CoinWorld reports:
Since the frenzy of the blockchain wealth myth went viral, there has been a continuous influx of newcomers into the melting pot of blockchain. Many people, when first exposed to various projects, still hold on to the concept of “money games.” These types of projects are essentially playing a game of pass the parcel, where early participants enter the scene, aggressively recruit others, and then cash out.
While from the perspective of financial products themselves, this point is not entirely incorrect, as both stocks and real estate, being popular financial products, require a significant amount of capital inflow, prompting early investors to exit profitably, gradually raising the bottom price, ultimately driving prices higher.
However, those who invest in these projects are making a fundamental mistake, which is also the main reason why most people in the cryptocurrency circle incur losses. Their investment approach is based on gambling rather than actual investment. They expect to get rich overnight, rather than upgrade their assets.
Today, we will analyze how to correctly invest in projects rather than seek overnight riches with a few simple examples.
First, before investing in any project, it is essential to understand three critical factors that influence the development of projects in the cryptocurrency market:
1. The rapid evolution of Internet technology and popularity. The development of any technology is akin to a tree branching out, with technologies closer to the source having longer lifecycles and gaining higher popularity. For instance, public chain projects represent the trunk of blockchain technology, while Dogecoin represents a fruit that has blossomed from a certain branch.
2. The scale of funds the market can accommodate determines the price ceiling. In the bullish market of 2021, the market capitalization of the top ten projects was mostly around a trillion, which has now shrunk to less than a hundred billion.
3. The success of a project originates from the project team. Regardless of how promising a project’s concept is, without the ability to sustain development, it cannot achieve its potential value.
Any successful project can trace its success back to these three points.
Next, we will discuss two representative projects: one that is relatively mature and already successful, and one that is still in the early stages of development with low market value. By comparing these two projects horizontally, we will analyze how to identify promising investment projects:
Firstly, let’s look at the success factors of SOL, which can be summarized mainly as two points: revolutionary public chain technology and investments from large institutions.
When SOL was launched, the two biggest headaches for public chains were speed and transaction fees. Therefore, SOL targeted and improved these aspects, significantly increasing the practicality of public chain technology. As a result, the ecosystem that can be supported greatly expanded, attracting institutional investments.
Institutional investments are crucial for any financial product since they not only provide ample development funds to project teams, accelerating technological and ecosystem development, but also enhance trust among retail investors in the market, attracting more capital and retail investors. When a project progresses smoothly and these factors combine, it propels the project to new heights.
However, an excessive amount of tokens held by institutions led to a ripple effect on SOL during the collapse of FTX, which is another issue to consider.
Moving on to the main point of this article, based on the experience of successful projects, how can we identify the next successful project? Let’s take AlveyChain as an example:
First and foremost, the initial step in investing in any project is to research its security or reliability. There is no shortage of projects disappearing with funds in the blockchain space, and for small projects with low market value, there is actually no foolproof way to judge this. Deeply engaging in the project community, observing and gathering information firsthand is essential for forming an independent judgment.
For AlveyChain, the project has been operating steadily for over a year, with the project team being highly active and involved. Recently, they participated in the Smartcon blockchain conference hosted by Chanlink and
