How to choose digital currency like a pro
If you are lost on which digital currency to invest in, then you should know that it is all about the fundamentals. Although this task may seem daunting, you can simplify it by doing some research first. In this guide, we’ll cover everything you need to know to answer the question of how to choose cryptocurrency successfully.
How do you choose a digital currency?
You should look for cryptocurrencies that are backed by strong communities and loyal followers because that indicates the real levels of interest that they are getting. You can join some of the sub-forums and YouTube channels and use Reddit to get a comprehensive view of what people are saying about your potential investment, and thus know whether it is right to invest in this currency or not.
2- Fundamental analysis
Fundamental analysis refers to the foundations of the investment, i.e. their team, ambitions, strengths, etc. Getting an understanding of how fundamental analysis is done can help you make better investment decisions, separating the wheat from the chaff rather than chasing low-quality altcoins like most novice investors do.
3- The team
Third on the list of how to choose digital currency: the team. Researching and examining the team behind the digital currency is one of the most important factors that you can look into. Here are some important questions you can answer:
- Who is behind the digital currency?
- Do you trust their expertise?
- Are they ambitious?
- Do they have a proven track record of success?
A big part of cryptocurrency success is the underlying technology, so you need to understand what makes a cryptocurrency technology stand out from the crowd. Here is one of the most important reasons why Ethereum is now one of the best cryptocurrencies:
Smart Contracts: A form of technology that facilitates the exchange of anything of value.
Ethereum Virtual Machine (EVM) technology: which makes it easier for developers to build applications at a larger scale.
In other words, the main reason that has contributed to making Ethereum one of the largest cryptocurrencies in the world is its innovative technology.
5- The white paper
Every time a new digital currency is issued, a white paper is produced outlining its purpose, technology, and overall vision. It is important not to invest in a cryptocurrency before looking at its white paper, as it is one of the best factors that may help you assess its fundamentals. Here are some points to take into consideration:
- Does digital currency promise unrealistic things?
- Does the white paper suggest ambition?
- Are there misspellings?
You have to make sure that the digital currency can last for more than 5 years at least. An important, clear and long-term vision is a sign of ambition. You should only invest in a digital currency with a strong vision that pays off in the long run. While the short-term gains may be exciting, you still have to think about what the currency will hold in the next five, ten or twenty years. <ref>Easy Ways To Pick Which Cryptocurrency To Invest In, kingpassive.
What greatly controls the success of the digital currency is the leadership team, so you should take a look at it and what it has accomplished so far. You can also look at other cryptocurrencies that they have successfully managed, and whether they have any relevant experience.
Have you ever heard the saying, “The best predictor of future behavior is past behavior?” Of course, this is not always the case, especially with cryptocurrencies, but looking at the history of digital currency may give you an idea of what might happen to it in the future. Here are some questions you can answer:
- Is it volatile in value?
- Did the currency behave flexibly in periods of market decline?
- Are they priced at the highest level of all time?
9- Credibility and reputation
If the digital currency has a bad reputation, it is not right to invest your money in it. You need strong credibility and confidence to ensure your success in this field. Keep track of what people are saying about the cryptocurrency you intend to invest in by doing some searches on Google or in the cryptocurrency communities we mentioned earlier.
Before you decide which digital currency to invest in, you should look for a currency with a solid roadmap and accurate development plans. Here are some things to watch out for:
Whether there are clear timelines for the development of the coin
When do they plan to release major updates
Whether the coin has a limited number of coins in circulation
You should look at the guide on how to choose a digital currency as a reference list to return to whenever a digital currency appears that you want to invest in. While there are certainly no “safe bets” in the cryptocurrency world, this guide may help you choose a solid investment with strong fundamentals.
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