The almost unbelievable fervor that the cryptocurrency industry experienced may have died down a bit, but there are still a lot of people interested in expanding their portfolios by investing in the various currencies. However, with well over a thousand different cryptocurrencies available and more added fairly regularly, how do you pick which ones to invest in?
Unfortunately, there have been numerous instances where a new cryptocurrency entices investors with impressive sounding white papers and alluring prices, only to shut down as soon as funds are raised. With no solid way of knowing which are going to garner profit and which ones may not live up to expectations, it’s generally considered a wise move to diversify and invest in multiple currencies. However, you do need to take precautions to ensure that you’re not investing in worthless currencies or ones that are just outright scams.
With that in mind, let’s take a look at some tips that may help you decide which cryptocurrency to invest in.
You should always take the time to read up about the currency before plunking down your hard earned fiat. Go through their website, white papers, and related documents to get a feel for what the company has to say, but then also utilize forums and communities to see what their actual investors are saying.
Regardless of its market cap or standing in the market, you need to do your homework. Are they really who they claim to be? Are the people on their staff page really real? Determine why the currency has been created and what they hope to accomplish — are they addressing a real-world problem and have practical and obtainable goals?
There are numerous ways to put blockchain to work, and new ideas are popping up almost every day. That being said, investors nor the market are impressed with cryptos that simply revisit the “decentralized currency” model, nor should they be. Look for those that seek to accomplish something ambitious or unique, or that puts a new spin on an old concept. If you encounter obscure, nonsensical, or regurgitated language on the project’s website, it’s likely an investment you want to stay away from.
A little research to address these areas and answer a few questions may save you a lot of headache and more than just a few dollars.
What’s Their Track Record?
For those new to investing in cryptocurrency, the best course of action is to invest in altcoins that have been around for awhile and have a proven track record. It’s simply safer to invest in a currency that has been around for a year than one set to launch or completely new to the market.
Take a long look at their historical data, it can provide hints at its possible success in the long run. Successful investors know that deciphering trends based on the movement of other altcoins or during certain periods of time is the key to smarter investments.
Additionally, when first starting out you may want to consider investing mainly in currencies that are featured within the top 100 crypto companies by market capitalization.
Don’t Invest Based on Price
While it may seem counterintuitive to say not to invest based on price, judging performance based on price instead of market capitalization is a mistake you should avoid when it comes to cryptocurrencies.
Price doesn’t matter when it comes to comparing two different currencies. The real measure of any currency’s success is its market cap and where it stands compared to others in the market.
Investing in cryptocurrencies is definitely still worth it, you just have to take the time ensure that you’re investing in the right ones.