Let’s be honest – crypto can feel like a rabbit hole. You hear about it everywhere, your friends might be dabbling in it, and maybe you’ve even bought a little yourself. But if you’re just getting started, the space can be daunting. I’ve been there.
This guide is meant to simplify things. It’s not about hype – it’s about helping you look at crypto assets with a bit more clarity, the same way you might evaluate stocks or any other investment. Let’s break it down, step by step.
Step 1: Start with the basics – coins vs. tokens
First things first: not all crypto is the same. Coins are the foundation. Think Bitcoin or Ethereum – they have their own blockchains and often serve as digital currency or fuel for their networks.
Tokens, on the other hand, are built on top of other blockchains (like Ethereum’s ERC-20 tokens). They usually power specific apps, protocols, or communities.
Knowing whether you're looking at a coin or a token helps you figure out what exactly you’re investing in – are you backing infrastructure (coins) or services and applications (tokens)? It’s kind of like investing in roads vs the cars that drive on them.
Step 2: Evaluating crypto assets – three things to look at
Purpose and technology
Why does this project exist? What problem is it solving?
Real-world use cases matter. For example, Bitcoin lets people send money across borders without banks slowing things down or charging exorbitant fees. That’s huge if you’ve ever waited days for a wire transfer.
Then there's innovation. Ethereum's smart contracts let people build entire applications that run without middlemen – imagine buying a house, and the contract automatically transfers ownership the moment funds are received. No lawyers. No paperwork. It’s fast and efficient.
Lastly, is the tech actually being built? Projects that regularly release updates or have a visible team of developers are usually in it for the long haul.
Tokenomics and economics
Even the best ideas fall apart if the economics don’t make sense.
Look at supply and demand. Is there a fixed supply, like Bitcoin’s 21 million coins? Limited supply often creates scarcity, which can support value.
How tokens are distributed also matters. If a small group holds most of the tokens, that’s a red flag – they could dump it anytime.
Check for financial transparency. Legit projects usually share how they’re spending funds and what their plans are for growth.
Adoption and market strength
Here’s where you see if the project is just hype – or if people actually use it.
Liquidity: Is it easy to buy or sell? High trading volume and listings on major exchanges mean you're not stuck holding something you can’t move.
Community: Active communities on Reddit, Discord, or X (Twitter) can be a good sign. If people are genuinely excited and involved, that helps drive growth.
Partnerships: Has the project teamed up with others in the space – or even outside of crypto? Real partnerships are often a sign of real traction.
Step 3: A quick evaluation checklist
When you’re sizing up a new project, here’s a fast checklist to keep in mind:
Whitepaper: Is there a clear mission and road map? Skip the ones that sound like science fiction.
Team: Do a little homework – check LinkedIn or Google them. Real teams should have real names, backgrounds, and experience.
Market cap: This gives you a sense of scale. Compare it to similar projects and ask yourself if the valuation feels justified.
Road map: Are they hitting their milestones – or just making excuses?
Risks: No sugarcoating it – crypto is volatile. Be aware of hacks, regulations, and price swings. This isn’t passive investing. It's active.
Final Thoughts
Evaluating crypto assets doesn’t have to feel like rocket science. Once you understand the basics – what a project does, how it’s structured, and who’s actually using it – you’re in a much stronger position to make smart decisions.
And if I could offer just one piece of advice: be curious, but cautious. Hype fades, but fundamentals stick around. Take your time, do your research, and always invest with a long-term mindset.
Matt Carstens is director of product experience at neo-broker amana
