What is a good altcoin?

According to coinmarketcap, there are now more than 1,300 altcoins. Some of these cryptocurrences represent a new technology, a new world. But there are many more crypto coins that represent little or nothing or even scamcoins. How do you distinguish the good from the bad?

The cryptocurrency market gets compared a lot with the advance of the internet companies in the late 1990s. Ultimately, only a handful of companies left from these internet companies now dominate the market. The rest has gone bankrupt or hardly plays any significant role.

Chances are that it will also go that way with cryptocurrencies. For example, James Altucher says that with time, 95% of the cryptocurrencies will disappear. Investing with an eye on the future in altcoins is therefore investing in the right direction.

This is what you have to pay attention to ...

1. The project

You have to analyze the economic value and the viability of the project. But not only the project is important, also the people who work on the project. We also see this in technology shares: Companies like Google, Facebook, Apple, ... attract the best people. And that works. It is no coincidence that these are the best and largest companies in the world.

Ask yourself the following questions to determine the viability of the cryptocurrency:

• a) Is there (a growing) need for this technology?

• b) Is there competition with a better project?

• c) Are the developers closely involved in the project?

2. The number of available coins

You should not just buy a coin because the name pops up in the media. Just as with investing in stocks, you also have to do your homework when investing in crypto coins.

For example, there are crypto coins with an unlimited number of coins. When unlimited coins can be added, it will work on the valuation after a while.

Suppose there are 100 million coins at $ 10 per coin. Then the project is worth $ 1 billion. After 500 million coins have been created over time, the project is worth $ 5 billion at the price of $ 10. If the project is actually worth only $ 2 billion, the price will drop to $ 4. The value of the project has doubled, but the value of the coin has more than halved.

3. The potential

Altcoins are sometimes projects of enthusiasts and sometimes they are projects for a total new business. Ultimately everything revolves around the economic market value of the currency. Honestly ask yourself the question 'If this crypto currency was a technology company, how much would it be worth at this time?'

View the value in relation to other cryptocurrences and the entire cryptocurrency market. What is the economic ratio of the new crypto compared to these projects?

4. Liquidity

This is a part that most investors overlook: liquidity. Sometimes you buy a cryptocurrency that rises and rises, to establish that you can not sell them or can not sell at the desired price due to the low liquidity.

Keep calm and hodl.

Feel free to share your opinion on this article, what are your favorite altcoins?

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