If we ask – do your own research (DYOR), when you do your own Do you have the money to buy a new car or a new house? No doubt your answer will be a big yes, right? When investing in something, it is usually important to find out its validity and whether it is the right choice. For this reason, invest in research. The same concept has become quite popular in the cryptocurrency space, with DYOR in cryptocurrencies becoming a trend.
From an investment perspective, doing your own research means analyzing an investment instrument, be it cryptocurrency or NFT, before investing your money in it. This article discusses the importance of DYOR in cryptocurrencies and how to approach it like a professional!
What Is DYOR in Crypto?
As you probably know, cryptocurrencies are a highly volatile market, and if you do not have a solid foundation of knowledge and understanding, you could get lost. To gain this knowledge and understanding, you need to educate yourself through research.
In today’s digital age, you can find information and misinformation almost anywhere. Therefore, before investing in a cryptocurrency, you need to understand through research how it works and whether it is the right choice for you-this is what we call the DYOR of cryptocurrencies.
Why Is It Important to Do Your Own Research in Crypto?
DYOR is a popular term in cryptocurrencies and is often used by cryptocurrency marketers and influencers after sharing some advice on “cryptocurrency investing” to inform investors that they should do their research before investing, regardless of the advice. It is easy to find such posts on social media platforms such as Facebook, Instagram and Reddit. Some of them even promise high returns. But remember, dear reader, there is nothing in the world like free lunch money. If something is too good to be true, it most likely is not true at all.
You should know that these influencers or marketers are often interested in gaining traction on some cryptocurrency system to fund the project, regardless of its viability. Although any post by a cryptocurrency influencer is unlikely to lack authenticity, it is difficult to distinguish between the real and the fake. Therefore, it is extremely important to do your own research. In addition, the hijacking of influencers’ accounts to promote cryptocurrencies has become a rather popular trend, which has led to the loss of millions of dollars due to scams or Ponzi schemes.
While it is not difficult to understand the hacking of Indian Prime Minister Narendra Modi’s Twitter account, there is a high risk of becoming a victim of a scam for posts by someone like Elon Musk, who is heavily invested in and actively promoting the cryptocurrency space. To avoid this, be your own savior. Do not rely on anyone but your own abilities.
How to Do Your Own Research (DYOR)?
Now that you know the concept of DYOR in cryptocurrency, let’s move on to the part about how to solve the problem and become an expert.
Before choosing a cryptocurrency, you need to do thorough research and analysis. The following methods will help you do that.
P.S. When you become an expert in DYOR, also take a look at Coin Sets and become an investment expert.
1. Fundamental analysis
Fundamental analysis helps identify the true value of a cryptocurrency. It includes an analysis of the cryptocurrency company undertaking the cryptocurrency project, the founding team, whitepapers, tokenomics, future roadmap, etc.
Fundamental analysis is critical to understanding the true value of a cryptocurrency and whether it can survive in the cryptocurrency market. It also includes researching and evaluating the entire cryptocurrency industry and competitors to get a complete picture of a cryptocurrency’s profitability in order to make an investment decision.
2. Technical analysis
Fundamental analysis indicates the value of cryptocurrencies, while technical analysis provides the strategy needed to enter the market. It involves analyzing the price movements of the cryptocurrencies you want to invest in, comparing them, and identifying trends to understand when to enter and when to exit. You can perform technical analysis by evaluating cryptocurrency price charts, reading trends, indicators, chart patterns, and more.
3. Sentimental analysis
Sentiment analysis refers to the analysis of traders’ opinion of market conditions in general or crypto assets in particular. Market conditions are often determined by how traders perceive market trends. This leads to oversold or overbought assets trading. This situation can lead to increased volatility and a high probability of entering or exiting the market at the wrong time. Although this does not affect the value of a cryptocurrency, it does affect its price and therefore your investment. Therefore, it is important to conduct a sentiment analysis before investing in a cryptocurrency.
4. On-chain analysis
This is a rather complex analysis, but it is useful in determining whether it is appropriate to invest in a cryptocurrency. On-chain analysis uses blockchain data to examine various metrics, including the value and number of transactions for a cryptocurrency, transaction costs, hash rates, tokens assigned to bets, and more.
The purpose of on-chain analysis is to understand how stable the blockchain network of the cryptocurrency you are investing in is in real time. It helps you identify market or cryptocurrency patterns.
5. Social media analysis
You can’t skip social media analysis when running cryptocurrency and be DISCONTINUED. the most important step in this analysis is to evaluate the cryptocurrency project website. It should give you all the information and future prospects of a particular cryptocurrency project.
The next step is to check social media platforms to see what experts and influencers are saying about your favorite cryptocurrency. However, make sure that the people you reach out to are unbiased and have no vested interests in your investment decision. You can also join a cryptocurrency community and meet investors who share your interests.
6. Read whitepapers
A white paper is a document that explains the prospects of a cryptocurrency from start to finish. It tells you why the cryptocurrency was born, why it was issued, the roadmap it follows, and its growth prospects. It is therefore essential to read the whitepaper before investing in cryptocurrencies.
7. Read news
This is an important step for DYOR in terms of cryptocurrencies, there is no other choice. It is necessary to keep abreast of all events in the global cryptocurrency market. A cryptocurrency ban in one country or a scam in a cryptocurrency exchange can significantly affect the price. Therefore, you should make a habit of keeping an eye on all new innovations, regulatory changes, and basically anything that could affect your investments.
8. Educate yourself on tokenomics
The term tokenomics is composed of two words: token and economics, or the economic viability of a token. It includes various factors such as the value and utility of the token, its supply and demand, the purpose of its creation, incentive strategies, etc. It is important to understand this if you intend to invest in cryptocurrencies, as their profitability depends on how the token is structured.
Checklists of Questions to Look Out for DYOR in Crypto
It is always a good idea to prepare a list of questions to make the process of investing in cryptography smoother. Here are some items to include in the DYOR cryptography checklist.
- Why are startups/companies launching or have launched cryptocurrency?
- What are the benefits of the coupon or what solution does it offer?
- Does the white paper convey all the required details in detail?
- Does the official cryptocurrency website and social media pages convey clear and accurate information?
- From what does the value of the token derive?
- What do fundamental and technical analysis say about cryptocurrencies? Is it the right price and the right time to invest?
- Who are the major competitors and how are cryptocurrencies positioned in the competition?
- Are there downsides to cryptocurrencies?
Things to Consider While DYOR
So we have covered all the important aspects of DYOR in coding. There is not much left except a few things to remember when doing your own research.
- Always get information from reliable sources.
- Not everything you read is true, even if it is your favorite influencer; do your research before making a decision.
- Do not invest your money without understanding the details of cryptocurrencies.
- You will probably make mistakes during your research, but you will eventually improve.
- Build your own unique research methodology that you can quickly consult when investing in cryptocurrencies or any other asset.
The Bottom Line
Whether you are a beginner or an experienced investor, the general rule of thumb for investing in cryptocurrencies is to know the space you want to enter. You must be willing to put your mind and soul to work and do your research. This will help you see cryptocurrencies from a different perspective and make financially sound decisions.