Deciding on a new investment can be quite daunting unless you understand financial terms and all the jargon that comes with it. Cryptocurrencies are no different, and there are benefits and risks when assessing which one you should go for.
You can find new crypto coins in cryptocurrency exchanges like Binance and Coinbase, DeFi platforms, crypto discords, data aggregators like Unizen, ETFs, NFT marketplaces like OpenSea, and ICOs.
Some new cryptos are available for presale, and you can find them on dedicated websites and social media websites like Twitter and Telegram.
Factors to consider before investing in a new crypto coin
There are currently over 20,000 cryptocurrencies by the end of last year, and new ones keep emerging. Therefore, it is important to have certain considerations when looking for the right investment.
Type of cryptocurrency
Before jumping on a new crypto bandwagon, you must understand precisely what you are getting. One of the significant differences to note is between coins and tokens. Put simply, crypto coins are digital versions of money native to their blockchain, and you can spend them anywhere they are accepted.
Tokens, on the other hand, are assets or deeds and they have limitations on where you can use them. There are different types of tokens, including utility, security, finance, service, and non-fungible tokens (NFTs).
Duration of investment
Are you looking for a long-term or short-term investment? A long-term investment involves holding on to your crypto until you can make a profit, while a short-term investment involves buying and selling your cryptocurrencies on the same day.
Choosing between the two options depends on whether you are willing to wait longer for your returns.
Crypto adoption
Crypto adoption refers to how well a cryptocurrency will be accepted, which is determined by how well it is known, how secure it seems, how much support it garners, and most importantly, what problem the crypto is hoping to solve.
You can find such info on the Crypto’s white paper or from crypto experts and the larger crypto community.
Security
Digital security is important. You are investing your money, and with all the scammers around, ensuring your digital wallet and investment are safe is important. To do this, read the necessary documentation to fully understand it. You can also join your desired crypto community to see how the developers respond to queries.
Benefits and Risks of new crypto coins
There are many benefits and risks of investing in new cryptocurrencies.
Benefits of new Crypto coins
Potential high returns
Investing in a new cryptocurrency can lead to massive returns in a short amount of time or in the future. For example, when Ether was first introduced in 2015, it was well under $1. However, it reached its highest peak in 2021 at over $4,000 and is currently at $1,600. If you stick it out, you may get great benefits.
Low prices
One of the advantages of new cryptocurrencies is their low prices. Cryptos that have been around for a while are usually more expensive, and you can buy a number of currencies for a fraction of the cost of an older currency like Bitcoin.
Availability
Because new crypto coins are starting out, it is easier to get your hands on one or more. This means you have the opportunity to be the first one to buy shares or make a substantial investment.
Risks of new cryptocurrencies
There is generally a risk when you decide to put your money into a new venture.
Lack of network engagement
Any new cryptocurrency will need to garner enough support to attract users or investors. If a project is unable to get enough network engagement, the prices will drop and prevent the currency from launching.
Price volatility
Though new cryptocurrencies are more affordable, their prices may be unstable when they first enter the market. They are yet to be adopted, and the price can shift either way fast.
Shortage of funds
New cryptocurrencies can run out of funds before they have enough support, and as we have seen above, a lack of engagement can tank a crypto. In addition, mismanagement of funds can also affect a project negatively, especially if it has a weak foundation team. This is why you need to research the team before investing.
Scams
It is no secret that crypto has had several scams over the years and more people are finding ways to scam new buyers. In fact, since 2021, more than $1 billion has been lost in crypto scams. Beware of rug pulls and phishing schemes.
Think it through
Though old-timers like Bitcoin and Ether are safe bets, newer crypto coins can be a worthy investment, if you are willing to take the risk. Do your research and use different sources and tools to evaluate a cryptocurrency. You can end up making a lot of money or losing it and you should only invest money you are willing to lose.
Disclaimer: Investing can be quite a wild ride – especially when you don’t know the terrain! To keep things from getting too rocky, take some time beforehand to get familiar with all of the risks involved. Our site is here to up your investor game by providing all available intel about platforms and trends, but we don’t take responsibility nor can we be held accountable as advisors. That being said, it’s still important for you to make educated decisions that match what works best for YOU – just remember: no amount of savvy will guarantee success or protect against loss so invest money you can spare.
