Follow the Money to check the lgitimacy of projects on Hive

In the crypto world, I always hear the same words being spoken: „before you invest, make sure to do your due diligence“. These are nice words but how do you technically do that?

I always try to start with the information provided in a white paper or a post. These are however only promises and how can you check whether these promises are actually kept?

One way of checking out the legitimacy of a project, especially on hive, is to follow the money. What happens with my investment? Where does the money go?

Before I invest somewhere, I have learned to follow the money by going step by step, transaction by transaction until the money is staked somewhere or it disapears. Also, I try to do the same on the other side. I try to track the money that is given to me and figure out where it came from. Has the token I receive been bought on the market or has it been issued from thin air?

On Hive, we are pretty lucky to have all the necessary tools to figure that out. I use my peakd.com wallet for that. I can check all transaction for hive, hbd and also all transactions for hive-engine tokens. For more details regarding HE tokens, I use the Hive-Engine Explorer that allows me to look at all transactions by an account for a certain currency.

Following the money often allowed me to find things that didn't match or that raised some red flags. It's a good exercise and it can be time consuming but it's definitely worth doing it.

How do you do your due diligence when checking a project or a token?

Let's connect ! You can find me on these platforms:

• Hive
• Leofinance
• Publish0x
• Lbry
• Torum
• Noise.app