Tips for Choosing Your Crypto Investments

Investing in cryptocurrency is all the rage right now. The concept is new but the potential is skyrocketing. But because it is so new, investors are wary, with the most experienced people still trying to navigate through the money going in, and out, or only existing in data.

Navigating through crypto can see you ending up burned if you do it wrong, which is why we’ve compiled this handy guide to keep you on the straight and narrow. Read on for all the advice you need to make a safe crypto investment.

Research crypto, not stock

If you have some experience with stock investment in your past, it might be attractive to dive into cryptocurrency with all the wealth of information that the experience has given you in the past. It’s tempting, but a good way to find yourself losing money.

Stocks are not the same concept as crypto. They might have some surface-level similarities, but their success is built on different foundations. For one thing, stock is created for the sole purpose of fundraising for a business model, and as the business grows, your money grows. Simple, right? Crypto is far less predictable, with a range of possible purposes that survive on a foundation of hype. A cryptocurrency lives and dies on its popularity, with low lows and high highs that you have to ride like a wave to success. This makes for a much more volatile market, where world events have a much greater effect in rapid real-time.

Another difference is considered quite the perk to crypto investors. Stocks are subjected to heavy regulations and annual audits, whereas crypto is considered the people’s currency, bypassing the use of the bank and their policies that control the economy. This can be freeing, but also dangerous, meaning that you will need to be sure you trust the team behind the coin or be subjected to a possible scam.

Research your coin

There is a lot to look into when purchasing Dogecoin, Ether, XRP or Bitcoin or indeed any cryptocurrency other than the technical aspect. In fact, it is best forgotten in favor of other elements for now.

What is more important to begin with, is ensuring trust in the coin and the team that manages it. You are looking for three main things: the strengths of the team, the vision of the coin and the ambition of the two.

Take some time to look up the team behind the coin you’re looking at. Don’t ignore any red flags that appear when you see them. Do you trust their expertise or qualifications? What does their track record give away? The team that manages a cryptocurrency has the power to steer the coin into success or failure, and yes, they can accidentally cause it to fail, and just as commonly, they can purposefully cause it to fail.

Take a look at the white paper that comes with the coin. Every coin should have one, so the lack of a white paper is another red flag. The white paper will outline what they intend to do with the coin. It will outline what the initial purpose of the coin was and what its long-term vision is. The vision of the coin is important because it will point to how long the team intends for the coin to be around. If you are looking to grow an investment by supporting a cryptocurrency, you want it to grow over a decent period of time. Coins with no ambition or vision do not intend to be around for 5-10 years and are likely to be a scam.

Other red flags in the white paper will be if you think the team behind the coin is aiming for something unrealistic or if it has poor spelling and grammar. Like any website or professional document, typos and spelling mistakes indicate a lack of professionalism. If they don’t care enough to put their best foot forward, why would you trust they care enough to manage their coin well?

Research the world

As mentioned above, crypto is a more volatile market than stocks, with more unpredictable waves to surf. You can get on top of this by staying as informed as possible about anything that might affect your coin. That will mean keeping one eye on the business section of the newspaper and another on the world news.

For the business end, there are regular updates on what companies are doing that could affect stocks, and that might also affect your crypto. Small things like CEOs posting a Tweet have been known to crash popular cryptos, and celebrity endorsements.

Meanwhile, a lot of people are still wary about cryptocurrency, in various industries. For example, China is rumored to be looking into replacing their national currency with crypto. Initially that sounds like it could only help crypto until you read that their first move has been to ban crypto trading in China. The market quickly recovered mainly due to the fact that no one was surprised by the move.

One advantage crypto has over stocks is the lively conversation. The currency for the people has people talking. You can follow guides online, sure, but you will get all the most up-to-date information and advice from subreddits of all things. Follow a few Facebook groups and subreddits to keep on top of things that might affect your coin.