities. Just be leary and aware of someone’s motives for building hype around a project and look for other sources to confirm or dispute their claims before accepting them as true. When investing in cryptocurrencies, it is best to make the decision on your own, without just guessing or relying on the word of someone else without researching it. In the end, the sole responsibility to invest in something lies with the person you see in the mirror.
Many who rush into investing in projects without doing their own research always want to blame the person they heard about it from, but no one is holding a gun to your head to make you buy. The decision and responsibility of the repercussions from those decisions lies solely with you.
So, how do you do your own research? First and foremost, do you understand the basics of cryptocurrency, blockchain, or even know the history of money? I always suggest someone starts there because if you don’t know how or why this technology is important, you can easily fall victim to a project that just uses a bunch of fancy, flashy words to draw you in to invest or buy their cryptocurrency. Saying a cryptocurrency can handle hundreds of thousands of transactions per second may sound like an amazing attribute, but if you do not not know how secure or decentralized a project is, you could be duped into thinking it is a great project.
Visa can process that many transactions in that time frame, but we will not be rushing out to invest in Visa stock. To better understand the basics of cryptocurrency, blockchain, and money, you should start in the school section of the Newscrypto platform. This is available to all members where you can go through many tutorial videos and courses to better understand the basics of these topics. An exciting announcement just this week, Newscrypto announced the upcoming release of Unchained Education, which will be a newer version of the Newscrypto school section but will provide knowledge and insight that is unlike anything you have ever seen. We will also allow educators to join Unchained education and provide education on their areas of expertise. Keep an eye out as this will be released soon.
Another great resource that is complementary to this information which I also mentioned in the prior How-To Crypto Report is the YouTube channel of Andreas Antonopolous, one of the brightest minds in the Bitcoin space.
Once you have a better understanding of the basics, you are better equipped to research and make better decisions. Now for a disclaimer, as you start to evaluate projects, you may find one that you feel is amazing and groundbreaking. But the name of the game is adoption. Hype and speculation can make prices pump up for a time, but if you are looking for long term adoption will need to take place. A great project that does not catch on could never give you the returns you are expecting. You may not be right in all your decisions, but if you continue to educate yourself and stay close to what is happening in the cryptocurrency space, you have a better chance of making the right decisions in the long term.
The next step is to make sure you are visiting the legitimate website of a cryptocurrency when looking for more information. Google search is not a great place to start since scammers have been known to create fake websites made to look like the official website and use Google ads to boost search results of fake websites. One recommendation is to start on Coingecko, or CoinMarketCap.
On these sites, you not only can see an aggregation of price data, but when you click on each one, you are given links to the legitimate website, and Coingecko also gives you links to their blockchain explorers, and social media pages. The blockchain explorer can be helpful to show you how active the coin or token is, and even how decentralized or centralized the holdings are. You can also find the links to legitimate social media accounts or communities for the project by visiting the legitimate website and clicking through to the links they provide on their website.
Being able to identify active social media channels and active social media communities can help you with your research and verify the validity of the project and team behind it. From the website, most projects will link you to the LinkedIn profiles of their team and most times, to Github to see their source code and work being done on the project. If their social media channels and groups seem not active or mostly fake bot conversations, then that could be a red flag. If the team behind it is private or cannot find much public information on them, then that could be a red flag as well.
Now, some of the best projects out there have anonymous teams, but trust is crucial when it comes to a cryptocurrency being able to thrive. No public team or team with all recently created LinkedIn profiles could be another red flag. Next you can search for news articles written about the particular project or team. Many will search for YouTube or other videos about the one they are researching, but keep in mind to be skeptical about what you watch until you can verify from other sources.
Most making videos about a cryptocurrency usually have a financial incentive to encourage people to buy that cryptocurrency. The channels, like the one for Andreas Antonopolous above that have a history of legitimate educational content are the best to use when doing your research. Cointelegraph and Coindesk are decent places to search, but pay attention to whether it is a news article or a sponsored ad made to look like a news article. It is no surprise that news can be biased, so remember, each bit of information you look at should not be the defining conclusion of whether a project is good or not, but instead used as a piece of the puzzle in making your decision.
As mentioned before, you are the only one responsible for your investment decisions so make sure you understand there is risk with every single thing you invest in. There are no guaranteed winners, but the better informed you are of not only the project, but what is happening in the cryptocurrency world and many of the external factors that can affect price, the better off you will be in your decisions. Over the years, I have had a few projects that I thought would thrive in the space, but failed miserably. On the ones where I did adequate research, even though I may have lost some value in my investments, I felt confident that I did my part and accepted that risk. This also led me to understand that learning to trade is one of the best ways to grow your investment over time by buying and selling in market cycles to profit from the price fluctuations. Trading allows you to make a profit even if the market is moving in a downtrend of price. Study all the trading tools and education available in the Newscrypto platform. Transitioning from an investor to a trader can allow you to increase your ability to make profits from the market.
Now a note for those of you that are active in the cryptocurrency communities in all the social media channels. Many times someone new to cryptocurrency will post a question like mentioned in the beginning as in what to buy and many are quick to blast the person with DYOR comments, and the creative ones use DYOR memes. Our goal with cryptocurrency is adoption so if we turn off new people looking for answers, we could be driving many away from even attempting to learn something that can seem overwhelming in the beginning. If you feel the need to comment DYOR when an uninformed person asks a question, make sure instead of just DYOR, give them some tips or places to start to learn or do research like mentioned above. We have to do a better job as a cryptocurrency community to unite to help those that truly want help.
Asking what to buy can seem annoying to those that have been involved for some time, but we must remember that we were all new at some point and needed help and guidance. Projects will continue to make this tech easier to use and understand, but the ability to benefit financially will continue to diminish as adoption begins to spread. Let’s all do our part to help others and also to take responsibility for our own actions and investments as we all get better at using the DYOR protocol. Remember, EDUCATION COMES BEFORE ADOPTION, so if you truly want see long term growth in your crypto portfolio, educate yourself and help spread that education and resources to those around you.
Content written by Blockchain Wayne and NewsCrypto Team