Figuring out which ones to shortlist can seem very simple or complicated with so many different cryptocurrencies on the market. On the one hand, you can create a shortlist by simply checking out the top cryptos by market cap. But naturally, you want to know more than just how much money is in circulation. You need to understand what makes crypto strong enough to be viable in the long run.
This article will look at some of the crucial factors that affect how crypto fares over time. It is not investment advice, but it is a general overview of some things you should consider when choosing which cryptocurrencies to invest in.
It offers insight into what makes good crypto and may help you decide whether or not (and when) it might be wise to add particular cryptos to your shortlist for future investments. When you ponder over new crypto, say, Solana, you may think, what is SOL?
Source of Your Information
There are many places to look for information about a cryptocurrency before investing in it. These include websites, articles, forums, and other sources of information. The source’s credibility matters when looking for “how to buy SOL?” So, it is important to do your due diligence first.
When you find an article about a cryptocurrency mentioned in a social media post or on a website you have never visited before, ensure to read through and determine whether it is credible. Look for references to reputable websites and other sources of information that support the claims made by that writer or website. Just because the writer has mentioned some facts about one cryptocurrency does not mean all his claims are true.
The most important thing to remember when researching any potential investment is that if something sounds too good to be true, it probably is not. Do not fall victim to FOMO (fear of missing out). Even if someone’s investment appears lucrative online or on television does not mean they will not sell it at any moment without warning their audience first
Investigate the Team Behind the Cryptocurrency
Why should I buy SOL? It is a very pertinent question that needs answering. You can view the team members’ bios on their project’s website. Look for the project leaders’ work experience and expertise and whether they have worked together before. It is helpful to read through their biographies to understand how they contributed to the project.
Check out each team member’s LinkedIn profile (or other social media you are comfortable using). If a team member has worked on other projects or ventures, it may be worth noting. It could indicate that they have experience developing, marketing, and growing products. It could also mean that they have been involved in scams before. You do not want to trust anybody blindly, so make sure you do your research and use extra caution if the person you are checking out has a questionable history.
Product and the Founder’s Vision
Going through these steps also gives you a good grasp of an important question:
- What is this product offer?
- Are they solving a problem?
- Is there a market for this crypto, and does it have real-world utility?
Answering these questions will give you an idea of how much in demand the crypto is. If crypto has real-world utility, it will receive usage and generate value.
To go deeper into shortlisting cryptos, look at the founder’s vision behind their cryptocurrency project. There may be no single more important factor than what drives a founder to take on such an ambitious project. They are often a similar force of nature as they are visionary entrepreneurs. An early win by one of these founders can mean huge gains for investors who have followed them from the beginning. However, be wary of being blinded by the hype and taking too much risk.
Community Support and Validity
Community support is key to whether a cryptocurrency will be successful in the long run. If the community is lively and vocal, it is more likely that their project is relevant and has staying power. If the community around particular crypto is antagonistic, toxic, or generally unsupportive, you may reconsider investing in
A large, enthusiastic community bodes well for a cryptocurrency’s success over time. It means that people care about this project and are willing to rally others behind it!
Coins in Circulation
Each cryptocurrency has a predefined supply. The total number of coins that this particular cryptocurrency will ever have is called its maximum supply.
When you buy a coin, it comes from the circulating supply and goes into your wallet. It reduces the circulating supply but does not change the maximum supply; it remains constant.
The current circulating supply is what you will find in market rankings for each coin. If you see that there are 5 million coins in circulation and are wondering where the rest are, do not worry: they are just locked up or lost!
Some people forget their passphrases, and their coins become locked forever (ouch). Others get hacked, lose access to their old accounts, etc. Crying over spilled milk will not help here; as they say: “possession is nine-tenths of the law.”
The Way Forward
Once you have completed all the above steps, you will have a list of cryptocurrencies good enough to invest in. I would recommend selecting the top ten from your list. Then research these ten coins to reduce this list even further. It will take only minutes of reading a few articles about the coins and their performance.
Finally, shortlist five coins that you want to buy based on the criteria of each coin and its potential for growth compared to your investment horizon and tolerance for risk (in case of loss). You can also consider investing in different categories. Such an investment can include the popular categories, like platform/utility tokens vs. security tokens, stable coins or DeFi tokens versus cryptocurrencies, etc., to improve portfolio diversification.