Since the Cryptocurrency “Bitcoin” value soared and many become millionaires, it’s almost like a fashion nowadays to invest in Cryptocurrency. But which cryptocurrency to invest in today is a puzzle. These “22 things to know before investing in Cryptocurrency” will help you understand the basics of cryptocurrencies. With proper research and guidance, a person can definitely know better cryptocurrency to invest in.

In this article, we will learn about the factors to consider while choosing which cryptocurrency to invest.

Cryptocurrencies are nothing but virtual money which are not governed by a regulatory body but they are a product of DeFi. (Decentralised Finance). They are based on blockchain technology which makes them very safe and secure. 

Not only that, this is considered the future of currency.  All the transactions are recorded in a public ledger with the help of blockchain technology. There is no intermediary gateway or tool required to send or receive the cryptocurrency. It means no third party has control over your money. 

Doesn’t it sound exciting, well it is. I am very fascinated by cryptocurrencies and I firmly believe this is the future of the currency. With the new technology coming on Web 3.0 is making it more reliable and trustworthy. 

1. Understand the basics of cryptocurrency

You understood the basics of cryptocurrency above it is not enough. If you are serious about investing in Cryptocurrency then you should know the basics completely. Learn about Decentralized finance, learn about blockchain technology in deep before investing. 

2. Consider your financial situation

Investing in cryptocurrency carries risk, and it’s important to consider your financial situation before investing any money. Don’t invest all the money you have. Only invest what you can afford to lose and avoid investing money you might need for basic needs like rent or bills. Consulting your financial advisor is always advisable before investing. 

3. Research the different types of cryptocurrencies

Every day new coins are getting launched and it is very confusing which to choose for investing in crypto. All the coins have unique features and characteristics. There are thousands of different cryptocurrencies available, each with its own unique features and characteristics. You should research the different types of cryptocurrencies to determine which ones align with your investment goals.

4. Look at the market capitalization

Market Capitalization is a very important factor once you start investing in Crypto. It refers to the total value of all coins in circulation. You should always look for cryptocurrencies with a high market capitalization, as it indicates that cryptocurrency is stable and established. 

5. Examine the trading volume

Trading volume refers to the amount of cryptocurrency that is traded daily. Bitcoin and Ethereum are all time highly traded. High trading volume can indicate that the cryptocurrency is popular and in demand, making it a very lucrative investment.

6. Consider the technology behind the cryptocurrency

The technology behind the cryptocurrency is essential and always to be considered, as it can impact its long-term viability. Technology is something that is the very base of any cryptocurrency. You should look for cryptocurrencies that are using advanced technology, like blockchain, to provide unique features and functionality.

7. Research the development team

The development team is the core of any decision-making regarding the coin futures and its technology. It is also responsible for maintaining and improving the technology. You should always research the development team to ensure that they are experienced and reputable and can take the company on a better path in time to come. 

8. Look for a cryptocurrency with a real-world use

If there is a real-life use of a cryptocurrency then these cryptos are likely to have more returns in the long term. There are many cryptocurrencies without a real-world use case, you should always avoid such cryptos. Real-life used cryptos are more likely to have long-term viability than those without. You should Look for cryptocurrencies that can be used to purchase goods and services or that provide other benefits to users.

9. Assess the level of adoption

The level of adoption is the number of people and businesses that have accepted or started using the cryptocurrency. You should always look for cryptocurrencies with a high level of adoption in the market. Never opt for such cryptos which have low adaptability. 

10. Evaluate the level of competition

Crypto market is highly competitive. More and more coins are getting introduced in the market thus bringing high competition in the market. You should always opt for unique selling points before investing in cryptocurrencies. Finding the key differentiator amongst the cryptos is a good way to pick the best cryptocurrency to invest today.  

11. Check for regulatory compliance

It’s like authenticating the legitimacy of a crypto. Most cryptocurrencies operate in a regulatory grey area, and any changes in regulations can impact their value. You should always keep an eye that the cryptocurrency complies with relevant regulations to avoid any legal issues. If you don’t inquire about this then you can put your money in such cryptocurrencies which are banned in your country. 

12. Look for cryptocurrencies with a strong community

A strong community can help support and promote a cryptocurrency. This helps cryptocurrencies to get increased adoption and demand. These communities are also a reliable source of information. You can find cryptocurrency community pages on Facebook, Twitter, or any other social platform. You should always consider those cryptocurrencies to invest in which has an engaged and active community. 

13. Consider the level of decentralization

Decentralization refers to the degree to which a cryptocurrency is controlled by a central authority or government. If a cryptocurrency is governed by any central authority then it defies its whole purpose because as we know Cryptocurrencies are DeFi Based investments.  Look for cryptocurrencies that are decentralized, as they are less vulnerable to external control or manipulation.

14. Check for security features

Despite being highly advance in security, Cryptocurrencies are subject to hacking and theft, and it’s an important aspect to consider in a cryptocurrency before investing. You should always look for cryptocurrencies that have advanced security measures, like two-factor authentication and cold storage for funds.

15. Assess the level of volatility

Volatility indicates the changes in the price of a particular cryptocurrency. If crypto has high volatility, it means prices are going up and down very fast. You should always evaluate the level of volatility of a cryptocurrency before investing. Never take extra risks as it is your hard-earned money. 

16. Research the historical performance. 

This is my favorite as I love to research. Researching crypto can give you valuable insight. You can learn from its historical performance and decide whether you should invest in this cryptocurrency or not.  This helps you select the right crypto to invest in. 

17. Consider the use of smart contracts

It is a technical advancement. Smart contracts mean that a contract is executed by itself if some conditions are met. It helps reduce manual activities from the operations of crypto. Those cryptos which use more smart contracts are good for investing. You should always look for cryptocurrencies that use smart contracts to provide unique functionality.

18. Research the level of interoperability

Interoperability refers to the ability of a cryptocurrency to work with other blockchains and cryptocurrencies. Crypto that can work with other cryptos will have more adaptation resulting in more demand.  You should invest in cryptocurrencies that are highly interoperable, as this can increase their potential use cases and demand.

19. Look for cryptocurrencies with a clear roadmap

A roadmap outlines the development plans and goals of a cryptocurrency. A crypto company whose roadmap is clear and planned has a more bright outlook. It helps to give transparency and communicate the company’s plans for the future. 

20. Research the level of censorship resistance

Censorship resistance is the ability of crypto to operate without being censored or controlled by external entities. If a cryptocurrency is controlled or censored by external authorities then it is no good.  

21. Consider the level of environmental impact

As you know cryptocurrencies are not mined and it requires a significant amount of energy and power which ultimately leads to a negative impact on our planet. If you come across a crypto that is planet friendly then you should keep it on your list. Research the level of governance

22. Evaluate the level of social impact

As with any other technology, Cryptocurrencies too can have a significant social impact, both positive and negative. Always  Evaluate the level of social impact before investing in cryptocurrencies. 

In conclusion, investing in cryptocurrency demands careful consideration of many aspects, including the technology behind the cryptocurrency, the level of adoption and competition, and the level of security and transparency.

 By evaluating these factors and doing thorough research, you can make an informed decision about whether cryptocurrency is the right investment for you. 

Disclaimer: We don’t encourage or promote any cryptocurrency. Investment in Cryptocurrencies is subject to market risk. Remember to only invest what you can afford to lose and consult with a financial advisor before making any investment decisions.