Source: Shallot Blockchain
Tags such as "high volatility", "instability", and "high risk and high return" have been accompanied by the growth of the cryptocurrency market. Although there are many believers in the crypto community, from this emerging market, more participants The original intention is still "investment" or "speculation." This means that many people in this circle don't actually have a high degree of trust in one or more currencies, and what they want to achieve is just to get a return in the market. Therefore, how to build their own cryptocurrency asset allocation Has become a widespread problem.
- The founder of the Bitcoin Foundation: miss the early bitcoins, optimistic about the integration of China and the US market
- Bitcoin is a safe haven for Chinese investors? Let’s first understand a strange market trend in early August.
- If $13000 to $9000 is not a bear market, will the history of the bull market re-enactment repeat itself?
- 72,000 bitcoin bursts, who is the culprit?
- Once Wall Street begins to tell stories, everything about cryptocurrencies will change.
- Token Watch | Ponzi Finance, Negative Interest Rate and Bitcoin
From this point of view, this article will sort out the method of judging whether an asset is "valuable" and help you who are reading this article to build an investment portfolio that truly suits you.
I. Constructing diversified asset allocation
Considering diversified choices from the perspective of market value means that some high-, middle-, and small-market currency currencies are allocated in the investment portfolio. In general, the proportion of configuration uses 50% of "big cap currency", 30% of "mid cap currency" and 20% of "small market value currency". Among them, 50% of the big market value currency is used to maintain the stability of the entire asset portfolio, and the remaining part is used to pursue the high growth of small currencies, which is the so-called pursuit of α configuration.
Various types of crypto assets or corresponding projects in the market actually have a direction of "solving specific problems", such as publishing, distribution, storage, or lending, etc. At present, some solutions based on blockchain technology have been produced. Program. The prospect of these "application landings" actually directly determines the prospect of the currency price of the corresponding token. Therefore, for constructing an investment portfolio, it is a more rational choice to diversify your investment in various fields. For now, the more promising directions in the crypto space include: distributed storage, computing, lending, development platforms, micropayments, privacy solutions, distributed exchanges, advertising, and social media.
(Used by the project)
Cryptocurrencies on the market currently use different technologies. For example, mainstream mining algorithms include SHA256, Scrypt, and X11. The common consensus mechanisms are PoW, PoS, and PoA. The difference in the application technology of different cryptocurrencies will directly affect the application prospects of these currencies. Each technology will have its own unique advantages and disadvantages, and these advantages and disadvantages will likely result in a certain day in the future when the market changes. One technology is "preferred". Therefore, when constructing an investment portfolio, the use of different technologies is also an important difference item. Covering more types of technology in an investment portfolio is of great benefit to the stability of the investment portfolio's prospects.
Second, circulation supply, planned supply, total market value
When evaluating a particular currency, the market value of that currency is very important and should even be the primary reference information. By evaluating the total market value of the currency, it can effectively predict whether the team's development goals are reasonable, and it can also be reasonable through the subsequent development performance of some assets that have similar functions or similar market value as the asset. Infer the development prospect of this currency in the future. Through this rough estimation, we may have a more intuitive prediction of the future direction of this asset.
While judging the potential market value trend, the supply / circulation change of the currency in the future for a period of time is also a very important indicator. Because even if the market value rises as planned, if the circulation volume increases significantly within the same time period, the currency price of the currency will fall during this time period. After a more comprehensive forecast of the market value and circulation of the currency, a clearer "development roadmap" was drawn.
When judging the change trend of circulation supply in detail, there are several important evaluation factors: First, the current growth rate of circulation supply, that is, the current rate of the currency being "injected into the market". The faster the new tokens are injected into the market, the more difficult it will be for the currency price to rise. Second, it is necessary to observe the current circulation ratio to the total planned supply. If the circulation has reached a large proportion of the total supply, it means that the growth rate of circulation will gradually slow down in the near future. The price is good news. Conversely, if the circulating supply only accounts for a small proportion of the total planned supply, the possibility of currency prices falling after the market is further diluted in the future will be relatively higher. Third, the scale of current supply. If the current supply of the currency is very large, the market value change caused by unit price fluctuations will be very considerable. In this case, it will be more difficult for the currency price to increase significantly in the future.
Total planned supply
If the total planned supply of the currency is a large and incredible number, or an unlimited ceiling inflation model, then the long-term value of the currency will be difficult to maintain stable, as new Tokens will continue to dilute the total market value of the currency, so the price of the currency is likely to collapse in the future due to severe inflation. In contrast, those currencies with a planned upper limit and relatively reasonable numbers are expected to ensure the stability and even continuous growth of the currency price for a considerable period of time in the so-called deflationary economic model.
