To save time answering similar questions over and over, I decided to compile following principles I follow when evaluating a crypto and/or blockchain project pitch. Hope you find it useful.
1. Take a step back
Do you truly think Crypto is an isolated universe with no impact from traditional markets and business principles?
Consider real-world application of a company or project you invest in, forget the word “Crypto” and “Blockchain” for a moment. Your investment is in a company, not hype.
Crypto ecosystem became a great tool for companies to go public before being eligible for an IPO everything beyond is in most cases pure speculation. In fact, until very recently it was a common raising tens of millions of US$ having only a website and a white paper on hand.
2. Why Crypto and Blockchain
Blockchain is a technology, that can be applied without crypto. However crypto cannot exist in its original form without Blockchain. To me, it’s rather a downside limiting crypto in application and scalability (unlimited scalability does not exist, everything comes at cost. People, who invested in Ethereum at US$900+ know this for a fact).
3. Avoid the noise.
Typically, I’m being asked about same project several times per day. Next day it’s another project everyone is raving about. First fundamental thought: consider that following a hype has limited upside by default. Ask anyone who invested in dot-com stocks in 1999.
So why does this happen? Well, (un)fortunately tools like Airdrops, referral commissions and profit-sharing often result in a financial pyramid, where, naturally, people are motivated to create buzz whether they believe in (or even understand the nature of) project they promote. Gaining US$ 20 for a twit, that attracts 50 Telegram followers is motivation enough.
Short-term forecast, to be published separately in a few words: there WILL be a major correction likely correlating with traditional financial markets. Hedge your positions. Make sure you have liquidity.