In crypto, there are only two category of coins: Bitcoin and Altcoins. Altcoins are every other coins minted or issued after Bitcoin, a pioneer in the cryptocurrency space. As of March 2022, there were more than 18,000 different types of cryptocurrencies, for a total market capitalization (market cap) for all cryptocurrencies of $2 trillion. Every other day a new coin is likely to be introduced. These coins are lesser in value and easier to purchase, unlike bitcoin itself.
With cryptocurrency being a well known generally accepted investment platform, lots of people are interested in staking their luck on these coins with hope that they make a fortune off it. While investment is a great thing to do, it is also wise to consider the options involved before investing your money into any altcoin.
Below are 5 things to consider before investing in altcoin:
Research is the first approach whomever wants to invest in altcoins should do. Take some time to investigate all you can about the altcoin you intended to invest on. Check online platforms like Reddit and other reputable sites to learn more about the coin. For example, this is a site where dogecoin is explained.
You can also consult professionals in the crypto space and seek their opinions about the coin. But if you don’t seem to be getting enough information about the altcoin you want to invest on, then I’d recommend to let go the coin and not to proceed. There are lots of scam coins out there, and one of the ways you can identify them is the air of secrecy and enough concrete information on the coin.
2. History Of Altcoin
Each and Every coin you plan to invest in must have a clear and legit history. For example, the main reasons why Ethereum (ETH) is trustworthy is because of the reputation it has garnered over the years, based on its history. History would always bring along with its credibility.
If the coin in question is still new and has little or no history that can vouch for its potential and stability, then it is not safe nor wise to invest. The bitter truth is, the coin will prove itself with time. If you see progress in its rise with time, then you may decide based on that history to buy it. It’s all up to you after all. No matter what happens, check on the coin’s history since it usually repeats itself over and over again.
3. Altcoins And Unpredictability
Always have it your mind that to a certain degree, altcoins are not perfectly predictable . Many of them can be uptrend today and downtrend tomorrow. Currently, there are over a thousand altcoins seeking your attention. Before you buy any altcoin, you must be sure in your heart that you will be ready for the uncertainties that follow.
You can buy a coin now – it can either rise, fall, or stay stagnant. Sometimes, it could switch between different routines in movement. Some coins can fall and never rise again. While it is true that things could look promising for some cryptocurrencies, it’s a general rule in crypto that things won’t always turn out in line with expectations.
4. For What Reason Are You Investing?
This is a good question to ask yourself as a prospective investor. What do you have in mind? Are you looking for a quick get-rich scheme, or do you have a long-term plan of waiting through?
If your position is the former, you should look for other means of investing your money. It is because most altcoins take time to gather momentum for a pump. You can’t use an altcoin as your get rich quickly scheme. People who buy altcoins must understand the psychology behind the business. It is a psychology of bravery, patience, and lots of waiting. If you do not have or cannot develop this kind of psyche, you should look away from investing in altcoins and find other investment schemes.
5. Fear Of Missing Out. (FOMO)
Lots of people easily get drawn into this. While it’s true that projects like Bitcoin and Ethereum have created a great success story that a lot of altcoins try to ride upon, there is a dark side of failure and loss in the crypto business too. There have been coins that rose mightily and fell with similar momentum.
As of May 2021, it is recorded that 2047 coins have failed. Others have failed and are yet to be recorded. Some people must have bought those coins out of the fear of missing out (FOMO). You do not want to join that list. It is why you should never make decisions in crypto out of FOMO. Ensure you do your research and that you are not acting on the impulse of fear.
Before investing in anything, it’s wise to think it through first and consider if it’s worth it. With altcoins, it’s the same thing. Take time to consider everything and do some personal research. The tips above can help you get started. Don’t forget to take your time in making your decisions. It might just be the saver you need!