There are currently more than 10,000 cryptocurrencies and for newbies and noobs alike, picking one to invest in can be a challenge, especially when there is no formal guidance as to whether something is there for the long term or if it is just a passing tulip fad.
For the alt-coin economy, one must determine its efficacy and thereby, profitability (in investing in those alt-coins) in three things.
First, the alt-coin must have “rules” to help determine its value.
There needs to be rewards for certain actions taken and certain behaviours adhered to within that altcoin-economy. In and of itself, an alt-coin has no value. For the most part, one cannot expect to go to a nearby supermarket that does not yet recognise that particular cryptocurrency token, to buy daily necessities. So to have these rules in place, where the alt-coin is able to be utilised as a means of exchange, thereby releasing value, will be very helpful and useful.
So number 1, find out for your alt-coin if these “rules” are in place. It can come as a place of exchange. How many DeFi exchanges are there that have listed this alt-coin to be traded? If you are able to trade back and forth (i.e. fiat money for alt-coin and vice versa), and there is a sizeable community recognising and using that alt-coin, it is a plus point. How will the crypto be earned? In the case of iFarm and Ampleforth, it is being used currently as crypto earned for Publish0x in writing crypto related essays. There is a community of writers, readers, and the community is growing well.
Second, alt-coins need to be utilised for a purpose – thereby providing scalability through utility.
This is where the concept of staking comes to being. Validation, staking, where validators are rewarded for validating a transaction, and stakers are rewarded for staking in their crypto will earn yield for their staking. Is the percentage earned high enough for them to participate? Are validators provided sufficient rewards for efforts? How are businesses built on that particular cryptocurrency (alt-coin)?
For Solana, one of the biggest DeFi exchanges are on it – FTX, belonging to 29 year old billionaire Sam Bankman-Fried. In fact, Solana is known for the DeFi related businesses that are built on it. For Zilliqa, several real-world applications are already on it – an academy for YouTubers (XCademy, etc), Mintable which does NFTs, etc.
Third, amount of subsequent investments poured into the businesses built on that network, along with momentum.
It is not about creating a business infrastructure and hoping that things will happen. Marketing needs to happen. Businesses that are built on them need to be thriving and in so doing, “burning” or utilising tokens. Are more businesses being built? For existing businesses, are there more people using them? Are more NFTs being minted if there is an NFT creation mechanism? Are people buying those NFTs by the way? Is there a bridge that is created to link up and smoothen transactions?
These are valid questions that we can and must ask, especially if we putting our hard earned fiat to work in the crypto world.
How about cumrocket, dogecoin, shibainu, and the others?
Based on just the points we have studied above, it is best that you avoid those tokens, as they will do nothing more than just provide a space for a gamble on whether that particular crypto token will “moon”. That is a risk that we do not find worth taking. Again, one may beg to differ, especially if one has taken the route of just buying in “early” and hoping for others to catch on. There are millionaires who have emerged, and there are others who have failed miserably. Yet, this is not investment advice, do your own research.
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