What cryptocurrencies to invest in to earn, not lose? Each of us asks this question. In this article you will not find fairy tales in style, buy cryptocurrency X and in two months you will become rich. Stepping on the ground, we seriously advise on how to independently assess whether it is worth buying a given cryptocurrency or a token.
What cryptocurrencies to invest in - basic assumptions
Almost everyone has heard about cryptocurrencies today. They have their departments in all investment portals, besides indexes, shares, ETF, commodities, precious metals and forex. It seems that the era is over when cryptocurrency projects grew just because they were just being discovered as a form of investing. Earlier, no one had heard of them or taken them seriously. As interest increased, more people entered the market and increased their prices with their purchases. This rise in prices has fueled the bull market that has triggered the trend to invest in cryptocurrencies. Who saw how much you could earn quickly jumped with his capital to the speeding train. This is how a great speculative bubble was created that burst in the 2018 year.
At that time the market was very immature. They mainly invested amateurs, because more capital did not take cryptocurrencies seriously. They formed cryptocurrency community and an alternative version of economics. Funny reasons, such as changing the project logo (rebranding) or a new website, resulted in investors being thrown at a given project, raising its price as if the team announced the payment of a big dividend. Cryptocurrency valuation was mainly based (and often still is) on the dreams of investors and fairy tales told them by project fan boys and marketers responsible for promoting them.
However, the market is changing and slowly maturing. Did the long bear market and stagnation caused by the lack of new capital change anything? What cryptocurrencies to invest in to earn on a future bull market? It's certainly worth doing your own research to find technological start-ups from thousands of projects that will become large and profitable companies in the future, or cryptocurrencies that will significantly increase in value because millions of people will use them as a means of payment.
What to look for when deciding whether to invest in a given project? See the guide below.
Investment and not speculation
Before we decide which cryptocurrencies to invest in, we need to ask ourselves - do we want to make a long or short-term investment? How long can we freeze our capital? A month, a year, five years? You should be aware that by investing in some cryptocurrency project at an early stage of its development, we may have to wait many years for its success.
In addition, the investment risk should be assessed, i.e. how much can we lose Do we use stop loss on price or capital? Do we want to speculate and play with the trend or for a given event, are we interested in finding a prospective cryptocurrency project i we want to earn on its development in the long term, adoption and profitability of his product?
If we only speculate, that is, we want to buy cheaper, sell more expensive in the short term (several days or weeks), we do not need to perform fundamental analysis, research and penetrate the reasonableness of the assumptions and objectives of the project. It doesn't matter to us whether we buy bitcoin, gold, oil or cocoa. Only price and its volatility matter. We can earn on a completely worthless project or even fraud. We can use fashion or irrational shopping mania and, by taking advantage of the trend, in this way earn me the growth of some cryptocurrencies.
However, we will focus on long-term investments, in which the quality of the project and its development perspectives are very important. Before we buy a given token or coin, we need to know the project thoroughlywho stands behind him, i.e. make a fundamental analysis. We must understand what we invest in our savings.
Before you invest in cryptocurrencies
The more you know about a given project, the better for your investment. The most inquisitive investors are the first they detect all possible irregularities or project failures, as well as unmask marketing gibberish and separate it from the real value and development prospects of a given cryptocurrency.
The necessary minimum before investing in a token or coin is careful study his whitepaper, i.e. white paperin which all project assumptions should be discussed in detail. Whitepaper should be on the official website of every cryptocurrency.
The whitepaper should be discussed the problem that the project plans to solve. The current state of the industry and the advantages of the project should be described in relation to existing solutions. What's new, what improvements the project will bring to a given branch of the economy.
The proposed solutions should be described in detail. What the team wants to do, in what order and when. So the white paper should contain schedule of activities leading to the achievement of goals project (road map).
Finally, it should be explained how they will do what they plan to do. How their product is supposed to work? What innovative solutions they propose, what they rely on and how they intend to implement them?
Finally, how much can you earn from it? How much the target product can be worth? How do you get the costs of creating it for profitable profits? How do they want to reach potential customers with their product and convince them to start using it?
