This is not financial advice
Do Your Own Research before you make an investment.
The common questions to ask are: Will there be a longterm need for this project and does it need to be on a blockchain? Is there a competing service that can easily out-perform this project? Do the developers appear committed?
As a mainstream member, you'll get access to our "Project Investing Spreadsheet" (Est. Q3) for beginners. Do the research and fill in the information, and you will be given an investment score between 0 - 100, 100 being the highest.
1. What's the token or coins utility?
Let's use Binance Coin (BNB) as an excellent example. The Binane coin gives you discount on your trades as well as voting power, for example when the community is voting for the next project to be listed. The cost will eventually build up over time as people are using it daily. So even if you don't buy them as an investment, you'd want to buy some at the time of trading altcoins so your fees are halved.
Also, the supply and demand will drive the price of this coin. And as Binance becomes more popular with new members, the demand for BNB will inevitably also grow. There are only 200 million coins (of which 100 million will be burned over time). The reason Binance is providing discount is to absorb the coins so they can be destroyed or reinjected back into the market for profit. This is a brilliant idea.
2. who is behind the project?
There are alot of projects available, when reasearching for the next big project. One of the smartest ways to start looking for the next big thing, is by looking at the team behind the project. Without a great team, their idea and vision will only be just that, because they don't have the people to make it happen.
Try to look for what Ian Balina call "all-stars" or suppoman call "superstars". This is someone who has a minimum of 2 years of experience working for relevant traded companies or a long experience in their field. Your project should have at least 2 all-stars in team. Also, look for projects that have all-star advisors to the project.
3. Does the project have a good use case, what problem are they solving?
I'll be using the project Zilliqa (ZIL) on this subject. Zilliqa is the first public blockchain designed to implement sharding, allowing for linear scaling as the blockchain grows in size. To date, scalability has been an issue for existing blockchain technologies.
Right now, Bitcoin can’t process all the demand for its network, and transaction fees have risen accordingly. The same goes for Ethereum where limited throughput means smart contracts can become gas-intensive. For instance, the popularity of Crypto Kitties significantly slowed Ethereum, showing the limits of the network.
4. do they have a working product or prototype?
Most of us have that friend or family member who never finish what they've started. Let's say your friend have been working on his business plan for 3 years, with nothing to show for except his vision that it will disrupt the cellphone market some time in the future. Would you lend him 10.000 $ if he asked you? - Probably not!
What if he had a software prototype, but he didn't know if it would go live in 2 or 5 years. Would you lend him 5.000 $ if he asked? - Again, probably not!
Before you invest in whatever project, you would want to know if they have a prototype or working product to match their vision. Do they have a roadmap telling you when they are planning to launch?
5. how good are they at sharing their vision?
Having a plan, a vision and a goal is great, but it needs to be communicated in the right channels when we, the investors are doing the research. The right channels are usually through a intuitive and good-looking website, a detailed roapmap and a good whitepaper. The whitepaper need to include everything. An IPO on the stock exchange or any other new business would call this a business plan. What are they trying to create, how are they going to do it, with what and who are going to do it.
6. How good is the community?
Always be sure to check the community that is behind a certain coin to asses the situation. From there on you can decide what to do. Understanding the impact of a community on the coin and price and can be a deal maker or breaker.
Be sure to always check the community one way or another when dealing with ICOs and potential coins to invest in.
Do they have a reddit page, is it being mined, are they on twitter, slack and telegram? Are they on facebook or other social platforms. Do they have a blog or forum? Is there a healthy interraction between the community and the team of a coin?
Those are keypoints to look for in this industry. The crypto industry relies heavily on crowdfunding thus one of the most important things to the developers and founders should be the community as it forms the backbone of any coin.
(Original post my xanthus on Steemit)
7. does the project need to be on a blockchain?
First and foremost, it’s so hyped and trendy. “A blockchain-based project” – doesn’t it sound cool? Every team members could add such an impressive line to their CVs, no matter if they know what it means or not quite. Some projects will use "blockchain" as camouflage to seem more interesting. And they will add a utility token with almost or no important value, just to use the blockchain in some form or matter.
It's up to you to decide whether you believe that the project's use-cases for the blockchain technology is needed. The best example will most likely always be Bitcoin.
8. For long term investment, dont merely follow the hype!
Often the real quality investments don’t market themselves until far later in the project life cycle, when they know that their product is worthy of sharing with others. The main problem that ends up happening is that the quick cash grab projects often market straight out of the gate, with little facts and product to stand on and more empty promises than actual development. This of course is great for their funding but when they hit road blocks they crumble and innocent investors lose it all.
Alot of the traders and investors in cryptocurrencies don't have the patience to wait for a good product. Invest in what you believe in, set your exit strategy and don't touch it.