Cryptocurrency refers to a digital or virtual currency that can be used for the transfer of goods and services. Online cryptocurrency transactions are secured using an online ledger with a relatively strong cryptography, thus making it virtually impossible to compromise or counterfeit. The technology behind cryptocurrency is referred to as blockchain, which is a decentralized technology. The blockchain technology is spread across many computers and works by recording and managing cryptocurrency transactions.
There are over 15,000 cryptocurrencies globally, with bitcoin being the most popular. The appeal of cryptocurrency is based on factors such as the impenetrable security associated with the blockchain technology, the fact that crypto is perceived to be the future of currencies, as well as the fact that it is not regulated by governments or financial frameworks. The widespread permeation of cryptocurrency as a medium of exchange is one of the reasons why many entrepreneurs are incorporating cryptocurrency into their businesses.
This checklist is thus a how-to guide for selecting an ideal crypto for your business.
Step 1 – The Whitepaper
1 Check that there is a whitepaper for the cryptocurrency
2 Check that there is sufficient data regarding the crypto in the whitepaper
3 Ensure the whitepaper contains details of the crypto’s timeframe and specifics
Step 2 – Business Preposition
4 Evaluate the crypto’s mission and vision
5 Check that the coin has some potential for real value
6 Evaluate the functionality of the crypto (is it a security token or a utility token?)
7 Check out the team behind the cryptocurrency (how dedicated is the team in achieving the coin’s goals?)
Step 3 – Price History
8 Analyze the coin’s susceptibility to hump and dump schemes in the past
9 Check out the coin’s market cap presently and in the past
10 Evaluate a coin’s price correlation with other coins
11 Analyze factors influencing the coin’s movements upwards and downwards
12 Analyze the number of exchanges the coin is presently traded on
13 Check that the coin is available in majority of the major exchanges
Step 4 – Developer Activities
14 Be cautious about developer activities that are trending downwards or are constantly low
15 Evaluate the number and frequency of updates on the crypto
16 Check that issues are frequently addressed and bugs are fixed
17 Be keen on the number of watchers, forks created, as well as stars awarded to the coin
Step 5 – Total and Circulating Supply
18 Evaluate the coin’s total supply (a coin’s supply influences it’s price)
19 Analyze the coin’s circulation (current amount of coin’s in the market)
20 Check out the coin’s market cap
Step 6 – Community Activities
21 Select a coin with a strong community
22 Check how involved the community is on the coin’s social platforms
23 Analyze the coin’s social media pages to evaluate its following
24 Evaluate the amount of activities on the coin’s social media pages (Twitter and Reddit)
Notes:
- If a cryptocurrency does not contain a whitepaper or if the whitepaper is vague and amiss of important details, consider that a red flag
- Check out the cryptocurrencies’ project activities on GitHub
- Use the currency’s Twitter and Reddit pages to evaluate its community activities
- It is worth noting that coin’s with a relatively lower market cap are highly susceptible to fluctuations and losses
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