How to choose a cryptocurrency to invest in?
Cryptocurrency stood the test of time and has established itself as a potential investment. However, you might be confused scrolling the ever-expanding crypto-list as over 5000 cryptocurrencies are traded online. So, how to choose the right crypto investment?
This should offer you some tried and tested filters to help you narrow down your choice to the best crypto investment.
Do not blindly trust any source of information, do your own research. You should analyse information from multiple sources including whitepapers, expert opinions, crypto charts, crypto news, and much more.
Try to answer the following questions while you do your research.
Does the cryptocurrency solve a real-world problem?
The success of any cryptocurrency is dependent on the real-world problem it solves. For instance, Bitcoin emerged successful as it solved some pressing issues of the current financial world. Ethereum is thriving as it introduced smart contracts and became the 'World's Computer'.
Before investing in any cryptocurrency you must go through its whitepaper, to understand its potential.
Does the project have a good team?
The crypto project would surely be successful if it is backed by a skilled team. You must always keep the cryptocurrency team in mind before you pour your hard-earned money.
Is the crypto token useful?
Always check the utility of the crypto token in the blockchain network. If the cryptocurrency has major utility in the respective blockchain network, it is considered a good investment. The greater the demand of the cryptocurrency the greater the value.
Use Social Media
Scrolling the Twitter feed, being active on Telegram, and actively monitoring GitHub is a great way to keep up to date.
You can follow the social media pages of different cryptocurrency networks. If the crypto company announces some major deals with other companies. Following social media pages might also tell you the activeness of the respective crypto team.
Also, hints of updates and other improvements are first visible on the social media pages.
Be a smart investor and closely monitor these trends. This will help you to hit the iron when it's hot!
Choose your risk level
One of the major parameters of any investment is the risk-to-reward ratio. Always analyze the potential profits while also developing an eye to catch the losses in disguise. You must always invest what you can lose, taking loans for crypto or any other investments is not wise.
Keep an eye on the political climate
External factors like political acceptance of cryptocurrencies or changes in crypto laws have a direct impact on your investment. For instance, if a government legalises cryptocurrencies in their country, the value has the potential to increase. Thus, always be updated on the crypto rules and regulations.
Summary
Cryptocurrency is growing like an ever-expanding universe. With over 5000 cryptocurrencies being traded online choosing the right cryptocurrency becomes a necessity.
You must always conduct thorough research while analysing the benefits and tradeoffs of cryptocurrencies. This will help keep you sure-footed in this unprecedented cryptocurrency world.