Let’s just accept that it is a task to find the right cryptocurrency to put your money and trust into!
I know it is and it is also true that asking friends and the internet only makes it more difficult. As everyone has their own opinion about each cryptocurrency and reasons for which they invest or not invest in specific crypto.
But does that mean we go ahead and follow whatever suggestions we receive?
I suggest No.
Top 5 Ways to Pick the Right the Cryptocurrency to Invest In
I have said it multiple times and will repeat it:
Make sure you only invest after you do your due research.
Thorough research will help you make informed choices and help in evaluating the suggestions received by others.
So start the hunt for the perfect crypto or cryptocurrencies to invest in with:
1. The Team
Great Teams Build Great Products!
When it comes to cryptocurrencies, it is important to know the brains behind the idea and the project. When you are placing your money on a project you would like to know whose project is it, so do a little research.
Go to the cryptocurrencies website and read about their core team. Who are the developers, what does its leadership look like and what background and expertise do they hold.
This should give you a fair idea about the values the network shares, and it is something that excites you then follow them on social platforms to get a deeper insight into their endeavours.
2. The Solution
Cryptocurrencies are more than an investible digital asset; they have utility. Every cryptocurrency is tied to a decentralised project on the blockchain. And these projects are blockchain infused solution trying to solve real-world problems.
And as these solutions get widely adopted in multiple sectors, the demand for the platform’s cryptocurrency will rise as everybody will then want to profit off it.
E.g. BAT is the native token of an advertising project built on Ethereum, which tries to identify frauds in digital advertising and aims to price user attention correctly.
In simpler terms:
The platform helps users earn BAT tokens for viewing ads and, at the same time, tries to maintain the authenticity of the ad.
So, when you know these facets, you have the leverage to gauge an investment’s potential.
3. Market Trend
Without a doubt, you should first look at the trends and market performance of the coin you are interested in. When you look at the chart to see the coin’s performance, you will see the trend either going upside, downside or sideways.
The intensity of these trends and how the cryptocurrency’s past performance has been when posed with similar situations shall give you an idea where the cryptocurrency is heading.
When examining these trends, one thing to keep in mind is that they can be influenced by pump and dump strategies that people use. And because of these strategies, charts show a false trend.
So don’t blindly trust the charts.
4. Fundamentals Stand Strong
By fundamentals, I mean the consensus mechanisms on the blockchain, is it PoS, PoW or DPoS – it is how members on the network validate the transaction and update the ledger.
The scalability of the network – the network’s ability to handle the no of transactions at a time. The governance structure of the protocol – the power share between the developers and the community and the developers’ alignment with that of the community.
I know it may sound too technical to you, but if you are really into cryptocurrencies, I suggest you do this legwork to understand the possibilities of blockchain and cryptocurrency. These fundamentals are nothing but how the blockchain your cryptocurrency is functioning on operates.
Do let us know on Twitter if you would like to have a few simplified pieces of content to understand these complex points, after all; we are here to make it easy for you :‑)
Truly based on the relationship between demand, supply and price: It is a straightforward way to look at the cryptocurrencies to identify their potential.
Check if the cryptocurrency you have an eye on has a cap on its supply and if it does, then look at how many cryptocurrencies are in circulation and out of them how many are available for people to buy. This should give you a fair idea of if the Demand > Supply or the Supply < Demand.
Secondly, check if the crypto you are looking at experiences halving or not. It again will help you determine the ratio of demand to supply because with every halving the supply of that particular crypto shrinks.
E.g., With every halving that Bitcoin experiences the price per Bitcoin increases because each halving reduces the supply of Bitcoin by 50%.
The bottom line here is that there are multiple parameters on which you can judge a specific cryptocurrency. But the right way to make wise choices is through knowing your investments in and out.
[su_note] KuberVerse is an educational initiative. Anything expressed here directly or indirectly is not investment advice. And we ask you to do your own research before investing. [/su_note]
Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.
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