Investing in cryptocurrencies is not an easy thing. One must overcome a number of psychological and other (sometimes legal too) barriers before he/she can start investing in cryptos as this field is seen with a lot of skepticism. And if somehow someone breaks through all these barriers, the next things that he/she faces are these questions: Which one is the best cryptocurrency to invest? Do I invest in Bitcoin, Ethereum or XRP?? How do I choose the best cryptocurrency?
These’re some classic questions that roam in the head of of any new cryptocurrency investor. Finding the right cryptocurrency to invest is critically important, and that’s why we’ve written this article for you. While we’ll not recommend you any particular cryptocurrency, we’ll share with you a 4-point criteria that you should keep in mind while choosing a cryptocurrency to invest. Let’s begin:
#1. 24-hrs trading volume
You may be invested in any particular asset, but it’s a fact that at some point you would want to sell it to get your return on investment. And in order to sell it it’s important that there are buyers available for it in the market. If there’s no interest in buyers regarding any particular asset, selling that asset may become very difficult (a fact that also affects the price that you get for your asset). Therefore, it’s important to ensure in the beginning itself that there’s plenty of interest in the asset that you’re buying. This applies to cryptocurrencies as well.
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So when you’re looking to purchase a cryptocurrency ensure that its 24 hrs trading volume is more than $10,000 per day at least. This is the minimum requirement – the more the trading volume, the better it will be from a liquidity perspective.
#2. Present market cap and price
The market cap and price are next important factors to consider while choosing the best cryptocurrency to invest. The thing to keep in mind here is that just like other assets (i.e. stocks, bonds) the current price of a cryptocurrency hardly ever reflects its true value. It’s upon you to figure out the real value of a cryptocurrency based on the current and future goals it has, the major things that are working in its favor and the things that are not working in its favor. Don’t let the low price of a cryptocurrency deceive you into not buying it if all other things are looking promising.
#3. Activities of developers
The two factors mentioned above were common sense from the world of finance and investing. Now let’s come towards some technical stuff that matters, because cryptocurrencies have come out of the world of technology. Before you put your hardly earned money into any crypto coin, it’s also important to analyze the developer behind that coin. Anyone with knowledge of coding and software development can create a cryptocurrency, and although not all but many among them do this for the sake of doing scams. If you don’t invest your time in analyzing the history of developers behind the project, why have they created their cryptocurrency and other vital info (i.e. how actively they fix the bugs, how involved and respected they’re in the community etc.)… there’s a good chance that you may run into a coin that’s scam.
#4. Potential vulnerabilities/scalability issues
The final things that you need to consider while choosing the best cryptocurrency to invest are potential vulnerabilities and scalability issues. Since cryptocurrencies are digital assets, it’s quite possible for many of them to have some vulnerabilities or scalability issues that can threaten their existence. And if that happens, the prices of cryptos come crashing down very quickly. You may loose all your investments in such cases. So do some research to ensure that the token that you’re choosing to invest your money doesn’t have any major vulnerabilities or scalability issues.
So these were the 4 things that you should keep in mind while choosing the best cryptocurrency to invest. Just keep them in mind and your choice will be better than a lot of other people who lose their money in these volatile markets.