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Investing rules

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Gandalf86 edited this page May 13, 2018 · 1 revision

These are simple rules that should be followed in order to be a successful crypto investor!

  1. Projects are valued based on their market capitalization, not on the price. Mcap = Price x Supply. Just comparing the price for one unit without taking into account the supply is a typical noobie mistake. ;)

  2. Invest into people. Everything about a blockchain project can change, the technology used, the website, documentation, marketing etc... even the goal of a project can change. The only constant are the people involved, i.e. the developers and the community. The developers should be competent and motivated, the community should be friendly and helpful. The blockchain is a consensus between the members of that community! That's what you are investing in.

  3. Buy low-cap projects. Buy projects that have a lot of unrealized potential. Help building it up and growing it. Take an active role. Define what low-cap means for you, for me it usually means a market capitalization below $1 Mio. USD. Don't get carried away by the unreasonably high valuations many crypto projects have nowadays, as these are mostly caused by hype.

  4. HODL. Invest long-term. Your time horizon should be at least 1 year. Only buy into projects that you are comfortable holding for an extended period of time.

  5. For ICOs: Market cap = raised value. If an ICO raises a lot of money, it doesn't have a low market capitalization any more. If an ICO advertises that it already raised XXXX BTC, you should stay away because it's not low-cap any more, and most likely is overvalued.

  6. Know what you are doing. People who lose money because they invested into something they don't understand are fools. If your wallet software breaks and you lose money, you are a fool. If you get scammed, you are a fool. Understanding what happens is the only real weapon against losing money. To understand, you must learn. Learning by doing is an option, but learning by asking questions is usually cheaper. ;)

  7. Avoid Ethereum tokens and other tokens. Tokens based on another project do not have the necessary scope to be a good long-term investment, because you don't know what will happen to the underlying technology. For me tokens are too "fuzzy", too hard to grasp. You can always run a miner for a blockchain to keep it alive, but a token is really outside of the control of a typical investor.

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