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A Beginner’s Guide to DYOR (Do Your Own Research)

Doing your own research is not only heavily advised, but it can also save you from investing in projects doomed to fail. But how do you conclude an effective research on a cryptocurrency?

**Firstly, the DON’TS:**

**#1** – Don’t believe any YouTubers with surprised or hyped faces and video titles such as “AMAZING OPPORTUNITY 🚀 1000X POTENTIAL COIN 😲”. They usually just buy heavy bags of low market cap coins, pump them in videos, then dump it when all their viewers bought in as well. Rinse and repeat.

**#2** – Don’t invest in a cryptocurrency based on one source. Always double or triple-check everything, and take every opinion with a pinch of salt.

**#3** – Don’t fall for Pump and Dump schemes. They usually involve organized shilling on Reddit, Youtube, Discord, Telegram, etc., claiming to know the next moonshot that will make everyone rich. They do the same as Youtubers, buy bags of a certain coin, “announce” it to everyone involved, and sell their coins when the price is high enough. All the others are left with heavy losses, and the organizers just pick the next coin afterwards and repeat the process the next day.

**#4** – Don’t ignore math behind cryptocurrencies. What I mean here is we see many newbies come here and say they bought XX,XXX coins because the price was $0.001, and what if it moons and reaches $1,000? Yeah, so prices doesn’t work that way. /u/Lovinglyhandmade created a great website to help you better understand market cap potential of alt coins. The website’s name is [The Coin Perspective](https://thecoinperspective.com/?c=XMR), and it helps you with calculating the price of many coins if they had the market cap of a different coin such as BTC, ETH.

**Secondly, what to DO:**

**#1** – You need to understand the basic terminology of cryptocurrencies first. For example, what is a blockchain? What are alt-coins? What’s the difference between a smart contract platform and a DeFi project? If you know these, then great, you can move on to step 2. If not, I suggest you start by researching these terms, and try to understand how crypto works in general. If you can find the time, I’d also suggest reading [bitcoin’s whitepaper.](https://bitcoin.org/bitcoin.pdf)

**#2** – After you know which coin you are researching (and what type of cryptocurrency that is), you need to dive in and start reading and watching content. A lot. Also, don’t forget fact-checking, this is crucial. One other thing you should do is list its competitors (for example, if you are researching Ethereum, its competitors include Cardano, Polkadot, Cosmos, etc.), and COMPARE the cryptocurrency you’re researching with its rivals.

***#3*** *- (I’d like to quote* /u/LargeSnorlax *here:)*
“Look at what’s wrong with the coin you’re looking at and understand its weaknesses, not just the strengths that the weird minions tell you about all the time.

* Does it lack adoption? How long will that adoption take to come? What are the barriers regarding that?
* Is the technical protocol incomplete? What are the plans regarding that? How long will it take to have a version that fulfills the project’s goals?
* Is it decentralized? If not, is there a plan to make it so? When will that plan be complete and what will the protocol sacrifice in order to get there?
* Is the project liquid? Will the developers lose interest if the price does not increase and move on to another project?

I find it’s always best to consider the bad things about the project rather than the good things. It’s easy to sell someone on the good of a project, and much harder to talk about the bad and how to fix that.”

**#4** – Google “[insert coin name] scam” just to make sure nothing serious comes up. If you happen to find something that might indicate your researched crypto is a scam, make sure to get to the bottom of it.

**#5** – Do a background check on the Dev team. Can you find them on social media? Are these real people? (Real photos, real posts, real connections, etc.)

**#6** – Do research on people who’re already invested in the project. What about the community behind this cryptocurrency? Are they cult-like shillers, talking about nothing but the price of the coin? Conversely, do they talk about tech and its possibilities? Are they optimistic about future updates and developments?

**#7** – Check the Nakamoto Coefficient to see whether your researched crypto is decentralized (enough) for you to invest in it.

Hopefully, I could help some of you with your research. As always, if you have any other good tips, make sure to share it with us in the comments! Special thanks to /u/Lovinglyhandmade, /u/LargeSnorlax and /u/ReloDD for inspiring this post.

Thanks for reading! 🙂



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35 Comments

  1. If a coin doesn’t have a whitepaper, go away and never look back. If a whitepaper does exist and there is a lot of competition in the market, make sure they mention it on their site/white paper. If a project is similar to another project in a similar position and they don’t compare their products on their whitepaper, it may not be a good product.

