Factors to Consider Before Investing in a New Cryptocurrency

With the advent of the blockchain technology and cryptocurrencies, hundreds of new cryptocurrencies have emerged usually with the goal of replicating the success of bitcoin or do even better. What is happening in the cryptocurrency industry has been compared to what happened in the 90’s when the internet emerged. A lot of internet projects spring up but with little success. Few others such as google and yahoo are remarkable success stories.

The puzzling task, therefore is how to know those cryptocurrency projects with the highest success potentials  that will bring the highest possible return on investment. The following factors will prove helpful in assessing the potentials of any cryptocurrency project.

  1. The People Behind it: Try to know where they come from, who is backing them and most importantly the knowledge and experiences they have. Find out every thing you can about their team especially the developers and consultants. Experience have shown that most successful cryptocurrency came from a team with proven experience. For example, Ripple was created by a team of wed developers and programmers, Litcoin was created by a former google employee and one of the most recent, Bitcoin cash, was created by a group of people who forked the bitcoin blockchain ledger.
  2. Special Features of the Coin: Here you consider what is special about the new cryptocurrency and the specific problems that the new coin will solve compared to others. Be careful about cryptocurrency projects with outrageous and less realistic objectives
  3. Market Strategy: Consider how the new coin will be made relevant in the face of many cryptocurrencies already in the market. Here you look at the total supply of the coin, the rate at which new coins will be added and the existing demand for the coin. The giving of high free tokens and referral bonuses usually reduces the value of the coin. Much information about the market potentials of any new coin could be gotten from the the company’s white paper and other publications of the company about their new coin.
  4. Stage of the Project: Consider the progress the company has made. Consider whether there are some lunched products or operations with limited functionality. Consider too the capital the company have raised so far at a given stage. A project with a reasonable amount of venture capital is usually a good one.
  5. Community and Media: Most cryptocurrency projects usually build their community through the social media. Consider the comment of people in the community and the general atmosphere.
  6. Quality of their Code: If you have some knowledge of programming, use it to assess the quality of their code.

 

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