Since Satoshi Nakamoto created what are considered two of the greatest inventions of our lifetime, Bitcoin and its underlying technology, the blockchain, there have been over 2000 cryptocurrencies created. What’s most impressive is the fact that the crypto revolution has just started, as more and more cryptocurrency projects will be launched with each passing year.
As the crypto/blockchain-craze starts to capture the attention of more and more people, governments, and even financial institutions from all over the world, investing in crypto has started to prove that it can be a gateway to prosperity and wealth.
Of course, opting to invest in multiple currencies in order to fully diversify your portfolio is nothing short of a good decision, but it can also be a very challenging and risky task at the same time since the crypto market is renowned for its mercifulness volatility.
Therefore, choosing which projects to invest requires a fine touch. It all comes down to making sure that you, a potential investor, don’t invest in crypto/blockchain projects with worthless coins.
To help you increase your chances of finding quality projects worth investing in, we’ve created a list with some of the most useful tips.
Research, research, then research some more
There’s an “old” saying in the cryptosphere, and it goes like this: “never invest more than you can afford to lose.” While the saying itself is not much of an encouragement for newbie investors, it’s also one of the wisest things to keep in mind.
Even though it might seem like obvious advice for some, the phrase DYOR, or “do your own research” is definitely one of the most important points to consider. The cryptosphere is riddled with fraudulent projects which sometimes even benefit from the endorsement of renowned publications.
That said, disregard its current standing in the market or its market cap, and do your research thoroughly. Check for all the signs usually associated with a fake project. Check to see if the website is accurate if the whitepapers are in order, and if the roadmap is not fictional. Check the forums and online platforms such as Reddit where communities discuss these types of issues. Some of the most important questions you should ask yourself before investing are: does it have practical goals? Are the founders trustworthy? Do they have experience in the field? Does this project act as a solution for a real-world problem?
Proven track record usually means “OK.”
If you are a newbie investor, then it’s best you stick to investing in something that has already proven its worth in the crypto markets. For example, it’s way riskier to invest in a crypto that’s been around for a week than investing in one that’s been around for a year. As a general guideline, it’s best that you opt for projects that are currently in CoinMarketCap’s Top 100 List.
Events have the power to affect a crypto’s price by a lot
This is somewhat of a short-term investment strategy that usually requires being able to accurately track the development milestones of a crypto project. The price of cryptos usually tends to rise after important events take place (partnerships, upgrades, mainnet launches, etc.). Of course, timing is everything with this method but, if done right, you can buy into a project early and ride the wave up following the announcement which should lend you some hefty wins.
Market cap is usually more important than the price
Judging a cryptocurrency by its current price can be like judging a book by its cover. While the analogy is not perfect, investing based on the price of a token is a typical mistake that many beginners make. While price is a valuable metric when it comes to comparing the performance of two cryptos OVER TIME, the real metric you should be considering is the market cap. That’s the true statement of how crypto compares to others.
Always stick to the safe platforms
Of course, checking lesser known exchanges can deem very appealing options, but this is usually a risky business. As a general rule, always buy using the safe platforms. It’s true that bigger names and good popularity usually results in high fees, but consider this: paying higher fees is actually safer than ending up losing your entire investment. There have been numerous hacks and attacks that left thousands of people empty-handed.
Learn the art of reading charts and historic analysis factors
There’s no getting around it: as a crypto investor, you’ll have to rely on hard facts besides your instinct for good business opportunities. This means that, as much as you want it or not, you’ll have to learn to read history data and charts. These charts can prove a clear view of how the cryptocurrency in question will perform in the long run. Understanding the movements of prices and value (even in a market as volatile as the crypto market) can result in smarter investments.
Don’t be afraid to ask for “help”
While consulting the community on various social media platforms won’t usually give you a straightforward answer, it might provide useful insights into the matter. If you are doubtful of a project, post your thoughts on social media or Reddit and see what sentiments they will bring from the public. There are numerous good sources of information out there, it’s up to you to have the confidence, patience, and inspiration to use them.