    Also, generally it isn’t a positive sign when a coin claims to be a disruptor. Unless the coin is a giant project, with a large team, a product, etc… being a disruptor isn’t necessarily a good thing. This buzzword implies that they are trying to replace huge company behind it, and it is foolish to think a coin with a team of a few people with no product can beat out a Google or a Paypal. In general, it is a better investment if they are trying to work around technology or build on it.

  2. I’m pretty old school. I don’t own a computer or have internet, besides a smart phone. I don’t have TV. I have probably invested 30-40 hours researching crypto and blockchain in the last couple months. I’ve come to the conclusion that it’s similar to reading a foreign language. I honestly do not understand most of what I read. That does not mean I do not believe it’s the future and want to take advantage of it while I can. From what my simple brain has concluded with Information that I only somewhat understand was Etheurim was my get my feet wet pick. Can I explain why, not really. Biggest upside with a network that can be used more broadly?
    I depend on reading what all y’all have to say. Each and almost everyone here has a better understanding than I.
    That doesn’t mean I don’t want to hedge my stock portfolio with crypto. I do.
    Eth seemed like a semi safe play with the most upside.
    I cannot express enough how combing through old post, like this one, and reading comments has helped me out.
    Thanks peeps
    -/The noob

  3. Great post. I’ve joined the sub and recently have been trying to watch some online courses from MIT regarding blockchain (shared in one of the post on this sub).

    Hopefully I will be able to gain more knowledge and make sound decisions instead of giving into FOMO.

    This sub has been great in helping me learn more. Hopefully we will all be able to grow together!

  4. Check a popular Reddit post about the coin you want to invest in and sort by controversial. It will probably be a shitshow, but it should give you a good idea of what the coin’s weaknesses and uncertainties are.

  5. I’ve started reading the white papers of the coins I’m interested in, but a lot of the technical and coding jargon is a little over my head. Can you suggest a place to find more beginner friendly sources of information?

  6. Easiest upvote for the day!

    Another protip is: if you see “buy now” and “profit” in the same sentence regarding a token or any crypto at all, avoid it immediately, it’s a scam 🙂

  7. A few other tips:

    1. Check social media as soon as possible. Check what people say on Twitter, Reddit, etc. You will see potential problems with that crypto straight away.

    2. Think about your personal use-case, can you do something with it?

    3. Can whatever they are doing be done without the use of a blockchain? Does the technology fill a gap? Needs a coin?

  8. Another brilliant resource for us all, thank you for your time to write this mate! Time to read some books ay! ![gif](emote|emo_pack_1|this_is_gentlemen)![gif](emote|emo_pack_1|arrow_up)

  9. >Check the Nakamoto Coefficient to see whether your researched crypto is decentralized (enough) for you to invest in it.

    The Nakamoto Coefficient is bullshit. Look at things how many nodes a coin has, if it was printed out of thin air, how much control the founders have, hashrate (if any) etc.

  10. After owning many many different coins I wished I had just bought BTC only from the beginning. My current advice to newcomers is to imagine an amount of money you’re willing to put in. Then buy BTC with 1/4 that amount. Wait for a pullback or crash or whatever and when it comes put your remainder 3/4 in to BTC. This way you’re in the market if we go to the moon and a pullback never comes and at the same time it prepares us mentally for seeing a “crash” as a buy in opportunity

  11. **#1 – You need to understand the basic terminology of cryptocurrencies first. For example, what is a blockchain? What are alt-coins? What’s the difference between a smart contract platform and a DeFi project? If you know these, then great, you can move on to step 2. If not, I suggest you start by researching these terms, and try to understand how crypto works in general. ****bold**

    Any good resources where one can learn about this?

  12. Solid post, thanks for sharing. I will echo one of your points: come to *learn* first, and the investments will become clear. Come to make a quick buck first, and you may as well be gambling and guessing. It may be helpful to newbies to define Nakamoto coefficient in that last point, btw.

  13. Good post. In my opinion the only way to really learn about crypto is going hands on. Checking out projects that are interesting to you and putting a bit of money into those. The money will drive you to find out even more about the project.

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