If you’re like many investors, you first became aware of cryptocurrency after hearing reports of other investors making millions from it, which undoubtedly made you want to learn how to understand cryptocurrency to invest in a good one yourself.
In fact, many successful cryptocurrency investors reported doing their homework first and then using the research to turn their findings into actionable insights that helped them pick the right cryptos. Traders also consider a cold storage wallet as a safe storage for their cryptocurrencies.
That said, some things to look for in good crypto include:
Developers’ Talent, Source Code, and Consensus Mechanism
In short, cryptocurrency is developed by groups of miners whose job is to also add blocks of verified transactions to the blockchain and more.
Therefore, you need to analyze various factors concerning the developer pool, including the current availability of talent, their skills, and more, to ensure they are experts at what they do.
You need to also consider the source code of the cryptocurrency to ensure it is high quality, which is evident by the number of stars and commits, issues and resolutions, documentation, third-party audits, pull requests, and more.
Lastly, the consensus mechanism, which is simply proof of work, must be secure and efficient with little impact on the environment.
The Organization Behind the Crypto
Though cryptos are considered decentralized, sometimes they still have a small group of people or an organization behind them, such as founders, marketers, and more.
During your research, should you discover there is a team behind the crypto developers, be sure their credibility is solid, they have strong skills and experience, and check out their social media status to ensure it is positive.
The Crypto’s Social Status
Successful crypto typically has a large community of engaged, enthusiastic, and active fanatics. Therefore, you should also be sure to research its social status before investing in it.
Some places to learn people’s reactions to different cryptocurrencies, including Facebook, Discord, Twitter, LinkedIn, Telegram, and Reddit.
The History and Liquidity of the Crypto
Good crypto also has a strong history of high trading volumes and increased growth among its active users.
It should also appear on credible exchanges and in multiple trade pairs.
If you plan to convert the crypto to cash on demand, you should also be sure it has high liquidity.
The Crypto’s Economic Impact
Since cryptocurrency is a financial asset, it should generate some revenue for its community of platform builders.
In fact, the general notion of crypto is for the cost and speed of its transactions to be cheaper and faster than conventional transactions, so people prefer it as the way to receive and pay, thus providing a multi-trillion-dollar opportunity.
Once you have found good crypto to invest in, the next step is to research its price to buy at the right time, which a cryptocurrency price checker like the OKX app can help you do.
Or you can also use it to get an idea of which digital currencies are most popular, so you know where to begin your research for good crypto.
