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Cryptogambling / How to Differentiate a Good Crypto Project from a Bad One

How to Differentiate a Good Crypto Project from a Bad One

Publish Date: 01/05/2023

Many people have written to confirm the ways in which cryptocurrencies and blockchain technology have impacted the financial industry, providing a decentralised way to transfer value globally.

With this technology and the increasing popularity and use of cryptocurrencies, many crypt projects have emerged on the scene, thereby making it a challenge to identify good crypto projects from bad ones.

As a crypto enthusiast, you might run at a loss if o invest in the wrong crypto project. this is why you need to know and understand the factors that differentiate a bad crypto project idea from a good one.

10 Things to consider when choosing a Crypto Project

Data is your ally

This might sound superfluous, but it is a very important factor in choosing the right crypto project.

Let’s say you come across a project where the top 100 holders own 80% of the tokens. In this scenario, it’s highly probable that either the majority of tokens are held by the project team or by large investors known as whales, who can easily manipulate the price movements due to their significant holdings.

Because this is based on a ratio of token holdings compared to the ratio of top holders, makes this is very important for you.

Put Your Eye on the Prize

It is important that you learn how to look out for specifics in projects. Every product requires marketing for expansion so as to reach the right audience and community.

While it might be challenging to keep up with the pervasive adverts and announcements on these projects, using data aggregators can help you get important information on changes in these projects.

Look out for Token Distribution

Valid distribution of tokens is imperative to gain the trust of potential investors.

Inadequate token distribution can lead to a number of issues, including token concentration, a lack of decentralization, conflicts of interest, and low liquidity. These problems might damage the project’s reputation, prevent it from expanding and becoming widely used, and maybe even make it easier to manipulate the token’s value.

Crypto Project Utility

The utility of a cryptocurrency project determines whether it succeeds or fails in considerable measure. This is so because the project’s survival depends heavily on its longevity and additional value.

Without any value, the initiative might lose support, which would eventually result in its failure, especially in trying circumstances like a bear market. In order to ensure its survival, a cryptocurrency project must have a defined goal and value proposition.

Community is Important

Having a strong community can provide absolute value to every project. Also, this community can help you know if you are investing in the right crypto project idea.

Communities provide a backbone, give stability, and trust and allow people to engage with the project.

Therefore, if people are not paying so much attention to a crypto project, it is a pointer that such a project lacks trust or interest, which can be a bad indicator for investment. High communal interests and growth can also add sentiments and positivity to a project.

Pay attention to Tokenomics

Just like the popular economics maxim, you have to understand the chain of supply, demand, distribution and longevity. Though the list goes on, all of these are needed for you to make sense of tokenomics and crypto projects.

This plays an imperative role in knowing if the signal is good or bad in the long term.

Know the Project Team

Every project team is important to the success of the project. with the right team, a crypto project stands to have a strong front. this is because the combination of talents will help ensure higher chances of longevity as well as build trust.

It is therefore imperative that you know the team behind any crypto project you come across.

Active addresses provide Vital Information

A digital currency project’s active address count can reveal important details. The number of active addresses on a certain blockchain network indicates the number of distinct addresses that have exchanged or received transactions over that network within a given time period. The user-based involvement is stronger when there are more active addresses.

Low numbers of active addresses can be a sign of disinterest or lack of trust, or they can show that there is an issue with the project as a whole. When assessing whether or not a project is good or not so good right now, this is a credible area to take into account.

Look out for Exchange Listings

Crypto projects can gain popularity by being publicly accessible, and exchange listings provide just that. The more exchanges that offer a token, the higher its chances of success for reasons such as accessibility, stability, growth, and engagement.

The quality of the exchange listings is also crucial in determining the potential success of a project. Therefore, multiple listings across top-tier exchanges are a better indicator of a project’s credibility.

Examine Roadmap Trajectory

It is impossible to stress the importance of having a trustworthy map when you are lost on the road. Consider a scenario in which the map does not live up to its promises and contains gaps. This can lead to serious issues, especially when it comes to trust.

This parallel applies to the roadmap of Bitcoin initiatives as well. If the deadlines and obligations are not kept, it may not only have an impact on the investors but also limit growth and erode confidence. When deciding whether or not to invest in a cryptocurrency project, the ability to assess if it has followed its roadmap and met its objectives is crucial.

Final Note

Overall, there are many factors to consider when choosing a good crypto project which is much more than these ten packets. However, these are the basics. These will help you to quickly decipher and make better judgements before choosing or investing in a crypto project.

It is imperative to consider the project itself, the unique qualities it has and how it is driven by tokenomics as well as how the financial incentives are set in lace to attract new investors or holders.

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