A Word Before You Invest in Crypto
The popularity of Bitcoin and the technology behind it, blockchain, have led to the birth of thousands of other cryptocurrencies. Some cryptocurrencies are attempting to solve a real business problem while others are there just to raise money for themselves. So before you invest in the coin you are eyeing, you want to make sure it is legit and operates on the blockchain. Blockchain is a public ledger accessible online, which means you can access all the wallets and transactions that transpired within the blockchain of a particular cryptocurrency.
If a cryptocurrency doesn’t have a blockchain, it’s not a cryptocurrency. So you may want to avoid that until they create a cryptocurrency with a blockchain and are listed on exchanges. Here are two ways to find out if the cryptocurrency you want to invest in is real or fake:
- The basic concepts of the cryptocurrency are available. This is comprised of decentralization, circulating supply, unlimited use, transparency of blockchain, and a source code disclosed to anyone for verification. If a startup company has none of these, they are not a legit cryptocurrency.
- Cryptocurrencies that don’t have real value. They may have the source code of the blockchain but the overall business doesn’t have a unique value proposition that can attract buyer demand. Here’s how you can measure the attractiveness of a coin’s value proposition:
- What they are offering sounds too good to be true. Investment returns rarely beat popular stock market indexes so if the cryptocurrency you’re looking at is promising twice the money you invested in a short span of time, it could be a scam.
- Verification of claims can’t be located.
- Company’s and owner’s information are not available. The company is not registered in any stock exchange platforms.
- The company is operating abroad where there could be no regulations.
- They claim to be committed to an honorable cause which investors could profit from.
- They focus on recruiting investors and their compensation plan comes with great rewards.
- There’s no concrete product available. Most of the time, recruiting people is the only real thing in the company.
- The location of servers that create or mine the cryptocurrency or who controls it are unknown.
- Their cryptocurrency is not listed in any exchange. If a cryptocurrency can’t be easily converted back into fiat, then it is not safe and most likely illegitimate.
High-Risk Cryptocurrency Investment
Investing in cryptocurrency is quite high-risk so be sure to perform due diligence on companies before diving in. Most people follow the hype, and blindly invest because they see other people investing in that coin. This is where their troubles begin. It’s critical to study and learn all about the cryptocurrency and the company behind it before putting your money in it. Information about startups and their coins should be readily available online if they are legit. This information should be disclosed to the public. Aside from researching the company’s and owner’s information, there are tools and apps you can use to guide you in your investment decisions.
HybridBlock: An All-in-One Cryptocurrency Ecosystem
For example, a new crypto startup that has been on the news a lot lately is HybridBlock, founded by former US-olympian Apolo Ohno. HybridBlock is an all-in-one cryptocurrency ecosystem with a goal to educate and engage the masses. They have several products geared towards different audiences, from a beginning crypto enthusiast to an expert crypto trader. Beginners can use HybridCentral, an education platform that will guide a beginner through the initial learning curve of cryptocurrency. BaseTrade is another app a beginner can check out. It’s the easiest way to buy, sell and trade cryptocurrencies. After verification of your identity, you can purchase your cryptocurrencies via a shopping cart, which allows complete transactions in one execution. This is a first in the industry.
HybridBlock also has products for the more experienced traders, HybridExchange (in its beta version as of this writing) and HybridTerminal (launch date TBA; read more about it here). HybridExchange is a web-based product that enables users to fund and manage their accounts. It was designed to work with multiple partner exchanges and to provide smart order routing and order routing to select third party exchanges. On the other hand, HybridTerminal is the world’s first standalone terminal specializing in crypto trading.
In general, you should research and follow the company for several weeks before making an investment decision. Don’t let fear-of-missing-out (FOMO) rush your decision-making process, and definitely do not blindly follow other people. One final note: think about why you are investing in cryptocurrencies. Are you investing because you believe in the underlying technology or to make a quick profit? If you’re investing in the underlying technology, don’t think about the day-to-day price movements because you should focused on the long-term price (2-5 year horizon). If you’re investing to make a quick profit, that’s okay too because many people have a similar mentality. The important thing is to understand yourself as an investor. But before you embark on your journey to the riches, think about the saying “pigs get fat,hogs get slaughtered”. It means it pays to be greedy, but not too greedy—or else you’ll get into trouble.