There are many cryptocurrencies out there, but which one should you put your money in? Bitcoin? Ethereum? Nahhh... I don't have those coins, but I'm not here to bash cryptocurrencies or explain why I don't own them. I'm here to give a guide for newbies on how to find the right cryptocurrency that will not give them a shock when high volatility starts to change things.
Disclaimer: I am not a cryptocurrency expert, and the information provided here should not be considered as financial advice. Everything written in this guide is based on my personal observations and experiences. Cryptocurrency investments carry inherent risks, and it is important to conduct thorough research and consult with professionals before making any financial decisions. The market is highly volatile, and past performance does not guarantee future results. Please use this guide for informational purposes only and make your own judgment when it comes to investing in cryptocurrencies.
You see, when I first started in crypto, nobody told me about these things. No one tried to give me a guide on how to pick the right currency. What I mostly read were topics promoting specific cryptos. I might mention some currencies here, but only because I need to use them as an example.
What are the factors that make a crypto good?
Supporters
The crypto must have a lot of genuine supporters. By supporters, I mean believers in the purpose of that currency, not just those who are there to make a lot of money out of it. If a crypto has many supporters, it is easier to trust it. Don't go for a cryptocurrency that begs for support on social media. Look for cryptocurrencies that average people are talking about.
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Projects
What projects are associated with these cryptocurrencies? Many cryptocurrencies present whitepapers that an average person can't even understand. They talk about lots of things for the future and blah blah blah, which don't even make sense to you. Find a crypto with existing projects associated with it. Projects keep this crypto running, and vice versa.
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What kind of projects am I talking about? Platforms that are used and supported by many users, platforms where people benefit and grow, not just in terms of money.
Ways To Earn From It
Don't pick a crypto that only promises future growth by just holding the currency. I find these ideas dumb. What assurance do we have that these cryptos will grow in value over time? And how long should you wait?
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Find a cryptocurrency that can be staked, has liquidity pools, or projects that you can join, or can be used to earn more crypto. We all know that crypto is very volatile. If your crypto doesn't have anything that can at least help you recover what you've lost during dips, then I don't think it's a good crypto.
To give you an example, let's say last October 2022, I had 380+ units of crypto A, which had a total value of $213. Then the bear market came. Even though I did not add any additional money from my wallet into crypto since that day, I now have over 800 units of that crypto, and the value is now $273. Within 9 months, even though the crypto market is constantly crashing, my money is still growing. That is a 28% yield in 9 months.
Purpose
Don't depend on their whitepaper to determine their purpose. If they claim to have a purpose, they should have existing projects that have a real effect on people NOW, not just in the near future or tomorrow. If they can't address today's issues, they're just like politicians who make empty promises.
Photo by Ian Schneider on Unsplash
Liquidity
If a crypto is hard to convert to cash and requires multiple conversions before turning it into real-world money, don't bother with it. The only exception I can think of is GameFi tokens, which are not really hard to convert. Some of them can be converted to money through peer-to-peer transactions, especially if the game is popular.
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Transaction Fees
Don't pick a crypto that has high transaction fees. There are many cryptocurrencies out there with low transaction fees, and we should not support cryptocurrencies with high transaction fees, no matter how popular the crypto is.
These are all what I think is important in finding a crypto. Don't spend too much time analyzing things like who the developers are or what real-time companies they are partnered with, because that will just bust your brain and you still wouldn't understand. Most of us are just average people, and what we mostly understand are things that are relatable. Make a sound judgment by using your logic based on existing results, not on technical explanations that might only happen if things work out right.
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