Cryptocurrency market is still in its infancy stage. That means that the industry around it is too. People all around the world are jumping at the opportunity to take the piece of the pie, and whoever gets it first is his. This results in a great influx of financial layman’s offering advice, bringing news and teaching you how to trade, especially on youtube where people first come for information because it’s easier to accept it in a video format.
A sentence I commonly hear among those who offer this information is: This is not financial advice, do your own research. They say this in order to legally protect themselves, yet they do offer financial advice. That’s why doing your own due diligence in the cryptocurrency market is crucial. And to assist you in that I’ve created a template for you to evaluate your source of information.
I’ve divided them into three categories: news, ico’s and analysis.
1.1 Is it a direct source (e.g., projects website or other social media outlets such as medium, (sub)Reddit, Twitter) (good)
1.2 Is it indirect source (news website) (neutral)
2.1 Entertainment (neutral)
2.2 To inform (good)
2.3 Advertisement and/or interest (bad)
Your goal should be to be the closest to the source as possible. If you are interested in latest developments of your favourite crypto project, join their telegram group, or slack channel. Every established project has one. If not go to Reddit and find their subreddit, where admins are the official community managers for the project. Many of them also have a blog on Medium where they update their readers on a regular basis.
Regarding ICO recommendation:
- Who is it coming from:
1.1 Does it come from someone within the space (good)
1.2 Does it come from someone outside the space (neutral)
- Why is he recommending it
2.2.1 To promote because of his interest (bad)
2.2.1 Is it just a fresh topic (neutral)
2.2.3 Because he believes it’s a good idea (good)
Cross-reference that will other people recommending the same thing, and/or ask people for their opinion.
As an example, you don’t want to take your ICO recommendations from the CNBC’s show Crypto Trader. Why? Because those are sponsored, and the show is for entertainment purposes.
1.1 Success track record:
1.1.1 no track record (bad)
1.1.2 vague track record (neutral)
1.1.3 clear track record (good)
1.2 Prior (before crypto) engagement in financial markets
1.2.1 yes (good)
1.2.2 no (bad)
2.1 Only crypto market (neutral)
2.2. Broad understanding of financial markets (good)
In the crypto world, everybody’s a trader or knows a thing or two about technical analysis. And that’s a good thing, but chose carefully who you are listening to when it comes to putting your money on the line. Ideally, you shouldn’t be listening to anybody. You should learn how to do your own analysis or higher a certified financial analyst to consult you on your investments.
That’s it. Now next time you are searching for information you have a way to validate them. I encourage you to expand on this template and create your own. Incorporate things that you find important when it comes to evaluating your source. And remember: always do your own research.