Unbiased Investing into a Financial Revolution ( Part 2, Research and Analysis )

When trying to be a part of a Revolution, you use Information gathering and it’s Analysis ( Research ), in order to understand it better and also find opportunities to participate in it. Whether your Research consists of reading or listening, it always comes down to answering the following questions :

• Who gave you the Information / Where are you getting it from
• How is Information presented
• What is the goal / intention of whoever gave you the Information
• How credible and verifiable the Information is

In Part 1, Introduction I have shown you my Argument as to why there is a Financial Revolution happening. In this second Part I will try to help you be a part of this Revolution in form of Investing. ( I will not cover the other form of participation, namely creation, because this Industry does not lack developers and innovation, it lacks Adoption and Education ).

This part will mostly contain ways to know how to do Research, things to keep in mind about this Topic and ways to choose your own Research strategy and Sources. I will show you my understanding of Research in the Cryptocurrency Industry and give you the ability to perform it on your own. This way you can decide what you are going to invest into, while I can hopefully stay unbiased and provide Education.

Introduction

When a new Industry is born, there will always be people who will try to make money in it. The first are the Creators. Those that solve Problems and create something new. Since it is not possible to make something using nothing they need Resources to sustain themselves ( for example Bills that they need to pay ). One of the most important Resources is Money, but when they have no Money and have an Idea, they need Investors to transform this Idea into Reality.

The second kind of people are Investors, those who provide Capital to Innovators, Creators and Developers thus allowing them to create something. In return, once this something becomes Mainstream and successful. both the Investors and the Creators of that something make money. This is healthy for the whole Industry because it is constantly creating value, passing this value around and solving issues in the World, which translates into a better life for everybody.

The third kind of people are Parasites ( the bad ones ). Those who try to steal money, but don’t want to solve a Problem and help the Industry. The interesting part is that they Create and put Effort into their work as well, they just have bad intentions. The most prevalent of the Parasites are the Scammers, those that Lie and Deceive in order to steal money or gain any sort of advantage in a fraudulent way.

Since Parasites can put a lot of work into Creating something, be it useless or malicious, they can blend in and appear as Creators. That tactic is much better and more sophisticated then a simple Ponzi Scheme, because the former exploits the weakness of Research, while the latter the weakness of Education. If you are educated enough to understand how the technology within your Industry of interest works, you will never fall for a Ponzi Scheme. But even if you are educated enough you may still fall prey to Parasites and loose money because your Research wasn’t sufficient. Or you did your Research the wrong way.

Now parasitism can exist in various forms, all of them with the goal of getting your Money. Whether it is in form of luring investors to give your Money to something that will never be successful on purpose( a scam ), or the goal of luring investors into a cult like environment that will support their Idea and spread it regardless of what that Idea is.

As example, you as an Investor are lured to give Money to a project that claims to solve a problem or that it might solve it in the future, but doesn’t actually intend on solving anything.

However here is where the difficulty in Research arises. Because as a genuine Creator with a great Idea you have no ability ( most of the time ) to have a working Product on hand to show to Investors. But you can create a Business Plan or a Report ( in Cryptocurrency it is usually a whitepaper ) where you will describe your Idea and present the reader with means to understand how you will be able to solve a Problem.

In order to judge if the presented Idea is genuine, the Problem is possible to solve and the Plan is viable to reach the Goal, you need to know many things about the technology used to create the Product. In Cryptocurrency you might need to have Computer Science knowledge, Programming knowledge or even knowledge in economics.

And that is when things can get even more complicated, because many people don’t have the knowledge necessary to understand it all nor the time to learn it. For that there is always the option of listening to those who can translate complicated and complex Ideas into something that you can understand. There are two major Problems that arise when doing that.

Bias and Misinformation

There are ways to know if the News you are reading contain Fake News, Misinformation or Disinformation. A great Article about this topic can be found in : “Fake News : Defining and Defeating, By DFRLab”. Basically when doing Research your want to avoid Misinformation which is a very hard thing to do. It requires critical thinking ( which i will cover in the future ) and more Research into those who Publish the News. You can only distinguish genuine News from Fake ones by knowing the intentions of the Publisher.

