The world of cryptocurrency seems to be growing by leaps and bounds each and every day. It seems like entrepreneurs are seeing the potential of the digital coin, both in terms of investing in existing ones or minting their own for their projects. What that means for investors is that cryptocurrency is suddenly becoming as crowded as any asset class, with some that are bound to succeed in the market and others that are doomed to fall by the wayside.
As an investor, you obviously want to come out on the positive side of that equation. One way you can do that is by relying on a trusted trading program, such as Ethereum Code, to help you navigate this extremely complex investment class. Another way is to take a look at who is issuing these coins and subject them to the same kind of scrutiny you would for any other type of investment instrument. Here are some ways to tell the wheat from the chaff.
- What’s it all about
Many scam artist types are using digital coins as a way of bilking investors out of hard-earned money. One way you can avoid that trap is to investigate what the underlying company is trying to do. That should be explained in detail in a prospectus or a white paper. Make sure they have one, and then take the time to read through it carefully to see if the idea holds water.
- Who’s behind it
Again, there should be detailed information on a website or social media page about the people who are creating these coins. Ideally, they should have a long history of success in whatever industry they might be inhabited, or at least an impressive educational background that speaks well to their ability to do well in the fields of technology or finance, or both.
- What are they promising
As is the case with any sales pitch directed at you, you should be concerned if it sounds too good to be true. You should also be worried if the pitch is all about bringing you lots of money, rather than what the coins are designed to fund. Try to determine if the intentions of the coin are both noble and feasible.
- What’s the track record
Ideally, you can find a coin that has already done well with investors. In addition, you should be able to see that progress is being made by the company founders toward whatever their goals might be. You are definitely taking a chance if the coin is new, perhaps as part of an initial coin offering, so you might want to hedge your investments there with investments in more proven entities on the market.
Cryptocurrency definitely holds a lot of potential for investors, especially considering how much it has risen in value in such a short time. But you have to take the time and study the investment as a whole rather than jumping on board and hoping to ride the wave.