Reddit User Lists 10 Critical Factors for Investing in Cryptocurrencies
From Elon Musk to Snoop Dog to Gene Simmons, cryptocurrency has taken the world by storm. But there’s always a huge risk that accompanies digital currencies and should be factored in before and while investing. A recent example is Bitcoin, the world’s oldest and largest crypto coins that plunged nearly 30 percent after the Chinese government’s crackdown on the trading of digital assets. Having said that, there are still a large number of investors who find the idea of investing in cryptocurrencies enticing but are unable to take the step forward due to a lack of knowledge.
And for them perhaps this post by a Reddit user (u/teoeo) may come in handy. The user, before listing 10 crucial factors, claimed that they been involved in digital currency investments since 2017 and, therefore, would like to share their two cents on how to go about it. The user stressed on choosing coins using a value-investing approach. Here are the 10 factors enumerated in the post:
1) The user emphasised that it was important to consider only those digital currencies that looked like traditional businesses. Furthermore, said would look at only those cryptos that have a “discrete product or service they provide”. Then said that while they were open to considering cryptos like Siacoin/ Storj/ Filecoin (decentralised storage), Golem/IExec (cloud computing), Theta (video streaming), Power Ledger/ WePower/ SunContract (decentralised energy marketplace), wouldn’t invest in Bitcoin, Nano, or other such currencies.
2) Once you have shortlisted a few potential cryptocurrencies to invest in, it’s time you excluded those that didn’t have a value-added proposition due to decentralisation. “Believe it or not, not everything needs to be decentralised. If I can’t answer why decentralisation adds value, then I throw out the coin,” the user wrote.
3) The third step involves finding if the digital currency has a working product or product in beta. The user said this step is critical, for anyone can say their product will do anything, but the proof is in the pudding. “If they have a working product, I test the product to see how it works.”
4) The next big factor to be considered before making any investments in digital currency involves ensuring your potential cryptocurrency has a method to maintain funding to the developers of the product/ service even if the price of the coin goes down. To clarify, the user said that solid projects usually have non-profit foundations with an ongoing revenue stream for developers. “This ensures the project will continue to mature/ grow even during a bear market.”
