It is easy to have a keyhole perspective where cryptocurrencies are concerned, simply because there is so much information on crypto and Fintech out there. This article suggests that you will only be successful in this sector if you have done a great deal of market analysis. You need to know in as much detail as possible the inner workings and blockchain tech that each crypto uses and facilitates access to.
Understand blockchain
The basis of all crypto is the blockchain technology that allows all transactions to be recorded, stored, and shared with those on the blockchain. It has also become a means of storing information, crypto records, and non-fungible tokens. You will have no chance of legitimately making the right type of choices or decisions unless you know and understand the blockchain tech that supports the various currencies out there. Also, learning about how to invest in cryptocurrency without understanding the technology that underpins such transactions is not wise.
Know what the cryptos each offer
The next step is to be able to read and research all the guides and how-to articles in the crypto that you have an interest in. A great example of an introductory guide for Cosmos crypto can be found at https://www.okx.com/learn/what-is-cosmos. It may also be worth doing a comparison between the cryptos that are top of your list using the points that are raised in a guide such as the aforenoted. Related to this is the fact that you should also have a clear idea as to what you intend to do with the crypto you’re planning to buy.
Know who the personalities behind the currency are
Crypto is a very subjective currency market and the volatility of cryptocurrencies has been linked to the approach taken by the founder or originators and developers of the specific currency. Before you are ready to make any decisions, you need to read and research who it is that created and is marketing, or will benefit from your purchase of crypto. Recently published crypto books would argue that the collapse of FTX/Binance was directly related to the loose and fast manner in which the founders/developers used and regarded their investments and those who had spent money on Binance. The system works, just look at Bitcoin and Ethereum, but oftentimes, it is the direction taken by the founders of the currency that leaves it in the doldrums.
Research how active the currency is
You will need to monitor online sites and crypto-related forums to see how active the currency is. In terms of adoption, it is always going to be the number of people who buy in and use the crypto that will provide it legitimacy. Is the currency that you’re interested in, active online? Do your friends and family know about it? Does it have a social media forum or site and is there ongoing online chatter around the currency? All these will be signs of activity that you want to see and prove before you buy into any crypto.
Cryptocurrency should be viewed no differently from traditional finance and the reading and research that you would do before making any investments should be the same starting point for any crypto investment.