The most popular crypto asset in the world is Bitcoin, but it is not the only one. An estimated 5,098 other cryptos known as ‘altcoins’ also, want to follow suit after the success of bitcoin.
Altcoins have different projects, smart contracts, and technology. Some coins target a particular industry, like entertainment. Then there are digital assets that give people the ability to create their tokens and develop smart contracts.
Altcoins are now being compared to dot com era penny stocks. It is possible to see the return of the stars as the first recipient of a successful altcoin. Hence there is a lot of buzz around which coin to invest in.
Although top cryptos like Bitcoin, Ethereum, and Matic have managed to bring incredible returns of 20,000% over 6 years, there are more than 10,000 crypto assets on the list of less popular trades like Bitcoin and Ethereum. However, they have been able to offer better benefits compared to higher altcoins. Now, as an investor, one is always confused whether one should look for coins that have a small market and are riskier but can bring better profits, or whether one should buy popular altcoins like ETHER (Ethereum), XRP (Ripple), MATIC (Matic), etc.
If we have a sea of altcoins to choose from, it is important to have a checklist of points to consider before investing. We will now discuss the top things to consider before investing in altcoins.
All altcoins listed on the crypto exchange are backed up by a white paper that clearly states the purpose that a particular altcoin solves. You can look at the white paper as a blueprint.
Further, as an investor, you should read the white paper and understand the basic purpose of the coin. Since it is an important document, if one tends to recognize certain mistakes such as punctuation marks and grammatical errors, then that can be viewed as a red flag. One should also try and understand whether a coin solves the real purpose or not because there are ‘meme coins’ or coins that do not solve anything but have received a lot of attention from investors, for whatever reason. One has to be aware of this fact and invest carefully. Now that we know what a whitepaper is, let’s look at the second aspect
One has to understand the basic technologies of altcoin and how it distinguishes itself from its competitors. In addition to obtaining technical information, one should look for new technologies that will add value to the industry.
If you are looking at the price of Polkadot you should look beyond the amount of money and see what new technologies it is based on.
For example, Cardano (ADA) is based on a proof of stake method that resolves previously addressed issues such as slower performance time, overuse of environmental impact. Similarly, Polkadot is based on technologies that integrate different blockchain technologies and combine different technologies into one.
Such unique technical proposals serve as an important factor in the growth of coin price and can be considered as a factor before making investment decisions. Now that we have understood blockchain technology, let’s look at the next aspect of investing decisions.
Founding Team Domain
As in the stock market, before buying a stock, we look for a promoter or company executive. Similarly, before buying altcoin, one should conduct a background check to find out more about the founder and the managing team of crypto assets.
Due to changes in blockchain technology, the management team needs to have a strong vision and backup support, so that they can make the necessary changes wherever necessary and the coin remains valuable compared to its competitors.
For any altcoin to be successful, it needs the support of sponsors who can disseminate information about new financial developments and maintain its consistency and popularity from time to time. Twitter, Facebook, Instagram, and Telegram are common social media platforms that need to be tested to see how powerful the altcoin community is.
Price History & Volume
As an investor, one should always look at the altcoin price chart and check altcoin price volatility. In addition, one should also check the trading volume in altcoin as that indicates the availability of cash.
Despite considering all of the above, there are situations in which the cryptocurrency you are trading or investing in is attacked by hackers from outside companies who fraudulently take your altcoin from your crypto wallet. In such cases, the investor needs to opt for a safe cryptocurrency exchange like ZebPay– India’s leading cryptocurrency exchange that ensures maximum security for all its investors.