We can all feel the hype when we see a new cryptocurrency hit the market, but do we find it useful? Let’s be honest: if no one uses Bitcoin except for you, then the cryptocurrency value is dependent on your personal opinion of it.
There are plenty of cryptocurrencies out there that have real utility and use for people outside of your household—and that doesn’t mean they’re not as valuable as whatever one person thinks about them. That is where cryptocurrency becomes more than just an investment—and something you can use to buy stuff or save money.
Make sure the cryptocurrency is something you’d like to invest in because it is more than an investment.
If you’re thinking about investing in cryptocurrency, do your research first. Don’t just assume that it’s a safe and viable investment because the price is going up. Do your homework and make sure you believe in the cryptocurrency’s purpose and what it will do for people in the future. Learn about its roots, fiat exchange rate, and other crucial details before you think of investing.
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Are the developers reputable?
To be fair, it’s not enough for anyone to start making a cryptocurrency. That is a tough game to crack, and the competition is ruthless. It takes not only a great idea but also an equally strong team of experts in the field of blockchain technology, cryptography, and security. The best developers are seen by looking at how they’ve handled past projects. Are they transparent about their intentions with their new endeavor? Are the people behind them respected in the cryptocurrency community? How well do they know the subject matter?
For instance, look no further than Ethereum (Ether), which has been under fire lately due to its controversial founder (now former) Vitalik Buterin. Some consider him a wannabe internet celebrity who inflates his ego; others see him as a visionary who could revolutionize social media as we know it today. In other words: he’s polarizing. His project has come under scrutiny because of its seemingly never-ending development cycle and Buterin’s infamous penchant for public feuds with other prominent figures in the crypto world (including Bitcoin creator Satoshi Nakamoto).
But any way you slice it, there comes a point where it stops being interesting and starts being annoying—or worse yet, harmful to the project as a whole.
We prefer projects that are less controversial but still have strong teams behind them with legitimate backgrounds in computer science and related fields—like Monero, which has been around since 2014 but still hasn’t received much attention from mainstream outlets or investors despite having some very tangible features like increased privacy features for users and miners alike.
Is there a real community behind that crypto?
Discussions on the internet are often one-sided and heated. As an investor, you don’t always get the full story of what’s going on behind the scenes. This is why it’s important to consider more than just price when investing in a new cryptocurrency—you need to know what kind of community they have, how that community interacts with one another, and whether or not there are any events or other activities taking place.
Below, we will discuss some of the things you should be prepared for if you plan to invest in a new cryptocurrency project—or even buy into an existing one:
What kind of partnership deals has the cryptocurrency secured?
With the cryptocurrency markets booming in recent years, there’s a lot of hype surrounding new cryptocurrencies and new coin offerings. However, it’s important to remember that plenty of these currencies will fail and disappear into obscurity. To help you get in on some of the next big deals, here are 7 key points you should consider before investing in a new cryptocurrency:
- Consider the number of partnerships. While many try to market themselves as unique and superior to other currencies, most are simply a clone of an existing currency with few or no improvements.
The easiest way to tell if they’re worth investing in is to look at their partners – do they have companies from multiple industries interested in teaming up with them? If so, this could indicate that the currency has staying power and also makes for a more versatile investment: if one partner were to drop out, does another partner exist within the same industry who could take its place?
- Consider what kind of partnership deal it is. Is it exclusive? If so, how long will this exclusivity last? What are both parties getting out of this deal? Could either party back out easily without suffering negative consequences?
- Consider who else is buying or using the currency besides investors and speculators (the latter often being referred to as ‘shorters’ because they simply hope that cryptocurrency prices will fall rather than hold onto their coins). Are there users actively using the coins for transactions or purchases? If so, what kind of transactions can be made with them? Is it only available via cryptocurrency exchanges right now but soon will be available on debit card services like Visa or Mastercard when they’ve partnered with an actual bank instead of just an ATM network provider?
Are the users and investors encouraged to become part of the system?
If you’re thinking of buying into a cryptocurrency, there are a few things you should think about before investing. First and foremost, remember that the two big reasons people buy into crypto are to make money and to help contribute to something they believe in. If you’re looking at crypto as a way to score some cheap coins for easy cash, it may not be the best idea for you—but if you’re looking for a new community where you can share your knowledge and expertise with other users who share your vision, then investing in a cryptocurrency could be worth your while!
Is there a potentially high return?
The world of cryptocurrency has taken off in a big way. Bitcoin, the first and most well-known digital currency, has grown exponentially since its inception in 2008. Various other cryptocurrencies have since been introduced and are now vying for attention and market share.
What does this mean for you? It means you have some serious decisions to make if you’re interested in investing in this new type of asset class. This is not the stock market we’re talking about—cryptocurrencies trade on decentralized exchanges without central oversight or regulation, so there are no regulations or agencies protecting investors from potential losses (although these things may change).
The risk is real, but so are the rewards. As with any investment, choosing to get involved with cryptocurrencies comes down to how much risk you’re comfortable taking on—so let’s take a look at what you should consider before making your decision to buy into this phenomenon:
Is there a potentially high return? – First and foremost, it’s important to ask yourself what kind of return you’d like to see from your investment in cryptocurrencies. While many people are currently getting lucky by catching the right wave at just the right time (meaning they invested early), there’s no guarantee that cryptocurrencies will continue their upward climb indefinitely—so be realistic about what kinds of returns could realistically be expected over a short period with high volatility. In our age of rapidly changing technology and innovation, it can be difficult to predict where trends will go next—but that doesn’t mean you shouldn’t try.
Cryptocurrencies still have plenty of room for growth as long as their core value proposition continues to resonate with users: decentralization and security against centralized systems. If recent history has taught us anything about investment and cryptocurrency markets, it’s that people will pay handsomely for something as long as they perceive it offers them added value—and that value proposition is likely only going to increase over time.
How much will you invest?
The financial markets have always been speculative and unpredictable, but that hasn’t stopped millions of people from trying to earn a buck by buying into the latest investment craze. These behaviors would be even more reckless if they weren’t taken advantage of by bitcoin’s incredible performance in 2017. The cryptocurrency rose from $100 to $19,000 per coin in less than a year, making many early investors very rich in a short period.
Now that the cryptocurrency has entered a bear market (meaning its value has decreased dramatically), there are plenty of skeptics who believe it will never rise again and plenty of others who feel this is the perfect time to buy some more. After all, purchasing cryptocurrencies like bitcoin is still much cheaper than investing in traditional assets like stocks or real estate.
While investing your money may seem like an appropriate alternative to buying actual property in today’s market, you should know exactly what you’re getting into before diving into this type of investment—particularly with so many volatile new options out there right now.
The first instinct for most people interested in investing is to search Google, but this will not yield useful solutions for an investment newcomer. Instead, consider this article as a handy guide for those who want to make an informed decision about whether or not investing in digital currencies is right for them—and how they can do it safely and successfully.
Cryptocurrencies are a new, emerging form of currency that uses digital encryption to secure transactions and control the creation of new units. Unlike other forms of currency, cryptocurrencies have no physical manifestation, though some do come with a wallet you can open on your computer or phone. Considering the benefits and pitfalls associated with cryptocurrencies, there are seven important factors to keep in mind before you invest in this new technology. So, do keep these in mind before investing.