How ‘Not to” Research a Digital Asset
If you’re like me, when you first ventured down the rabbit-hole of digital assets, you were immediately met with the phrase “Do Your Own Research” or #DYOR. While certainly well-intentioned, there are very few resources that are affordable and accessible to the new investor.
How how do you start? Where do you begin? I think the most helpful place to start is with answering the question — How NOT to research a digital asset.
Before you begin crafting your own rubric for researching, consider three common ‘pitfalls’ that have befallen new investors in this space:
#1. Recognize that a large social media audience does NOT mean quality insights.
When I first discovered digital assets, I did what many people do.– I started googling. I started looking online for information about these projects.
I found myself watching YouTube videos, in the CT (Crypto Twitter for short) comment threads, Reddit, Telegram, Discord Channels, etc. More than likely similar places you found yourself as well. Here’s a dirty little secret about social media for information. Social Media is build around boosting clicks, follows, views, engagement. Everything that doesn’t necessarily make the information credible, reliable, or in some cases even real.
Naturally, social media algorithms recommend sources with the most views, subscriptions, best thumbnails, etc. And if you’re not careful, you’ll end up believing the hype around a particular project without first looking at the fundamentals of what makes a crypto project strong (i.e. An Experienced Team, Confirmed Partnerships, etc.) But more on that in another article.
Social platforms are a great place to find new projects, but a terribly medium for actually understanding their use-case and value. Some can be quite entertaining, but remember their goal is your engagement, not necessarily to give you quality information. Tread lightly here when you are #DYOR
#2. Weighting All Information Equally
Not all information is good information. And if you don’t have a defined strategy for how to make sense of all of your research, you will become quickly overwhelmed with how to organize it and make sense of it all.
When I first started, I was overwhelmed and I consider myself to be a data junkie. It’s one of my strengths. I can synthesize information, see patterns and themes better than most. Even for the best data junkie’s you will need a rubric for understanding how to measure the credibility of the information you find. Again, more on that rubric in another article.
Another frustration you will find is even the “credible” firms like established financial intuitions have a history of black-balling the digital asset industry. Only recently, that narrative is beginning to change and slowly.
I knew that if I was going to be a successful retail investor, I needed a framework. And that my only hope in finding one wasn’t going to come from my financial advisor, my CPA, crypto twitter, or a YouTube influencer.
#3 FOMO (“Fear of Missing Out”) Will help you Hit Your Goals
Again, this article is about how NOT to research a digital asset. Sadly, FOMO is a real emotion in this space. If you spend enough time in digital assets, you soon will feel it too. Even 9 years into digital assets, I still have to contend with my emotions. Investing in digital assets is about emotional and impulse control more than anything. And if you aren’t preparing yourself for when your portfolio goes down by 90%, you certainly won’t be able to capture your gains at 100x.
To be clear, I made a lot of mistakes. And most can be attributed to me reacting too quickly to the market, to a new project, to what’s trending on CT, etc. And in those cases, I’ve paid the price for my lack of discipline.
When FOMO hits you (And it will hit you). Take a breath. Don’t hit the buy or sell button. Instead put on your investigative reporter “hat” and start digging.
More on the “How” to research in the next article.
