Last Updated on Apr 17, 2020 by James W
Investing in cryptocurrency is still a bit of an unknown proposition to many people at this point. The market is so new and, in many ways, untested that it is hard to grasp on anything solid on which you can base your decisions. Not enough time has truly passed for track records that will predict future success, or lack thereof, for certain coins. But you can always fall back on one of the hallmarks of picking any kind of asset: looking at the fundamentals. It might be a little harder to discern the fundamentals of cryptocurrency offerings and may require a bit more digging on your part. But unearthing the fundamentals should give you an idea of whether investing in a specific coin is worthwhile or not.
In terms of cryptocurrency, there is, just as in the case with stocks, always some sort of underlying company or group of people at the heart of every coin being offered. There is also an idea about what the coin is intended to do. These are the things that you must grasp and try to determine if they form a good foundation for future success in the market. If doing that kind of legwork seems time-consuming and burdensome to you, a trading program such as Bitcoin Trader can be the answer to your prayers. The fundamentals are out there for every cryptocurrency coin out there; you just must know where to look for them.
1. The Idea
Every initial coin offering worth its salt is something that should be outlined in detail in a white paper or other technical document explaining what the sale of the coins is meant to fund. It could be just another attempt at digital currency like Bitcoin, or it could be something along the lines of Ethereum with its many applications. But you should be able to check it out, and it shouldn’t just be filled with promises of how you’ll get rich by investing in the coins in question.
2. The Idea Men and Women
Just as you can usually judge a company issuing stock, to some degree, by the track records of the people who are in leadership positions, it stands to reason that those performing coin offerings should also have some sort of record of success on which you can bank. The record doesn’t have to be a mile long, especially since cryptocurrency is largely the province of younger entrepreneurs and technology experts. But that there should be something about them that stands out to you when you check out their C.V.
3. Testing It Out
If you’re now sure about making a heavy investment in a new coin, you might be best served to dip your toes in the water and test what the company is offering. If it is a new form of currency, check to see if making purchases with it or receiving payments are feasible. Or, if there are other promises being made about its utility, see if you can verify them. It’s the adage that says you should invest in products you love. It works with crypto as well.
Checking out the fundamentals isn’t an easy task in the world of cryptocurrency. But it can save you from investment heartache if you do a good job of it.