On top of figuring out if there is Misinformation present, you need to know if there is Bias present in the News Article you are reading or the video you are watching. This also requires an Analysis of the Publisher / Author and you might want to ask yourself the following questions :

• When covering something new about a project, are opinionated remarks present ? ( Opinion is not always a bad sign, but it becomes twice as hard to know if the Opinion contains Bias or not )
• Is the Publisher trying to sell me a product or convince me to invest into an Idea ? ( He / she could be motivated to advertise you the product because of a compensation or a reward, not because the Product is good or that he / she even believes in the success of the idea )
• Does the Publisher have a focus on a specific Project / Product while avoiding discussion of anything else ? ( Being open to new things and discussion is a great sign of somebody who might be less inclined to be Biased )
• Do the Headlines try to invoke Emotions ? ( Excitement, Feat )
• Are there any pointers to the primary Source ? ( If the publisher is trying to explain something complex like an advancement or innovation from a Project, does it have a Link to the actual advancement or innovation. If Sources are not present, it is possible that the publisher is trying to mislead you into believing in something )
• Is the publisher qualified to report or talk about complex things ? ( This Information can be difficult to obtain, and even harder to get proof of. If the publisher does not have the appropriate qualification, it does not mean he / she will be unable to do a simplified report on a complex Topic, it just means that you might have to double check the Sources. This can be offset by experience. Qualification is proof of experience, be it in theory or in practice. If the publisher has been in the field he is reporting for long time he will have enough experience to cover it better the longer he does it )
• Does the publisher work in or is invested in the Project he is covering ? ( Here is where the majority of bias can arise even if the publisher is covering news from other Projects. Since he / she could be invested in a Project X, he / she might display preferential remarks about that Project. Things like : “This innovation on Project Y is great, but this other Project X already has had it for long” )

Complicated News vs Simplified News

Simply put, it is possible to get new Information about Projects and coverage of Innovation by being subscribed to publishers that cover things that are very technical ( we can call them Facts ). This method of Information delivery is for those who have the understanding of Technology and the knowledge to understand the complex things in that field.

And it is possible to get new Information by being subscribed to publishers that cover things in a simplified way that many or most people can read and understand ( we can call them News ).

Both of those can fall prey to Bias. Here is where you can decide what the publisher is by using this 2 by 2 Matrix :

Big News websites could potentially have a form of Bias. They could be trying to sell you something or will try to get you Emotional with their Headlines ( because a lot of people don’t read the full Article, only the Headlines ). Smaller News websites or blogs, could potentially have a lower form of Bias, specially if those are run on donations or are smaller in scale.

Finding Unbiased News Sources is much more difficult, but possible. You will need critical thinking and logical thinking to be able to Process and judge Information.

Publishers who report complex changes and new things in the Field have a lower chance to express Bias. But they could still express preference by being involved in or invested in a certain Project.

Disclaimer : Unfortunately it is extremely difficult for me to say that Source X or Website X or Publisher X fall in one of these categories without expressing my opinion. I could display a form of bias or even be completely wrong if I start pointing fingers. I will give you two Sources that I currently use to get my Information and also my Argument as to why. It is for the same reason that I mentioned in “Part 1, Introduction” that I want to avoid giving any opinion. If you can learn how to distinguish between good and bad, you won’t need my opinion at all. That is my goal with this Series.

Headline and Article Analysis

As Example you would have 2 Article Headlines from two different Sources ( as News and as Facts ) with the following Headlines :

1. DEADLY vulnerability found in Project X could be disastrous
2. Critical Vulnerability was found in Project X in form of …

The Headline 1 clearly tries to play on the Emotions of the Investor, who just by reading the Headline would express fear and could potentially sell their investment Position in that Project.

The second Headline merely tries to inform about a Problem that needs to be solved. This then helps you evaluate the quality of the Project with time by following up on these updates :

• How fast did the Team respond to it
• What Plan did the Team create to tackle this Problem
• The severity of the Problem and the Priority the Team will give to it
• How did the Team solve similar Problems in the past

As another Example consider the following 2 Article Headlines :

• Country X will be banning Project Y from operating
• Country X created a draft proposal that would heavily regulate Project Y and possibly ban it if no cooperation is present.

