How to properly analyze crypto-tokens before investing

The only way to protect yourself and properly analyze crypto tokens is to exercise extreme caution. If you ask people what they know about cryptocurrency, you will most likely hear the words Bitcoin (BTC) or blockchain - or even both. However, many people do not know that there are over 5,000 cryptocurrencies on the market today. This huge number can be a bit confusing for investors. With so many options, choosing which one to invest in can be a daunting task. At the same time, however, there are several potential scams in the crypto space. You see, some bad actors have developed tokens to trick people out of their hard-earned money. Whether you choose to move funds transparently or privately, your first priority should be to find genuine crypto assets to invest in. In this article, we have compiled a list of several precautions that will help you properly analyze crypto tokens, whether it is a utility token or an asset token, to make a safe choice. Carefully review the token white paper A white paper about a cryptocurrency or initial coin offering mentions the background, strategy, goals, challenges, and timeline for the successful implementation of a blockchain-related project. Since white papers are supposed to be detailed, they can be very revealing. The biggest advantage here is that you can find out if the company has a well-thought-out plan for the company's implementation - which can be very useful for analyzing tokens. Therefore, reviewing white papers can be very helpful. Here's what a white paper should answer: What is the project's unique selling proposition, especially compared to its competitors? What is the vision and methodology of the project leaders, and how do they plan to succeed? What steps will the company take to achieve its goals? What are the use cases for the token? Start making any cryptocurrency or blockchain investment decision by carefully reading the whitepaper and checking if it has any additional resources. This may inсlude financial models, SWOT analysis, legal issues, and a roadmap for implementation. You will also be able to determine the suitability of the tokens for mass standardized trading. If a company does not offer a whitepaper, consider it a red flag and move on to another. At the same time, keep in mind that whitepapers should not be taken as the holy grail of authenticity - a scam company can very well create a convincing whitepaper. For example, PlexCoin managed to raise over $15 million with its noteworthy whitepaper before the SEC shut it down. Learn more about the team leaders The developers and management team are a vital part of the success of any token project, so you should have an idea of ​​the people backing the project. Find out if anyone has worked on reputable projects before or is a notable player in the blockchain landscape. In addition to this, their qualifications and experience should also be important. Make sure that the token is backed by people who know what they are doing. This will help you to move away from companies that put personal gain ahead of ethics. Seeing this loophole, scammers have started to come up with fake founders and biographies for their projects. Sometimes, they may even use the personal data of uninformed victims to their advantage. Therefore, the best defense against this scam tactic is to do your research and do it well. Skip tokens for which you cannot find information about the developers or founders. Even if you find profiles, check if the activity matches the number of followers and likes, and pay attention to other similar nuances. Identify the likelihood of any legal issues It is not enough to find a great token ICO to invest in. Sometimes, you may be denied participation due to your jurisdiction. If you decide to act in such cases, you may break the law. To avoid this, you need to make sure that the regulators in your country have not restricted participation in such tokens. Although ICOs are still unregulated, the good news is that regulators are working on creating friendlier rules that could lift most of these restrictions in a large number of regions. Make sure the token project solves a specific problem. Ask yourself this question before investing in a token: what problem does this token solve and what makes it unique? Due diligence is crucial when it comes to analyzing tokens, especially if you want to protect the security of your investment. People are becoming more aware of the looming online threats