If you know how to pick scam free crypto tokens you will make it big in crypto investment. Of course there are no crystal balls to peep into that will tell you which token is be scam free and which one isn’t.
Many tokens fail within the first month of releasing them. That’s investors money going down the drain because these developers, whether prepared or not push their tokens out there and expect it to work. If it didn’t work they pull the plugs on investors and disappear.
Also, there are many scammers out there looking to exploit new investors. They can organize scam presale without any intention of starting a token project. They can also start a token project and once people have invested in it they will pull out the liquidity and shut down the token.
The question now in the lips of every crypto investor is how do I pick scam free crypto tokens to buy?
How Scam Free Crypto Tokens Work
If you can find scam free crypto tokens to buy then you should know how it actually works. A token is a version of a coin built on an existing Blockchain that belongs to another coin. So the difference between a token and a coin is that coins have their own Blockchain but tokens don’t.
So, anybody can create a token, even without any experience in Blockchain technology. However, a token is also indirectly controlled by the price of the coin on the Blockchain it’s built. Examples of Blockchain networks are Ethereum, Binance Smart Chain, Tron, etc.
But a token must first be built before it can become profitable. And there are processes it’s required to follow to achieve that. As an investor, your primary job is to find out which of the token has the potential to become profitable before you buy.
There are things you need to check when buying a crypto token.
Check The Current Price
Start with knowing the current price you are buying the token. The price of the token determines the quantity you can purchase. If it’s a new token, consider the number of zeros in front of the price. If you like buying into a coin when it’s launched newly, the more zeros in relation to the total supply the better. But if you prefer a tested project, the less zeros might be better.
When checking the price, always relate it with the total token supply, minus the burn token and the current market cap.
Check Token Total Supply
The total supply of the token has a lot to do with your decision to buy and the quantity you should be buying. The higher the volume could mean more zeros to kill off before reaching 1 dollar. So, the total Supply is an important key when deciding to buy a particular token.
One more thing you should know about token total supply is that it’s directly related to its market capitalization. If the token supply is much, it might take longer time to reach its full market cap. And that means it might take longer time for the token price to reach $1 USD.
Check Transaction Log
A transaction log keeps record of all the transaction about a particular token. It gives you the impression about the market response to the token. A token without recents transaction log can mean either it’s just launched or it has failed.
It can also give you the impression of high or low demand for the token. The last few purchases should either show recent or old. And it gives indication if the demand is constant or distant.
Check Market Cap
Market capitalization is the real value of the project. It’s also what’s used to benchmark a token again another token. Market cap means market trust on the token. It’s simply the amount of money in US dollars that investors were willing to put into the token.
It’s the amount of the token purchased in monetary value. The market cap can increase as more investors buy into the token, or decrease as investors sell their investment in the token.
Buying at a lower market cap may be a good time to invest into any token, especially if that token is newly launched. It gives you enough potential to benefit from the token more than those coming in later at a higher market cap.
Check Liquidity Level
The liquidity of a token is your door to exiting the project at any time if you ever got in. Liquidity means the amount of cash available in the token pool that anyone can exchange for the token if he or she chooses to sell their tokens.
Liquidity is your exist door. If you are going to take some investment risk, it’s proper to check if theirs a way out. Where there’s no liquidity or even adequate liquidity, you should be careful with such investment.
Another thing to check about liquidity is how the liquidity is added. Does the token have auto liquidity pool? How much of the liquidity in percentage of the amount already invested in the project?
Check Rug Pull Feature
Rug pull is a form of crypto scam. Although, not all rug pulls are scam. Some are actually token failure. The real idea of a rug pull is when developers take out the token liquidity, making it impossible for investors to cash out, which makes the tokens worthless.
A failed token project also makes the tokens worthless. However, whether failed token or a result of rug pull scam, they both face similar problems, liquidity drain.
One way to ensure the token is not going to be rug pull is to check ownership control, if ownership control is renounced or not. A smart contract creates room for community control and limiting the control of the developers to what they can change and not change.
Check All Time High (ATH)
All time high or ATH is the highest price the token has ever attained. It’s important to know what the token has been able to achieve before buying into it. Especially if it’s not a new token. That would help give you understand the potential or possible failure.
All Time High (ATH) means the token has attained a higher price in the market than it’s currently being sold. Most investors consider ATH as an important indicator for picking a profitable token to buy.
