3 Things to Consider Before Picking an Altcoin

3 Things to Consider Before Picking an Altcoin

Apr 26, 2022, 9:15:27 AM Business

Those who succeed with crypto in the long term are those who understand that there are more than two or three players in the game. They also understand that smaller coins are often those with the most potential.

If you want to become one of these successful traders, we would suggest that you start looking at lesser-known altcoins. Finding good coins can be a challenge, however, and some altcoins are little more than a joke, so there are things you'll need to look for before you choose one. Let's take a look at a few things you should consider when picking an altcoin.

Does it Have Intrinsic Value?

Not all coins have intrinsic value. Some will say the same thing about fiat currencies, but they are still backed by their economies. Coins don’t necessarily need to have intrinsic value, and Bitcoin is a prime example of this, but choosing a coin with an underlying value ensures that there will always be a baseline demand for it.

Coins like Ether, for instance, are far more than speculative. The value of Either lies in the fact that developers need it to power applications on the massive and very reliable Ethereum blockchain. So, as long as developers want to use the Ethereum platform, there will be demand for Ether.

The issue, however, is that Ether has been seriously impacted by speculation. But many similar coins still have space to grow, like Solana or Polkadot, for instance, so, if this category of coins interests you, you could always give those two a closer look.

Is This a Serious Coin?

There are a variety of meme coins out there, and you should think twice before investing in them. They could sometimes be a good choice if you can gauge market sentiment and see that a coin is gaining traction, but, besides that, they aren't a good option as long-term investments.

If you absolutely want to trade meme coins, you have to at least have some background information about them and don’t just trade on hype. If you want to know which meme coins are worth considering and to gather some information on meme coins in general, Cryptoext has a useful article on the subject you should check. You’ll learn the real value of meme coins and whether you should consider them as an option.

Do You Even Understand the Type of Coin You're Buying?

There are many different types of coins out there, and not all of them will make sense to you as an investor. For instance, there's no point in you investing in stable coins if you want to speculate. This is because these coins are only there to give traders a crypto asset that is easily tradeable across exchanges without the volatility that comes with the average cryptocurrency.

This is why you need to know if you're buying a transactional coin, a utility coin, a privacy coin, or a purely speculative coin. You should also read the white paper for any coin you are thinking of buying, know the people behind the coin and their reputation, and make sure that the coin has a real usage case that you can understand.

These are some of the things you’ll have to pay special attention to when looking at altcoins. This will allow you to avoid coins that don’t have a chance and find hidden coins with potential.

Published by Toma Bonev

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