The Lifecycle of a Cryptocurrency – Part 1

Bitcoin, the biggest cryptocurrency by market capitalization, goes back to 2009. One of the concepts that made bitcoin possible was the concept of the proof of work. Cynthia Dwork and Moni Naor introduced the concept in 1993 and Markus Jakobsson and Ari Juels coined the term in 1999.

Because cryptocurrencies are so new, it is hard to predict what will be happening to them in the future. However, what is clear is that they are based on groundbreaking technologies and offer features that no currency has offered before such as full transparency, coin cap, and decentralization.


Pre-launch of a New Coin

A typical lifecycle of a coin begins with a pre-launch. During the pre-launch, many developers offer extremely attractive terms to those who invest in their coins. Unless you know a lot about the developers, the technology behind their coin and the space in which they are launching their coin, investing during pre-launch is not the best long-term strategy.

Pre-launch is a great time to start doing research and learn as much as you can about the developers, including their background and reputation, the technology behind the coin, the idea and the space where developers are launching the coin. This is also a great time to check the coin for the red flags such as pre-mined coins and centralization of the network. You may also want to pay attention to the depth of the marketing plan of the developers. Many developers talk about how every investor in the coin will be very rich when the network has millions of users, yet they provide no roadmap to how they will get to the first hundred, first hundred thousand, first million users.

It is very likely that your first interaction with a coin will happen in the announcements section of one of the major cryptocurrency forums, such as Even though, as its name suggests, BitcoinTalk originated as a forum dedicated to bitcoin, today is it the place where most developers present their new coins and cryptocurrencies to the public. You can see the latest announcements about altcoins at

When you visit the forum, you will see coin announcements ordered by the time of the latest post. This means that an older coin with a more active community may be located higher in the announcements section than a newer coin with less traction. If you are serious about investing in new coins, it is a good idea to become a member of and also join private forums for any coins that you may find interesting. However, on you will be able to view the threads even if you are not a member of the forum. When you join, one of the best strategies is to ask developers any and all questions that you may have.

Developers of legitimate coins are very open and approachable during the early stages of the project, which is why you should take advantage of this, get a feel for the team behind a coin and obtain as much information as you can. You will be able to learn a lot about a coin by not just reading about the technology, but also by simply how its developers interact with you and answer your questions.

Typically, serious developers who have thought their coin and project through will start their announcement thread with a link to their whitepaper.


Reading Whitepapers

A whitepaper is a scholarly document that introduces a complex concept. Satoshi Nakamoto wrote a whitepaper about Bitcoin in 2008. It was called “Bitcoin: A Peer-to-Peer Electronic Cash System.” To this day, Nakamoto’s whitepaper is available. You should read Nakamoto’s paper to get a feel how a quality whitepaper reads like and feels like.

Nakamoto’s whitepaper is short. It has just nine pages, yet on those pages it discusses the most important aspects of cryptocurrencies, including the way transactions work, timestamps, the concept of the proof of work, the network, incentives for miners and privacy issues. Nakamoto’s whitepaper has 8 references, going back as far as to 1957. This is one of the things you should be looking for in whitepapers: they should refer to recognized scientific works, not just links to forum threads.

A thread or a whitepaper should also introduce the team of developers behind the new coin, including their real identities, work experience, education, and accomplishments. The more information you see about the real identities behind the project, the higher the chances that the team is in the project for the long haul because sharing information carries potential physical and legal risks.

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