8 Things to Look Out for When Investing in Cryptocurrencies
Cryptocurrencies seem to be on the tip of many tongues these days. Many people do not know much about how to go about investing in digital driven cryptocurrency. Now Investing Haven has put together some tips for investing in the utility tokens.
- To really understand cryptocurrency as an investment, it is important to understand commodities. When people think of the tokens or different forms of cryptocurrencies, their mind may not immediately go to the world of commodities but there are a lot of similarities between the two. Like tokens, there are two uses for most commodities. There is a real world use they have and there is room to make money by investing in them. Gold is a good example. You can wear it as a necklace or you can invest in it. Cryptocurrency is very much the same. It can be used to make purchases and you can invest in it.
- More and more people are using and investing in cryptocurrencies. By some estimates, as many as 30% of millennials say they would prefer to make their investments in cryptocurrencies than in other things. Having said that, when you look a the different tokens such as Bitcoin, Ripple, Litecoin, Ethereum, and others, you will find there is a market cap of about $60 billion.
- Despite the fact that more people are using and investing in cryptocurrencies, the actual number of people doing this is exceedingly small. People who work in the field say that it is just starting and that they are working to build loyalty programs for people who start to make use of the different forms of this new kind of currency. It is worth noting that only 24% of American adults really understand what cryptocurrency is.
- Investors should look at usage. When it comes to investing in the different forms of cryptocurrency, usage should rule the day. These are not actual tokens that people can use but the number of transactions that use these kinds of currencies is on the rise. When you are looking to invest in one of these currencies, look at how much of it is available at the time you want to make your investment.
- Not all cryptocurrencies are not expected to survive. Experts compare this kind of currency to the overvalued companies from the dot.com period. Most people say that 80% of them will not be able to make it. This is for a lot of the same reason so many technology companies looked great until they didn’t anymore. There is a lot of hype around a lot of these tokens but that will not mean much in the long run.
- To succeed, cryptocurrencies need to be a solution to something. It is not enough for companies to think they can offer investors a good ROI. If that was the case, these would just be a new form of a Ponzi scheme. If they are going to be around for a while, there has to be some problem out there that they offer a solution for. That is the main thing all products need to do to be successful. Before the iPod came around, people did not see that they needed a way to listen to their music in a digital format, now most people listen to it that way. Before Netflix, people did not see the need to binge watch their television shows, now they do. To succeed, these currencies need to do something similar.
- There is a conversion of money for cryptocurrencies. It is crucial that people remember they can take their cryptocurrencies and get actual money back for them. The way this is done is still being hammered out in a lot of places but, unlike in the recent past, when you buy it, you can sell it for real money should you want to. This makes it less risky of an investment than it once was.
- Do not buy into the hype. It is important to do your due diligence before investing in these new currencies. There is good information out there if you look. Just as when you make investments in anything, you should get objective data to evaluate before spending any money.