Finding Crypto Gems
The cryptocurrency market is perhaps the only market that offers so many opportunities for investors to achieve short-term massive gains. In the cryptocurrency market, these gains can literally happen overnight. However, not all of the cryptocurrency projects in the market are legitimate projects. Some projects are also scams that prey on cryptocurrency newcomers. So how do you differentiate between projects that are scams and projects that have massive upside potential? In this article, we will take a look at what cryptocurrency gems are, as well as what to look for when trying to find gems and avoid cryptocurrency scams.
What Exactly Are Cryptocurrency Gems?
Cryptocurrency gems are cryptocurrency coins and tokens that are undervalued and not really in the public eye, with the potential to deliver massive gains. The price of these cryptocurrency gems is often very low, like below one U.S. cent per coin. These coins also have a smaller market capitalization, also known as a market cap, and require a lot less participation and volume from investors in the market to increase their value by 100x. So how exactly do you spot these 100x opportunities? Let’s take a look,
What To Look For When Serching For Crypto Gems
There are quite a few criteria that you can use to determine whether or not the reward of investing in a cryptocurrency outweighs the risk of doing so. A coin does not need to have all of them, but the more boxes a project ticks, the better. This also increases the chances of the project becoming a 100x cryptocurrency gem. Let’s take a look at some of the most important criteria that can be used to identify cryptocurrency gems.
The Project’s Team
The first thing that you want to get as much information on is the team behind the project. Try to find out if the team has previously worked on other projects in the market and how capable they are of delivering on the promises they’ve made to their community. It will be good to also see how active the community is on social media as well as how open they are to community feedback and if they actually act based on the feedback. Lastly, see if you can find out who the backers of the project are. Most venture capital firms provide information on cryptocurrency projects they have backed in the past and how well those projects have performed.
The Price of the Coin
Looking at the price of a cryptocurrency is also important when trying to determine if a coin or token is a cryptocurrency gem. By looking at the price of a coin, combined with its total circulating supply, you will be able to calculate the upside potential of the coin or token. By combining the price of the coin with its circulating supply, you can work out its current market cap, as well as estimate what the price of the coin may reach when looking at potential forecasts for the project’s market cap. When forecasting the market cap, it’s important not to be unrealistic about what the project’s market cap might reach. A good rule of thumb is to look at the market cap of each of the projects in the cryptocurrency market, and then divide it by the number of coins in the total supply of the coin that you’re trying to calculate the future price of. Although there are multiple factors that will determine if the project can reach a specific market cap, using the market caps of other coins and dividing them by the total supply of a project will give you a more realistic target of what the price per coin will be.
Analyze the Smart Contract
Many cryptocurrency coins are built on top of blockchains like Ethereum and Binance Smart Chain using smart contracts. These smart contracts cannot be changed once deployed and set all of the functions and parameters of the coin. Looking at the smart contract code, you will be able to see if the owner is able to mint new tokens, how many tokens he or she holds, and how the coins were distributed. You will also be able to identify any potential exploits due to bugs in the smart contract.
The Number of Holders
You can keep track of how many wallets are holding a specific coin or token using block explorers such as Etherscan and BscScan. Ideally, you’d want the number of wallets holding the cryptocurrency to be continuously growing, and wouldn’t want all of the coins stored in one wallet.
Now that we have taken a look at what to look for to identify cryptocurrency gems, let’s take a look at what to look out for so that you can avoid falling victim to scams.
Red Flags to Look Out For in Cryptocurrency Gems
A good rule to remember is that if it’s too good to be true, then it probably is. If the project’s team is saying that the price of their coin will pump 100x in a week, or that you will get a 10% daily return on your investment, do not invest in the coin! In these situations, the teams are just trying to pump their coin so that they can increase the value of their own holdings before dumping their holding in the market for a profit.
Possible Exploits in the Code
Reading a smart contract’s code and understanding what is going on in the source code is best left to the more technically-inclined community members. Many people just rely on the fact that someone else did the due diligence and the smart contract code is safe. Some projects may also increase the legitimacy of their coin by hiring firms like Certik and Hacken to audit the project’s smart contract and then publish those results. This gives a higher degree of reassurance that the smart contract can’t be exploited.
Tokenomics is a term used to describe the economics and business model of a cryptocurrency. The tokenomics will shed light on details such as how the coin will be distributed, its use cases, the vesting schedule, the number of coins in circulation, and the total supply. Usually, coins with bad tokenomics have founders holding a large portion of the coins, or initial backers and cryptocurrency investors who bought coins at a huge discount and are just waiting for the perfect opportunity to dump their coins for a decent profit.
Finding Crypto Gems
There are a few ways to search for cryptocurrency gems. One of the best ways is to use price tracking websites like Coinmarketcap and Coingecko. These websites list almost all of the tokens in the market that have at least some trading volume and are a great way to find undervalued coins.
You can also utilize group messaging apps like Telegram and Discord. These apps are used a lot in the cryptocurrency space and traders often create their own groups to discuss new coins, send signals, and search for gems together. Teams also create groups to communicate and make announcements to their community more easily.
If you really want to jump on a promising project early then take a look at decentralized exchanges for newly listed coins. Projects will usually list on decentralized exchanges first before getting listed on centralized exchanges like Coinbase and Binance because it is a lot easier to get listed on a decentralized exchange. To get listed on a centralized exchange is often a time-consuming and costly process, so most teams list on decentralized exchanges first to shorten the time to market penetration for their project. However, investing in coins that have recently been listed in decentralized exchanges is very risky since anyone can list their project on a decentralized exchange, including scammers! So if using this approach, practice extreme caution and do as much due diligence into a project as you can before investing in it!
So there you have it! You now have some good tips for what to look out for when trying to determine if a project will be a cryptocurrency gem, as well as potential red flags that can be used to identify cryptocurrency scams and protect your funds.
Finding Crypto Gems: Conclusion
The cryptocurrency market offers many opportunities for some wild returns on investments if you can find the right project. There are a lot of criteria to look out for when trying to identify cryptocurrency gems. However, the main criteria are how many wallets hold a specific token and how many tokens they hold, the team behind the coin, the price of the coin, and the quality of the project’s smart contract source code if the project is built on top of a blockchain as a smart contract. There are also some red flags to look out for such as teams over-promising, bad tokenomics, and possible exploits in the project’s source code. There are a lot of resources available to search for cryptocurrency gems. You can utilize group messaging apps, new decentralized exchange listings, and price tracking websites. However you want to go about it, you will need to do your own research to better your chances of finding the 100x cryptocurrency gems.