Many investors are afraid to enter the crypto space as they don’t understand how it works, and the technical jargon is either a turn-off or just too much for them to handle. Others get overwhelmed by volatility or the sheer number of options to choose from. There’s not much we can do about some of those things, but deciding which cryptocurrency to choose should not be that hard if you know what to look for. And we are here to ensure it isn’t.
8 things to check before picking the best cryptocurrency to invest in
1. The founding team
The first thing to look out for is the founding team behind the crypto in question. Most trust-worthy cryptocurrencies have a highly skilled and well-respected team behind them. A team should come with extensive, relevant experience, excellent credibility, and a positive social media presence.
The founding team has the power to make the cryptocurrency a success or failure. That is why assessing the team is important before deciding on the cryptocurrency to invest in, and the lack of a trustworthy team should be seen as a red flag.
While taking a closer look at the founders, developers, marketers, and so on, here are a few things to consider:
- Are the team members ambitious?
- What is their track record?
- Do you trust their expertise?
2. The fundamentals
Learning technical stuff will take time, so it makes sense to look for ways to decide best crypto to invest today and make a choice that doesn’t involve technical expertise and years of market experience. Fundamental analysis is one such option. It helps you understand the big picture with reference to the crypto’s user community, real-world application, financials, and future use.
Knowing how to study the fundamentals of a project will be of assistance if you are looking to make more informed investing decisions. In a market where most people are chasing coins of questionable quality, a tool like fundamental analysis can help you pick a cryptocurrency that has a higher probability of staying in the market for the long term. That’s the way you’ll find best crypto to invest in 2022.
3. The white paper
Whenever a new coin is launched, the people behind it usually publish a white paper. Almost every coin, therefore, comes with its white paper. The white paper contains important details about the coin like its technology, the purpose of creating it, how it works, what problems it will solve, and most importantly, the creators’ vision.
Make it a point to read the coin’s white paper before investing in it. A white paper is also one of the best places to evaluate the fundamentals of a coin.
If you are new to this market, you may have to wade through the technical jargon in the white paper, but don’t skip it. Reading the white paper will be totally worth the effort. And the more diligently you read it, the better you’ll start understanding the technical jargon.
4. The community
Nowadays, having a strong community is essential for the success of any business, and this holds true for cryptocurrencies as well. So, look for cryptocurrencies with strong communities and loyal followers.
A cryptocurrency with a strong community shows that people have a genuine interest and belief in it.
If you are not sure which crypto is popular, there’s an easy way to find out. Check out some YouTube videos or Reddit forums. They will give you a fair idea of what the community supporting it is like.
5. The technology
Technology determines a crypto’s success to a significant extent. Technological innovations significantly impact most markets, and it is the underlying technology that pretty much gives crypto a foothold in the market today. In fact, technology can make or break a new coin.
- Smart contracts—programs stored on the Ethereum blockchain which make online transactions faster and easier for users;
- The Ethereum Virtual Machine technology (EVM), the computation engine that makes it easier for developers to create new bigger applications; and
- The fact that Ethereum tech makes it possible for developers to merge the blockchain with their own applications.
Since Ethereum was the first crypto to provide such benefits, developers and investors quickly backed the coin up, and we all know what happened later. The innovative technology powered Ethereum’s rapid rise to become one of the world’s largest cryptos.
6. The problems the project solves
The reason why analyzing the technology of a cryptocurrency is important is because it also tells you the problems that a project will solve.
The technology’s problem-solving prowess will keep people interested and invested in the coin. It helps maintain the community.
It is also important to check out what kind of problems the coin is causing. If the coin does more harm than good, then it’s wise not to invest in it.
7. Price history
While some might advise you to focus on the future and make price predictions, it isn’t wise to do so. Price prediction of any cryptocurrency is mostly a fool’s errand as no one can accurately predict prices. However, for someone who is just entering the market, knowing the price history and volatility of a coin is essential.
Here’s what you need to be looking into while studying the price history of crypto:
- Is the price volatile?
- Was the coin resilient during market downturns?
- Is it trading at an all-time high? If it has hit an all-time high, then wait until the crypto takes a dip to make a purchase.
8. The future roadmap
Understanding the future roadmap of a cryptocurrency is essential. Without a defined vision and a roadmap, the crypto will struggle to establish itself as a true contender or disruptor in the market. You might want to ensure that the coin will last at least for the next 5–10 years, and if the founders aren’t thinking long-term, you should be concerned. You can find out about their future plans from their white paper or on social media.
Consider this guide as a checklist. Study each of these 8 variables carefully before deciding which is the best cryptocurrency to invest in and make sure your investment choice checks all the boxes. While there are no absolute safe bets in the crypto world, these guidelines will help you select a good coin that has strong fundamentals.
Which cryptocurrencies should I invest in?
It’s important to do thorough research and consider factors like market trends, project fundamentals, and risk tolerance. Popular options include Bitcoin, Ethereum, and Binance Coin, but diversification is recommended.
How do I start investing in cryptocurrency?
To start investing in cryptocurrency: 1. Research and choose a reputable cryptocurrency exchange. 2. Create an account and complete the verification process. 3. Deposit funds. 4. Select the cryptocurrency you want to buy and place your order.
What factors can affect cryptocurrency prices?
Several factors can affect cryptocurrency prices, including market demand, regulatory developments, technological advancements, investor sentiment, macroeconomic trends, media coverage, and the overall adoption and acceptance of cryptocurrencies.
How much should I invest in cryptocurrency?
The amount you should invest in cryptocurrency depends on your financial situation, risk tolerance, and investment goals. It’s generally recommended to only invest what you can afford to lose and to diversify your investment portfolio.