How to evaluate an altcoin

It seems like there is a new cryptocurrency token launched every day of the year. There are currently over 1500 in circulation on the international market, and the list just keeps growing. But along with the growing list of different tokens comes a growing concern over which ones are the right ones to invest in. In this article, we are going to go through some of the things you should be aware of when assessing a new token. When looking at a new cryptocurrency token to find out whether or not it is a good bet, there are a few things to consider.

Team and technology

First, look at the team. Is it made up of people with a lot of experience in cryptography, digital marketing, and investment? Or is the team mainly made up of anonymous newbies with no proven track record?

Second, you will want to look at the technology underpinning any given project. Does it provide something new and innovative? Or is it simply copying existing tokens? More importantly, does it look like it is a project that would be successful? If not, then it is best to stay away.

Community and real-world application

Third, the community surrounding a given token will be very telling. Like any other service or product, social proof tells you something about what other people think. Does the new token have a huge fanbase? What are the followers saying about the project? Make a note of this and see if it matches up with your own impression.  

Fourth, have a look at the real-world application of the ICO and token you are assessing. Can you see the utility in the promises made by the developers? Can you imagine their project gaining mainstream success and further funding? Or will it simply fall flat like so many other blockchain projects?

Social presence and market cap

Fifth, research the social presence of the ICO and token you are evaluating. Most legitimate projects will have a Telegram and a Slack group, and be very active. Try engaging with them on these channels and see what kind of response you get. Further, look them up on Facebook, Reddit, Twitter, and other popular social media platforms and see what the level of engagement is there.

Finally, the market cap of a given project will also tell you something about how successful it might be in the future. If the project has a market cap, you might be tempted to think that this is positive. However, projects with high market caps have less room to grow than smaller ones. As an investor, you are interested in seeing the value of your tokens grow. If the company has little room to grow, so will your investments.

The soft and hard caps of an ICO will also help you determine the evaluation of the company when it takes off. If the ICO has a huge investment, it will be valued at a high price after the ICO. This means that the value of the tokens you have purchased will go up. You might also want to look at the number of tokens in circulation and who holds them. The more tokens there are, the less they will be worth.

 

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