How To Identify Altcoins That Are Worth Investing
Cryptocurrency has grown over the years, and most of the world’s population is embracing digital currency these days. One of the original digital currencies is Bitcoin. After its success in the industry, other coins have been created. These coins are referred to as alternative cryptocurrencies, commonly altcoins.
With altcoins coming into existence one after the other, it might be challenging to know which coin to invest in. Since cryptocurrency is an unregulated industry, you need to do your due diligence before investing. That said, how will you know if an altcoin is worth investing in? Worry not; this article highlights tips you can utilize as you decide.
Here are some of the effective ways you can identify altcoins that are worth your hard-earned money:
- Check The Level Of Technology
Different altcoins utilize different technologies to offer their services to investors. The level of technology, in terms of advancement, ease of use, and efficiency, will determine if a given altcoin is worth investing in.
It’s not worth investing in an altcoin where you spend most of your time configuring its working instead of trading. This is a waste of your time and resources.
An altcoin worth investing in has advanced yet simple-to-use technology, and allows you to navigate your operations efficiently. Additionally, consider one with an automation option; automation comes in handy at times as you invest in an altcoin. Meanwhile, you can adopt free crypto trading bots to help you trade automatically as you minimize risks.
- Consider The Market Position
The market position of an altcoin refers to how it’s performing in the cryptocurrency industry. Here, be sure to look at the successes of the coin over the recent past. You can get this information by studying its crypto stats, graphs, and prices from various credible sources. You should consider investing in altcoins that have been doing well over a considerable amount of time and have a promising future.
You can also identify the market position of an altcoin from the number of investors it has. Many investors imply that a majority of the population trusts the coin’s performance and has enjoyed the benefits of this investment. You should consider investing in the same; however, do your due diligence since a big number doesn’t necessarily mean a good investment.
- Assess The Security System
The security of your investment is crucial; you don’t want to make an investment, only for it to be stolen. Therefore, be sure to assess the security system of your chosen altcoin. One, ensure that it’s compliant with all necessary security standards and laws in your given state, such as GDPR. With such compliance, you’re assured they’ve put the bare security minimums in place.
However, your basic assessment shouldn’t stop here; it should extend to the workings of the altcoin itself. How do they handle private keys—are they shared or are you in control? Does it allow for a two-factor authentication system?
Even as you consider the security of the altcoins, consider assessing the companies behind them. Here, find out about their reputation regarding transparency. Do they have good or bad publicity? A dishonest firm means that there’s a possibility of them stealing your investments in one way or another. Therefore, invest in altcoins whose companies have good publicity.
- Assess The Founders
You can tell a lot about a given altcoin from its founders since they’re the cornerstone of the success of the given coin. Be wary of altcoins whose founders you can’t identify. Why would you hide your identity if you weren’t hiding something?
One aspect to look at as you assess the founders is their knowledgeability in cryptocurrency. You can know this by looking for blog posts they’ve written, their fame in the industry, and their successes trading with crypto. With this information, you’re assured they created the altcoin from the point of know-how. This means they’ll create a platform that’ll work and incorporate the fundamentals of cryptocurrency to prevent errors and inefficiencies as you trade. In short, you can trust them with your investment funds. However, it’s good to be wary as you base your choice on the founders’ fame and success; some might take advantage and use the fame to scam investors.
Besides the founders’ knowledge of the cryptocurrency industry, dig deeper into what they did before joining cryptocurrency. What company did they work for? Do they have a bad reputation? For instance, it won’t be wise to invest in an altcoin whose founder was once jailed for embezzlement or fraud.
This article has given you valuable insights into how to identify altcoins that are worth investing in. Consider adopting these tips before making your altcoin investment decision. As you adopt these tips, it’s essential to know that none of the tips supersede the other. Weigh your options jointly to prevent making mistakes.