How to: Pick the right cryptocurrency

Cryptocurrency is the future and that is a fact. It is a fact that a lot of people have agreed with, and decided to invest in. There are, however, around 9400 different cryptocurrencies to select from, and selecting the right coin can be a dilemma. This guide aims to help you pick the right coin to offer a strong return on investment.

Conducting your research is the most crucial thing to do before investing, and this article will discuss the most important topics to research before investing.

The first step in selecting the right cryptocurrency is verifying the community that supports it, the Web 3.0 space is very communal, so any currency that has a strong community behind it would most likely offer promise. The most important platforms to gauge a community’s strength are Twitter, Discord and Reddit. It's a good sign for a cryptocurrency community to have a thriving Reddit, which are usually highly helpful and eager to answer any inquiries. If you have doubts about any coin, visiting forums and checking out the Reddit community is a wonderful method to learn about the hype surrounding them and whether or not you should invest. We have seen examples of the benefits of a solid community in the Web 3.0 space with the Loot Collection on Opensea and the massive success the collection had.

The next thing to watch out for is the technology behind the coin and if the coin has any innovative ideas that it hopes to support. A good coin to invest in will have a unique problem that it hopes to solve. Bitcoin was a game-changing cryptocurrency that revolutionized the way people exchanged money, by eliminating the need for a bank or a central regulating authority.

In terms of technology, Ethereum and the groundbreaking moves it took in the area of decentralised finance are a fantastic example. Ethereum was the first coin to implement Smart Contracts, which help enable the exchange of anything of value, the coin serves as the fuel for decentralised finance by powering the majority of transactions on the blockchain network. Ethereum is also particularly developer-friendly, as it was created to make it simple for developers to integrate the blockchain into their apps. The Ethereum Virtual Machine technology also makes it simpler for developers to build larger-scale apps. All these innovations helped Ethereum rise to be the second-largest coin by market capitalisation, only behind Bitcoin.

You should also look into the cryptocurrency's white paper. The white paper is a document that discusses the project's objectives and technology. It includes data, graphs, and facts to persuade potential investors to buy the cryptocurrency. A white paper is one of the greatest places to assess a coin's fundamentals, and you should never invest until you've read their white paper.

The number of white papers you read will significantly boost your chances of identifying the winners. They can provide you with a wealth of information about their realistic plans, vision, supply and circulation, use cases, and so on. The most important questions a white paper should answer are:

• Is the white paper, in terms of its overall goals, ambitious?

• Is the cryptocurrency promising something too good to be true?

An example of an excellent white paper is Ethereum’s whitepaper.

Another thing to watch out for is the team behind the cryptocurrency, the founders, the developers and the overall organisation behind the cryptocurrency. You will have to check if they are verifiable individuals and they have a track record in the crypto space. The cryptocurrency should have a highly skilled and well-respected team behind it with extensive, relevant experience, excellent credibility, and a positive social media presence.

The final step is the tokenomics of the coin. Tokenomics refers to the factors that affect the demand and supply of a coin. The factors which might affect the price of the coin which you should look at are the distribution and allocation of the token, you should make sure that the tokens are distributed to prospective users. You should also verify the supply of the token, if the supply of the token in circulation keeps increasing, then the price would also keep increasing but this must be matched with its demand. Another important aspect of tokenomics is market capitalisation which is calculated by multiplying the current market price of a token with the circulating supply.

This guide should be used as a checklist to verify if a coin is stable enough to invest in and if the coin would allow an investor to recoup their investment. The non-negotiables that an investor should verify before investing are:

1. RESEARCH

2. COMMUNITY

3. INNOVATION

4. WHITE PAPER

5. THE TEAM

6. TOKENOMICS