How do you select the right cryptocurrency for your portfolio? What is the criteria that need to be met in order to be interesting for you?
To me a currency need to have the following checkmarks to become interesting:
Lets get into a little more detail on each if these points.
The first point deselects already more than 90% (if not more) of all Cryptocurrencies out there. Why is that point important. If you can choose between 2 equally strong currencies, one with and one without fees the answer is that you would go for the currency without fees.
No one likes Transaction Fees and preventing paying fees is one of the reasons people looking into crypto currencies. They want to have an alternative to the fees they need to pay in the regular monetary system, so any project that has no fees is right of the bet more interesting.
If you ever waited for a Transaction come through than you know that speed is another important factor many people look for. If you can't pay a coffee or send funds instantly than this will be a problem for many. So every project with fast transaction speed has an advantage over similar projects with slow transaction speed.
Does the project has any application that can be used by people to interact with, like for example an exchange, blogging platform, decentralised applications or smart contracts? When there is no application for people to use the currency with than how can it have value to them?
Knowing that your funds and personal data are save is one of the most important aspects for any user. This might be very well the most important point since no user would use a platform, no matter how fast, cheap and fancy if not secure.
How many people know about a particular blockchain project. Is it widely known, is there information about it out there, is it easy to find. Marketing might cover this point the best and is very important for value creation. I know a few projects that are great on many of the points listed but not many people know about it because of no or bad marketing. Similar to the 4th point (save), if just a few people know about a great project than the value will stay still low no matter how good developed all other points are.
Value is driven by all points mentioned above. If a project is widely know, save, fast, secure and useful to use by people it will have value and increase in value.
The point here is that you need to find good projects that look promising but haven't met all points fully yet. If you invest in these projects early you will certainly make a profit over the long run.
To me it is because it matches all the criteria I am looking for when investing longterm into a crypto currency.
I am very interested what you think about this post and if you either agree or disagree. Please let me know in the comments.
Thank you and all the best!
