How to Analyze Cryptocurrencies to Invest in or Accept Payment With

How to Analyze Cryptocurrencies to Invest in or Accept Payment With

Author: Aaron Cole

Cryptocurrency has been gaining a lot more traction recently as we have seen astonishing highs from Bitcoin, Ethereum and even the meme coin Dogecoin. 

While many freelancers and investors alike continue to rush into these crypto currencies to avoid the fear of missing out (FOMO), many are skipping crucial steps that allow them to make sound decisions when investing into the more high risk altcoins

To make the best choice for deciding on what cryptocurrency to accept as payment or invest into here are 3 methods you can use to research cryptocurrency.

Carefully going through the token’s white paper

During the crypto research process the most important is to check the white paper of the cryptocurrency you are looking to invest into.The white paper is essentially like the course syllabus that you get in your university classes that tell you everything that is going on. 

White papers reveal details about the cryptocurrency that you need to know ranging from: the security, whether it is proof of work (PoW) or proof of stake (PoS), token distribution, tokenomics, the code, what block chains it’s built on and/or interoperable with. 

The whitepaper most importantly tells you as the investor what problem is the cryptocurrency looking to solve, whether or not it’s solving a problem is a key insight into the trustworthiness and validity of the coin. 

Is it a meme or a legit problem solver, this will be determined by checking out the white paper!

It essentially reveals all of the intricate technical details that investors would need to know before investing. So when in doubt, always check out the white paper for your favourite cryptocurrency. White papers are essentially the crypto guide book that will answer the majority of the questions you might have regarding any crypto.

So if you have any, make sure you refer to the whitepaper immediately! It will give you good insight into whether or not the project is legitimate or not.

Find out more about the team leaders

One of the first signs of a suspicious cryptocurrency asset is one that does not include information about the team leaders or even leaves very vague information about the team leaders.

Legitimate projects do not feel the need to hide their faces from the public eye in fact the want to be as transparent as possible about who they are in order to build more trust among their potential investors

Suspicious projects will often either not leave any information about the team leaders, or will leave unverifiable information about the leaders. Keep an eye out for this and make sure to verify leaders through reports, news, social media and especially LinkedIn.

Determine the probability of any legal issues

Legal issues can place a huge damper on the success of a project, in more recent years in order to help combat issues with ICOs (Initial Coin Offerings) regulators across the globe have taken initiative to get ahead of the curve of crypto regulation.

This is done in order to make sure money is not laundered or misused during these fundraising events for the various cryptocurrency projects.

Does the crypto have any structural flaws that could lead to problems down the road? Did they centralize their cryptocurrency and unknowingly sell unregistered securities?

While in recent history most legal cases get settled before making it to court, it’s still good to know what could potentially come down the pipeline so that you can make the best investment decision for your situation.

As a bonus observe the token sale process, was it a fair launch token sale meaning no coins were distributed ahead of time like bitcoin? Or is it a pre distributed coin launch where a certain amount is allocated for early investors, ICO launches (private sales) and teams. 

Both options have their pros and cons but this can be a key giveaway into the minds of the leaders and what their goals appear to be.

 

Research is a fundamental aspect of investing into cryptocurrency as there are 1000 ways to lose your money quite easily within this space. With the rise of meme coins better known as pump and dump coins it’s easy to get sucked into the hype and potentially lose money in the process.

If you want to avoid the pain of regret of losing your investment make sure to use these methods in order to maximize your opportunities in good quality investments.

Be smart, be prepared and happy investing Wi-lancers!


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