Awareness around crypto-currencies is at an all-time high. More people know about these digital currencies than ever before. With the crypto-craze at its height, an increasing number of people are putting their money into cryptocurrencies! However, with the rise in the interest around cryptocurrencies, there has also been a rise in cryptocurrency related scams and fake coins which are created solely for the purpose of scamming investors.
Investors need to be alert about certain facts pertaining to the currency that they are about to invest in. These facts help them realize if the currency is a legit investment opportunity or is it a scammers ploy to steal the money from the investors.
How To Pick The ‘Right Currency’ For Your Crypto currency Portfolio
There are a number of questions that one needs to ask out loud before they invest into a cryptocurrency. The answers to these questions help an investor determine if the currency that they are about to invest in is a legit cryptocurrency or just another crypto-related scam.
Does This Cryptocurrency Solve An Actual Problem?
The first question that one needs to ask themselves is that does the currency that they are about to invest in solve a real problem? Is there truly a ‘need’ for this cryptocurrency? If the currency does propose a problem to a real-world challenge, do you believe that the currency would be able to solve this problem? If the answer to most of these questions is negative, you might just want to avoid investing in the currency.
Read The Whitepaper, Carefully!
Every major and legitimate currency has a whitepaper that details out the plans for the currency as well as the vision behind the creation of the currency. First off, if there is no whitepaper, it is an immediate red flag. Moreover, the goals that are mentioned in the whitepaper need to be realistic and attainable! If the whitepaper seems too good to be true, there is a chance that the currency may be a scam.
Who Are The People Backing This Currency?
Another question that one needs to ask is – who are the people who have supported the currency in the past? Sometimes, for credible cryptocurrencies, you will be able to find multiple industry experts having commented on the currency. Moreover, at times, the credibility of the founders too, tends to play a major role. One needs to check out who the creators of this cryptocurrency are – and are they members of the fin-tech industry, do they have a presence on the internet, providing expert opinions.
Moreover, one also needs to check out the social media profiles of the founders and the promoters of the cryptocurrency they are about to invest in. Sometimes, scammy cryptocurrencies make use of fake and stock images and made-up names to promote their currency. A little research on social media can help investors ensure that they are investing in the right currency.
Sentiment Analysis of the Currency
‘Sentiment Analysis’ is basically the understanding of the kind of conversations that are happening around the currency you are about to invest in. Checking out the social media pages or communities such as Reddit should give you a better idea about the conversations around the currency that you are willing to invest in. If the conversations around the currency are positive and optimistic, it indicates a strong bull-run may be coming in the days to follow. However, if the conversations are negative and the currency is caught in various controversies, it may be best advised to stay away from it.
Performance in the Past
Before investing in a cryptocurrency, it is always advised to check out the past performance of the currency. While it is rarely an indicator because prices can rise at any point of time – however, a consistently bad performance can be a clear indicator of the fact that the currency that you are investing it may not be a good choice – as the prices can continue to fall. A trend-analysis of the currency’s price-movement can help determine if it is the right currency or the right time to invest in it! You can also go through crypto guides at CryptoGround for better knowledge.
In addition to the price performance, another thing that needs to be checked out is the market capital of the currency. If the market cap of the currency tends to fluctuate a lot, it might not be healthy for a long-term investment. Currencies which show a stable growth or have a stable market cap are the best advised currencies. Moreover, the older the currency has existed, the more trusted a name it is likely to be!
About the Author
Prince Kapoor is a Freelance Marketing Analyst and Blogger. While not working, you can find him in gym or giving random health advises to his colleagues which no one agrees on :). If you too want some of his advises [on health or on marketing], reach out to him at @imprincekapur