Neoxian's guide to evaluating a crypto-currency

in cryptocurrency •  last year 

Hey my Steem friends, looking at some strange new crypto-coin and wondering if you should buy in? Well Old Neoxian is going to help you out. Here are my guidelines for judging whether a new coin is an actual crypto-currency that's worth buying.

I just want to note that these guidelines are not all necessarily 100% rules, but strong indicators. If the coin is breaking one of the rules here, be sure that you have some compelling reason for buying it anyway. As always, invest with caution and do your own research.

1) It should have a white paper. The paper should make sense, and it should talk about the basics of the coin.

If the coin doesn't even have a whitepaper at all, then the chances are excellent that it is crap.

The whitepaper should talk about the basics of the coin: things like the consensus mechanism, total number of coins, inflation rate, block times, transaction fees.

The consensus mechanism is usually proof of work, proof of stake, or DPos, or some combination thereof. If is it something different, then try to take some extra time to understand it.

If the whitepaper just talks about feel-good, pie-in-the-key, unicorns farting rainbows good things, and doesn't mention any of nuts and bolts of the coin, well, that's a very bad sign.

2) The coin must actually be decentralized!

See above, the whitepaper should describe the consensus mechanism. If it doesn't have a proper consensus mechanism, then the coin isn't decentralized and isn't really crypto-currency.

3) The coin should have a local wallet you can use on your computer.

When investigating a new coin, you should find the local wallet for the coin, download it, purchase a small amount of the coin, and play around with it.

If the coin doesn't have a local wallet, that's a red flag. A web wallet might be ok, but you have to make sure that it is using Javascript (or whatever) to generate and encrypt a key locally.

It should be possible to use the wallet and coin without having to give your personal information to anyone.

If there is a hardware wallet available, that's also a plus.

4) The coin absolutely must be open source!

This is a really important one. I would say this is the one rule you cannot break. The coin needs to be an open source coin. This means that you should be able to find (and compile if you want to) the source code for both the wallet and the consensus nodes (servers). Usually the code would be found on Github, or something like it.

Bonus points if it runs on Linux.

You can't trust a currency that is closed source, god knows what might be happening under the hood. I'm not going to buy 10K usd worth of a coin and put it into a closed source system. Madness! Madness I tell you.


(meme generated with https://imgflip.com)

Batman knows better.

5) If the coin promises an insanely good interest rate, then it's likely to be a scam.

Yep I'm talking about Bitconnect or things like it. If the coin promises 25% + APR, or like 1% interest per day, with something that requires almost no work (such as a loan platform) then yea, it's almost certainly a scam, and should be avoided.

Also, if there is a pyramid scheme attached, where you have to sign up people under you to make more money, that's also a hint to stay far way.

Invest carefully

Again, if you are breaking a rule from above, be sure you know why, or at least know that you are taking more risk. I'm sure some amazing coins will emerge in the future, but so will tons of crap ones. Hopefully this guide will help you tell which is which.

Neoxian-FINAL-FRAME2.gif

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This is some good advice. It must be heard by all.

Great checklist for evaluating a coin or token that will help some of the newcomers in this space, I will share this with my friends who are new :)

Always listen to Batman.

I do.

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Batman is good. Still Clark Kent is above.

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I bet they both smack Robin around though. It's his fault. He acts like a target and says stupid things.

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See. Even the animal kingdom knows what's up.

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I'm Batman

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No. I'm Batman.

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NO! Shut up, Robin. Go put your pajamas back on.

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I'm Batbatmanman, with extra bat and extra man.

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I'm na-na-na-na-na-na-na-na-na-na-na-na-na-na-na-na Batman.

What are your favorite coins? I like steem, bitcoin and ethereum but I am new to the game.

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I like Steem, Eos, Dash, Bitcoin, Litecoin. I do hold some others for various reasons.

This is great info @neoxian, im starting to invest in cryptocurrency and like other investments, its scary but there will be warning signs ahead that i have to watch out for.

that slap ufff that hurts haha
well anyways thanks for a great post lots of interesting things you shared :)

many ico don't even have white paper now a days and people still invest heavily

I say the best way is to throw any reason down a window and choose something you just feel like! These are the times!

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That's one way to do it.

On point guide thanks for sharing it bro very helpful

will always take care of these points from now on before investing in any crypto :) post like these made my day !!

this is super helpful. Thank you!

Solid advice. I have in the past bought coins just because it has a good name. There are a ton of scamcoins out there you really need to research

If the coin doesn't even have a whitepaper at all, then the chances are excellent that it is crap.

It is call

SHITCOIN

Thanks for sharing your info @neoxian

thanks for the guidelines, although i am a lazy reader for part 1 ><

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When it comes to whitepapers, just skim all the feel good bullshit and get right to the part that talks about how the coin works.

I'm guessing you don't care much for ripple then.

thanks for information on crytocurrency guide.

The world of cryptocurrency is revolutionizing the planet, and we are all part of this monetary revolution. Excellent post my dear a big hug

Thanks for sharing. This was particularly useful. (including the meme)
Lol

I wonder why anyone would buy a coin that doesn't have any real use case though...

That's like buying nothing

Steem on

This is a really helpful post. My bf is really into crypto so I’m learning...or trying to...and I’ve started a little investment portfolio in the last few months. This is a really great, simple, and must-have list of tips that helps me order my thoughts a lot! Thanks for writing this for newbies like me. :)

good tips!

yes, this is very useful sir ..

Thanks for your [email protected]

Thanks @neoxian for the wonderful tip-off.
I almost fell into a scam coin pre-sale last weekend, if not for a friend that called my attention to some things.
You really made my day
Thumbs Up

This is a really detailed and useful guide.
Thank you for the really enjoyable read.

DQmcyKwGQFVaCbPiR6mpBKnF5zsruDkeKBhXq8qdMutPSnr - Copy.gif

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I contact to @neoxian at steemit chat and also discord.But any reply not get from him.I went to lase sp what should i do. Please answer to me @neoxian bro.

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You didn't give me very much time to reply. I'm not a 24/7 service.

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Can i lase steem power from u sir i need a little steem power for my group .Please.Btw i apologize for my commemt.I don't know what to do so.I lase minnow market but wasting time i not get sp i pay APR% above 30 but nothing .