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5 Things to Look for When Investing in Crypto Tokens

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DappRadar

Don’t throw your money into something you know nothing about. These guidelines are meant to help you get better informed!

Investing in crypto tokens has become very easy. A simply credit card purchase can already set you up with some exposure. However, you also want some fundamental reasons to invest into a token. Before you do this, you might want to read our thoughts on 5 things to look out for when investing in crypto tokens.

Cryptocurrencies are arguably the most lucrative asset classes in the history of mankind. Big cryptocurrencies like Bitcoin and Ethereum have been around for less than two decades and increased their value over 5,000%. However, cryptocurrencies can be just as risky as they are profitable. Investors have lost their life savings speculating in the cryptocurrency markets, and newcomers should proceed with caution when investing. These are the top things you should look out for before investing in crypto tokens.

Now it’s very interesting to invest money into gaming-related crypto tokens. You can simply go to DappRadar Token Swap and get the tokens you want easily. But you also need to know what to look our for. Therefore we’ve provided a checklist:

1. Actual token project

Not every coin can be a unicorn like Ethereum, or Bitcoin, but the cryptocurrencies you should be looking at should do something different. Think about introducing new functions or being the foundation of new technology, perhaps using older tech in a better way. You also want to make sure its applications are practical, achievable, and exhaustively explored in their whitepaper.

Therefore it’s important to look at projects that aim to develop an actual project. What’s the token economy behind the project? Who are the developers? Import questions that need answering before you dive headfirst into a new play-to-earn game.

2. Tokens require community

Consult the top online crypto communities and see what people think about the token you are interested in. You can start by checking forums, and online communities like Reddit to see what experienced traders, investors, and developers are saying about the coin. It could answer some of the questions that were not answered by their whitepaper and press releases. 

It’s important to recognize that no community can thrive on people shilling a coin. Within that community there need to be developers, content creators, fan websites, and people providing perspective and analysis. Only when those ingredients exist, there’s a potential for a token to succeed. No crypto token can find long term success based on people asking ‘when moon?’.

3. Developers

You want to make sure you investigate the developers before investing into a project. Research the people behind the developments, check for developer activity, and development roadmaps. Leave no stone unturned, and make sure to consult all their social media, Github and Codebase contributions, and past projects.

If the developers behind a token are anonymous, stay clear of it. There will be no tangible way of tracking them and getting your money back if something goes wrong. This doesn’t mean that every anonymous project will fail, but when you’re investing serious money you also want credibility.

4. How well is it doing

Most experienced traders don’t recommend buying into a coin dip for obvious reasons. The dip won’t matter as much in the long run if the asset is going to perform. After researching the coin online, hop onto your preferred exchange and see how well it’s doing. Look at the market cap, trading volume, the overall trend, and market history, if the coin has been in circulation for a few years. You want to look for a high market cap with more tokens to come, an uptrend, and decent volume to push activity.  If you find all these, you could shortlist the coin for long-term investment.

5. Before you invest 

Once you’ve done your due diligence, you should be set to invest. However, note that investing in a cryptocurrencies carries a certain risk regardless of how impressive and unique it might look. The crypto markets are heavily driven by market sentiment and fundamental analysis. We recommend not tying all of your assets up in a single token. Keep a wide spread across multiple interesting coins and buy to hold and not to swap all the time.

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