My approach
First, I want to highlight that I want to apply my investment analysis plan only to already-in-the-market assets. In soon future, I will definitely work out ICO evaluation methodology, as new projects are entering the market almost every week and there is a good investment potential to discover disrupting or unique projects which I do not want to miss.
Scam scanner
The market is growing very quickly, during the last 4 months the overall capitalization quadrupled, new projects enter the scene almost every day, as the result we now have 844 currencies and 204 cryptoassets accordingly to Coinmarketcap.com. It is a good thing to have a reliable filtering tool that can detect red flags at the very beginning of a research, so I can save time on bad projects and devote more attention to better ones. Having reviewed about 50 projects I listed most basic aspects that may define a project as a scam, and here there are:
1. Properly set up website
It is very funny when scammers use some popular website builders with absolute lack of clear presentation of a project. Accounting contemporary technologies a properly set up and neat looking website is a matter of 100 dollars or a couple of days of work even for a lamer. So an obviously weak web page is a red flag.
2. Whitepaper
This is the essence of a project where the team presents the problem they are trying to solve together with promoting and development plans. If it is missed, when a project gets a red flag with no exceptions.
3. Public team with social proofs
The history of ICOs and cryptomarket already knows successfull stories when anonymous teams or teams with anonymous team members were successful to gain capital. Even Satoshi Nakomoto, the father, the creator of the very first cryptocurrency is an anonymous person with no public credibility. In the new world it is a personal choice if to stay public or anonymous, the only thing is credibility or social proofs. If a project team can not present valid testimony of their relevant experience or even hide any evidence of bad or suspicious reputation, it is a red flag.
4. Team contact and availbility
This aspect correlates with the previous one. Project team must be reachable for investors, press and even for governmental representatives. Projects lacking of any contact information get a red flag from me immediately.
The basic review
Once a project passes the scam scanner, it is liable to the basic review which will be presented both as a video on my Youtube channel and an article on my steemit blog. Pls, mind that the basic review is not an investment recommendation or advice, I will deliberately overview just the major sides of a project in order to decide if it is worth a further deep analysis for a final investment resume and decision. In case I detect any signs for a red flag while doing the basic review, I will announce and explain them.
At the moment I have listed 12 facets for the basic review. If you have ideas or comments to this scheme, pls, you are welcome to comments and share your thoughts.
- Value proposition
- Problem definition
- Problem solution
- Market
- Market definition
- Market size
- Competitors
- Trade Numbers
- Capitalization
- Number of supporting exchanges
- Liquidity
- Team
- Team completeness
- Team expertise
- Roadmap
- Real progress
The deep analysis
Deep analysis is an advanced or extended variant of the basic review scheme. It is not a secret that a right investment decision depends on the amount of analysed information and most investors take such decisions based on hardly 5-10% of available data. I have tried to point out most essential and vulnerable parameters which may help to discover mo red flags, rather than strong features of a project.
I decided to keep my approach methodology public, as my first goal is to get feedback on it. I’m not afraid of copy-pasting it by others, on the contrary it will give more credibility and assurance in my analytical skills, if somebody takes it as a base for his own analysis. Furthermore, the most difficult part in analysis is the analysis itself and it is experience and specific knowledge what makes an analyst a good analyst. The only thing I want to do to keep the secret sauce is leave the deep analysis scheme without comments and detailed description. It should be also clear this is not finite and will be definitely updated if I discover new important aspects for investigation.
- Value proposition
- Problem definition
- Problem solution
- SWAT analysis
- Market
- Market definition
- Market size
- Competitors
- Potential Revenue
- Trade Numbers
- Capitalization
- Number of Listings
- Liquidity
- Number of Trading Markets
- Distribution Model
- Compound Annual Growth Rate
- Average Growth Rate
- Team
- Team completeness
- Team expertise
- Roadmap
- Real progress
- Team completeness
- Team skills aligning the market
- Team previous projects, work history
- Team members reputation resume
- Media Mentions
- Big Backers, Partners, Clients
- Investment Resume
Go voting
As I mentioned in my previous post, first I will go and analyse Steemit. Next three: Etherium, Etherium Classic, Ripple. The full list is here. If you are interested in investment and getting an analysis of a certain project, you can subscribe to my Youtube channel, Steemit blog or my newsletters and wait until the time will come. If you want some projects to be analysed much sooner, you can vote for them. Here is the rules for voting:
“The order of the queue in each list is not finite. As the project analysis is a source and time-consuming process, I decided to offer the market or you, people, crypto enthusiasts, to decide on the analysis prioritization. Meaning that everyone, who is interested in getting the analysis of a project or just wants to support my initiative, may vote for a project to lift him up in the list.
One vote equals 0.0001 btc. 1000 votes will equal 0.1 btc. Votes will be accepted either in btc and native project tokens and will compose a final sum of votes. Votes in native tokens will be counted accordingly to their rates to btc at the moment of the snapshot. To vote for a project one should send 0.0001 in btc or equal sum in a native tokens to the right address. The snapshot of the lists with vote numbers will be made every Monday on 11:00 am (the time I will be certainly up and at my computer).
I leave for myself the right to change, update or remove any rule for the voting process.”
That is it for now, stay tuned and don’t get hacked.