Anytime you are planning on investing in a new form of cryptocurrency, there are four important questions that you need to ask yourself:
- Does the purpose of the company that is behind the currency make sense to me?
- Do I want to support the company that is behind the currency?
- Do I think other people will want to support the company that is behind the currency?
- Are there any perks to investing in this specific cryptocurrency?
Every form of cryptocurrency has its own unique flavor, by which I mean that every alt-coin has something about it that is special and unique. Many businesses have begun creating and using their own forms of cryptocurrency to help support investments into their growth and success. When dealing with these specific types of alt-coins, the company that’s behind them can be as important as the currency itself.
Top Question To Ask Before Trading Cryptocurrency
Let’s take a deeper look into the four questions for more details.
1. Does the purpose of the company that is behind the currency make sense to me?
At this point it is important to do your research and learn everything you can about the company that is offering this alt-coin. By trading in this specific alt-coin, you will actually be investing in the company. Because of this, it’s important to know exactly who you’re investing in and what the company is all about. You should be able to look at their website and locate in less than one minute all of the information necessary to determine who the company is, what their goals are, and how to become a part of it. If you can’t find that info easily, it may just mean that their online presence is poorly developed. However, it could also mean that they aren’t legitimate and you may not want to become involved with them.
Now that you know everything you need to about the company, you need to learn about the technology used in the alt-coins themselves. You don’t necessarily need to be a technological savant, but you will need to understand the basics of how cryptocurrencies work in order to do this. What does their blockchain consist of? What is the value of this alt-coin when compared to 1 Bitcoin? How easy is it to get one? It’s also important to figure out what the community surrounding the coin is like, because you what to make sure it is adequately decentralized.
If you can easily explain to someone else what the company is all about and what they stand for, you’re good to go on this step.
2. Do I want to support the company that is behind the currency?
If you don’t feel like you can really get behind the company and what their all about, then it might not be the best choice for you to invest in it. Whether it’s something you just don’t find interesting or it’s something you don’t believe has a good chance of success, both are a good indicator that you won’t make the best investment decisions when working with them.
On the other hand, if you can see yourself getting passionate about what they do, or at least see it as a clear improvement over the alternative, then it makes sense to invest in their success. The more you believe in what the company is doing, the more likely you are to make smart choices and you can trust yourself ot make the right decisions when investing in their cryptocurrency.
3. Do I think other people will want to support the company that is behind the currency?
This can often be hard for us to admit to ourselves, but just because we really like something doesn’t always mean that other people will. Unfortunately, when you are investing in a company’s future you need to know that you won’t be their only fan. If there is only a small group of people interested in the what the company stands for and hopes to achieve, it may not be enough for them to actually achieve success.
It’s important for you to look at the company objectively and determine whether they truly have an offer that will appeal to their target market. If they don’t solve the right problems for the right people, they’re not likely to come out on top.
If you can see a good number of other people getting excited about what the company offers for the same reasons that you are, then you may be on track with something that is worth your time and investment.
4. Are there any perks to investing in this specific cryptocurrency?
This question has less to do with the company offering the cryptocurrency and more to do with how they ar offering it. Many companies will want to incentivize use of their specific alt-coins by including perks for purchasing them or advantages in the market. You need to determine if there is something about using the coin itself that is better for you than using other types of alt-coins.
Some alt-coins offer launch specials when they are first released, or bonuses to trade values when trading between specific types of cryptocurrency. Others offer incentives for being a part of their community, such as interest that accumulates based on how many of the alt-coins you have in your wallet. Not all communities offer any sort of incentive at all, so researching what may or may not be on offer can help you to decide if the investment will be beneficial for you.
Final Cryptocurrency Investing Advice
No matter which company’s cryptocurrency you’re looking to invest in, it’s important that you have answered all four of these questions before you make your decision. You should only move forward if you can firmly answer “Yes” to each question.
For many forms of alt-coin, the only thing most people worry about is the monetary value of the coin itself and the tech or coding that it runs off of. However, it’s important to remember that many of these alt-coins are investment tools for specific companies, and as such, the success or failure of the company is closely tied in with the value of the cryptocurrency itself.