What do you need to look for when Investing in New Cryptocurrency Coins
With the cryptocurrency
new coins, the market is constantly growing. More and more people are making
big bucks and investing in the next big thing. There are thousands of different
virtual currencies, so how do you know which one to invest in? That is the
question we will try to answer in this article. There is obviously no magic
formula but smart tactics that, if followed properly, can give optimal results.
We will list below some aspects
that you should analyze in a cryptocurrency to measure its potential:
Understand the project proposal
The cryptocurrency new coins represent a new
technology, so each coin can be seen as a project. In other words, what
problem is this project trying to solve? We already know that Bitcoin proposes
to solve the problem of financial transactions by allowing each user to be his
own bank. When we don't rely on intermediaries, it becomes a huge innovation.
The world does not need
another Bitcoin, after all, it already has one. Many crypto coins are nothing
more than a copy of Bitcoin by another name. Does it add any value? Is there
any chance that Bitcoin will be replaced by this new currency? Probably not. After
all, it does not make sense to exchange a well-known and successful project,
with thousands of full nodes scattered around the world, generating robustness
for the network, for another identical currency that does not have all this
infrastructure.
That is why it is crucial
to understand the difference between the new cryptocurrency coins that you are
analyzing. If there are advantages and innovations, then it's definitely worth
investing.
Find out about the team that is developing the cryptocurrency coins
Look on the website for
the "team" of the coin, that is, who are the people behind the
project. Cryptocurrency coins generally show not only the names of people but
also their profiles, academic titles, experiences, etc. This is very important!
A good project needs a
good team. It does not make sense to invest in a project managed by an
incompetent team.
In fact, there are many
frauds in this market, so be wary of promises that are too good to be true.
Even if a currency does not seem to offer such an innovation, but it has a
strong team, then definitely learn more about them and make a consideration.
Who knows, they might be creative enough to turn something boring into the next
best thing.
When the team has names
known as "Former Director of Microsoft's Technology Area"
(hypothetical example), or "Co-creator of the Javascript Language,"
this gives a very strong signal of credibility. With this in mind, you know
that they are most likely to succeed.
Usually, the currencies
also have advisors. Important people as advisors are a good sign, but be sure
to know what the involvement of these advisors really is, whether they are
involved in the project or whether they are just following from afar. Do not
forget that the counselor is different from staff.
See if the cryptocurrency
new coins have partnerships with companies or universities. If the project has
partnerships with universities or large companies, then this is a good sign.
Cryptocurrency coins need strong research and development teams which involves
partnerships with university collaboration.
Discover details about the community
See how many people are
involved in the project on GitHub and if there are channels for interaction
with the public. This factor is not as important as team quality but can play a
big role. For example, if you are not sure about the quality of the team, but
there is a large community involved in the project, it is a good sign. Bitcoin,
for example, is a project created by a large community.
Consider the currency market cap
The market cap is the
financial volume associated with the currency. On the CoinmarketCap site, you
can discover this easily, including comparing with other crypto coins.
Big market caps mean that
the currency is quite popular, which means they have a lot of investors. That's
a positive sign, but on the one hand, it shows that more people are optimistic
about the project. Then again, it might not be a good idea because the currency
has little room to grow and value.
As we are at an early
stage of the cryptocurrency market, a high market cap today does not mean that
the currency is already at its height, after all the entire virtual currency
market can still grow a lot, in which case the best projects will appreciate it
even more. So having a high market cap does not mean there is no potential.
Bitcoin, for example, is the largest market cap cryptocurrency coins, and yet
shows very high growth in some moments.
Take this into account
It is clear that low
market cap coins have more potential for return after reaching a market cap of
$ 1 billion in market cap. For example, if a currency has potential and a
market cap of $ 100 million, then if it reaches 1 billion dollars, this will
represent a 10x profit on your investment.
Comments
Post a Comment