Another very good benefit of checking the All Time High (ATH) of a token before buying it, is to help you understand how low or high in the price chain you want to get into the project.
Check Active Marketing Plan
Marketing plan is important to an overall success of the token. Apart from reading a detailed road map on the token website, what have they been doing to grow the token. Tokens with better marketing plan tends to do better than those without one.
I stopped buying older token because they really don’t have marketing plan behind them. The initial idea of crypto project is community driven mindset. But that’s not working much nowadays. Like the saying, if you want something done, you have to do it yourself.
If a token doesn’t have better marketing plan, it will grow dull and die. There are many new tokens coming out like everyday. And I have also observed that new tokens with good marketing plan grow faster and hit higher market cap than those without a proper marketing plan.
Check The Tokenomics
This gives you an idea how the token works in terms of who gets what, what goes where, and why. You need to read the tokenomics of any project before investing your money. Key things to find here are:
- Total token supply
- Number or percentage of burned or to be burned token
- Percentage of transaction tax
- Holders reflections
- Liquidity pool supply
- Percentage for Charity work
- Marketing budget
- Developers token
A good project should have some key tokenomics in place, like:
- Good Percentage of transaction tax for liquidity pool
- Good Percentage for marketing efforts
- Good percentage of planned burn or auto burn mechanism
Note that most burn at the initial stage only makes it higher for investors to get into the project. And really doesn’t help the price from an investment perspective. Although it makes it easier to attain the full market cap. But burning when the project is at a peak pushes the price way up and builds new level of confidence.
But developers shy away from burning when the project is at the peak because burning early at the start gives them more money, and burning during peak gives more money to the Investors.
Check For Community Activity
Most importantly, before buying a token, to check for its community activities on social media platforms. Search for all the platforms where it has presence and check for user activities. The more activities on a platform the better for the project.
Token is a community driven project. The presence of a community works magic on new investors. Even though you can allocate huge amount for marketing, drive more of your marketing through the community.
The more people talking about the token would attract even more people to buy into the token. Do everything possible to have a vibrant community. Number is important but don’t neglect activities. It’s the fuel that drives the engine.
That means you should equally have more moderators and assign roles to them or what areas of enquiries they should handle. However, as an investor, a token that doesn’t have community activities is not the right place to invest your money.
Check For Audits & Exchange Listings
How secured the project is should be another checklist you need to verify. Have they been certify by any organization responsible in verifying crypto projects? Owners control or control renounced? What are they saying about their certification? Do they have any exchange listing currently or they are in view?
Techrate and Certik are two popular certification companies in the crypto world. You need to know if the token has been certified by any or both or even any other company. Check what they have been certified for.
Another thing to check is listing on exchanges. When a shitcoin is listed on exchanges is proof that it has been verified by other reputable crypto organization as well. But most of exchange listing happens after the token has been launched and probably garnered certain number of holders.
However, you can check their exchange listing plans and see if they are making moves to get listed or they simply ignored that part. You can also see in their white paper their road map to know when they want to get listed on exchanges and what target exchanges they have planned out.
Check For Presence Of Whales
One of the major cancerous problems with shitcoins growth is the huge presence of whales. This same problem is also a blessing to young tokens in disguise. The absence of whales in any newly launched token could dull the entire project and dissuade potential investors.
The whales put in large monies into newly launched tokens. Something that small investors wouldn’t dare to do. They also help to create the first impression about the new token, helping it drive its market cap in record time.
But the modus operandi of whales is what makes investors disdain them. They pump in more money to shore up the market cap, and help bring in more new investors, but as soon as the price starts adding up they would also pull out their investment with such force that sends the token crashing.
You should check for the presence of whales. Too much of whales in a token is dangerous to the project. You have to check the list of highest holding accounts. Any account from 2% above could be Whale account. If there are many of such accounts in that project be careful how you invest.
Crypto market is volatile, but that’s not all the problems with the market. There are scammers, whales, failed projects and so on. If you have to navigate your way, you need to know what to look out for when you want to buy tokens that can give returns on your investment.
Although there’s nothing general wrong about whales. But the havoc they can wreck to a token could be devastating. Their modus operandi is what makes them deadly. But every token really needs the presence of whales at the initial stage to build momentum and attracts small investors who are hoping to also take in profits from their small investments.
Finally, always do your own research (DYOR) before investing in any new token.