Crypto is becoming increasingly popular in both the US and across the globe on a wider scale. Recent reports revealed that 28% of American adults own cryptocurrency or have done so in the past, and many more residents have shared an interest in doing so in the future. The popularity of digital assets is so apparent that many believe it to be the future of finance itself. With that in mind, it makes sense that more and more people are being drawn to the wonderful but often complex world of cryptocurrency. If this sounds like you, and you’re approaching crypto for the first time, we’ve compiled a list of some of the most important things to look for when considering investing in a specific coin.
Utilization
One of the most important things to think about when considering whether or not to invest in a new crypto coin is how versatile it is, and where it can be utilized. Many companies and sectors have begun to allow payments for their goods and services to be made using crypto, however, these companies do not accept every kind of cryptocoin out there.
With that in mind, if you’re planning on investing in crypto to use it for a specific purpose, such as for shopping or gaming, then it’s a good idea to check whether the platforms you intend to use it on are accepting that specific type of coin.
A Strong Whitepaper
Another strong sign that a specific crypto coin might be worth your investment is if it has a strong white paper. The white paper is the document crypto creators draft when they bring a new coin to the market. The white paper will detail everything there is to know about crypto, including the project’s intentions, and its utility, as well as how the creators intend the coin to interact with the blockchain system.
When looking to invest in a new crypto, make sure that the company makes a link to their whitepaper clear on their website. It should be easy to comprehend, sufficiently detailed, and free of spelling and grammar areas. The more attention that has been paid to the white paper, the more likely it is that the Crypto coin creators take their project seriously and have high hopes for its future success.
Not only can crypto be used in several big-name companies, including Starbucks, Microsoft, and Twitch, but it can also be used in the online entertainment industry, namely, within crypto casinos. As seen on Coinpoker.com, these casinos not only seamlessly integrate crypto, allowing users to make an additional wager on the volatility of coins, but they also give them access to a wide range of bonuses, rapid transaction speeds, and increased security.
Hype
Another thing to look out for before deciding whether to invest in a specific crypto coin is whether there is any hype surrounding the coin, and how strong it is if there is. One of the greatest things about cryptocurrencies is the dedicated communities that often rally together in support of them, and the blockchain more generally. If a coin is getting a lot of hype, especially prior to its launch, this is a good indication that the coin will surge in value when it is released.
Celebrity endorsement of a coin is great, but it shouldn’t be the only thing you rely on. Try and find out what regular people are saying, involve yourself in the community, ask questions, and see if others are answering them. If things seem oddly quiet around a crypto coin, this could be a good indicator that the community doesn’t have much faith in it, and therefore, it might be a good idea to stay away.
The Team and Their Commitment
Before investing in a cryptocurrency, it’s a good idea to research the backgrounds of the minds behind its invention. As stated, crypto is all about community, and crypto creators often have strong connections in that community. Those who have been involved in other projects are able to prove both their commitment and skills when it comes to the crypto world. However, although strong connections are desirable, it can also be commendable to see a crypto creator emerging for the first time in dedication to their project, so it’s all about finding a balance.
Another way to ensure a team is dedicated to their project is to pay attention to the smaller aspects of their cryptocurrency. Not just the coin itself, but things like how aesthetic their website looks, whether it is easy to use, how good their customer service options are, and whether they have worked to get their project hyped up in the community.
Investigate its Price History
Cryptocurrency is a highly volatile asset, meaning it can rise and fall in value over time. This is due to a variety of reasons, including demand, hype, and current events. Although volatility is to be expected, and the price history of a specific coin will likely experience peaks and troughs, sudden changes in the value over a short period of time can be a cause for concern.
If you see a coin that has suddenly surged in value before dry hopping exponentially, this could be a sign of a ‘pump and dump’ scam. ‘Pump and dump’ is when a coin value is artificially inflated in an attempt to attract investors.
While looking at the price history, remember to look at different periods in detail, such as ‘all time’ and the last ‘1-3 months’, and see whether the coin has been experiencing a gradual rise in price over time. If this isn’t the case, the coin might not be strong enough to be worth your investment.
Use Cases
Another way to assess whether a specific coin is worth your investment is how many use cases it has. Many different crypto coins are designed for specific purposes, for example, Bitcoin was originally made to solely be used as a payment method, and Ethereum for scalability and future development. Over time, cryptocurrencies often evolve to have more use cases and become more versatile.
If a crypto has a lot of use cases, this is a good indicator that it is built to withstand the test of time, and will likely remain a strong asset well into the future.
Volume
A promising crypto will have a good enough volume that it can be sold rapidly should the investor need to. This ability to sell crypto rapidly refers to the coin’s liquidity, and it is something you should look out for before settling on a specific coin. If a crypto coin has a very low volume and low liquidity rate, then it may be too early in its development for you to invest without large risks, or it may simply not be strong enough, in general, to be worth your time. On top of this, a significantly low volume can be a good indicator that a crypto project isn’t legitimate and may instead be a scam.
Conclusion
Investing in a new kind of crypto is a fulfilling experience fuelling the investor with excitement for the future, but it shouldn’t be something an investor rushes into. Instead, there are several different indicators to look out for to see whether a specific coin is strong enough to be worthy of your time and money. The crypto market is highly speculative, so it’s important for investors to demonstrate extra caution when navigating the crypto world and to look out for signs of both a strong and weak crypto project. Crypto, like many aspects of tech, can be daunting for those not used to how it works, but knowing signs like these are a great way to keep yourself safe from taking unnecessary investment risks.
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