### Cryptocurrencies have seen a rapid rise in popularity over the last few years, with Bitcoin and others reaching new all-time highs repeatedly. However, the vastness of the cryptocurrency market, with over 23,000 cryptocurrencies currently available, can make it difficult for investors to distinguish legitimate cryptocurrencies from scams.

Not every cryptocurrency will recover to its previous all-time high. Whether it was low adoption, fraud, or a lack of investor interest, many cryptocurrencies have actually failed. Here are four steps to take before considering a cryptocurrency as an investment:



#### One: Research the team behind the cryptocurrency

Look into the team that developed the coin. Verify that they have a history of completing projects to high standards and that they have previous experience working in the relevant industry.



#### Read the whitepaper and look for clarity, transparency and realistic tokenomics

Whitepapers are documents that define the essential aspects of a project, including its goals, its technology, and its plan. Whitepapers that are open and easy to understand are a good start. That said, not be led on by good writing. Check if the tokenomics make sense. Did the team reserve a large amount of tokens for itself? What risks does white paper acknowledge? What is the white paper not saying?  



#### Check for community support


Investigate whether or not the cryptocurrency is supported by a robust community. The presence of a community may be an indication that there is enthusiasm for the project as well as that it has untapped potential. Watch the community over time and gauge for yourself if the majority have good intentions, or if they are looking for a pump and dump.  


### Examine the real-world use cases presented

Is the cryptocurrency claiming to solve real-world problems? Does the solution presented make sense (i.e., realistic), or is it just a ruse to present utility? 

By including these steps in your research, you may prevent unnecessary losses.  Good luck out there!



**This article is not financial advice.**

The world of cryptocurrencies has seen a rapid rise in popularity over the last few years, with Bitcoin and other cryptocurrencies reaching new all-time highs over and over again. However, the vastness of the cryptocurrency market, with over 23,000 cryptocurrencies currently available, can make it difficult for investors to distinguish legitimate cryptocurrencies from scams.

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