Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

Today: How do you know if a token is a good investment

First things first! This is not investment advice, and crypto is massively volatile. Do not invest what you can’t afford to lose entirely. Always do your own research. In fact, today, we’ll talk about some of the things you might want to look for when doing exactly that.

So, you’ve found this coin and consider investing some money. What should you take into consideration?

We would ask ourselves two things: Is this a legitimate project with good intentions? And does the technology have future potential?

The first is pretty clear: There are a lot of scams out there and we’ll talk about them in more depth next time. But there are warning signs you can listen to: How much is owned by just a few people? How long has a project been around? What do people say about it in forums? Are decisions made through the community or by an anonymous few?

Also important: Market capitalization, meaning how much money is invested in a coin. While getting in early may pay off, consider that a young token with little money behind it is more likely to be a scam.

Secondly: Does this solve any problems that existing technologies don’t? The fundamentals are that transactions are fast and cheap, and a blockchain can handle many of them at the same time. But also consider if it solves a new use case that could make it very popular. A good way to think about it is: Will a lot of people likely still use this in 10 years?

That’s just a small list and you will add your own ideas to it over time. And next time we’ll talk about the making of bitcoin scams, so you can spot those from a mile away.

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.