Masternodes - Good projects vs scams
By Rafał - 2018-10-02
Masternodes are becoming more popular. Almost every day we see new coins but unfortunately a lot of them are not successful. Even good projects can lose value so quick that you will be focused on getting your investment back instead of profits.
In this situation, it is important to learn how to pick best coins and avoid scams.
First of all, before you pick a coin you need to answer one question, which is what you are expecting from this cryptocurrency. Do you want quick profit because you saw huge ROI at masternodes.online or you really believe in the project?
If you saw huge ROI and you want quick profit, you need to be aware that you can lose a lot of money. Coins with huge ROI and nothing more are among the worst to invest in.
Sometimes you will find a coin on early stage, build few masternodes from high rewards, and then sell and make nice profits, but this is short term investment and most of the time you will be too late to really earn something.
On the other hand if you really believe in the project and see it as a long term investment you should not care about current price. You should focus on setting up as many masternodes as you can.
Good projects vs Scams
You will never know which projects will be successful. You need to take a look at the roadmap, team, use case, maximum supply. Then you have to consider if it is premined, market that coin is focusing on and more.
The first difference between good projects and scams is TEAM.
I never saw a scam project which team would share their identity. Sometimes they try to look better and provide some usernames and avatars. If you see something like that, be aware that your investment would be at risk.
However, not every project that doesn’t share developers’ ID with community is a scam. I understand that sometimes we do not want to tell who we are to everyone. But there is a good way to do that. Know Your Developer (KYD). This is the minimum what every team must do to look legitimate. You do not want to share with community your ID? KYD verification is good for now.
You need to check developers’ activity. They must be active on discord channel, telegram, bitcointalk.
Another feature that you should look at for is roadmap. If you see a roadmap where almost every step or phase contain marketing effort and attempt to hype the project without laying emphasis on substance, you should be wary.
Some of such projects would offer airdrop as part of the roadmap or speak of “further development” (what is that supposed to mean?) It could mean that there is no further work on the project because the developers are confused or that there is nothing more to communicate to the community.
At other times, you may come across “whitepaper 32.0” and such new versions of the whitepaper. It is not as if there is no need to upgrade whitepapers, this should not necessarily be included in the roadmap. These could be signs that they do not know what to do next, and that they released a coin without a solid plan.
Marketing is an obvious aspect of a project, why would a serious project ass it in its roadmap? Why airdrop? Come on. Whitepaper or website updates? You should also check the platform or product development.
It is alright announcing the product development, but not overemphasizing it with highlights such as Platform Development Phase 1, Platform Development Phase 2… and so on. This is not what you should see on the roadmap.
The same goes for exchanges. Listing “More exchanges” is not really a bad idea but highlighting on exchange listings as if it is part of the accomplishments of the project takes away from it. It gives you the insight that this could be a team with no vision but to take people’s money.
Roadmaps that have 3-4 steps/phases and on every single step you see the same points means that project is 99% scam or it was made “just like that”, without any idea. There are times when project whitepapers are plagiarized from other sources. This is a clear indication that you are dealing with a scam.
Every serious project should draft their own whitepaper before giving it to a professional copywriter to do the polishing and finishing. That the whitepaper was plagiarized is evidence that you are dealing with a scam.
The most important point in assessing a coin should be utility. What would this coin be used for? What market the coin is targeting should be specific. It is not about being “decentralized” since almost every cryptocurrency is decentralized.
It is not even about being a cryptocurrency. We have over 2000 coins already in the coin market. The team should aim at a specific market. Gambling, traveling, sport betting, savings, butterflies, etc. The coin should have goals and objectives which it should accomplish in use. There should be a direction or focus at building a working product, at least an alpha product.
Coins without use case is useless, perhaps the right word is worthless. There will be no demand after big ROI hype phase. That is, if there will be any hype. Masternode coin that is created to have with high rewards and great ROI will lose value really fast until it is worthless.
Of course goals need to realistic. If coin developers promise you that they will start issuing their own credit cards, you shouldn’t readily believe that. You should know that it is not easy to issue cards, especially to cryptocurrency companies.
You can go a step further by asking the team whether they have registered the company, if they haven’t, you may forget about making investments on this coin. If they tell you that they are “working on it”, you need to decide if you believe them.
If coin is popular with huge volume and big ROI, it is good and bad. That type of coin can drop or gain 50% one day. If the hype is extended, you could make nice profits but when it ends, you should expect a steep drop in the value of the coin. 100k satoshi to 100 satoshi in few days is a possibility.
There is a need to look at volume. We should bear in mind that there is also something like fake volume. Some exchanges or even developers sell and buy their own coins to create big volumes to attract new investors.
It is really nothing new considering that the crypto industry is largely not regulated. Fake volume is cheating, nothing more. However, if that volume is created “quietly” for a reasonable coin with something to offer in terms of utility and not just ROI, it is not so bad. This is because it merely works like marketing campaign but still, this is cheating. It should give you an insight into the team behind the project with the realization that they are not reliable.
Coin specification and premine
Very important in all cryptocurrencies are coin specs and rewards. Some coin specifications are almost the same for every masternode coin like block time or algorithm. The important specs are max supply, premine and reward structure.
If the maximum supply is low, that means coins can be worth more. Collateral changes also can help maintain the price at some level. Rewards are important because ROI and inflation depends on them.
The best performing masternode coins have small premine. Team should define premine use. If premine is too high according to masternode collateral and presale it is not good. It should be clear what team is going to do with it.
About presales I could write another article (I think i will). It could be great opportunity to get coins cheaper and set up masternode as one of first to get a lot of rewards.
But presales are very risky. If you buy scam coin presale and dev disappear, you will lose 100% of your investment. There’s nothing you can do about it. If you paid too much for a masternode, rewards are too high and presale is too long, inflation would wipe off your profit. If demand is low in first days at the exchange and impatient investors start dumping their rewards, the coin could lose value and dip so low that compared to presale price you could by not 1 but 100 masternodes.
If you are investing in presale be aware that you may lose a lot or even all of your investments.
So to pick best coins to invest you need to analyze:
- The team: Pictures, names, Linkedin profiles or at least KYD verification.
- Roadmap: Does it make sense? Check if the goals are possible, every step should be different and make the project better .
- Product. How can you use this coin, where you can use it. If there will be a platform is there any demo or sneak peek.
- Market. How many coins are in circulation, is there any demand.
- Premine. How big it was and why.