Choosing a Cryptocurrency
Cryptocurrency investing rewards leaders, and punishes followers.
Playing a reactive game of investment whack-a-mole by jumping on every coin that’s skyrocketing is a great way to watch your portfolio wither away.
Remember, if the value is not rising it is falling, and being late to the party is far worse than not going at all.
How to Find a Good Investment
Don’t search for the hyped, search for the yet-to-be-hyped: those investments that deserve more attention than they’ve received so far.
Good investors think predictively.
We search for hidden gems and support them through their early stages of development, hoping that once they find their legs, we can share their success.
Here’s 13 questions you should ask yourself before investing in a specific cryptocurrency:
- Is there a real world problem that the company is trying to solve?
- Will their proposed solution drastically improve the way things are currently done?
- If the company was to solve this problem, would the solution be newsworthy, profitable and useful to society?
- Is a new class of currency (or token) actually needed for this solution?
- Does the company’s roadmap outline a sound strategy towards achieving their goal?
- Are the milestones listed on their roadmap realistic, and will they be newsworthy?
- Is the company currently on track with their roadmap, and do they have a good track record of meeting their milestones?
- Based on their past experience, do the team demonstrate the ability to achieve their roadmap?
- Is this company the one most likely, amongst its competitors, to succeed at creating a blockchain solution for the problem they’ve identified?
- Does the company have any pre-existing businesses, apps or products that you can review and, if so, are they any good?
- Is the currency undervalued? Is the market cap low? Is there room to grow?
- Are you satisfied that there are no foreseeable changes to society or technology that will alter the need for the company’s proposed solution?
- Do you believe this project will still exist in 5 years time?
If you cannot answer “yes” to each of these questions then you are thinking emotionally, not predictively, and emotion is the enemy of the astute investor.
You will find that answers to the above questions are readily available, provided that you are willing to do your homework. Here are 6 places that will help you find the information you need:
- The company website. Be sure to study their whitepaper, roadmap and team. If any of this information is missing, don’t invest.
- Competitors websites. Compare their whitepapers, roadmaps and teams. Which project is most likely to succeed?
- LinkedIn. Make sure the team has achieved what they say they have.
- Facebook. Search the project name in the search bar and review public perception on the offering. Sometimes the less you find the better, it can be a signal pointing towards a project that is under-hyped, but it can also mean their marketing is weak.
- Google. Search for anything that you can find on the company. Especially articles, news and interviews. Avoid rumours and pay attention instead to past statements from the team making promises of things to come. Have they missed deadlines? Have they developed any tangible product worth talking about?
- Ask their community. Join their Facebook Group, Telegram Chat or Discord Group and ask questions to fill any knowledge gaps.
Be Studious, Patient, and Disciplined
If you’ve done your research and you’re confident the project will succeed then you will have no real reason to panic when the price dips, which it inevitably will.
It’s normal for people to sell their stake, and they do so for any number of reasons. If you follow this guide, the most common reason will be that they haven’t done as much research as you.
Make informed decisions and trust them through your uncomfortable emotions. If you were confident enough to invest in the coin in the first place, and the company has done nothing to lose your trust, then leverage that confidence and invest additional amounts during the dips.
If you have an opportunity to invest at a price lower than your original investment, doing so will bring down your dollar cost average.
If you lose, and from time to time it may happen, then at least let it be from investing in a project that you know deserved your support.
You may slip up, we all have. At some point you will probably try something that you know isn’t smart. You’ll either take a big hit and learn quickly, or you’ll gain a small victory and try it again. When you’ve finally had enough of the big hits, you’ll reel in your compulsive behaviour and once more focus on predictive thinking.
It’s all fun and games until it’s not — and then it is again!
Investing is not a game — but by becoming a great investor you will grow to treat it like one.