3 things to do before investing in any cryptocurrency
Have you been reading stories of people who invested in solana when it was just $1 and now it has done over 100% making them millionaires or You have some spare money and you have been thinking of investing in crypto currencies?
Well, I want you to know they didn’t just wake up one morning and decide to buy the coin. It’s not magic either,they did enough research before making a decision.
So before investing into any crypto here are 3 things to do;
• Read the white paper of the coin
A way to check out more information about a cryptocurrency is to read the white paper. A white paper is a document that explores the technology and purpose for the coin.
Reading the white paper of a coin would give you more information about it and influence your decision to purchase that coin.
You can find out why the project was started, the amount of money needed to be raised for the project and what it’s going to be used for.
The white paper is the first thing you should read before making a decision.
• Check the team behind the coin
When you find a good project to invest in. It’s advisable to go to their website and check out the team putting all this together. You would find their names, pictures and handles on social media.
Check them out and make sure they are reputable people. You can also do research on the projects they have been involved in the past.
It will let you know if they are capable of delivering the promises in the white paper.
If you find scam related news, there’s a 99% chance the project they are on now will be no different.
• Find out the problem the token is solving
This is another major checkpoint before you decide to buy a coin. Find out the major problem that the project is determined to solve. It will determine its value in the long run.
I will use Ethereum as a case study.
When it was launched in 2015 by Vitalik Buterin and Joe Lubrin. Ethereum’s focus was to leverage blockchain technology for diverse applications and not just to become another store of value like bitcoin.
The developers were able to build smart contracts and applications on the blockchain.
It’s one of the major factors that increase the value of ethereum from $10 to $400 between the space of 5 months in 2017 and it will keep increasing in value as there are more use cases for the project.
Just as Warren Buffet said “Never invest in something you don’t understand”. It’s important to do enough research before buying any coin.
Here are a few links to help you learn more about investment in cryptocurrencies.