How to Decide Which Cryptocurrency to Invest In?
Blockchain technology has blessed us with many cryptocurrencies. However, how can you decide which one is right for you and invest accordingly? Let us find out.
Identify the Cryptocurrency
When you want to buy cryptocurrency, you must first understand your needs. That way, you can purchase the cryptocurrency that ticks all the boxes on your checklist. It is crucial to identify the cryptocurrency that fits your needs.
While there are many factors to consider when investing in crypto, it is necessary to know that not all crypto coins are created equal. Some might be more volatile than others, and some may have more potential for growth than others.
Look at the market cap of the coin and compare it with other coins on the list. The market cap is simply the total value of all coins in circulation multiplied by the price per coin. If this number is high, then it means that many people believe enough in this currency. So, as long as they don’t lose faith, then this currency should continue growing over time because it is hardwired into their system.
It also means that if someone were looking for something cheap (or free), then this wouldn’t necessarily be recommended because it would mean less potential profit due to fewer users adopting these systems over time. However, early adopters will benefit from investing early since their investments will increase significantly once adoption rates increase exponentially due.
You should also look into factors like whether or not you can buy the crypto with your credit card and its fiat conversion rate over the years. These factors will also influence your decision.
Consider which ERC20 Tokens to Buy
A key factor to consider when deciding which cryptocurrency to invest in is whether or not you want to invest in ERC20 tokens. ERC20 tokens are tokens built on the Ethereum blockchain, which means they can be traded on decentralized exchanges like EtherDelta and ForkDelta.
ERC20 tokens are not all created equal. They come with a wide variety of characteristics, including value and market cap. Some have only one utility use case (e.g., Binance Coin), others have multiple utility uses (e.g., 0x), and some have no utility whatsoever (e.g., Dentacoin). Investors need to understand these differences before making an investment decision because it could mean the difference between doubling your money or losing it altogether!
Analyze a Cryptocurrency’s Team
To get a sense of the cryptocurrency’s team, you can check their LinkedIn profiles to see if they have relevant experience in the industry. You can also look at their Twitter and Github profiles and Medium posts they may have written that mention their project. If there are any Reddit posts or YouTube videos featuring them, these would be good places to start your research.
On top of all this, you can also check out Telegram groups and Discord channels where they might be hanging out online. Finally, Bitcointalk is another place worth checking out for information about cryptocurrency teams (and for more information about blockchain technology overall).
Check How It is Being Used
Check the community, developers, and team behind the cryptocurrency. The best way to do this is by looking at their social media platforms like Twitter and Telegram. Seeing how often they post updates about their project, you can get a good idea of how active they are with development. You should also look for developers who are answering questions about their projects on Reddit or other forums like BitcoinTalk.
Look at the cryptocurrency’s use cases. Every cryptocurrency has its purpose, so it is vital to understand why yours exists and what problems it’s trying to solve before deciding whether or not it’s worth investing in.
In addition to researching common uses (like payment processing), look into less conventional ones that could benefit from blockchain technology—for example, supply chain management systems could benefit from using smart contracts written into Ethereum’s blockchain network because it would allow businesses like Walmart Stores Inc., which has been testing out these blockchains since 2016, greater control over their data while maintaining privacy protection for customers who have opted-in.
However, this may not necessarily apply when considering other types such as Bitcoin Cash which was created primarily because some people believed there wasn’t enough decentralization within Bitcoin due largely in part due to concerns over mining centralization caused by ASIC miners being used instead.
Understand the Risks
When choosing crypto, make sure that you are aware of the following risks.
- The risk of losing your money. This is the obvious one and it is a major factor that should be considered when determining whether or not to invest in any cryptocurrency. Cryptocurrencies are volatile, so you can lose all or most of your funds if you invest without knowing what you’re doing.
- The risk is that the cryptocurrency won’t be used by anyone. If no one uses a currency, then it becomes useless as a medium of exchange and store of value—which means that its price will drop to zero over time (assuming no other factors are driving up demand).
- The risk that the cryptocurrency won’t be adopted as widely as other coins/tokens have been in the past, i.e., Bitcoin during its early days before it became popular with merchants and users alike around 2009-2010). That happens either because there aren’t enough people who want to use a particular coin/token or because there aren’t enough merchants/exchanges willing to accept them for payment or investment purposes.
- The risk that security flaws could cause problems with using this form of currency over others.
After all this, you can choose which cryptocurrency you want to invest in and put your faith in.