New cryptocurrencies and various blockchain projects are emerging every day. Getting in on an exciting investment opportunity early can be great but carries risks as well. Investors should carefully evaluate any cryptocurrency investment opportunity, and here are some simple steps you can take to make an informed decision.
Look Into the Cryptocurrency’s Stats
While there are plenty of different aspects to consider when evaluating potential investments, a lot of the decision-making process comes down to numbers. If you find a new cryptocurrency, you should check out some of its core statistics.
Most investors are looking for something new but somewhat well-established. You can look at the daily trading volume and the market cap to get an idea of how big the cryptocurrency is right now. There are many advanced metrics that investors can look into as well, including the distribution of the cryptocurrency to find out if certain investors might have too much sway over price changes.
Check Out the Developers
Cryptocurrencies and other projects are initiated and maintained by developers. These are the individuals with the technical knowledge and innovation to create exciting new crypto features and applications. You can form a clearer picture of the potential for success that a cryptocurrency has by learning a bit more about the developers.
Any reputable cryptocurrency will have a developer website with information about the team and their goals. You can find out if the team includes any developers with proven track records in other crypto ventures. You can also get a better understanding of whether or not the cryptocurrency really has something new to offer or if it’s just going to fade away into the crowd.
Read the Whitepaper
Whitepapers have been used primarily as a business-to-business marketing tool for decades, providing a thorough and insightful overview of what a project or company has to offer. Today, crypto developers write and release whitepapers to the general public to establish confidence and trust in their cryptocurrency.
The whitepaper can give you insight into the unique value that a cryptocurrency provides. The developers will explain their vision and how their cryptocurrency executes that vision in great detail. If you aren’t particularly tech-savvy, you can still judge the whitepaper based on its overall production value as an indicator of how committed the developers are to promoting their cryptocurrency.
Some providers like the Immediate Edge Trading app don’t offer a white paper which can withstand public scrutiny. However, due to lack of understanding many investors still choose to proceed despite the obvious risks which are involved with such a questionable software.
Find Out What Other Investors Have to Say
Unless you really are the first person to discover a new cryptocurrency investment opportunity, you should be able to track down a fair amount of discourse online. People provide their insights into new investment opportunities quite readily. You can find analysis and predictions from experts that can help you understand the advantages or disadvantages of a certain investment.
There are also plenty of places online where everyday investors discuss opportunities. You can see what the general consensus is regarding a cryptocurrency. This is particularly useful in exposing scams or low-quality investments, as word spreads quickly through these online communities.
Don’t Ignore Red Flags
You can put a lot of work into finding the right crypto investment opportunity, but don’t forget the importance of always spotting the wrong one. There are plenty of poorly conceived or even outright fraudulent cryptocurrencies out there that are almost certain to be poor investments.
Always watch out for the sudden spike in value that might signal a pump-and-dump scheme. These are widespread throughout emerging cryptocurrencies, and you could find yourself on the losing side if you choose to invest. Avoid any projects where developers aren’t named or don’t have any contact information as well. By taking a little extra caution, you can avoid losing big time on your next crypto investment.