I am by no means a professional so please take these points as guiding points.
Positive signs
- Community involvement community involvement is a good sign, if there is an active slack channel, subreddit or similar which actually contribute to the project (as opposed to solely talk about price movements) that is a good indicator that other people who understand the code have deemed it of value and are willing to contribute their time to the platform.
- Roadmap The team has a clear plan of what they’re working on and estimated time of completion
- Clear direction The project has a clear direction or niche it’s attempting to tackle. Compare this with pre-existing projects and determine whether another projects already covers this niche or not. For example, Platforms such as Ethereum or NEO allow for a wide range of uses and may make a specific project redundant.
- Addresses a Real Issue This one is a bit harder to assess. This is down to whether it’s solving a large enough problem that people are willing to abandon legacy technology. Does it simultaneously reduce costs and offer an easy to understand and adopt interface? What is the actual industry size? Do users really see an advantage to using the new system? For example, LBRY Credits looks at allowing online content creators to charge whatever they want for their content but there is a reason current industry giants are moving away from this: As much as people hate advertisements they still prefer to watch them if they get free content. Take for example people lining up for an hour to get a chocolate bar from a promotional stand. Is it worth their time? Almost certainly not, but it’s free. The same can be said for watching a video, the vast majority would prefer to watch a 5 second advert than pay even $0.10 for a video.
- Room for growth  Even if a project has identified a niche for itself, has a strong team and all the other positives you must ask yourself if the market it is aiming for large enough. Bitcoin aims to be a global currency. We could compare it to the amount of money in circulation, or the total value of gold and see that it has the potential to grow into the trillions of USD. Can we say the same about a currency for purchases of items within online games? No. The entire gaming industry was estimated to be worth $99.6 billion in 2016, the niche such a currency would be addressing is a subset of that so is obviously smaller. While this is still a lot of money placing your money in something with a market that is 10 or 100 times larger will offer you much greater potential returns.
