Cryptocurrency investments are the new craze! While ‘investments’ used to be a thing that the youth weren’t really involved in, cryptocurrencies have brought quite a revolution. 2017 particularly, was an incredible year when it comes to cryptocurrency investments. This was the year the interest hit fever pitch and the global market cap approached the $1 Trillion mark but fell short by a couple of hundred million dollars.
However, being a part of the crypto-craze does not mean blindly investing in any cryptocurrency that comes your way. Cryptocurrencies are for smarter investors and they need a smarter analysis before an investment is made. There are many factors that need to be considered before investing in a coin. Let us take a look at these factors.
The Deciding Factors:
- The Underlying Technology: One of the key things that needs to be looked into is the technology that powers these cryptocurrencies. Is it something that appeals to you? Does the underlying technology have the potential to bring forward a change? Or is it something that may not be a long-term idea. It is the underlying technology which is going to ensure if the currency will stand the test of time.
- The Founders: Another factor that needs to be considered before investing in a cryptocurrency is taking a look at the founders of the currency. Are these people credible enough? Are they recognized in their particular fields? Do they have any other web presence apart from being on the page of these cryptocurrency websites? A background check of the founders can help ensure if the currency is legitimate.
- ICO Reviews: When investing in an ICO, it is critical to understand all the key financial details about the ICO and about the developers who are initiating the ICO process. Websites such as ICOtokennews help provide reviews and accurate details on upcoming ICOs. Going through these reviews helps ensure the fact that the ICOs are legitimate and not a ponzi scheme or a scam.
- Monetary History: If the coin has been listed and is being traded for a while, take a look at the graph and check the history of the currency. Is it prone to fluctuations? Does it have the capacity to bounce back from dips? A coin’s performance in the past may not be a direct indicative of the future – but it does drop a few hints!
- The Exchanges that List the Coin: It is also important to take a look at the exchanges which have listed these cryptocurrencies. Take a look at the top 10-20 cryptocurrency exchanges – has any of them listed the coin you are planning to invest in? It may raise a few red flags if the name is missing.
- Are you willing to lose all the money you put in the coin?: Cryptocurrency investments, if done at the right time, can give you very high returns. Case in point being Ripple and Ethereum, which grew by 36,000% and 9,000% in the span of just one year. However, there are also times when the price of the currency may fall drastically, resulting in major losses for the investors. Before investing, it is important to do an analysis of your monetary health – and understand that the money you are putting in cryptocurrencies is in a risk! If departing with that amount does not affect your daily life, you can go ahead and invest in the currency!
These are the factors that need to be kept in mind before investing in a cryptocurrency!