Critical Analysis: Alt Coins

in cryptocurrency •  2 years ago 

If you’re going to invest your money, first invest your time into learning about the coins on your own!

Unless you are an experienced day trader of cryptos, most likely your goal is to find altcoins that have lasting potential, there aren’t that many out there but by eliminating the bad apples early it will narrow your search.

What you’ll need is a critical mind armed with the right questions.

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It can be difficult to find unbiased information about an alt coin. Most often when you google search it, you’re shown links to the official website. Which isn’t exactly designed to highlight it’s weak points. This is why it is so important when looking at these sites to have a keen sense of what they AREN'T telling you. They are the car salesmen. Yes they might actually have a great car for you that meets all of your needs, they also are there to sell you and unless you know what to look for, you could end up with a lemon.

The best way to find unbiased information on a coin is to look for recent publications concerning it. There are many crypto based news websites that you can look into, like these:

You should also look for reviews of the actual coin.

There are also people who seem to exist only to criticize alt coins.

At first glance, they may seem like Debbie Downers, but in reality they aren’t afraid to ask the tough questions, and if the coin can withstand the harshest critic, then that’s a good sign.
You should check out:

Tone Vays

Andreas Antonopoulos

Listen to what they have to say.

If you don’t know which questions to ask, I found a great article that gives you some help and is the basis for this post:

Investitin Article

It explains how to be critical of every aspect of an alt coin, from the technology and economics to the marketing and history.

Here are some things to look out for:

  • What problem is the Cryptocurrency trying to solve ?
  • Are there alternatives to address this problem that are more efficient?
  • Is the Altcoin structured with central control or a decentralised governance?
    And I think this last one is very important to consider:
  • How much of the price of the cryptocurrency is based on the value being delivered today and how much is it based on future promises of development?

Marketing Strategy/Social Proof:

If you’re looking for an alt coin that has some longevity it’s wise to investigate it’s social circle. How big is the community? You can find out by checking how many followers the coin has on Twitter, and by paying a visit to it’s slack channel. Not only will you be able to see how active the community is, but you’ll also get a feel for the overall sentiment of the coin. The slack channel is also a great place for you to ask all of your hard hitting questions. Like how many times has the alt coin rebranded and why?

Development team and Technology:

  • What is the new tech that the altcoin is developing? (if any)
  • Can the solution be easily copied?
  • What is unique about the team behind this altcoin?
  • What are the weaknesses of the development team?
  • Are the dev team accessible?
  • Are their identities public?

Price analysis:

Im sure you’ve heard the phrase pump and dump more than a few times by now.
These are essentially fueled by investors who spread FOMO to pump the price, that’s fear of missing out and then spread FUD to crash the price down, that’s fear, uncertainty and doubt. Many times it is the day traders who create these pump and dumps so they can skim profits.
But a real concern that will be more important in the future is when cryptocurrency ETFs are approved. This is cause for concern because ETFs will allow speculators to short a coin- or bet on it’s decrease of price- without actually having to hold that coin. This is called naked short selling.

When you want to look at the price analysis of a coin consider these things:

  • Does the price pump and dump cycle make sense?
    • Is it connected with actual events that add value to the currency?
    • Is all the market rising or just the cryptocurrency in question?
  • On what volume was the price increase or decrease done?

Economics of the coin:

  • What is the inflation rate or deflation rate of the altcoin?
  • Is the altcoin a PoS (Proof of Stake) or a PoW (Proof of Work)?
  • If it is a PoS, what was the distribution model?

History of the coin:

Here is where you’ll find if the coin was designed to be just a scam, or if it was created with good intentions, yet implemented badly.

Analyzing the history of a coin is what will give you a better sense of the proof of progress the coin has made thus far and can also shows the direction the coin is heading in the future.

  • Is the coin progressing towards its goal?
  • Was the coin insta-mined or pre-mined?
  • Was that money put to good use?
  • Did the creators announce the exact launch time and date of the coin?
  • Who are the most influential critics and what have they commented on the altcoin in the past?
  • How has the altcoin changed over time?

Now that you know what to be critical of, I encourage you to go out and conduct your own research, join the slack channels and start a conversation with the developers. Read up on any articles concerning the coin and see how it’s progressed, how or if it has made progress, and see what the other critics have to say about it.

