How to Choose a Cryptocurrency to Invest in
Cryptocurrency is highly volatile and pretty unpredictable. Investing in it is always connected with risks. But if you choose the right coin, you can have a significant profit from your investment.
If you are new to crypto investing, you can start with our beginner’s guide on how to invest in cryptocurrency. Have you already selected some coins? Compare them with the requirements mentioned in the guide, the coin that complies with all of them is definitely worth your attention. Are you still choosing the right cryptocurrency? Follow our guidelines to find the best option.
Does the Cryptocurrency Have the Right Community?
If a cryptocurrency has a good community and followers, it means that people are interested in the coin and believe in its potential. You can check the communities on Reddit, make sure to search for YouTube channels, check what the community members tell about the coin. Also, such communities will help you to understand more about cryptocurrency. You can ask any questions that interest you, and you can count on easy-to-understand replies.
Check Whether the Team Is Credible
The cryptocurrency market is highly competitive. There are more than 4,000 cryptocurrencies, and all of them offer something special. Do you think that somebody who has neither experience nor deep knowledge of the topic can offer something valuable? If the team behind crypto hasn’t achieved anything in the field previously, it is difficult to imagine that they can develop a cryptocurrency with some potential.
That’s why checking the team behind the project is one of the most important steps.
For example, two of the most promising cryptocurrencies, Cardano and Polkadot, were created by former Ethereum developers, Charles Hoskinson and Gavin Wood, respectively. And for now, Ethereum is one of the most promising cryptocurrencies. Thus, we can conclude that Cardano and Polkadot have some perspectives, too.
The Underlying Technology Can Lead the Crypto to Success or Make It Fail
Always check whether the cryptocurrency offers something that might influence the market. Make sure you are investing in a coin which technology makes it stand out. The best investment options are the cryptocurrencies that might disrupt the industry.
For example, have a look at Ethereum. It has offered the world completely new features such as:
- Smart Contracts;
- EVM, or Ethereum Virtual Machine;
- Decentralized applications;
- Decentralized Finance.
Ripple also has always been worth attention because it was the first coin aimed at improving the existing banking system instead of replacing it.
If you see that the coin offers some unique features that can be utilized in the already existing infrastructure and improve it, you can consider investing in the coin.
Read the White Paper Attentively
When a cryptocurrency is launched, the team shall bring out a white paper. There, they explain everything about the coin. While the document might be not easy to read and filled with some technical jargon, it is recommended not to skip it because there, the main aspects of the coin are explained.
If the white paper contains a lot of mistakes, is written non-professionally or the team is trying to operate general terms without going into detail, those all are big red flags. These details indicate that the team itself either doesn`t take the project seriously or isn`t sure about what they are doing.
When you are reading the white paper, check whether the project promises a guaranteed profit. Nobody knows whether the coin is going to succeed or fail, and whether you are going to earn from it or not. If the team insists that their investors are going to win, they are lying. It is better to keep your money away from such an investment.
The Team Are Those Who Move the Project Forward
Research who is behind the cryptocurrency project. It is better if, among the team members, you can find people who have already succeeded in the cryptocurrency world. For example, when you see that Charles Hoskins, one of the Ethereum developers, is in the Cardano team, you can expect that Cardano will have some success. But if you see people who have never been in cryptocurrency, moreover, if the photos and names of team members are fake, it is a huge red flag. Keep your money away from such projects.
Check the Road Map to Understand the Progress
Always check the road map of the coin. It shall give you a clear idea of what the team plans are and where the project is heading. When checking the roadmap, pay attention to the following details:
- The timelines for coin development shall be specified clearly. If this is not the case, it means that the team either isn`t sure of what they are going to do and when it is going to be done, or the team isn`t dedicated enough to the project. In either case, it doesn`t promise anything good to you.
- Check when the major updates are going to be released and what updates are those.
- Make sure you know whether the coin will have a limited number of coins in circulation or not. If the number of coins is limited, check how many coins can be released and when approximately they are planned to be released.
If you don`t see this information, it means that the team doesn`t completely know what they are doing. It is better to keep your funds away in this case.
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