No doubt, bitcoin is one of the most valuable cryptocurrencies among thousands and the number is still increasing. However, investing in bitcoin is the best option, many people look for bitcoin alternatives as well as other cryptocurrencies.
The value of crypto coins like bitcoin and its alternatives are already very high. Investing in these coins requires a lot of money. So, which are the next emerging cryptocurrencies that can give you significant returns in the future?
Choosing the right coins among the huge number of lists is a challenging task. It is quite different from stock selection in the share market. Therefore, read this article till the end to understand the factors to consider for choosing a crypto coin or token before investing.
Factors to Consider for Selecting a Crypto Coin
Selecting a crypto coin from a huge list of cryptocurrencies is truly difficult. According to the https://bitcoinfuture.app/, here are some important factors you need to look over before investing in any crypto coin.
How Useful the Coin is?
Unlike the stock of a company, you can’t assess crypto coins. The best way to assess a crypto coin is to check its utility. Check how useful the coin is in the real world. Whether it is solving any problem or does it have any real-world utility?
For example, crypto coins like Ethereum used for transactions, payments, smart contracts, etc. These utilities simplify the agreement and settlement between businesses. This allows a platform between two businesses to make financial transactions more effectively.
Therefore, measure the potential of a new coin by comparing it with other similar coins. How is it performing, what are the problems it is solving?
What is the Purpose of the Coin?
Check out the official website of the coin, you will find the purpose of the coin in the whitepaper. Generally the creators of the crypto coin mention the purpose of the coin in the whitepaper. Sometimes they are technical and hard to understand. If you don’t find the purpose then you can check their blog. Note, if you don’t find any information on its purpose or the site is full of only marketing stuff, then reject the coin.
Analyze its Competitors
Another important factor is to check its competitors. Where does it stand as compared to similar kinds of tokens or coins in the market? Remember while you consider its competitors, make sure to check the lifecycle of the coin too.
While checking the utility of the coin, you will figure its demand. In fact, a rise in demand ensures rise in its value. On the other hand, a high supply can reduce its price. However, a fixed supply is a good investment option in the crypto market. But ensure that the coin solves a real-world problem.
Market Cap and Founder’s Holding
It is crucial to check the market capitalization. Because market cap ensures liquidity, and liquid coin performs better.
Another important part is to check the total holdings of the coin by the founder. This increases your trust factor before investing. When the founder of a coin holds a large amount of the coin, then it is a good sign that they believe in their project.
Valuation gives you more clarity. A cheap coin does not mean that it is a good option for investment. There are other factors that must be considered while analyzing their valuation. When the price is higher than the number of users using it, then it is overpriced.
Hopefully, the above article helped to share some insight on the factors related to crypto coin selection. Understanding its purpose, utility, and demand helps you decide better. Additionally, checking price as well as market value gives you a clear picture of crypto coin selection.