Investment is one of the most reliable ways to grow your money and attain financial freedom. Growth over time, and the ability to outpace inflation, are some benefits of investment.
Over the years, people have put their resources into various types of investments such as stocks, bonds, and real estate. However, a form of investment that has caught people’s attention in recent years is cryptocurrency.
All investors would agree that before putting your money into any investment, you have to know how the market works.
Thousands of cryptocurrency projects have been created since 2009 when we had less than 100 projects. While some boomed, some went out without a trace. This, however, does not mean it is a bad venture. It is possible to invest in a cryptocurrency project and make good profits.
Let’s see, here are two important things you must know before you invest in any project
Research the Project Team
With an increasing level of scams in the world of cryptocurrency, you have to know those behind a project before committing your hard-earned money to it. Some of the questions you need to ask yourself are
a. What is their reputation?
Have they done other projects that succeeded before, or did they just appear in the market from nowhere?
Remember the squid game scam, a lot of people lost their money through the “scam coin,” and the perpetrators got away with it.
b. Do they have Blockchain experience?
If they have no industry experience, then that might be a red flag. This may appear to be harsh, but it is the reality.
Project Use Case
Most cryptocurrencies thrive on hype, but you should also be conscious of the usefulness of the project in the real world. What is the likelihood of others buying into their idea, as well as the possibility for profit?
Consider if the project is long-term or short-term, and how the project team intends to keep the coin’s worth.
How Do You Find This Information?
Well, the simple answer; is the “project white paper.” You can use the project white paper to fact-check before you commit your money into any cryptocurrency project- you have to understand the project’s aim.
This is what determines if a project will boom or be gone in a jiffy. The white paper might be long and boring, but it is definitely better than being scammed.
Investing’s Golden Rule
After reading the white paper, determine whether the crypto project is generally strong. If you believe it is, you’re good to go.
Finally, remember not to invest more than you can afford to lose. Isn’t it a cliché? You may be sick of hearing it, but it is still the golden rule of investing. Whatever the strength of a cryptocurrency project appears to be, only invest what you can afford to lose.