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Note: This blog is part 1 of a 4-part series. To follow the series, you can subscribe to receive our blog updates by email or download the entire series as an eBook, free of charge. See the bottom of this page for details.
Investing early on in a new company or product can be incredibly profitable if the venture turns into a big success. While risk may pay off over time, this comes with the possibility of losing your entire investment. This is why it is crucial to do thorough research into any project that you are considering for investment.
In the traditional investment industry, value investors typically base their valuations on a company’s financial statements, asset valuation, the quality of leadership, and the economic sector. This would break down into aspects such as the business’s ability to sustainably generate cash, the quality of earnings, as well as the calibre of leadership, management, and experience, and the risks that are inherent to that industry. A high risk/reward ratio might be lucrative to those who can stomach the uncertainty, but certainly “not for widows and orphans”, a phrase commonly used by traders.
When it comes to cryptocurrency, an asset class on its own, how does one judge whether it is a good store of value or simply a case of market frenzy? While it is extremely difficult to accurately calculate the intrinsic value of a new and groundbreaking technology, there is a range of criteria to consider when evaluating a coin or token. It breaks down into three categories of cryptocurrency fundamentals:
Our newly launched ebook “How to Find the Best Cryptocurrency to Invest In - 2018 Edition” explores these three cryptocurrency fundamentals and provides you with some subcategories by which you can assess the potential value of a cryptocoin or blockchain.
Here’s an excerpt from the eBook that is available for (free) download over here.
While the full list of coins in a Bitstocks’ investment portfolio remain a trade secret, our CEO Michael Hudson has publicly declared our commitment to investing according to the fundamentals instead of market hype and speculation.
We play the long game: we do our research on the viability of a coin early on, then hold on through the turbulence of the cryptocurrency market. Follow our example and you will be able to HODL with confidence too.
Disclaimer: One of the golden rules for investing in cryptocurrency is to invest an amount that reflects your comprehension of the market and the underlying technologies, and no more than you can afford to lose. If you are uncertain, it would be wise to contract cryptocurrency market advice.