Up until 2009, the term cryptocurrency was non-existent. However, it all changed with the launch of one interesting project named Bitcoin (BTC). At first, it was not quite clear whether Bitcoin would be truly revolutionary or just a momentary distraction, but the past 12 years serve as proof that Bitcoin and other cryptocurrencies that will follow are here to stay.
In 2021, cryptocurrencies have become the buzz of the town, with over 6000 coins existing on the market right now. These decentralized digital currencies have grown to serve a number of purposes over the years, including trading assets, secure mediums of exchange, and digital payment options.
One of the most difficult obstacles for investors wanting to trade cryptocurrencies is avoiding getting caught up in the excitement, especially with new coins popping up on the market quite frequently. Digital currencies have swiftly come to prominence in many retail and institutional investors’ portfolios. At the same time, economists recommend investors be cautious about the volatility and unpredictability of the market and make their decisions based on facts rather than sentiment.
To make an objectively informed decision when choosing which crypto assets to invest in, traders should do their due diligence and evaluate each potential option based on a few criteria. In what follows, we are going to go over these criteria, so that you can better decide which crypto assets are worth putting your money on.
Determine the coin’s revenue model or economic impact
The first thing we must address is what the cryptocurrency’s revenue model or economic effect is. After all, a cryptocurrency is a type of financial asset, so it should be intended to address an issue or produce revenue for its ecosystem. This ecosystem may include miners, node operators, partners, and even companies that are developing the platform.
Let’s take Bitcoin, for example, which is a decentralized medium of trade that is not reliant on a government or a bank. The core notion is that anyone in the world may use Bitcoin to pay someone else because transactions are less expensive and faster than traditional ones. Ethereum, on the other hand, is used as a platform for smart contracts, which made it become the second biggest crypto asset.
While most crypto assets have been built with a specific purpose in mind, 2021 saw the rise of meme coins – cryptocurrencies with no real economic purpose other than being traded on the market. The pioneer for these meme coins is Dogecoin (DOGE), a coin launched as a joke by an Adobe developer in 2013. Right now, there are over 90 meme coins on the market, but none seems to have a stronger purpose than to make its developers rich.
There are, however, projects that want to change the way people see meme coins, and one of them is TORG, a coin launched in July 2021. The coin was designed as the first utilimeme — a meme currency with practical applications. TORG’s founders hope to make it a people’s coin, out of reach of banks and governments, allowing the under- and unbanked to profit from it in a number of ways. The coin seems to be well received by the public, with trading volumes going over $21 million, according to CoinMarketCap. This serves as proof that, if you do your research, you can find valuable and profitable assets to invest in.
Do a fundamental analysis of the asset
Fundamental analysis refers to an investment’s underpinnings — its team, aspirations, and strengths, for example. Fundamental analysis will benefit you just as much as technical analysis in the long term and is much easier to understand for beginner traders.
Fundamental analysis focuses on a number of criteria traders should analyze, including:
- The development team: One of the most critical elements to consider is investigating and evaluating the team behind a cryptocurrency. You need to be able to determine who they are, as well as their expertise, ambitions, and track record of success.
- The technology used: The underlying technology has a significant role in the success of a cryptocurrency: You must comprehend how it will perform in comparison to rivals – and what makes the technology stand out from the crowd.
- The coin’s white paper: New coins usually launch with a white paper as well. This paper should outline the purpose of this coin, the technology used, as well as its vision. While you don’t need to get lost in the technical jargon, try to analyze if the coin has unrealistic ambitions or promises.
- The team’s vision: The cryptocurrency’s vision is really important. You want to ensure that this coin will be around for at least the next 5-10 to ten years, and if they aren’t looking long term, you should be concerned. For example, TORG has a clear mission of giving value to meme coins and establishing a new model for upcoming tokens.
- The roadmap: What are the team’s plans for future development? If the coin you plan on investing in does not have clear timelines for development, you may want to look in another direction.
Look for coins with strong communities
A cryptocurrency’s community is an important factor in its success; thus, seek for coins with large communities and dedicated followers, since this indicates that people have a real interest and belief in the asset. Examine various forums, subreddits, YouTube channels, and community comments – and see what they have to say about your possible investment.
Some of the more complex and technical ideas are also frequently taken down and discussed simply in these communities, so it becomes that much more helpful for beginner investors. Reputable cryptocurrencies have developed their own communities on various communication channels. Sticking with TORG as an example, they have a very active Twitter, Telegram, Reddit, and Medium community, which shows there is a great deal of effort being put into this coin. Becoming an active member of these communities from early on also allows you to observe how the following base evolves over time, which is an important measurement for success.
Keep an eye out for promising ICOs
Initial Coin Offerings (ICOs) are the preferred mechanism for digital currency enterprises seeking operational capital and the launch of new cryptocurrencies. This is similar to betting on the stock market in that you are betting on a firm that can provide the goods and offer you a return on your investment – in this case, a new coin.
When deciding which cryptocurrency to invest in, ICOs provide some great opportunities. To put it simply, you have no historical charts to help you. As a result, you must rely on your grasp of the product, what distinguishes it in the market, and the people behind the offering.