On top of invoking Emotions such as Fear, the first Headline is also misleading and can be considered misinformation. Sometimes the Article itself will be different from the Headline, so it is always important to read the full Article.

The second Headline basically simplifies the whole Article, does not try to invoke any Emotions and tries to inform of something new. Headlines like these are rare because of their length so this is just an example. You cannot judge the Publisher solely by the Headline, but you can at least have an idea of his intentions with it.

As final Example consider the following 2 Article Headlines :

• Huge Partnership between Project X and Project Y
• Project X adopts Project Y’s Standard to Increase Interoperability

The first Headline plays on Emotions ( excitement ) which would make you want to Invest in that Project. But it also is a form of fake news. Now in this case it is not completely fake, but the implied Scope of this cooperation could be over-hyped just by the Headline ( the Article itself could describe it in detail but the Headline is the biggest focus ). A Partnership does mean cooperation between business partners ( in this case between two Cryptocurrency Projects ), but sometimes a certain Project could implement a change or a feature of another Project without even having any contact. ( in this example Project X adopted something, but they didn’t necessarily have to even talk to Project Y about it. Project Y could be a simple provider of such Standards, doesn’t mean that every Project that adopts their Standards are automatically their partners )

The second Headline again reports something that you could find of importance and simplified it in a small Sentence in a Headline. You can then click, read the Article and judge for yourself whether this “cooperation” is “Huge” or merely part of innovation.

Source examples and Arguments

I personally hate Social Media because of extreme manipulation and other factors that I will not discuss right now. However they can be used to gather Information if you know how to do the following things :

• Know how to think critically ( will be covered in the future )
• Know how to recognize manipulation ( majority of manipulation in social media is done using bots. Here is a great Article that can help you spot manipulation in twitter, which can then apply to other social media platforms : “BotSpot : Twelve Ways to Spot a Bot, by DFRLab” )
• Know how to filter Information correctly

This requires years of experience and without the above skills using Social Media to do your Research or gather News can be very dangerous. So then why would you want to walk in a minefield even if you know how to spot a mine ?

The answer lies in other People.

Disclaimer : I will talk about Social Media Platforms in General, but my focus will be mainly about Reddit. It could be seen as somewhat of a different approach to Social Media because this Platform resembles something like a forum, where people can ask questions and share their opinions. This way the comment section is given more value then in other Social Media Websites which creates more Discussion about the post.

Khe Hy in his Article “Reddit has become the gospel of personal finance” ( Same Article without the paywall can be found here ) argues that “most financial advice is not objective” and that “Conducting a Google search for a straightforward financial question yields a number of biased results, often masquerading as reliable Information”.

He continues by saying that “The first results from the financial institutions are trying to get you to open an account with them — in other words, make money off you. The posts on two of the non-traditional publications have disclaimers that say something along the lines of “We may receive compensation from the issuers of some products mentioned in this Article.” They may be incentivized to drive clicks to certain companies in exchange for an affiliate fee which could be in conflict with objective reporting”.

Similarities can be drawn in Cryptocurrency Advice and News where somebody could be paid to portray a certain Project in a better way in order to make money off of you.

But here is where the “other People” come in to help. If you see a News Article on a Social Media Platform ( for example let’s take Reddit ) you should always check out the comments. A lot of the time the comments contain the most useful Information. Sometimes the comments contain a TLDR ( resumed version ) of the Article, sometimes people point out to Bias present in the Article by the Publisher. Other times people even go to great lengths and write big comments to show that the Article is Fake News or Misinformation and why they think that.

It still doesn’t mean that the Author of the Comment is to be trusted, but a lot of the time he / she will include Sources ( to Research or Facts ) that could disprove something that the Article is claiming to Report.

As an Example we can take the Headline from before that states the following : “Country X will be banning Project Y from operating”. If you then go to the comment section you might find the following comment :

“Title is misleading, Country X merely created a draft proposal that needs to be approved in parliament in order to have any effect, here is the Link to the Draft Proposal itself : …”

The voting System within the Platform can also be used as a way to critically assess the Information provided by the Author of the Comment, but not in the way you might think. ( you do need to keep in mind that votes can be manipulated using bots )

If a comment has many positive votes it doesn’t mean that the comment or the Author are legitimate. However if a comment has positive votes, counter arguments, proof of statements and Sources for claims it could be worth giving it a read. ( you should still use critical thinking )

You should also never completely avoid comments with negative vote counts, specially if they also contain proof of statement and Sources. Since votes can be manipulated you should always make sure that the real genuine comment with good intentions are not somewhere down-voted to oblivion by bots.

