The Importance of DYOR (Do Your Own Research) In The Cryptocurrency Space

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Do Your Own Research (DYOR) is a term that is well-known throughout the cryptocurrency world. As a cryptocurrency investor, it is always in your best interest to “DYOR”. Relying on somebody else’s recommendation or hunch for your crypto Investments can become problematic.

The presence of celebrities and public figures (who are often whales holding large amounts of a particular cryptocurrency) has pushed even your average Joe to dive into the crypto market, often with the hopes of cashing in on the hype while the market is hot.

Unfortunately, the power that public figures and celebrities can have over popular opinion also provides a conflict of interest where their investments are involved. A simple tweet or mention in an interview can be all it takes to pump a particular cryptocurrency before they dump their holdings and cash in on the hype they helped create.

Today, we’ll talk a little bit about the importance of DYOR in the crypto space and shed some light on why analysing your investments in the space is always recommended over hopping on the hype train.

What Is DYOR?

Born out of necessity, DYOR is an acronym for Do Your Own Research. Originally the term was introduced due to an influx in scams present in the cryptocurrency marketplace forcing ethical market participants to raise awareness that there are such risks in the industry’s early proliferation. Each blockchain or token should therefore be carefully evaluated, just as it would be for any other investment.

The term DYOR became increasingly popular when the market was flooded by “get rich quick” schemes in the crowdfunding space.  The term spread like wildfire on the internet, and enthusiasts in many spaces (including cryptocurrency) adopted it to encourage informed investing in the space. Most youtubers and crypto twitter influences often used this tag line as a disclosure at the end of their content.

The internet has brought so much information to our fingertips at a second’s notice. As technology is evolving, so is the available information. The benefit of this easily accessible information is that investors can do their own research and develop their own analyses regarding their next financial moves. Let’s take a look at some of the circumstances surrounding the DYOR movement and the terms that apply.

What Is Shilling?

It is essential to understand what shilling is when it comes to investing. Essentially, shilling is when an interested party spruke a financial product, whether that be a specific coin or protocol which they will directly benefit from its increased adoption and therefore mutual financial gain.  In cryptocurrency, it’s a practice where coins are advertised to alter the price positively. Perhaps upon hearing this, several instances of tech billionaires hyping up a certain coin, Doge in social media come to mind.

Sometimes, it can be difficult to tell the difference between shilling and unbiased information. Relying on your own research rather than what a celebrity or famous pundit says could keep you from getting caught up in misinformation and buying or selling as a knee-jerk reaction.

What Are Sybil Attacks?

Sybil attacks usually occur on social media platforms. These attacks are a process where people create multiple fake accounts to alter the market by tricking investors into buying into a coin based on a “popular” post (lending it an air of legitimacy). Beware any trending post that hypes up a currency or links to anywhere that you can enter your personal or financial information. Always do your own research and double check outrageous or impressive claims, and only invest through mediums that are verified and legitimate.

The Importance Of DYOR In The Crypto Currency Space

We live in a time where anybody can invest in almost anything, and better still anyone with enough technical knowledge can create a token on the blockchain. We no longer need to go through an intermediary such as a broker to toss our life savings into the market. But, we can take charge of our own financial destiny by doing our own research, and this is no different when it comes to cryptocurrency.

This term is also often used when traders or cryptocurrency enthusiasts post information on forums or boards to protect themselves and their analysis with a disclaimer. The use of this process as a disclaimer allows other investors to recognise that they are merely publicly posting their opinion, and the reader can choose to act on the information or not. It is important to be aware that everything you read on the internet is inherently subject to biases of those who created it.

How To Do Your Own Research

Now that we have discussed the importance of doing your own research and some aspects that you should avoid, let’s talk about what it actually means to “DYOR”. Let’s discuss some of the fundamentals.

Industry Research

Industry research is no different with cryptocurrency than it is with traditional investment sectors. When you look at the real-world Industries, how does their performance hold up against competitors? For some cryptocurrencies, the technology behind them also has real-world applications, such as is the case with Ethereum and its adoption by many tech and financial businesses as a tool to execute smart contracts.

Professional Information

When you invest in any business, you want to know more about the founders and their mission and goals. In the crypto space, you still want to know that same information.

Project Whitepaper

A crypto project is not the same as a cryptocurrency, but crypto projects can have a cryptocurrency. Each project should have a white-paper that documents the founders’ project. This whitepaper should give you enough information to learn about your potential interest in the project and whether it has potential as a real-world tool that will be utilised..

Sources of Funding

One of the things you need to look into is if the founders have previously invested any capital or private equity into other investment firms and, if so, which investment firms. Follow the trail of funding and see if previous Investments were successful with positive returns.

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Mitchell Travers

Mitchell Travers