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  • Vikrant Mehra

Crypto: Before You Buy

Updated: May 24, 2021

I'm often asked how I decide if a coin is legit. This was my first question as I learned about crypto too.


Here's the framework which I've found works best - looking for answers to four categories of questions:



1. About the Project


> What problem is it trying to solve?

> How can you actually use the tokens, either now or in the future?


Every crypto project publishes a white paper. That should be your first stop. There will be a fair amount of jargon, but don't let that faze you. Read until you have a sense of what the project is trying to accomplish.


These are the questions you need to be looking for answers to when I ask you to explain the project to yourself.


2. About the Developers


> Who are the people working on the project?

> What makes them the right people to solve the problem?

Social media numbers are fool's gold - it's surprisingly easy to buy your way to a 10K+ follower count.


Look for past projects, or Github repos. And look for how frequently those repos have been updated.


3. About the Community


> Does the project have a strong presence on social media?

> What are people saying about them?

> Are people happy/sad/frustrated with their investment?


4. About the Trading Activity


> How frequently do people trade this token?

> Is the supply of this token spread across the market evenly? Or is it concentrated in the hands of a few people?


With Bitcoin, for example - more than half the wallets in existence combine to hold about 0.01% of the total circulating supply.

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