Are you new to the world of blockchain and cryptocurrency, and are you wondering which coins to trade? Alternatively, are you a Venture Capital (VC) fund manager looking for the best blockchain projects to invest in? You need to find the most impactful blockchain-cryptocurrency projects. How to find the most impactful cryptocurrency blockchain companies? We explain that here. Read on, as we talk about the factors that you should consider.
Obtain clarity: Decide what you plan to do in the blockchain/cryptocurrency space
What do you plan to do in the blockchain/cryptocurrency space? Do you want to invest in a resilient asset class? The price of Bitcoin (BTC) rose despite the COVID-19 pandemic, therefore, it proved to be a resilient asset class. Ethereum (ETH) experienced a notable price rise too. You could consider these market-leading cryptocurrencies to invest in.
Do you want to trade in cryptocurrencies while avoiding the volatility in the crypto market? You could invest in stablecoins. These cryptocurrencies are pegged with assets like USD, gold, etc. This helps them to maintain stability in their price. USD Coin (USDC) is a good example, which is pegged to USD.
If you’re a VC manager with plans to invest in promising blockchain projects, then you need to do extensive due diligence. This includes meeting the leadership team of the blockchain start-up, assessing the business idea, analyzing the technical solution, etc.
Get clarity about your long-term objectives in the blockchain-crypto landscape.
Transparency: Choose crypto blockchain companies that uphold transparency
The cryptocurrency market has seen exponential growth in recent years, and there have been scams too. How to identify trusted companies when you look for top blockchain crypto companies? Look for companies that uphold transparency. Check out the following:
• Does the company disclose the identity of the leadership team?
• Is the company disclosing its corporate structure?
• Find out whether the company respects the laws and regulations where it operates. The governments, central banks, regulators, and lawmakers in many countries have expressed apprehensions about some blockchain-crypto companies acting against the law of the land.
• Does the company offer sufficient information about its products and services? It should provide a website that clearly states what the company does. Most trusted crypto companies offer whitepapers, which go to great lengths to explain the projects.
• Does the company provide sufficient information about its fund-raising attempts, e.g., ICO (Initial Coin Offering), STO (Security Token Offering), etc.?
• Cryptocurrency blockchain companies should publish their product development roadmap.
Impact: Assess the potential of a blockchain-crypto project
There are thousands of cryptocurrencies, tokens and other blockchain projects. Not all of them will go on to make a lasting impact. Identify the potential long-term impact of a blockchain project by asking the following questions:
• Does the company plan to solve a real business problem? Does it show empirical evidence of a real business problem, and does it quantify/qualify the problem?
• Do other companies try to solve this problem? Have they already launched their solutions? Did those solutions succeed?
• How does the project intend to solve the specified problem? Does the company provide a clear solution? Has the company shown a functional prototype of the solution? Look for tangible information, and don’t fall for jargon.
• If the company plans to launch a cryptographic token, does it talk about token economics?
• Does the company demonstrate why the solution needs a blockchain and a crypto token? In other words, can one deliver the same solution using modern web development technologies including databases?
To take an example, Ethereum solved a real business problem. It provided a smart contract platform for blockchain developers to create “Decentralized Apps” (DApps). Ripple (XRP) is another example, which facilitates cross-border payment.
Technology: Assess the strengths and weaknesses of the proposed technology solution
Blockchain is a new technology, furthermore, it’s evolving. Developers often come up with innovative solutions to address key problems in the blockchain-crypto landscape, e.g., scalability, transaction throughput, etc.
Some of these innovations have proved their mettle. A good example is the concept of a “sidechain” on the Ethereum blockchain. The Ethereum smart contract platform is very popular, therefore, many developers create their DApps on this network.
This causes congestion in the network. “Sidechains” help developers to deploy their DApp on a different blockchain network that’s connected to the Ethereum main network. Developers can choose a consensus algorithm based on the security requirements of their DApp, furthermore, this reduces congestion on the main network.
Some blockchain projects don’t succeed though. This can be due to many reasons, e.g., developers have relied on an untested solution. In some cases, developers plan to use a blockchain network where a traditional database would work better.
Take a close look at the technical solution. Blockchain projects are open-source, therefore, you can review their GitHub repository. Engage an experienced reviewer if you aren’t familiar with the technology.
“What’s the world saying”? Check the media and social media reports about cryptocurrency & blockchain companies.
Bitcoin, Ethereum, Ripple, etc. are famous blockchain cryptocurrency projects. You have likely read many reports about them already, and you know enough about them. Not all blockchain projects are that well-known. You need to find sufficient information about the project that you are interested in.
The marketing campaigns of cryptocurrency blockchain companies rely heavily on digital platforms. Online news portals are the best starting points to get information about these companies. This includes the traditional news portals, furthermore, well-known news portals are covering the blockchain/crypto landscape exclusively. Look for reviews of the project on these portals.
You can get information about crypto blockchain companies on social media platforms too. Most of these companies need to keep their stakeholders up-to-date on platforms like LinkedIn, Twitter, etc. The global blockchain-crypto community uses Telegram significantly to gather and share information. Additionally, Reddit has many knowledgeable observers that review blockchain-crypto projects. Look at these platforms for reviews of the project that you are interested in.
Blockchain is relatively new, and many crypto-blockchain projects have attracted plenty of attention. Some of them have significant long-term prospects. However, some blockchain-crypto projects fail too. Identifying the most impactful project takes systematic analysis. In this guide, we talked about the key factors to consider when identifying high-impact projects.
*DYOR – This is for informational purposes only and is not financial advice. Do your own research.