Since Bitcoin first came onto the scene in 2009, there has been an explosion of other cryptocurrencies all looking to grab investor attention. Some of these could be successful and offer good returns on investment in the future. Unfortunately there have also been many too good to be true projects that have sprung up looking to make a quick profit. This article will present some thoughts on factors you may want to consider when choosing which cryptocurrency to buy.
Before we get started, we would like to make it very clear that we are not financial advisors and only provide these materials for educational purposes. Whilst we hope this article will be helpful to you, we stress that you also independently verify any information we provide. You can find further information through our site disclaimer.
Does it actually “do” something?
By this we mean does the cryptoasset aim to perform some kind of clear function? If so what is it and is it realistic? Some projects proclaim they want to perform many functions, however you should question whether these are attainable. Be certain to look at what problem a project sets out to solve with their cryptoasset. Is it are feasable? Most importantly, do you believe the function has a real chance of mass adoption and will have constant demand?
Is it already used?
If a project already has a working model of its cryptoasset, is it working as intended? Looking at a working example of a cryptoasset can show you where a project is against the overall vision. You can also see if there are any known drawbacks and how well they’ve addressed these. From this information you can get an idea of whether the project is meeting expectations and how well it deals with setbacks.
Does the project have good leadership and consistent development?
Following on from the above, it can be useful to look at the project developers. A sign of a good development team is one that is always looking to progress the technology behind their project. Visit the project website and check out the team profiles as well as whether it has a roadmap. Project roadmaps can give a great idea of development progress as it is essentially the blueprint of what the project intends to achieve and by when.
Furthermore, as cryptocurrencies have an open-source code, programmers on the internet can work on the project who are not part of the core development team. Interest from such parties can give a good indication of support for a cryptocurrency project. Looking at github activity for cryptoassets could provide insights into how much outside development is going on. A high amount of activity could indicate that a project has a following who believe it will succeed.
Does it have any business backing or adoption?
Has the project you are looking to invest in secured any partnerships with prominent companies? Such deals show there is faith that a blockchain project’s technology could one day be used in business practices. If so is the prospect of real world use close or is practical adoption still potentially some time away? A notable example of business backing is the Enterprise Ethereum Alliance. They are a group of companies collaborating to (amongst other things) to accelarate the adoption of Ethereum in business.
What is the word?
It is good to keep your ears to the ground to hear what is being said about the asset. By this we mean that you do you critically assess the information, views and opinions you find. This will help you build your own picture of the possible good and bad aspects of a project. Doing a research on Google (or your search engine of choice) to find articles, news reports and other information is a prudent starting point. It is also a good idea to get an idea on how large the community following is. For example, are there dedicated social media pages and groups on platforms such as Facebook or Twitter? Coingecko also provides a useful ranking of cryptoassets by their following on Reddit and Twitter.
We hope this article has been helpful in giving you some thoughts to consider when choosing which cryptocurrency to buy.