Cryptocurrencies are confusing to a lot of people, and if you’re just getting started and are confused by them, it’s perfectly normal. The first thing you should do is keep your scope small when you look at them.
There are so many different cryptocurrencies right now, and if you were tempted to invest in some obscure cryptocurrency because of its seeming growth potential, you might be in for disappointment. Concentrate on the projects that are moving the community and that are getting at least some interest from major influencers. Let’s take a look at some tips that will allow you to choose which cryptos are worth considering.
Understand the Type and Use Case
The very first thing you have to do before you invest in a cryptocurrency is to learn its type and use case. If your goal was to speculate, for instance, then you should know that some coins will not allow you to make any profit at all. Stablecoins, as they’re called, have the sole purpose of facilitating transactions between cryptocurrencies while sheltering traders from the wild fluctuations of the crypto market, so you should avoid them if you want to make money in the long term.
Learn about things like DeFi tokens, stablecoins, utility coins, and all the other types of coins available before you invest in them. You should then verify with the community if the issue they’re trying to solve is legitimate and if they see cryptocurrency as a viable solution.
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Knowing the price history of any asset is very important when investing, especially with crypto since there’s less information available about them in general. Try to find out recent price movements and historic ones and use a crypto to fiat converter to know exactly how much a cryptocurrency will cost in fiat money.
Price history will let you know of certain patterns, but also if a certain crypto has peaked. It will also let you know the floor price for cryptos, which is very important.
Learn about the People Behind the Project
You also have to know what the community thinks of the people behind a project before you get invested in it. Try to know what other projects they were involved with too. If they’re largely unknown in the community, then it’s a clear red flag. That doesn’t mean that the crypto shouldn’t be considered, but you will need to dig deeper into the team’s background to know if they have the expertise needed for this type of project.
If the people have been involved in several projects, look at their history. If it was bad, then you should think twice about investing in the project. But, if they’re largely respected and the cryptocurrency ticks all the right boxes, then you may be looking at a winner.
All of these tips will allow you to find a few cryptocurrencies worth investing in. The most important part is getting as many second opinions as possible from people in the crypto space and taking the time to do as much research on crypto before you start.