First of all, the cryptocurrency market is a young, still fairly unregulated and volatile market. Most, if not all, start-up projects are in alpha state. Many come and many will have to go again.
Before you investing in cryptocurrencies:
- You have to be aware that in the worst case you can lose everything. So invest only as much as you can cope with existentially and emotionally. It makes sense to start with smaller amounts first, so that you get a feel for trading and creating cryptocurrencies.
- If you can keep your nerves trading, then your invested sum will be right. Sure, no one likes to lose money “for nothing”, even if it’s only five euros, but the crypto currency market is “still miniature” in terms of market size and thus sensitive to change, which is also the reason for the currently high volatility. If prices rise or fall sharply you should not be impressed. Many tend to buy at high prices because they still want to get something. This phenomenon is normal and even has a name: FOMO (fear of missing out), in German: afraid to miss something. Understandable, because the upward curve signals something positive and, of course, profit. Just as there can be FOMO on rising coins, there can also be FOMO on coins, that suddenly fall in value. Panic selling. Quickly get rid of this “Mistding” before the loss gets even bigger! In both cases it is usually already too late. You have bought too expensive or sold too cheaply or even at a loss. Everything that falls normally rises again and everything that rises, falls at the very time. You have to be able to sit out. Usually bought when there is a “bloodbath”, so the Altcoins write red numbers. See it as a sale. But before that: Be up to date on your coins. Thus we come to the next point: Everything that falls normally rises again and everything that rises, falls at the very time. You have to be able to sit out. Usually bought when there is a “bloodbath”, so the Altcoins write red numbers. See it as a sale. But before that: Be up to date on your coins. Thus we come to the next point: Everything that falls normally rises again and everything that rises, falls at the very time. You have to be able to sit out. Usually bought when there is a “bloodbath”, so the Altcoins write red numbers. See it as a sale. But before that: Be up to date on your coins. Thus we come to the next point:
- Information is the be-all and end-all. You have to inform yourself in advance about the cryptocurrency in which you want to invest. Take special care with ICOs! So far, nothing is regulated, ie no one can be held accountable for any promises. There are more and more “wolves in sheep’s clothing” who still want to take advantage of the hour to become millionaires within seconds. Keep your investment when you realize that the company keeps what it promises, when there is a large community behind the company when it comes to the project …
- Be extremely careful on “pump and dump” issues, especially as a beginner. The true winners are less the crowd that participates.
- You will have to read a lot in English, but there is still the need for Google Translate or online dictionaries like Pons.
- Most cryptos have a startup behind it. Keep in mind that 90 percent, it is said, will be doomed to failure.
- As in real life: the first impression counts! Go to Coinmarketcap , where all cryptocurrencies are listed. Perhaps the first feature you should pay attention to is the name. If this sounds like a wild beast block, it may be advisable to keep your hands off it.
- It is better to first look at the top 30 in the ranking . Many of them, such as Bitcoin (BTC), Litecoin (LTC), Dash and Ethereum (ETH), have been able to hold their own for a relatively long time. They are almost among the “original coins” that have performed reliably. But that’s just a suggestion!
- What is the total amount of “max supply” on the market? Circulating supply, as the name implies, is already tradable on the market. Max supply is the limit. For bitcoins, for example, that’s 21,000,000. More will not be gemined. The higher the total amount, the longer it takes to add value. Very attractive are coins with a total of less than 25,000,000 (orientative – anyone can decide for themselves). Normal are between 25,000,000 and 120,000,000. And all that over 120,000,000 is rather unattractive from the point of view of the crowd. BUT: Maybe the cryptocurrency is about to explode with other qualities? Then longevity pays off.
- Project : What kind of project is it about? Is this communicated understandably? Are there similar projects? But above all: what problem should be solved with this project? Which unique selling point does it have? Is this a common and serious problem? Could it be successful or is it absurd or risky?
- Look at the developer team behind the project! Are they experts? Can this experience prove? How big is the team? Bigger teams can bring more and take away. Are there publicly known faces underneath? Do they publicly advertise on social networks like Reddit, Slack, Facebook, Twitter and bitcointalk and are open and dedicated to their community?
- Look at the roadmap or action plan. Is this promising? Is this complied with?
- If there was an initial coin offering (ICO) , a kind of crowdfunding, how did it go? How much has come together? Is the target total reasonable or was it set higher than the project is actually worth? How is the credit split? If an address holds more than half of the total then it is better to keep your hands off it. Who has invested – experts, well-known names?
- Exchanges: on which larger Exchange or Cryptocurrency Exchange is the Token / Coin traded? Enjoy a good reputation: Kraken , Bittrex and Coinbase . Poloniex was one of them until recently, but users report more about bad experiences. In addition, Poloniex should demand in part from crypto candidates to 30 percent. This allows the Exchange to influence the price of the currency. You can raise prices to make it interesting. People buy (FOMO). And when the price is up, they sell again to take profits. But only by the way. Beware of Yobit, Liqui, Cryptopia, C-Cex and Novaexchange. Time will tell which good stays good and which bad stays bad.
- Community : How many members are there? How active are these? Do they contribute to solutions? Do you believe in the currency, or the project, even if the price falls once? How do you deal with each other? Beware of opinion-making bots! Fake Twitter accounts that follow more than followers are a sign of a social bots.
- Social networks: In which social networks is the start-up present? How does it interact with the users / followers / members? A must is the presence in Bitcointalk. Other pluses are: Reddit, Twitter, Telegram, Slack and YouTube.
- Website: What impression does the website make on you? Understandable? Multilingual? Content? White Paper? Performance of the entire team as well as the Socia Media Channels? Address?
This list is based on personal experiences and is certainly not definitive and will always be subject to change or update. Nonetheless, it’s enough for a first look.