I would also suggest avoiding asking very broad questions in a Social Media Platform if you require help in a certain Topic or just seek general advice. But there are still ways you can get good advice and gather important Research material when looking for opportunities to Invest in. Here are some tips you can use if you seek Discussion / Argument driven advice :

1. Focus on the details

Instead of asking “What should I Invest in to”, ask instead : “Is Project X a good investment ?”. You should then search for comments that contain Arguments where the Author is also able to explain those Arguments and bring proof to his / her claims.

2. Focus on the Problems / Issues

Instead of asking why a certain Project is good, ask instead why people see this Project in a bad way or what its Problems are. Voltaire once said “Perfect is the enemy of good”. If you are unable to find Problems, Issues or any points of critique in a Project then chances are it might be a scam. Nothing is perfect and to me a Project is valuable if it recognizes Issues and tries to work on solving them. You need to find the middle ground on it, because if you get an answer that lists too many Issues ( or red flags ), it could mean that the Project is a bad Idea, the Team is unable to solve the Issues they have or it could simply be a scam. However it could also mean that the Goal the Project is trying to achieve is too exaggerated and it will require a much longer time for it to solve these Problems.

So in conclusion if you are able to :

• Filter Information correctly
• Identify Manipulation
• Critically Analyze any claim
• Know the intentions ( or at least have an idea ) of the Publisher / Author of the comment
• Read counter Arguments and Analyze proof
• Have access to Sources ( direct Sources, primary Sources )

You can use a Social Media Platform ( in this case Reddit ) to gather Information necessary for Research or even as a Source for News.

My favorite Source of Information is a Medium Publisher Paradigm-Fund. This one I would categorize ( using the 2 by 2 Matrix ) as Unbiased Facts. Their Articles are always well written, well structured and most importantly contain the least Bias ( in my opinion ). They are however very technical, so if you do not understand the complex Topics of Cryptocurrency / Blockchain or Computer Science, you should start by reading News and doing your Research somewhere else. If you are not able to understand the technicality of whatever is reported, you won’t be able to judge whether the Project that is being reported is doing well or not or what the significance of that report even is.

Another great Source of information that I can suggest are well written Reports. They can be invaluable Sources of unbiased Information because most of them focus on the bigger Picture.

Some of my favorite Reports include :

• CVVC Top 50. Many Quarterly Reports about the top 50 Leading Projects
• CVVC Global. Yearly Reports about the Cryptocurrency Market and its Projects
• Coingecko Quarterly / Yearly Reports.
• Binance Research. Many different types of reports, including Surveys
• Upblock Research which does Analysis Reports of certain Projects and Upblock Insight which has Monthly Market Recaps
• Big Projects that are run by Foundations also usually have Research Reports or Performance Reports that could contain interesting and valuable information straight from the Project

Before reading complicated and detailed reports I would suggest you to start with Big News Publishers such as Coindesk, Cointelegraph and Bitcoin Magazine. Another great and simple to use App Decrypt has simple to read Articles and even has a section where you can Learn about different Topics and Projects.

This way you can start practicing critical thinking and critical Analyses of Information and later decide whether these publishers are Biased or if you should find another Source of Information.

Conclusion

Knowing where to look for News and Updates within this Industry can give you a General Idea of the Scope of it and where it is headed. Knowing if News are genuine or not can be difficult, but I hope this Article can help you find News Sources that will help you get critical Information for Investing. How to Choose and Analyze Cryptocurrency Projects is a Topic I will try to cover in the next Part. It is important for me to first explain the definition of Research before you choose the Project you want to Invest in. Because you might fall prey to Bias and Misinformation and will sell your Investment position in a potentially good Cryptocurrency Project.

This content is for Information and educational purposes only and should not be considered investment advice or an investment recommendation.