Investing in a cryptocurrency can be very lucrative, but with such an investment comes the onus of learning the key fundamentals behind such analysis. So, here’s the top 5 critical things that one needs to consider before evaluating a crypto coin.
Utility is probably one of the most essential characteristics of a coin. Does the coin solve the real-world problem, or is it just hype? Some projects, like Ethereum, offer smart contracts, while others, like Chainlink, offer decentralized oracles. A good use case has much more probability to be adopted and grown in the long term.
A good team is what makes a successful cryptocurrency. Research the developers, advisors, and partnerships by investigating their credibility, previous projects, and how active they are on sites like GitHub. Often, an open and active team will create a reliable project.
Tokenomics is the study of the supply, distribution, and demand mechanisms of a coin. Is it capped supply like bitcoin or inflationary? One must research token burn mechanisms, staking rewards, and circulating supply because this affects the price of the coin over time.