If you’ve been involved with crypto for any length of time, it’s painfully obvious that many projects seem to be copying their business plans, not from Warren Buffet, but Enron… Many have been burned by a project that promises the world but fails to deliver. That’s why we’re giving you 5 rules to live by before you get swept off your feet by “the next Bitcoin”.
1 — The Team
A project is only as good as its team. No matter how amazing their vision or tech is, if they don’t have the people (or at least the resources and ability to hire them) to act on those ideas, steer clear. Ideas are a dime a dozen; don’t buy into them. What you need to look for is proven results from a proven team of talented experts. Look at the members of the project, and if the team has been involved in previously, and thoroughly research key team members. If you want to be extra safe, reverse image search their profile pictures, one scamcoin actually used a picture of Ryan Gosling as their CEO… seriously. Don’t be the next guy to buy into “Goslingcoin” or whatever the newest scam is.
2 — Business and Capitalization
Find out how the project is structured. Is it an actual business or company, or just a group of guys with a BTC wallet address and their fingers crossed hoping regulators never ask any questions? That’s not to say you can’t have an amazing project come out of passion and drive — look at Bitcoin! — but as the industry matures, be wary of anyone who hasn’t taken even the minuscule amount of time and effort to set up an LLC.
Beyond the corporate structure though, look at how the project is capitalized. Have they raised any outside money, or are they betting everything on selling tokens? If that doesn’t go well do they have any secondary plans for fundraising? Is a token sale all they’re doing, or are they focused on good business principles and other revenue streams like product sales? A project that can’t make payroll is a project doomed to fail. Look towards projects that have garnered significant interest outside of their token itself, and aren’t solely reliant on token sale proceeds to continue operating.
Additionally, is the project following the laws of their local jurisdiction? There would be nothing worse than the project shutting down because the entire founding team took a long vacation in Club Fed while their assets are seized.
3 — Whitepaper and Tech
Look at the team’s whitepaper and review it thoroughly. Many dishonest projects have lifted whole sections of their whitepaper from larger, more successful, projects. Try putting chunks of their whitepaper in a plagiarism detector to see if that’s the case. It would be wise to steer clear of a team who isn’t competent enough to write a whitepaper on their own tech or at least hire a decent technical writer to help them. On that note, look at the quality of the writing itself. If the team claims they are from an English-speaking country, does the whitepaper look like it was written by a native English-speaker, or run through a machine translator?
4 — Social Media
Does the team have a solid social media presence? Nobody wants to admit it, but sometimes it’s how you say it, not what you’re saying. Do they have a reasonable number of followers for the size and age of their project? Be careful of just looking at vanity metrics like followers though. No matter how amazing your project is, unless Elon Musk signs on as CEO, you’re not going to gain 100,000 followers two days after starting your account.
Also, look at the content of their social itself. Do the messages put out by their marketing team align with their stated goals as a company? If their project is focused on blockchain for supply chain management, is that whom their marketing is targeted towards? Not everyone has the money to hire a graphic designer at the start, but do they at least look like they care about the quality of their social media and marketing content? There’s a difference between professional and unprofessional social media beyond just the quality of your art. You’ll go much further if you work with projects who present themselves professionally and have a solid marketing strategy.
5 — Utility
Does their token or blockchain actually solve a legitimate problem? I hate to say it, but no, your food delivery app likely doesn’t need blockchain to function, UberEats runs just fine. Don’t get awestruck just because it says “blockchain”, look at the actual use and adoption potential. Can you legitimately see this product, beyond just the blockchain and crypto aspect, being used by people? Does the problem require or especially benefit from a blockchain solution? If not, ask yourself why they are spending time and resources on building a blockchain. No matter what you’re making, this is a business, and you need customers to survive. Don’t forget that just because someone slaps “-token” on the end of their project’s name.