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In November, the CCTV focus interview program mentioned that most of the current blockchain companies are borrowing or building momentum, and some even play fraud. Many projects use professional terms, claiming high yields. According to data provided by the relevant departments of the National Internet Emergency Center, there are more than 755 types of zero coins or air coins that can be detected at present, of which there are 102 MLM coins.
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Only 1% of cryptocurrencies can solve practical problems and expand adoption.
Looking back at the 2017 ICO chaos
As China strongly affirms the blockchain technology, more people are bound to enter the field of blockchain and cryptocurrency. However, the ICO chaos in 2017 left most people dead.
When the ICO rose in 2017, the public knew little about blockchain, but its interest was growing. Most people believe that blockchain technology is a panacea that will change the current problems in various industries and fields of banking, finance, payment, and logistics. Many influential people, bloggers, Weibo Da V, etc. have all expressed their opinions and opinions about the blockchain, and have started to promote the blockchain technology and projects that support their own platforms. As a result, this boom has intensified.
At the beginning, many ICO promoters put professional terms such as "blockchain technology" and "smart contracts" in white papers, and sold ERC-20 tokens, and the public went crazy. In just a few months, thousands of projects participated in the ICO. All ICO projects are linked to the blockchain on the surface, but most of them are zero coins, air coins, and MLM coins.
What investors care about is not whether these so-called technologies can change their field, but the soaring price of ICO tokens and the possibility of overnight freedom of wealth. When the ICO was the craziest, the amount of financing was as high as $ 200 billion. However, shortly after, most people's dreams of wealth and freedom shattered, most of the ICO tokens were reset to zero, and the remaining projects were lingering and the market value shrank to 1% of the original peak.
Currently, on CoinMarketCap, we can also find 4782 cryptocurrencies with a total market value of 240.3 billion USD. This number is quite amazing, anyone can create their own cryptocurrency and try to persuade people who have just entered the crypto space to invest.
In most cases, these tokens have no actual use cases and cannot solve practical problems, so in the long run, such tokens are absolutely worthless.
Only 1% of cryptocurrencies can solve practical problems and expand adoption.
How to pick 1% of projects?
To screen out 1% of projects, you must look at all aspects of the project due diligence. Judging from a single dimension is not enough. It must be considered from multiple dimensions:
The long-term value of the token lies in whether it can solve the actual problem, so it must be seen which industry's problems and pain points are to be solved by the project, which determines the significance of the project. If the project does not solve any problems, or the existing technology can perfectly solve the pain points of the industry without using blockchain technology, then this project is only for the purpose of forcibly engaging with the blockchain for financing and issuing coins. Having a good vision is not everything, and some projects have a good vision and bright packaging, but when it comes to landing, it is blank. In addition, some projects have visions that are too "beautiful." Tencent established a blockchain team in 2015. With the support of the government, Tencent issued its first blockchain invoice in 2018. Tencent has a strong background and government support, and it will take three years to achieve results. Some teams of 3, 5, and 10 people in their vision promise to overturn the industry tradition in just two or three years. It seems too whimsical. Therefore, caution is also needed for such projects.
2. Technology dimension
Blockchain is a technology-driven industry. A good blockchain project will necessarily require corresponding technical support. When investors do not have computer programming knowledge at all, they can investigate from Github code base indicators, crypto project GitHub code analysis websites (CoinCodeCap, CrytoMiso, etc.), peer evaluation, and the number of times used by peer projects. The blockchain project is open sourced in Github, which means that the community can directly see the source code of the project.
In Github, before examining the quality of the code, we can see the number of positive comments (star). The more positive the number, the higher the developer ’s attention to the code of the project; the more the number of forks, the more the industry The higher the project's recognition of the project; the number of developers (Contributor) represents the strength of the project's development team. The more developers, the higher the technical support of the project. Investors can also view the evaluation reports of professional evaluation agencies and so on.
3. Token (token) dimension
According to the role of tokens, tokens can be divided into three main categories: securities tokens, asset tokens, and utility tokens . Securities tokens are strictly regulated to ensure the rights and interests of investors. Asset tokens are a blockchain mapping of physical assets and face risks such as company bankruptcy, over-issues, and bank account freezes. Utility tokens provide holders with various functions and application scenarios.
The purpose of issuing tokens is to raise funds for operating or promoting a certain business model. Through tokens, it can reasonably stimulate output, change the production relationship, and bring the value of the blockchain into play. If the business model works perfectly, then the token has long-term value, and if the business model does not work, then the token loses value. The role of Ethereum is to pay for the use of the Ethereum network, to encourage miners to continue to maintain the network and form a relatively good business model. However, not all projects need to issue coins, but consider them according to different application scenarios. 99% of the project's tokens are a means of collecting money. Therefore, investors must examine whether the project's token model can be virtuous.
4. Team dimension
In a team, the founder is the group soul. Prior to the ICO, the founders of most projects were like you and me, obscure people. If after the ICO, the founders appear to pay money or extravagant behavior, then the project needs to be carefully considered again. In addition, you can also inspect the founder's education, work background, blockchain expertise, and whether there is a dark history.
Secondly, if the project is a corporate system, the location where the company is created is also critical to the development of the project. There are differences in the monitoring systems of blockchain companies in various countries. Blockchain monitoring in Europe is relatively relaxed, and the technical atmosphere is strong. Some countries (Malta, Liechtenstein, etc.) have issued laws against blockchains. In China, the supervision is strong and there are no corresponding laws and regulations. The MLM atmosphere in Southeast Asia is strong. In the United States, the laws and regulations of each state are different.
Third, investors also need to examine the team's ratio. A corporate team is usually divided into management, marketing, and technology departments. Projects with a large marketing department usually focus on traffic, while projects with a large technical department are relatively more reliable.
Fourth, look at staff changes in the team. If personnel in key positions change frequently, it will have a greater impact on project development. In addition, you can also look at the evaluation of the project by departing staff, especially technical staff.
5. Project progress
"Project doing things" is more than just a slogan.
Especially in 2019, after most projects return to zero, is the project team doing something to decide whether it is waiting for this winter. So from which aspects can you tell if the team is running or doing something?
First, development progress. As a project progresses, it must be constantly updated to improve features and user experience. WeChat is already a popular social software adopted by the public, but it still needs to be updated. And whether the blockchain project is still being updated, you can check the code activity and the number of code submissions on Github (the quality of the submitted code can be found in the professional evaluation agency report).
Second, the project needs to continuously develop the ecosystem. The ecology of the public chain mainly depends on the number of developers in the ecosystem. The number of developers on the Ethereum chain is the largest in the public chain. In order to develop its ecology, other public chains will take some incentives or develop out-of-the-box toolkits to attract developers to develop applications on the chain. The transaction-oriented cryptocurrency will try to expand the token adoption rate as much as possible, increase partners, for example, cooperate with a shopping website, support the use of the cryptocurrency for payment, or develop a new business model in conjunction with a certain field.
to sum up
Investors must conduct a thorough investigation before investing. This article lists five perspectives of investigating projects. Before investing, investigating can avoid pyramid schemes and zeroing projects to the greatest extent. However, this article is not intended as investment advice. The dimensions of the survey project include but are not limited to the above.