During the last years, cryptocurrency has become more and more popular. Now, more than ever, those who want to invest in virtual coins have a lot of options. You can choose from coins, tokens or blockchain projects, but no matter what your preference is, you have to consider several aspects when you are looking for the best cryptocurrency to invest in.
There are a lot of possible choices and most of the times it’s hard to choose a project to invest in, especially if you are just making your first steps into the world of crypto. However, experts say that there are some tips which will help you identify quality projects and become a successful investor.
Firstly, keep in mind that there are two types of cryptocurrency
You have to be very careful when you choose a virtual coin. After all, you’ll invest your hard earned money. In this case, you should keep in mind that cryptocurrencies and tokens available these days are currency-type and business-type.
The currency-type is the coin which can replace traditional money or fiat currency; it can be used as payment mean for buying goods and services or transferring value: Bitcoin, Litecoin, Zcash, Dash, PIVX, Monero and Bitcoin Cash. None of these currencies are tokens.
On the other hand, business-type cryptocurrencies have a totally different purpose. They might exist for fulfilling a need from the market by using blockchain technology. Also, they might intend to create a marketplace that operates with cryptocurrency or to use a decentralized business model for disrupting an existing industry.
Now that you know which the two main types of cryptocurrencies are, let’s see how you can find the best project to invest in. Some tips from experts will head you towards the right direction.
- See if the project has a good business model. In this phase, you have to think about the project’s goals and see how it plans to become profitable for itself and/or its investors;
- Ask yourself if the project really needs its own coin or token. Many virtual coin projects want to create their own token or coin in the hope of being able to successfully run an ICO. This operation will bring them millions of dollars if they could sell their own cryptocurrency;
- Find out if the project is pre-mined and how tokens are allocated. Most new projects are tokens nowadays, so they are an important digital asset on top of an already existing blockchain;
- Find out who is behind the project. Don’t rush into investing before you find out more about who’s running the operations. Be skeptical, because this keeps you away from fraud;
- Find out the other’s opinion about the project. Some people will express their thoughts on a certain project by using several websites. Reddit and Bitcointalk.org are good information sources in this area.
The most important thing before investing in a new crypto project is to start a thorough research. You will find out more about them and be able to analyze all the pros and cons. Also, talk to specialists and ask questions if you have doubts.