There have been a lot of discussions about whether we are getting the next Shiba Inu soon and many new altcoins are circulating daily. If you don't want to get distracted by overpromising altcoins carry on reading this article and learn how to invest in really useful projects.
With cryptocurrencies' value skyrocketing in recent years, everyone has been looking for a new coin or token to invest his money in. Bitcoin is at an unprecedented level currently trying to reach $40,000 and it seems hard for new investors to purchase 1 BTC compared to previous years. In fact, the difference between Bitcoin and altcoins in the total share of cryptocurrency investments is large as Bitcoin accounts for around 40% of the pool (according to Coin Gecko's charts).
However, the bear market gives us quick chances to renew our portfolio and do research for new projects. In order to understand better how to discover promising hidden gems (worth under $0.50), we need to find out the definition of a "shitcoin" as well as list prerequisites to figure out a project's legitimacy.
Shitcoins; are they really profitable investments?
This controversial term covers various projects which have no reason for existence and lack many fundamentals. For instance, they don't specify any important goal in their whitepaper, other than a higher value (take a look at Kishu Inu's wallpaper and think if there is any serious goal to achieve).
Their value is driven only by publicity; the more appealing they appear on Twitter or Reddit the bigger the base of potential investors. Therefore, marketing plays a big role in promoting these projects. Better marketing doesn't always mean better token.
Shitcoins have some common characteristics (few holders, minimal liquidity, operation on the same blockchain with other tokens, undefined goals).
Is it worth investing in shitcoins?
From my personal experience (I spent a small amount on shitcoins like Crazy Miner when I was new in crypto) it's not always worth it. Even if they promise wholesome exaggerations like insane returns and early retirement we should always do proper research and investigate the core data of a project (community, source code, whitepaper, etc.) before spending our money on such volatile tokens.
How can I identify hidden gems?
It's not that hard to identify a shitcoin (you can check out various guides, I recommend this one as it's among my main sources for this article) but it's much harder to find out a hidden gem. Many altcoins will circulate for a few months and disappear quickly after failing to achieve 99% of their promises. It's thus necessary to figure out the following criteria are met prior to investing in any type of token.
This is the main reason I wrote the article. We all try to find tokens at alluringly low prices to generate some quick returns. However, this doesn't mean we shouldn't be cautious and practical in our calculations. If Kishu Inu for example reaches $0.001 with the maximum supply of 100,000,000,000,000,000 tokens, the total market cap will be $100,000,000,000,000, which means $100 trillion and higher than the global nominal GDP of 2017! This shows the absurdity of exaggerated promises by many projects.
We should overall look for currencies with a fixed supply (deflationary if possible), low price (not so many zeroes though), and decent chances for growth. This is the most important factor in our investment.
A great example of a promising project is the community. If the team behind the project has links for both its website and Discord, Reddit, or Telegram communities then their token is advantageous compared to others. Trying to discuss in groups with members or developers can be crucial to the final decision because we want to be sure about their backers, their goals, and capabilities of achieving them, their honesty, and last but not least their involvement in previous projects.
A functioning community is a major advantage in the crypto space, as we build trust with other investors in the same project. Besides, the point of crypto is to achieve financial freedom, and cooperation on some occasions is a necessity. An example of a healthy community I found is the Telegram group of NSH. Even if the growth chances are far-fetched I decided to invest a small amount after interacting with the community, plus the token has some unique features which I can analyze in a separate article.
The number of holders is no exception from the list of important criteria. Etherscan and BscScan (for the Ethereum Blockchain and Binance Smart Chain respectively) are a great way to track down the holders of a coin developed on these blockchains. Ideally, the coin should have an increasing number of wallets with a small balance (no wallet must have an extremely big amount of the token). We can also look for liquidity and exchange reserves.
Bear in mind that Solidity gets constantly updated, therefore you need to continually brush up on your knowledge to fully master the language.
Last but not least, we should check out the whitepaper, which states the goals and tokenomics of the project and secures its authenticity. Even though today most whitepapers look professional and trustworthy, in reality, we can point out many exaggerations. Herein lies the choice of whether a project is valid; goals must be realistic and achievable with the token's current features, otherwise it's no more than a scam.
The decision of investing in cryptocurrencies is both a brave and a risky one. Managing to evade inflation and achieve financial freedom is easy in words but hard in practice. It requires multi-dimensional education, a diversified portfolio, and well-adjusted, trustworthy assets. Since cryptocurrencies are more than Bitcoin, in this case, we search for altcoins.
Looking for tokens that meet all the prerequisites above is hard and occasionally impossible. In my opinion, the main requirements which need to be pleasured are the coin price and the whitepaper. It's much easier for a token to succeed with a relatively stable price and realistic goals. This is why
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