Here’s how to find out which cryptocurrency to invest in
The actual process of investing in cryptocurrency is not that difficult. This is done relatively easily through a crypto exchange, and most crypto exchanges explain how to proceed in a very good way. However, it is the process before you get as far as taking time.
In 2017, Bitcoin was the obvious choice for most people who wanted to invest in cryptocurrency, simply because it was the only cryptocurrency available on the market. Bitcoin was a term found on everyone’s lips. If you said the word “bitcoin”, there was a 99.9% chance that the other person knew what it was about – of course to a greater or lesser degree.
But now it has been almost five years since Bitcoin appeared and took the world by storm. And what has happened in these five years? Yes – several cryptocurrencies have appeared, so now the choice is not as easy as it once was. Now there are many more to choose from!
In 2017, many people chose to invest in Bitcoin because it seemed exciting, but the crypto industry has developed so much that the level of tension no longer holds. In this article, we will look at how you can determine which cryptocurrency you should invest in.
What cryptocurrencies would you like to invest in?
When Bitcoin appeared on the market in 2017, the cryptocurrency was met by a relatively unploughed mark. Cryptocurrency was not a very common concept at that time, and therefore there was no great competition.
There is no doubt that the launch of Bitcoin opened the eyes of many developers who were curious about this and who may even be doing it quietly for themselves. It quickly became quite clear that there was great interest in cryptocurrency.
This interest led to the number of cryptocurrencies exploding in a relatively short time, because it was quite clear that there was a market for it. As mentioned in the introduction, this means that there are many more cryptocurrencies to choose from now than there were in 2017.
So the first step in the process of figuring out which cryptocurrency you should invest in is figuring out which cryptocurrencies you would like to invest in. You have to have two options that you can compare with each other and hence find the best option.[etoro]
What should the cryptocurrency you are investing in have?
As mentioned in the introduction, perhaps curiosity was a contributing factor in that so many were fascinated by Bitcoin when the cryptocurrency appeared in 2017. At that time it was completely new, and there was virtually no one who knew exactly what it was.
But one thing is for sure, and that is that a lot has happened on that front since then.
In today’s crypto industry, however, this is not the case. Now it is all the more important to make decisions based on thorough research rather than being guided by curiosity or other similar emotions. Of course it is important there too, but should not be a deciding factor.
Below we will take a closer look at some of the things you should look at when comparing the cryptocurrencies you would like to invest in with each other.
What technology is the cryptocurrency based on?
Cryptocurrency is a comprehensive theme. In practice, this means that it can be relatively difficult to get acquainted with it – especially if you are very new to the game. But here it is important that you take the time to help, possibly ask someone you know, so you know that you are making a good choice.
What you should look at first is not which cryptocurrency has the coolest name, but what technology the cryptocurrency is made up of. The technology behind a cryptocurrency plays a very large and important role:
- What aspects of the technology on which the cryptocurrency is based, does it make it stand out from the cryptocurrencies with which it competes?
Today’s cryptocurrency industry is characterized by the fact that several of the available cryptocurrencies are very similar. This is because most cryptocurrencies are based on open source. In several cases, a hardfork has arisen behind the scenes, and then a developer has created his own version, for example Bitcoin vs. Bitcoin Cash.
But there are also developers who want to do something new, and the cryptocurrency Ethereum is a good example of that. Today, Ethereum is known as the second largest cryptocurrency in terms of market value, and there is a special detail about this cryptocurrency:
- Ethereum was the first cryptocurrency to be developed with a smart contract function. So the developers behind Ethereum not only launched what was to become one of Bitcoin’s biggest competitors, they also launched smart contracts .
See more about the technology at the back of this video:
Who developed the cryptocurrency?
Another aspect that you may want to take a look at is who is responsible for the cryptocurrency you are considering investing in. This can often give you an indication of how serious the individual players are.
- Are these people you can trust?
- What ambitions does the person have?
- Does the person have relevant experience? Have any of these experiences led to success?
- Is the cryptocurrency based on a project that has relevant investors behind it?
This list includes only some of the questions that may be relevant here. However, the main focus should not be on how the questions are formulated, but the content of them. The purpose is to find out more about the management’s ethos, and it can do so in several ways.
When it comes to management ethos, there are many examples of this, and they are, for example, Charles Hoskinson and Satoshi Nakamoto.
Charles Hoskinson has extensive experience, and has worked with both Ethereum and Cardano. It is in the latter’s leadership that he has a central role now. While Satoshi Nakmoto, who is related to Bitcoin, is a person (or we think it is a person) that people generally know very little about, although it has been a while since Bitcoin was launched.
What do the developers behind the cryptocurrency want to achieve?
What the developers behind the cryptocurrency want to achieve should also be a very important factor when choosing which cryptocurrency you want to invest in. This is also called visions, so what visions do the developers have with their cryptocurrency? And how do they plan to develop?
If the developers express that this is just a pastime while waiting for the idea of their next big project to come, then you may want to think about it a few or more times before you decide to invest in this cryptocurrency.
The point of investing in cryptocurrency is that you want to invest in a way that ensures financial gain in the long run. And an actor who only sees the project as a kind of pastime can not guarantee it. Then you should instead look around for developers with bigger ambitions.
Of course, it can be exciting with short-term speculation, but if you ask us, then it is not something we would have recommended anyone to try out. When it comes to investing in cryptocurrencies, you should always go for the option that leads to the most long-term return for your part.
A slightly longer video on the subject:
What is the price history of cryptocurrency?
Cryptocurrencies are generally characterized by high volatility. This means that the price fluctuates at a rapid pace, which can be difficult to predict.
Therefore, it is important to look at the price history before deciding whether you want to go for that option or not. Here, too, there are a number of questions that may be relevant to ask:
- How is the volatility of this cryptocurrency?
- What happens to this cryptocurrency when the market falls?
- What trends are affecting the price development of this cryptocurrency here and now?
There are many cryptocurrencies with high volatility, but there are also some cryptocurrencies that are associated with slightly lower volatility. These are often called stack coins, and stand out from the other cryptocurrencies such as Bitcoin.
By learning more about the price history of cryptocurrency in general, you will get a pretty good indication of whether it is a good investment or not. The price history can, for example, help you find out whether the current time is a good investment time or not.
Does the cryptocurrency have a good reputation?
And last but not least, the importance of the reputation of the cryptocurrencies you are considering investing in. Here, of course, it is a good idea to choose a cryptocurrency that has as good a reputation as possible.
You often grow up hearing that popularity does not matter, but in connection with cryptocurrency, it actually plays a very important role.
This is something you should make it a habit. Even though you may think that someone looks good, it will be worthwhile to do a quick google search to find out what experiences others have. At best, that would be what saves you from a scam!