And above all - what the investor should be most interested in - what the economy of tokens looks like / coins of the project. What are they to serve in addition to collecting money in ICO and speculation on the stock market? What does the distribution of tokens look like - how much does the team have and how many investors? Is it possible to reprint tokens? When will the new team tokens be released into the exchange? And most importantly, how the success of the project and its product will affect the price of the token? Is he connected to him in any way? Is using the token in the product so important that it will raise the current price? Is it planned to pay a dividend on the profits of the project? Do token holders have any say in project development matters?
The answer to the above questions is one of the most important part of the cryptocurrency project research, in the process of deciding which crypto-currency investments to invest in. It is necessary to assess whether the project is meaningful, original and necessary, and the product being prepared will be profitable and will affect the valuation of tokens in which we invest.
Now that we know how the project works, look at its creators. Do they have the appropriate experience and skills to make a roadmap? Is the creation of a product real? Where did these people work before? What education do they have? It is worth checking the composition on the official website of the project and visiting the profiles of team members on the portal Linkin.
Is the project being carried out according to the schedule so far? Have the first products or effects of the first tasks been published? What quality are they? Does the team regularly create code? If it is an open source project, you can check it, eg on the portal design profile Github. Link to such a profile can be found, for example, on his card in CoinMarketCap.
Is there any interest in the project. Maybe already a large and well-known company decided to cooperate with it? If so, what is the partnership and will it translate into the valuation of the token?
Above, the necessary minimum has been described, which should be checked before deciding which crypto-currency investments to invest in. However, due to the different nature of different groups of cryptocurrencies, we should approach the evaluation of start-up tokens and currencies for payment differently.
Independent assessment of cryptocurrencies
In which crypto-currency investments we assess with a clear distinction, whether we are dealing with a cryptocurrency to pay or with a start-up project token. Other criteria must be met by a good start-up cryptocurrency project and another payment currency.
Investing in cryptocurrency for payment is like buying an American dollar or a Swiss franc. It is a payment unit that is designed to allow the exchange of capital for goods and services, as well as to store the value of this capital.
We buy the currency and then use it to paywhat in the accident cryptocurrency today is not very popular for their use, due to the convenience of using payment cards, as well as type applications Revolut. Cryptocurrencies can also hardly be called a "store of value", i.e. an instrument for storing valuesbecause cryptocurrency rates change by many percent during the day, week or month. Therefore, most often investing in cryptocurrencies used to pay is connected with a hope of increasing their value.
At this point, we need to ask ourselves - what is supposed to cause that the value of such a cryptocurrency increase? Of course, so-called adoption, which means more people will use it to pay, the more units of the given cryptocurrency will be needed. The more coins needed, the higher the demand for them, with the same supply and a limited total number (no possibility of printing). Higher demand than supply results in a higher valuation.
Now cryptocurrencies to pay are hundreds. Reflecting on which crypto-currency investments to invest, we must independently assess whether any of them has a chance to become widespread enough that its value will increase in relation to today's valuation.
Such cryptocurrency should certainly be very fast, with high scalability, i.e. the ability to handle thousands of payments at the same time. Payments and transfers should be very cheap or free.
Before we invest, let's consider where a given cryptocurrency could find its use (people pay in the store or devices to each other - the Internet of Things)? Is the currency so competitive that it will break through and achieve success? Or maybe already existing large corporations will create competition for her and remove her from the market? And maybe in this case, the most important quality and technical parameters are notand recognition? Before investing, you need to find out about a given project enough to assess its long-term
Self-evaluation of the token
The issue of tokens by technology start-ups wishing to raise capital for their development can be treated as a form of crowdfunding - we collected money in the collection, we emitted souvenir bricks… and that's it. The pricing of a token is usually not related to success ICO project. Token holders do not belong to anything, nobody guarantees them anything, even though they bought them in order to sell more expensive ones.
Treating tokens as an investment in a start-up let's make sure that its valuation has a close and clear link to the product. Even if the project was brilliant, if its token does not guarantee our share in profits or the demand for the product is not related to the demand for tokens, there is a high risk of loss of invested capital.
Therefore, wanting to invest in cryptocurrencies, as in innovative companies that in the future may become the second Apple or Amazon, let's make sure that the interests of token holders are somehow secured, and their valuation is not only determined by speculation or fashion.
How can you calculate whether you can earn on a given token by linking it to a possible project success? show In this article, on the example of the Atlant project.