How to research a cryptocurrency
Eight questions to ask about any coin before you trust it with your money.
Instead of asking whether a coin's price will go up, ask what it does, who controls it, how many coins exist and who holds them, whether people actually use it, whether it's been hacked, and whether you could sell it. If you can't answer those questions, you don't know enough yet.
The eight questions
- What problem does it solve? Can you explain it in one sentence without the marketing words? Does it really need a blockchain or a token?
- Who's behind it? Are the founders and developers public? What have they built before? Anonymous teams aren't automatically bad (Bitcoin's creator was anonymous) but they make accountability harder.
- How does it work, and who controls it? Can a small group change the rules, pause the system, freeze funds or mint more tokens?
- What's the supply? Check the maximum supply, how fast new coins are created, and when big blocks unlock for insiders (compare market cap and FDV).
- Who holds it? On a block explorer, see whether a handful of wallets own most of the tokens. Heavy concentration makes dumps more likely.
- Is anyone using it? Real users, apps and fees, not just trading and social-media buzz.
- Is it secure? Has the code been audited? Has it been hacked before, and how was that handled?
- Can you get out? Is it on reputable exchanges with real liquidity, or only on one small platform?
Instant red flags
- It promises guaranteed or fixed returns.
- It's pushed by paid influencers, strangers or "mentors" with urgency.
- You can buy but can't sell (a "honeypot" token).
- The team holds most of the supply with no lock-up.
- The website copies another project, or the contract address doesn't match the official one.
Unsure? Use the scam checker.
Where to look
- The project's own documentation, and whether independent sources agree with it.
- Block explorers for supply and holders.
- Independent security audits (and whether they found problems).
- Our coin fact sheets and the list of cryptocurrencies for the major ones.
Frequently asked questions
How do I know if a crypto is legit?
Check who's behind it, whether the code and supply are transparent, whether people actually use it, and whether it's on reputable exchanges. Guaranteed returns are the biggest warning sign.
What is a token unlock?
A scheduled release of coins that were held back, often for early investors or the team. Big unlocks can add selling pressure.
Where to next
Written for beginners and checked against the sources listed. Last reviewed October 26, 2026. This page is educational and is not financial, tax or legal advice. How we write and check pages.