Although it can be a bit dense to read, a project’s white paper is often the best place to research a crypto asset. The white paper will include all important information about a project, including its goals, technical information, and how tokenomics works. If a project doesn’t have a white paper, that’s already a bad sign. If the project has only a litepaper, or yellow paper, this can also be a bad sign of future development.
This is because without a white paper, there isn’t much direction for the project to evaluate, and litepapers don’t have much information.
The best projects will have a white paper and a litepaper available for reading, and you should do just that. By reading the white paper you will have a better understanding of the project and you will also be able to evaluate the care with which it is developed. This is because the more time and effort that has been put into explaining their idea, the greater the chances that it will materialize over time.
It goes without saying that simply having a white paper does not mean that a coin will be successful. A lot of scam coins have had comprehensive white papers over the years. Instead, use the white paper as a starting point for learning about a coin.
Use Crypto Screeners
Crypto screeners are sites like CoinMarketCap and CoinGecko. These sites have information about a coin such as its distribution, total supply, circulating supply, price history, general project information, and more. Using crypto screeners will help you examine an asset’s history to determine if it’s a good time to buy, as well as provide you with links to articles about the asset and the project’s official website.
It’s probably best to avoid the comments section on one of these sites, as they’re full of people trying to pump up a resource and create FUD (fear, uncertainty, and doubt). Instead, simply use cryptographic screeners as references to your broader research using the project’s white paper.
Use Block Explorer
Block explorers are an underrated way to research a crypto coin or token. They are most useful for tokens within a coin’s ecosystem, such as Ethereum tokens like SHIB or Binance Smart Chain tokens like CAKE. Using a block explorer you can really see the distribution of an asset on the blockchain, i.e. who owns it and how much they hold it. It can be useful to determine if an asset is subject to manipulation due to the fact that it is a large portion held within a few portfolios. You will be able to tell if the large holder is a real whale or an exchange based on the identity attached to the address, as most exchanges have labeled their address as “Binance Hot Wallet”.
If you can see that an asset is mostly held by a whale that is not an exchange, then you may be better off avoiding it as it could easily be manipulated by that holder.
Information is power
You should always do your due diligence before investing in anything, whether traditional investments like stocks, or alternative investments like cryptocurrencies.
We would be remiss if we didn’t mention CryptoVantage’s extensive coin guide section which should give you some background information about the most popular cryptocurrencies.
A cryptocurrency whitepaper is by far the best place to start your search, as it should contain all the important information you need, including how the asset will create demand for itself (tokenomics). Adding some referential information to your search through crypto screeners and block explorers will only help you make your decision.
Remember, invest only what you are willing to lose!
