Technology

How to find the best-rated cryptocurrency, beginners guide

Before you start

Make sure that you know and understand these basic terms:

  • Blockchain
  • Cryptocurrency
  • Security token/Utility token
  • Proof of Work/Proof of stake 

Only if you understand all these terms and can tell them apart – you can proceed to invest.

There are services that rank cryptocurrencies for you. They aggregate information from hundreds of projects, saving you tons of time:

  • At icoholder, you can find the best rated ICOs, IEOs, or STOs. 
  • Icomarks lists only ICOs.
  • Icobench lists ICOs and IEOs. 

You can even cross-check a project on all three platforms to find all the information you need. Here’s all you need to find and why you need to find it:

1. What is the project?

First, you need to learn the project’s purpose. Find if it solves an existing problem or fills some need. It’s also important to check the project’s team: their background, goal, and plan. Stay away if any of those aren’t clear.

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It is essential to know the uses of the cryptocurrency. A security token represents a part of the company, while a utility token is used for services on the blockchain.

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2. Currency Supply

Total supply of a cryptocurrency is the limit to the number of coins that can be mined or issued.

Circulating supply is the number of coins in the cryptomarket at the present moment. The founders hold a percentage of most coins. 

It is important to know these figures to evaluate the project’s value.

These numbers influence the coin’s price significantly. For example, Bitcoin’s supply is limited to 21 million, and a low supply means higher demand. That is one of the reasons that Bitcoin’s price keeps climbing.

3. History

The volatility of the crypto market is legendary, as the cryptocurrency exchange rate can change drastically overnight. Coin’s price is affected by hype, fraud, hacks, and so on. So coin’s price history can say a lot. 

Usually, cheaper coins with lower market caps are riskier. Keeping this in mind can help you prevent losing funds.

Cryptocurrency prices also correlate to other coins, stock markets, and global events. Some coins grow following Bitcoin, some drop. Many ICOs are based on Ethereum, so they tend to follow ETH movements. Therefore coin’s price history can also give you an idea of its correlation.

4. Exchanges

Knowing where the coin can be traded is also important. If a currency is listed at a major exchange platform – it can be a nice boost for the price. It is also interesting that price movements of coins listed at Binance correlate between themselves more than with other coins. 

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All these factors can help you understand the reasons behind price movements. Knowledge is the basis to evaluate long-term value. 

5. Developer Activity

It is quite natural that a strong project keeps developers busy.  High activity is definitely a good sign. You can easily monitor the project’s developer activity with GitHub.

All activity metrics of that project and all the work that was done on GitHub is public. You can watch the number of updates, the number of forks, etc. These metrics can be a great insight.

If you see a rising number of contributors, bugs fixed, issues identified, and overall activity is growing – this looks like a legitimate and strong project.

6. Community Activity

The first thing to check – are the social media accounts of the project. You can check how many users follow them and how active these accounts are. Active community involvement strengthens the coin’s value.

There is also a great tool to measure social engagement, social dominance, and other interesting metrics: Lunarcrush. It is crucial to be on top of important posts or trends, and lunarcrush will help you not to miss anything. 

You should also check Reddit. A lot of announcements, news, and conversations about cryptos start there. Check if there are many subreddits related to the project, or are they active.

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Summary

It is difficult to find gems among thousands of cryptocurrencies. Yes, it is all fresh, new, and risky, but you can protect yourself from failure if you do enough research. There are more and more convenient and useful tools to help you make your choices educated. 

Don’t believe opinions and hype. Check data and documents.

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