My second weekly post is a list of checkmarks that I tend to oversee when I am looking into buying any crypto asset. This is:
The ₿inochet 10 Commandments Before Buying
Disclaimer, I am not a financial advisor, I am merely a helicopter pilot. Always do your own research and be extra cautious to where you invest your money.
1.Find an asset with something unique, something that will distinguish it from the endless sea of shitcoins and clones. I am always looking into technology and what problems it solves, what gaps in the market it is filling and something to make the asset stand out. As an example, I was heavily investing into sol from its single digit days, because of its unique transactions per second and their so called “Proof of History” – which is a glorified Proof of Stake. I started taking profits when it hit triple digits (sold the top for the most part but kept a small moonbag)
2.Find an asset that has an actual use case in real world. Everything is based on profits and about stacking them bags into racks until the end of times. So despite any blockchains good intentions to solve problems and provide new tech, it has to have an actual use case that institutions and smart money can get behind in order to invest. Because the institutions and market makers are moving the prices and not retail.
3.Find an asset that is open sourced and has code audits. This will ensure that no backdoors are into the smart contracts that will allow an exploit. At least it minimizes the risk to get rugpulled by either the dev team behind the project or any malicious attack by hackers. Which leads me to my next point.
4.Find out about the team behind the asset. Who is behind it? What projects did they work on before? Are they involved in any scams or outstanding court cases? Which country are they based and what regulations that country has for blockchain and crypto assets?
5.Find out about how much interest the asset has from hedge funds, VCs, for profit research and whales. No big investment firm will ever invest in a scam or a shitcoin, because as I said, its about stacking them bags into racks as high as possible. Always follow the money, the smart money.
6.Find out about the token distribution. Did it have a fairdrop? An ICO(Initial Coin Offering)? An IDO(Initial DEX Offering)? How much of the supply is held by developers and the project in general? Because they have to get paid as well at some point and take profits, and this could lead to a price plummet if they hold the largest allocation in the project.
7.Find out about the market cap. Market cap is the actual price of the asset, not the value it is displayed. You must think of it like the potential price it could have in the future. Dogecoin and Shiba are great examples for this. If the market cap is already in high billions, how much do you think a shitcoin like the abovementioned ones could grow? For scale, Ethereum has 266billion market cap -as of now. Doge has 14.8billion market cap. HOW MUCH DO YOU THINK A SHITCOIN CAN GROW? Think for a second! Is it going to overrun ACTUAL blockchains with mass institutional adoption that host hundreds of applications on them “just because”?
8.Find out about the project’s growth through charts. You must wear your TA hat now and check the charts, in long scale first ideally since inception and extrapolate your initial conclusions. Check the valuation with the BTC Pair, even the Eth pair in some cases.
9.Find out about the activity in Github. How often they are pushing changes? Is it a ghostchain where nothing is developed on? I want to point out here that, as a software engineer myself, I could be committing jargon into github all day long just to show activity and traction, so this isn’t as high in the list as priorities go.
10.Find out the impact it would have in your portfolio in contrast to if you strengthened your position to an already acquired asset rather than buying a new one. Is it a riskier asset? Did I make my risk management? Do I have a solid enough portfolio to invest in something more “exotic”? If you have a portfolio filled with risky assets, you will probably get rekt in a glorious manner in a bear market, in a black swan event or in any massive capitulation really.
So, there you have it. My 10 commandments when buying magic internet coins. This doesn’t mean you have to find something that checks all 10, because it’s going to be pretty hard. I try to cross check as many as possible and do my due diligence in risk management and you should do that as well and plan accordingly.
*Your friendly neighborhood helicopter pilot, ₿inochet
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