Stepping into Cryptocurrency is a quick way to become a millionaire. That’s because we are at the inception of things and the investment channels are just so obvious. The digital coins are largely being accepted and their values quickly growing from cents to tens of dollars in short terms.
Cryptocurrencies can also be a quick way to waste money if care is not taken. The news of newly created Crypto millionaires is everywhere. This is arousing a huge excitement in many new investors who are seen throwing away their hard earned money into coin opportunities without proper research to ascertain their legitimacy and profitability.
Here are a few questions to help you escape the trap of burying money in cryptocurrencies that will never see any rise in value.
Related: Crypto Trading Ultimate Guide
1 – Does the coin seek to solve a specific problem?
Most coins are generic. The creators just want a payment unit that can be accepted by everyone online for financial transactions.
That’s the case of Bitcoin. Anyone can use it anywhere. But Bitcoin’s global acceptance and integration has made it the master. Its success makes other coins that follow suit to face really difficult times. That’s why there is a massive pump-and-dump in most of the Altcoins in the market today. Those coins don’t actually have any reason people should hold onto them.
They only hope on the community to grow and in some cases, they make fake promises to issue debit cards and other facilities that are never going to be a reality.
Some coins are industry-oriented. Such coins seek to provide a solution to a specific problem or simply, they are working towards moving a certain industry to blockchain.
Bitquence (BQX) for instance seeks to provide platform that solves a big problem in Cryptocurrency. Dealing with a bunch of wallets and different public/private keys is a big pain. That’s why I think BQX has a future as it seeks to solve this through its universal wallet.
InsureX (IXT) is bringing the Insurance/re-insurance industry to blockchain. And of course, there are many more.
These are industry centric Cryptocurrencies with a high long term profitability if their developers push the projects through the challenges.
2 – What’s backing the cryptocurrency?
I think it’s not enough to have a huge community of coin users. If there is nothing that keeps them, they will soon dump the coin for fiat currency or other digital coins as soon as the value grows to a reasonable profit.
Bitcoin for instance has a large community but that’s just an element. Here are some more reasons I think BTC is highly backed:
- Bitcoin is about 90% the coin used to buy other coins.
- Bitcoin is traded on almost all exchanges.
- Bitcoin can be bought with Credit/Debit cards
- Bitcoin can be converted into fiat currencies easily
- Bitcoin is largely integrated on platforms as payment method largely accepted by merchants
- Bitcoin is constantly growing in value
- Bitcoin Debit cards and ATMs are almost in every country
These are enough factors that back Bitcoin and I think anything that thinks it can stop Bitcoin is yet to surface.
Recently, I started looking at BitConnect. It’s a generic currency but with a strong backing. That explains the rapid growth.
NB: To know more about the backing and why this coin will constantly grow, read this post
What about Ethereum?
So I think for a cryptocurrency to really excel and be profitable in the long term, it has to be addressing a crucial issue with a strong backing factor.
Let me hear from you…
How many coins have you invested in? Do you think they will help solve a problem?
Kindly drop your comments