Additional Reading/Sources:

Investitin Article
Coindesk
Cointelegraph
Cryptocoinsnews
Tone Vays
Andreas Antonopoulos

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  ·  2 years ago (edited)

I prefer investigating coins through https://bitcointalk.org . There you get to see some interesting debates with harsh critiques. I can't really rely on individuals and media owners. There are plenty of vested interests when it comes to established news outlets and industry pioneers.

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Listening to some of the honest criticism outside the immediate community is very important

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You're absolutely right, I get a lot of good info from Bitcointalk. Thanks for providing a link for others to check out

I always enjoy your videos! Any chance you can do more, more often? :D haha Resteemed and upvoted!

Good post Heidi travels, but you don't spend much time on steemit. Yet you hold great power. Maybe try up-voting a comment or to and share some. Or better yet found a good post on steemit and Up-vote. Time to give something back to the platform. The sky is no limit for you on steemit!!

  ·  2 years ago (edited)

The first sentence are my thoughts in your mouth👍

You should make shirts out of it and hand it over/sell it to crypto newbies ✊✌️

Great advice on crypto investing! I like the different angles that you take to evaluate a crypto project; I think this is ever more important in today's ICO-crazed environment. It seems like there is a new announcement every day. Thanks for sharing!

Very good article @heiditravels. Many just buy totaly unreflected into a hype espacially newbies. That is where a lot of money can be burned. Thanks for sharing.

This is quite a complex subject. Thanks for the info

As always your content is on point. Love reading what you post as well as your other half. Always been great chatting and reading. Wish I had more time these days to stay in touch with the friends I have made here.

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I'm glad you enjoy it :) Any time you wanna chat I'm here!

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How are things for you guys?

great article and some good source recommendations! Followed :)

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Awesome!

Thanks for another great post Heidi, re-steemed..... Alot of new users these days! Happy travels!!

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Thanks for your support! I'll be traveling again very soon :)

This is very complete post.

Good job, Upvote, Resteem and thank for sharing it.

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I appreciate the support!

You did a great job with this article as is just full of valuable information. You really did your homework. Thank you for this excellent contribution to Steemit!

Thanks for this very informative post!

Great article, thanks, i fallow me

Great info! Mining and POS staking is the way to go. Most beginners should stay far away from trading.

You're great Heidi!! Good stuff, thanks

What I find useful is to treat each altcoin as you would any company selling a share in the stock market. Look beyond the value of the coin in the exchanges and especially don't get distracted by how the price goes up or down (especially if the volume of coins traded is below the millions as those might be easily "pumped-and-dumped).
When I saw Ethereum 4 years ago, I realized that they were going to fill an missing piece of the blockchain platform. With today's alt coins (and ICOs), find out if they have a working product, or has the team been part of a successful product before? Are they solving a real need, or just creating a use-case which may not be addressing a problem (medicine or vitamins)?

learning to invest time and effort to broaden our knowledge is the leading way to success , we learn from our experience and the information we got from others. Thank you for sharing your post. Good reads here @heiditravels ;-) I am still a newbie and going upwards and onwards to explore more hehe _

Good read, as always.
Btw, Tone Vays says that Steem is a scam and is not even on the blockchain.
That's just a fun fact, your article nicely explains how to deal with various sources of biased information and make up your mind.

PS
I'm sensing a deficiency of travels in your latest posts... ;-)

Great post!
Very good info for newbies and more experienced users as well.
Thanks for sharing and Steem on :)

Check out zappl.io ! :P

Very good..)

Sounds like some really good advice.

I research my coins by searching for articles on twitter or by going onto coinmarketcap and going directly to the coins website in order to find out about both the coin and the team behind the coin.

Excellent information and sources.

Very good info about coins as they are alot of coins which are scam and fraud after reading your very informative tips its easy to understand which coin is reliable and real.

good analytical approach to the alt coin subject

Good article! But for those not into analysing too much just use our simple checklist before buying an altcoin: https://steemit.com/cryptocurrency/@ictjunky/a-checklist-of-good-and-bad-signs-of-a-cryptocurrency-to-use-before-investing

Very informative..some words require some research for us newbies thanks!