So I have gotten many questions about tips on investing in cryptocurrencies or blockchain projects, since I the launch of the website “TheBitcoinMan.com“.
Here below is a simple article I’ve put together, outlining the four questions I always ask myself before investing in any crypto. The above illustration “The Bitcoin Man Slaying The Giant Bear” was produced to accompany this article because of the many scam-coins and shit-coins out there, that give cryptocurrencies a bad name, possibly even the reason for a bear market; and the bitcoin man wields the ‘Blade of Bitcoin’ a.k.a. the slayer of shitcoins.
To start off, I have to disclaim that “I am NOT a financial advisor, and none of this advice should be taken without speaking to a qualified professional first. Also, my results (are most likely) due to pure luck and zero skill.”
Ask Yourself These 5 Questions Before Investing in Any Cryptocurrency
Question 1: Do I understand the tech?
During this stage of research I’m trying to find out everything I can about the company in which I’ll be investing. I start at their website. I want to know in under 30 seconds who they are, what they plan to accomplish, and how I can get involved.
If you can put into one sentence who the company is and what they aim to accomplish, you’re ready to move on to step two.
Question 2: Whom are the founders, the core-team?
It is important to look into the background of the founding team, their career history, entrepreneur journey, etc. If the chief executive officer (CEO) has a illustrious entrepreneur journey, even if failed startups, it still counts as lessons learnt; if the chief technology officer (CTO) has a good background and education in technology; if the chief marketing office (CMO) is well-marketed himself already, for example, if he/she already has good following across social media platforms at least, etc… These are important factors that will contribute to the success of the company.
Question 3: Would I use the tech/company myself?
This one has often been the deal-breaker for me. If I can’t say with certainty that I’d personally use the tech or company, I believe I have no right to invest in it. For me, being involved in the company community helps further my understanding of the tech, and that makes my investments feel personal. If you have a personal interest in the company or tech, you’re more likely to make smart investment decisions.
Question 4: Do I see other people using this tech/company in 3 years?
Perhaps you answered question 3 with an emphatic “YES,” but you’re an obsessive geek like me. In the case that you’re a part of a tiny percentage of people who plan on using the tech or company in question, maybe you should reconsider your investment. If you expect to turn a profit on your investment, you had better not be the only user.
Question 5: Do I have any type of advantage investing in this token?
This one is the icing on the cake. Who or what do you know that will give you a leg up by investing in the token you’re considering? Some tokens offer an incentive during their initial coin offering (or “token launch”).
Some tokens also do giveaway tokens, just for being involved in the community. This can be a huge advantage if you hold a decent amount of that token, but not all tokens do it.
Only invest after YES.
For me, it’s important that all four questions are answered with a resounding “YES.” My cryptocurrency investment philosophy is that I’m investing in value. I believe that the market (no matter how volatile or bullish) will eventually reward the hard work of good companies; and, so far, this four-question-system has proven that belief to be right. The above of course is a simple rating questionnaire, there are more complex ones, especially those from crypto exchanges, before they list tokens onto their exchanges.
What cryptocurrencies are you investing in? Are these questions working for you? Feel free to reach out to me on social media @HerbertRsim – Facebook, Twitter, Instagram.