How to choose the right cryptocurrency before investing? Investing in cryptocurrencies can certainly be positive and interesting, but it is often stressful, especially for those who are not familiar with the basics of trading in the cryptocurrency market, which is a high-risk, high-volatility market.
In addition to well-known cryptocurrencies such as Bitcoin and Ethereum, there are countless new digital currencies that appear all the time. Currently, the number exceeds 19 thousand currencies. With this large number, it is difficult to choose the appropriate currency in order to achieve the largest possible profit.
Now here are the most important basic things to monitor before any investment
First: Check the currency position
It is known that creating a website has become relatively easy, and any company, website, or serious project will have a professional website that reflects the goals of the project. Therefore, some necessary basics must be available in websites, including the following:
1 - Design: The website design must be professional and consistent, with specific sections and containing the white paper for the project, names of the work team, and some of their links.
2 - Company information: You must find on the site information about the company, its address, its headquarters, its licenses, and so on. One of the important things is to look for the age of the company and how long it has been operating. Do not be satisfied with what you find on the company’s page, as you may find that it indicates years of work and it has not yet been completed. Its first month, and there are sites to verify this, such as https://www.scamadviser.com/ Also, sites that do not have social media links can be said to be unreliable.
3 - Protection: One of the important things that must be available on every cryptocurrency site is protection. If the company does not have effective protection, it is a fraud without a doubt. Stay away from it. A company that does not pay to protect its site cannot be trusted.
Second: The project’s white paper
The Cryptocurrency White Paper is one of the fundamentals and one of the most important tools for evaluating a cryptocurrency because it explains in detail the project objectives and stages. It is a document that defines the goals and strategies for using cryptocurrency. It is considered a road map for the cryptocurrency, and is always the first thing investors ask about, as it includes details about how the token will be distributed among investors in addition to supply limits. It also includes information regarding the release of new tokens as well as token burning.
Here we confirm that if you do not find the white paper on the site and review it and find that it contains a detailed explanation of the project, it is advised to stay away from the project, as it is not worth putting your money into.
Third: Monitoring social media
With the development of technology and the increasing importance of social media sites, any digital currency project must have social media sites, and to get a clear view of the cryptocurrency community, first visit its social media accounts. Most cryptocurrency projects will have Telegram, Twitter, Discord, and sometimes YouTube and Facebook channels.
Note the number of followers they have and whether there is interaction in the comment sections. Evaluate whether community moderators are answering questions, promoting news events, and actively participating in discussions. For example, if people are asking legitimate questions in their telegram or Discord channel and they are being ignored or not responded to, then you have to be careful or not invest in it.
You may sometimes find some social media sites where people are added without their consent and without their request, and you may find real views, so here you have to wonder about this matter, as it is mostly a bad indicator. You can do a general search through social media for mentions and discussions related to cryptocurrency. If a lot of people are talking positively about the cryptocurrency on social media, this may indicate that there will be buying pressure and investment interest. On the other hand, if the signs are mostly negative, it could be a warning sign.
Fourth: Currency project
Sometimes we find digital currencies without real projects. Look for coins that offer utility in the blockchain ecosystem. Is the currency project seeking to solve a problem within the network or improve its functionality? One notable example is Ethereum. Many smart contracts, NFT projects, and companies rely on their technology to survive, so they know that they must retain their value over time, so it is very important to know whether the currency project has an important benefit or not.
Here we point out some exceptions. For example, meme currencies, or what is known as shitcoin, are initially launched without a project, and if they succeed, they create real projects. Here we point out that this type of currency is very high risk.
Fifth: Analysis of the project team and partnerships
The team working in the field of cryptocurrencies is very important and the success of the cryptocurrency depends on its team members. Many reputable coins have project members who have participated in other successful coin launches. This helps create more trust within the community. You should be able to find the founders and key members in the project whitepaper and website. Research the team to determine their reputation and thought leadership in the blockchain ecosystem. A team with a previous history of successful projects is a great sign, while a team that is completely new to the cryptocurrency community may not have the experience needed to achieve their goals.
Here we emphasize that the work team must be well-known and have experience in the field of blockchain technology and cryptocurrencies, or at least in other fields related to the field of finance and business, such as running banks or large companies, and so on.
The issue of companies is considered one of the fundamental matters in the field of cryptocurrencies. If you find a group of partnerships and understandings with other successful projects, this is a good indicator. However, if you do not find any partnerships, be careful. The currency may be weak or not strong. We must also verify the validity of the partnerships. Big names may be used to attract investment, so you must verify the reality of these partnerships and the extent of their actual impact on the digital currency project.
Sixth: Auditing the currency contract
Here you should visit https://coinmarketcap.com/ to know some very important details, including the following:
· Circulating supply: for the currency, which is the quantity of pieces currently offered of the currency. The lower it is, the better the currency is and its price is higher.
· Maximum supply: It is the quantity of coins offered for circulation and not offered (that have not been mined + or stored). The greater the difference between them and the circulating supply, the greater the probability that the price of the currency will decrease in the future.
· Market value: It is the result of multiplying the circulating supply by the current price. The higher it is, the more stable the currency is and a suitable option for investment, so choose currencies with the highest market value to buy.
· Trading volume: Another indicator to monitor is the currency’s trading volume. This metric shows how much a cryptocurrency has traded over a specific time frame. High volume means a lot of investors are buying and selling, leading to more liquidity and price stability. An example of high volume is ETH, which, as of this writing, has a daily trading volume of more than $14 billion. In contrast, low volume indicates low investor confidence in price action and can lead to large price fluctuations and poor liquidity.
Summary: How do you choose a digital currency successfully?
The cryptocurrency market is dynamic and offers diverse opportunities for those wishing to delve into it. However, it is important to approach these opportunities with a clear understanding and cautious optimism. Consulting with financial experts can help align these new investment methods with your overall financial goals, ensuring you make the right decisions for you.
So always make sure to learn the basics of digital currency trading and learn to invest in digital currencies in order to ensure that you make wise and smart investment decisions in this volatile market.
Don't forget to visit the following link:
https://www.binance.com/en/markets/overview
