Key takeaways
ChatGPT simplifies intricate crypto projects by summarizing white papers, clarifying use cases, and dissecting tokenomics.
Investigating the team, partnerships, and security threats is essential before investing in any crypto token.
Benchmarking projects against competitors uncovers strengths and weaknesses for informed decision-making.
ChatGPT can propose pertinent research questions, serving as a resource for both novices and seasoned investors.
Investing in cryptocurrency is both thrilling and daunting, with thousands of coins and tokens on the market today. From Bitcoin (BTC) and Ether (ETH) to lesser-known altcoins and memecoins, opportunities and risks abound. Conducting thorough research is essential before investing your funds.
That’s where ChatGPT steps in.
This article guides you on utilizing ChatGPT to research cryptocurrency projects (illustrated with various examples), evaluate their credibility, and make informed investment choices. Whether you are new to investing or an experienced trader looking to enhance your approach, ChatGPT can act as a valuable research partner.
Why research is crucial in crypto investing
Unlike conventional stocks supported by earnings reports and regulatory documentation, crypto assets frequently lack standardized financial data. Instead, you must navigate through white papers, GitHub repositories, community sentiment, and more. Failing to conduct thorough research may result in investing in overhyped or potentially fraudulent projects.
Crypto scams can take numerous forms, exemplifying the importance of diligent research:
Rug pulls: These occur when developers launch a new token, promote it heavily to lure investors, and then abruptly withdraw all funds, leaving investors with worthless tokens. A notable instance was the “Squid Game” token in 2021, which soared in value before the creators disappeared with millions.
Pump-and-dump schemes: Groups artificially inflate a coin’s price by spreading false hype, only to cash out their holdings at a profit, driving the price down and causing losses for others.
Fake projects or plagiarized white papers: Some tokens present white papers copied from legitimate projects or filled with vague, technical jargon that conceals the absence of a real product or team.
Pig butchering: Scammers cultivate long-term relationships to build trust, convincing victims to invest heavily in bogus crypto projects before ultimately stealing their funds.
Deepfake scams: Advanced AI-generated videos or audio imitate influencers or executives to deceive individuals into transferring crypto or revealing private keys.
Cybersquatting: Fraudsters register domain names similar to legitimate crypto projects or exchanges to mislead users and pilfer credentials or funds.
Phishing and fake websites: Scammers create sites that mimic popular tokens or exchanges to steal private keys and funds.
Thus, prior to investing in any coin, it’s critical to confirm these fundamental aspects:
ChatGPT can assist you in answering all these questions more swiftly and clearly.
Did you know? Scammers have impersonated Coinbase in phishing attacks by sending fraudulent emails or text messages resembling official Coinbase alerts. These messages often request users to click on harmful links to “verify” their account or “resolve security issues,” tricking them into exposing login credentials or transferring crypto funds. Always verify the sender’s email address and access Coinbase through their official website or app to prevent falling victim to these scams.
Step-by-step: Using ChatGPT to research crypto projects
Here’s how to effectively use ChatGPT for researching coins before investing:
1. Start with a project summary
Utilize ChatGPT to provide a high-level overview of any coin, allowing you to quickly grasp the project’s objectives and purpose.
Example prompt:
“Explain what Bitcoin Hyper (HYPER) does in simple terms.”
As demonstrated, ChatGPT can simplify complex technical language and help you understand the core concept, even if you’re not a blockchain expert.
2. Get a breakdown of the white paper
White papers are foundational documents outlining a crypto project’s technology and roadmap. They can be dense and technical.
ChatGPT can summarize white papers (if you provide them) and present a clear version of the key points, saving you time while ensuring clarity.
Example prompt:
“Summarize the main points of the Stellar white paper.”
3. Check the use case and market fit
Many coins claim to be innovative, but do they address a real-world issue? To find out, ask ChatGPT to help evaluate the utility of a coin.
Example prompt:
“What problem does Chainlink solve, and who uses it?”
This provides context on how the project fits within the larger ecosystem.
4. Evaluate the team and partners
A credible founding team and solid partnerships often indicate legitimacy and potential for execution.
Example prompt:
“Who founded the Avalanche blockchain and what’s their background?”
5. Assess tokenomics
Tokenomics involves the structure of a coin’s supply, incentives, and distribution. Inadequate tokenomics can lead to inflation, rug pulls, or price crashes.
Example prompt:
“Explain the tokenomics of the Hedera (HBAR) coin. What’s the total supply and how is it distributed?”
6. Check for compliance and security concerns
Security and regulatory challenges can hinder even the most promising crypto projects. You could ask ChatGPT for potential risk factors.
Example prompt:
“Has Tether USDt (USDT) faced any regulatory issues?”
7. Compare with competitors
Understanding how a coin stacks up against its peers (DeFi, layer 1, NFTs, oracles, etc.) helps identify strengths or weaknesses.
Example prompt:
“Compare Sui and Sei blockchains in terms of scalability and interoperability.”
You can also request pros and cons in table format for easier analysis.
Did you know?ChatGPT was trained on a large dataset containing diverse text from books, websites, and articles, enabling it to produce informed responses across a wide range of topics.
Bonus tip: Ask ChatGPT what you should be asking
If you’re unfamiliar with crypto, you might not know which questions to ask. Try this:
Example prompt:
“I’m considering investing in a new crypto token. What key things should I research or be cautious of?”
ChatGPT can provide a checklist addressing fundamentals, technicals, sentiment, and security, ideal for constructing your personal research plan.
Did you know? ChatGPT’s framework is based on the transformer model, employing self-attention mechanisms to comprehend context in text, allowing it to produce coherent and contextually-aware responses.
What ChatGPT can’t do (yet)
While ChatGPT is an excellent research assistant, it’s crucial to recognize its limitations:
No real-time data unless paired with tools like web browsing or APIs.
No investment advice or guaranteed forecasts.
May provide outdated or incorrect information (always validate facts).
Whether you’re investing a modest sum like $10 or a substantial amount such as $10,000, thorough and careful research is your best protection against risks. Fortunately, AI tools like ChatGPT now facilitate gathering insights, organizing information, and formulating the right questions.
It’s essential to use ChatGPT to enhance your research process, not as a substitute for your critical thinking and due diligence.
This article does not contain investment advice or recommendations. Every investment and trading decision carries risks, and readers should carry out their own research before making any decisions.