Team and consultants
Similar to the diversity of crypto assets, an excellent team should also have richer "constituent elements". For the team in the crypto world, in addition to a group of excellent developers, the project should also have experienced product promotion / designers, and a planning and marketing team with successful experience, plus a management experience Rich leadership team. At present, there are many such excellent teams in the cryptocurrency world, but there are also many team hype through false information, so assessing the "quality" of a team has become an important part of investing in crypto assets. In this process, what you need to do is not to trust any information written on the project's official website, but to make subjective judgments through some details on the team member's personal information.
For a team in the early stages of development, the role of consultants is critical. Although consultants may not be involved in the daily work of the team, communication with consultants can more effectively determine whether the team has sufficient potential. In addition, whether the consultant hired by the team has sufficient influence in the corresponding industry, and whether the consultant can effectively help the team grow, these factors are important links to judge the "good or bad" of a project.
4. Investors and capital reserve
Obviously, funding is an important indicator for judging the potential of a team. Without sufficient funding support, a team will be very difficult at the start-up stage. When judging whether funds are sufficient, in addition to knowing how much money the team has, it is also necessary to understand the team's "spending speed" because the two determine how long the project can persist without new funding. You can't expect developers to still perform voluntary labor after the team's funds are exhausted. Therefore, if a company arbitrarily forms a large team without raising much capital, this will be a very dangerous signal.
Sometimes the person giving you money is more important than the money you receive. A team has passed the review of professional investors and received the investment, which means that the team has met the standards of the corresponding investor / investment institution. Therefore, if there are well-known investment institutions in the investment background of this project, it will become an important bonus for this project.
Five, the frequency of code submission and the number of contributors
Mining a common code base for a crypto project is a very interesting job. The frequency of code submission from a project, how many different contributors have submitted code, the number of submitted issues, and the severity of the problem are all reference standards. . The frequency of code submission and the number of code contributors are the two most important indicators. There are many cryptocurrency projects with good market value. In the past six months or even a year, there are only single-digit code submissions, or only one or two developers are maintaining the code of the entire project. Both of these conditions are unhealthy signals for the development of this project.
And research project code is also an important way. With a certain code foundation, you can observe whether the code submitted by the developer is sufficient and whether the project party has a powerful and complete test environment for testing. These factors will affect the future scalability of the project. It is also important to understand the content of the code. Of course you don't need to understand every line of code, but by skimming the code, you can understand the capabilities of developers.
Six, white paper
When reading a project's white paper, you have to remember that it's not just those bragging white papers that are good, because if the team can't have these so-called visions in the future, the white paper is actually a pile of waste paper. The content presented in the real white paper are those that can be achieved, can solve practical problems, and have objective needs. In fact, from the white paper, we can completely see whether the person who wrote the white paper is a person who knows the cryptocurrency industry sufficiently, because if this person does not have the technical and practical foundation for development, the final white paper created will be very "false big empty", And such projects must be avoided.
Communities are an integral part of a project's ultimate success. Because if you create a product that has no users at all, then this project will be difficult to develop. A strong community will mean that the probability of the corresponding project being exposed on the network and social media will be greatly increased, and the propagation effect of this network will increase exponentially. The “native users” brought by community support will provide very great support for the development / management of the project, and a sufficiently strong community may even in turn promote the development of the project. In addition, a large scale user group will also become a powerful guarantee for valuation. But if there is no community support behind a project, the probability of success of the project will be very low.
Marketing and Hype
In addition to the product's development capabilities, a team's marketing and hype capabilities are just as critical. Because good promotion ability can help the project to establish a good partnership with other companies or teams, and can bring some sponsors and financial support. If there is not enough marketing support, then a good enough product may eventually fail because the user cannot reach it. But this does not mean that we are pursuing excessive hype, because the false prosperity created by excessive hype that lacks strength must be unsustainable.
Nine, schedule planning
Team work progress and timeline planning to achieve specific goals are also important references for judging the development prospects of this project. No matter how good this team is, you still need to come up with real results to talk about, because investors can't give you unlimited patience after paying a lot of money. And community users' support for a project is also not blind. Only when the team achieves the stated goal step by step relatively smoothly, the team is considered to be operating healthily. In other words, when the goal is not achieved, at least a convincing explanation should be given.
In addition, the timetable must not be blindly optimistically setting goals that are difficult to achieve, nor a goal that is too far away and has no sense of urgency. The market is always maintaining rapid development, and the competition in the cryptocurrency market is more intense. If the goals set are too loose, the project is likely to be defeated by those "latecomers".
10. Be sensitive to market trends
Since the cryptocurrency industry is still in the early stages of development, the market / technical development and the speed of iteration are very fast. Therefore, it is vital to maintain sensitivity to the new market direction during the investment process. Once your investment portfolio deviates from the market's trajectory, it should be adjusted as quickly as possible. Remember that investment can never make mistakes. It is most important to stop losses in time after making mistakes.