The importance of Do your own research (DYOR)
The importance of Do Your Own Research (DYOR)
“Do Your Own Research” (DYOR) is a popular term within the cryptocurrency, blockchain and trading communities. It’s a gentle reminder to take charge of your own investment knowledge and decision-making.
This is especially important for newcomers, who are more prone to making mistakes - or being misled. Luckily, when it comes to cryptocurrency, there are plenty of resources to help you.
The top mistakes crypto newcomers make
Newcomers often rely on other people for advice, but investing is ultimately a personal decision.
Newcomers are often disappointed if they don’t suddenly make big gains overnight. In the world of cryptocurrency, it pays to be patient – it takes time to build your knowledge and some coins can take time to build up momentum.
Lots of beginners in this space also make the mistake of skipping over learning about security measures. This includes reading about things like digital wallets, and public and public keys, but these are crucial to understand, to avoid theft and unauthorised access to funds.
Challenges you may encounter when learning
Concrete information on certain subjects can be hard to find or may not exist yet. For some new coins, this can lead you to jump on the hype bandwagon before doing your own research. The fear of missing out (FOMO) is a very real phenomenon within the world of cryptocurrency. That said, it is also fairly common to encounter unduly negative opinions of other cryptocurrencies, which can lead to you genuinely miss out on a sound investment.
Verifying and understanding information can also be challenging. Similar to any other new and complex topic, all it takes is time to read, understand, question and assimilate the information at hand. Remember, patience is a virtue.
Useful research for DYOR
Below are some resources that allow you to gain some wisdom prior to deciding what cryptocurrencies you would like to invest in:
Market capitalisation databases: Coin Market Cap is perhaps the most popular cryptocurrency price and market capitalisation website.
ICO calendars: ICO calendars are curated calendars of new token sales. With Tokenmarket, for example, you can register to be alerted before a token sale commences.
Block Explorers: Block Explorers can help you check address balances, track coin transfer histories, keep an eye on transaction acceptance and monitor other statistics and variables. You can read more on Block Explorers here.
Forums: Reddit is probably the biggest community in the blockchain space, but it can be the root cause of FOMO-driven purchases. Make sure to use it to do your own research and make your own decision. A popular reddit thread is r/cryptocurrency. Medium is also popular for independent commentary.
Various types of price charts: Including line charts, bar charts, and candlestick charts. You’ll learn about these in the next module.
News outlets: Make sure to read a variety of news outlets – not just cryptocurrency-focused publications, but national news outlets too, so you get a balanced view.
Whitepapers: If you’re looking for a deeper dive into cryptocurrency, it’s worth looking at some of the original whitepapers published on Bitcoin and others.
Questions to ask before you invest
Here is a handy checklist of the basic questions that you should ask before investing in cryptocurrency:
- What are the key features of the cryptocurrency’s blockchain?
- How did the cryptocurrency develop and what are the plans for future development?
- Is the cryptocurrency truly ‘decentralised’?
- Which exchanges offer your chosen cryptocurrency/cryptocurrencies?
- Does it solve a problem?
- How different is the cryptocurrency to its closest competitor?
- Any legal barriers to entry?
- How big is the target market?
- How is their marketing and social media presence?
- How reputable is the history of the team?
- How concrete is their roadmap?
- Look for any red flags - Google is your best friend!
Whilst there is a lot of excitement around cryptocurrency, knowledge is power. Invest the time in doing your own research before investing your money, and you’ll be more likely to achieve success within the cryptocurrency world in the long run.