Things to lookout for, before investing in crypto

I thought I would share some of the tips I have learned to be on the lookout for before you decide to buy some altcoins. As most people that are preparing for the next bull run probably are looking to pick up some altcoins as well.

What is an altcoin?

This I think is a good starting point, especially if you are new to crypto. And you see a lot of terminology and acronyms being thrown around. An altcoin is basically every other cryptocurrency other than Bitcoin. In short, there is Bitcoin, the king of crypto if you will. And then there is every other cryptocurrency. And just to make it easier when you are talking about several coins that are not Bitcoin people use the term altcoin.

The first tip, subscriber counts do not match activity

This is something that should be fairly easy for you to simply add to whatever it is you normally do for research when it comes to looking at a potential cryptocurrency to invest in. You probably already are planning to take a look at the project's official twitter account to see some of what is happening with the project. And get a feeling for how popular it is. Here is the tricky part tho. Everything you see on the internet is not as it seems. A complete shocker, right? =)

Don't stop reading, let me explain what I mean. Just because a project's twitter account has a certain amount of followers does not mean they truly are followers of that project. The best example of this is probably the current situation that is going on regarding Ergo. Ergo´s original twitter account had around 70k followers. But through some event, the official Ethereum Classic´s twitter account was transformed into the new Ergo account. And it had around 650k followers, so almost 10x in difference. And completely disregarding the event that leads to the current situation. If you as a potential investor in Ergo take a look you will see a lot of followers. And thus you could not really be blamed if you then made the assumption that the project was way more popular than it really where.

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In a sense, you would have been tricked. And one could argue that it is very similar to false advertisement. And the same thing can happen on youtube. Where channels with a lot of followers can be turned into crypto promotion channels. Making it easy to believe it to be legitimate. This is usually done by selling stolen youtube accounts. But there is also accounts that through a payment will promote virtually any scam crypto under the sun. And this is why some, far from enough tho, celebrities like Kim Kardashian have been sued and found guilty.

There has even been so much uproar about the Ergo twitter situation that they even made a poll recently asking if they should give back the account or not. And by the looks the majority of people are not in favor of it. And the accountholders are even giving the proverbial middle fingers to everyone who wants them to give it back. At least that's how I read their recent change of the name for the account.

But how can you protect yourself from this type of situation? Where an account has, in one way or another, gained followers that do not really support the current version of the account. The easiest way is to look at the interaction. If an account has a ton of followers, then it stands to reason that its content would have interactions mirroring the number of followers. The account that is Ergos official account uses the handle @Ergo_Platform, and if you look at the interaction their tweets have you will see a handful of comments, a few dozen retweets, and about double the amount of likes as retweets. And that should tell you something is not as it should be. That is probably the easiest way to see if an account has something iffy going on with it. And you most likely would be able to see iffy youtube accounts in a similar way. But there it is probably easier to see if the account has a backlog of videos. Stolen accounts usually do not.

And just to be clear, iffy does not necessarily mean bad. For me, it is however a big red flag. And unless there is something that outweighs the red flag then it will be a pass for me. But that's just my way of approaching things.

The second tip, altcoins to be wary of

a lot of people are looking to build up their altcoin holdings before the next bull run. And while some altcoins are more safe than others, the bigger the risk, the bigger the reward. At least in general. But of course that does not mean you should put your money in whatever meme shitcoin that plops up. Or do it is your money after all. But one thing you can do to eliminate some of the risks is this next tip. Sadly tho this tip is not as universally applicable as the first one. But it has the potential of stopping you from making potentially very risky investments.

The tip pertains mostly to altcoins that are minable. And what you need t do is to first go on to a site such as https://miningpoolstats.stream/ or a similar site that lists the sources of the hashrate that currently is mining the coin you are interested in.

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And what you do not want to see is something like in the picture above. Where one mining pool is totally dominating the hashrate. And the reason for this is simple, they can whenever they feel like it execute a 51% attack and take over the blockchain. But there is an even bigger red flag hiding in plain sight in the picture than the ~65% hashrate that the Herominer pool has. I will give you a little time to look it over and see if you can find it.

Found it? Good. The much bigger red flag is that there is a huge discrepancy between the "visible" hashrate and the Network hashrate. If we do a little match we find that a staggering ~71% of the total hashrate is not visible, it is someone or several someones that are using anonymizers when mining. And in this case, we do not know if it is one person or many so we have to assume the worst, that it is one person. And with them controlling 71% of the total hashrate they can very easily take control of the blockchain if they want.

Even if they simply are mining just because they believe in the project. They will still be getting 71% of all block rewards. And that means they will control a very large portion of the total coins, if they do it for a prolonged time. And with one person holding a very big bag of the total coins, they can become a market maker. Meaning they can manipulate the price of the coin, and more or less suck up all the liquidity from the pools leaving everyone else holding the baggs. So in short I find it better to avoid finding myself in those types of situations.

Do you have any things that you look for before investing in a coin? If so I would love to hear what they are, good or bad. Please share them in the comment section below, as it can only help me and others.

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