Joining the cryptocurrency market feels like moving to a new city where you know no one and feel like a stranger. Given that this is a financial market, often described as a digital wild west, understanding the people you are dealing with is more than important.
Reputation is everything. But you are not investing in the stock market. The number of projects reminiscent of big tech enterprises, the big four, or any noteworthy investment firm is sadly small. Unless you limit yourself to buying Bitcoin and Ethereum, you will have to deal with tons of research in regard to a project’s owners and developers.
Imagine the following situation. A new DeFi token joins the market, and within days, it gathers enough popularity to be discussed by the entire Crypto Twitter space. What do you do? Do you blindly invest, or is there a way to investigate the project and confirm if the team is legit. After all, the chance of running into a scam is particularly high, and as a beginner, know that the possibility of investing in one is even higher.
This is the first lesson that is part of our ‘Analyzing’ sub-series that deals with researching cryptocurrency teams. By the end of this lesson, you will find out the hallmarks of a great crypto team and learn how to recognize one.
Let’s say for a moment that you are an entrepreneur founding his first startup. You have the idea, capital, and plan. All that is left is to find a suitable team to make your dreams come true and launch a product worth buying.
You create a job ad and search for employees with prior experience in your sector. You find a few reasonable candidates and arrange an interview for next week. The day finally comes, and after a short introduction, you barrage the candidate with questions such as:
It might seem strange, but these are exactly the questions that you should ask yourself when reviewing a cryptocurrency’s team. Yes, you might temporarily play the role of an HR manager, but we promise that meticulous research always pays off.
Find out who the people behind crypto projects are and get to know them. Unless anonymous, it will be easy to research a position’s background with the help of websites like LinkedIn.
But if that is not the case and the team is anonymous, you are certainly putting yourself at risk. Are all anonymous teams a clear indication of a scam? Not at all. But the truth is that anonymity removes all accountability and that when present, privacy can be your investment deathbed.
Besides LinkedIn, another great platform for finding details of many crypto teams is Craft.co. The platform lists popular projects, their employees, history, and other relevant information.
The best way of finding out if someone is dependable is by checking their portfolio and past experience. If the developer of a new cryptocurrency has previously worked on another project and was successful at their job, the success will highly likely be replicated in the newer team.
A great example of estimating a project’s potential by digging deep into its owners is Andre Cronje. Cronje is a developer who has previously worked in the blockchain industry, bouncing between numerous projects such as Kosmos, Fusion, BitDiem, CryptoCurve, CryptoBriefing, and many others. Not to mention, Cronje also had pet projects of his own on which he invested a significant portion of his time.
When Cronje finally revealed in 2020 that he joined the DeFi market and planned to launch a yield farming aggregator, it was more than certain that his project, Yearn Finance, would succeed. And succeed it did! Anyone who knew who Cronje is has invested in a project that now hosts $3.71 billion in collateralized value.
You might encounter a team without any experience in the cryptocurrency market, but that is not a big deal. However, we must mention that there is more risk at play, as well as more unknown factors. But while investing in an underdog does require you to put incredible amounts of faith, it would not be the first time for such a combination to win in the end.
Your local blockchain developer is not inaccessible. If still not sure about a team and how much to trust them, try to contact the team directly with the help of social media.
Believe it or not, a project’s founders will answer back. It is not rare to see founders, software leads, and other important positions actively communicating within their Discord server or Telegram channel. By talking with them, you can figure out what kind of people you are dealing with, whether they are responsive, and how they react to criticism.
We do not have to do much explaining here. Through conversation alone, it is possible to determine whether the project is trustworthy or not. Trust your gut and intuition.