Choosing a cryptocurrency can be quite simple, you just need to do a little research. 10 simple ways to decide which cryptocurrency you should invest in are presented in this guide…
Part of a cryptocurrency’s success is its following – so look out for cryptocurrencies with strong communities and loyal followers, as this shows that people have a genuine interest and belief in the cryptocurrency. Check out some subreddits, YouTube channels, and feedback from their communities – and see what they are saying about your potential investment.
If you are confused about the coins, visiting forums and checking out the community on Reddit is a great way to understand the hype around an altcoin and figure out if you should make an investment. You will also find on Reddit that some of the more difficult and technical concepts are often broken down and explained simply on these forums.
So if you need help understanding how the process works, the technology, etc., this community is a great place to start.
- Fundamental Analysis.
‘Fundamental analysis’ simply means the basics of an investment – the team, the ambitions, the strengths, etc. If you are new to cryptocurrencies, do not get hung up on the technical stuff!
In the long run, fundamental analysis will help you as much as technical analysis. So if you understand how to do fundamental analysis, you can make better investment decisions. And in a market where most people are chasing inferior altcoins, you can use fundamental analysis to separate the wheat from the chaff.
- The Team.
One of the most important things you can investigate is the cryptocurrency team. In fact, investigating and reviewing the team behind a cryptocurrency is one of the most important factors you can consider.
Here are a few things you should analyze:
Who is behind the cryptocurrency?
Do you have confidence in their expertise?
Are they ambitious?
Do they have a proven track record?
These are all important questions when deciding which cryptocurrency to invest in – because a team has the power to make them succeed – or fail.
A big part of a cryptocurrency’s success is its underlying technology:
You need to understand how it will perform against its competitors – and what makes the technology stand out from the crowd. Look out for the big innovators – the cryptocurrencies that will completely transform their industry.
Take Ethereum, for example.
Ethereum is one of the best cryptocurrencies (in terms of technology) because:
Smart Contracts: This is a technology that facilitates the exchange of value. It’s a bit technical – but you can read more about it here.
Ethereum’s technology is designed to make it easy for developers to integrate the blockchain into their own applications.
Ethereum Virtual Machine technology (EVM): this technology makes it easier for developers to build applications at scale.
Because Ethereum has such innovative technology, it has quickly become one of the largest cryptocurrencies in the world.
- White Paper.
Every time a new cryptocurrency is launched, a white paper is usually released as well. This describes the purpose of the coin, its technology, how it works, and its overall vision (I’ll get to that in a moment).A white paper is one of the best sources for evaluating the fundamentals of a coin – and you should never invest in a coin until you have read the white paper.You may have to wade through some jargon in the white paper, but do not let that deter you. It’s 100% worth the read, as it’s a treasure trove of insights.
And the more white papers you read, the better you’ll be able to spot the long-term winners. A white paper can also tell you about the professionalism and credibility of the cryptocurrency – here are some red flags to look out for:
Does cryptocurrency promise anything unrealistic?
Is the white paper ambitious in terms of its overall goals?
Are there any spelling errors? If there are more than a few, that’s a big warning sign! A company that can not spend the time to write its white paper properly is probably not serious about its future.
- Their vision.
The vision of cryptocurrency is really important:
You want to make sure that this coin will be around for at least the next 5 to 10 years, and if the company is not thinking long-term, you should be seriously worried.
A great vision = a sign of ambition.
And without a clear vision and mission, the coin will have a hard time becoming a true competitor or disruptor in its industry. Also, try to find out what the intentions are for the future of the coin from the whitepaper, social media or website, and also look at the community to see what kind of culture is being created. Even though short-term gains can be exciting and you may be thinking about swing trading, you should still think about where cryptocurrency will be in the next 5, 10, 20 years, etc.
- Their leadership skills
The success of a coin is driven by the leadership team – they are the ones who make all the important decisions!
The leaders are the ones who execute the vision. To find out about the team and see what they have accomplished so far.
You want to be sure that they can lead the coin to success if they stand up for the vision.
Check to see if they are personally invested in the project.
Look at other cryptocurrency projects they have worked on – or if they have relevant experience.
Do they have a good reputation as a CEO?
Research what their leadership team has said about the coin and what they are trying to accomplish.
- Pricing history.
Have you heard the saying “the best predictor of future behavior is past behavior”?
Of course, that’s not always the case – especially with cryptocurrencies. However, price fluctuations give you a good idea of the coin’s history and whether it will be a solid investment for the future.
Is its value volatile?
Was the coin resilient when the market took a big plunge – which is regularly the case?
Is the price at an all-time high? If they are at an all-time high, I would recommend waiting until the cryptocurrency experiences a decline. Most people have no idea what they are looking at! Looking at the current price is one thing, but some people want to try to predict the price trend.
Trying to predict the price performance of a security traded on the stock market is a gamble. No one is going to be right all the time.
So if you are a beginner, I would not worry about predicting the future price – just stick to the fundamentals.
- Credibility and reputation.
Is the cryptocurrency respected online? Does it have a good reputation?
If the cryptocurrency has a bad reputation, then you know you better not invest your money in it – you need high credibility and trust to be successful in this field.
So do a Google search, look around crypto communities to see what people are saying about the coin, and invest in a coin that people think positively about. You need to avoid the scam!
10. The Roadmap.
When deciding which cryptocurrency to invest in, look for a coin with a solid roadmap and strong development plans.
This is the key if you want to be successful in the long run.
Here are a few things you should look out for:
Clear timelines for the development of the coin. If there is no clear timeline, it could be a sign of a lack of commitment from the development team.
When are major updates scheduled to be released?
If the coin has a limited number of coins in circulation, when is that limit expected to be reached?