In the crypto world, there are two major types of coins: Bitcoin and Altcoins. Altcoins are the coins minted or published after Bitcoin, a pioneer in the cryptocurrency space. As of January 2022, there are over 16,500 cryptocurrencies. Every other day a new coin is likely to be introduced. These coins are lesser in value and easier to purchase, unlike bitcoin.
With cryptocurrency being a popular investment platform, many people are interested in staking their luck on these coins hoping that they make a fortune. While investment is a great thing to do, it is also wise to consider the options involved before putting your money into any altcoin. Here are five things you should consider before investing in any altcoin. However, what are altcoins? In short, any coin that is not Bitcoin.
It is the first thing anybody who wants to invest in altcoins should do. Take your time and find out all you can about the altcoin you have in mind. Settle down to read about it on platforms like Reddit and other reputable sites. For example, this is a site where dogecoin explained.
You can also find out what the professionals in the crypto space are saying about the coin. If you don’t seem to find ample information about the altcoin you’re after, then it’s advisable not to proceed. There are many scammer coins out there, and one of the ways you can identify them is the air of secrecy and the lack of vital information. If this is the case, it’s not wise to invest.
2. History Of Altcoin
Every coin you plan to invest in must have a clear history. For example, one of the reasons why Ethereum is trustworthy is because of the reputation it has garnered over the years, based on its history. History would always bring along with its credibility.
If the coin in question is still new and has little or no history that can vouch for its potency and stability, then it is safe that you wait. The truth is, the coin will prove itself with time. If you see continuity in its rise, you may decide based on that history to buy it. It’s all up to you after all. No matter what happens, look at the coin’s history since it usually repeats itself over and over again.
3. Altcoins And Uncertainty
Always remind yourself that to a certain degree, there is little or no certainty with altcoins. Many of them can be here today and gone tomorrow. At the moment, there are over a thousand altcoins seeking your attention. Before you buy any altcoin, you must be sure in your heart that you will be ready for the uncertainties that follow.
You can buy a coin now – it can either rise, fall, or stay stagnant. Sometimes, it could switch between different routines in movement. Some coins fall and never rise again. While it is true that things could look promising for some cryptocurrencies, it’s a general rule in crypto that things won’t always turn out in line with expectations.
4. Why Are You Investing?
It is a question to ask yourself as a prospective investor. What do you have in mind? Are you looking for a quick get-rich scheme, or do you have a long-term plan of waiting through?
If your position is the former, you should look for other means of investing your money. It is because most altcoins take time to gather momentum for a pump. You can’t use an altcoin to get rich quickly. People who buy altcoins must understand the psychology behind the business. It is a psychology of grit, patience, and waiting. If you do not have or cannot develop this kind of psyche, you should look away from investing in altcoins.
FOMO means the fear of missing out. A lot of people get drawn into this. While it’s true that projects like Bitcoin and Ethereum have created a great success story that a lot of altcoins try to ride upon, there is a dark side of failure and loss in the crypto business too. There have been coins that rose mightily and fell with similar momentum.
As of May 2021, it is recorded that 2047 coins have failed. Others have failed and are yet to be recorded. Some people must have bought those coins out of the fear of missing out (FOMO). You do not want to join that list. It is why you should never make decisions in crypto out of FOMO. Ensure you do your research and that you are not acting on the impulse of fear.
Before investing in anything, it’s wise to think first and consider if it’s worth it. With altcoins, it’s the same thing. Take time to consider everything and do your research. The tips above can help you get started. Don’t forget to take your time to make your decisions. It might just be the saver you need!