Blockchain was seen as a niche or alternative technology a couple of years ago. Still, nowadays, people have little doubt that investing in projects based on the blockchain will provide them with remarkable results. If, at first, people believed that it could be used only as a public transaction ledger for Bitcoin, Ethereum and other digital currencies, it is considered an innovative technology that could transform dozens of sectors and only advance on its growth curve. Among the numerous ways to make money out of investing in blockchain, one of the most effective ways is to buy Ethereum p2p because the cryptocurrency is heading towards a bull run, and the chances to produce a return on investment are high.
Suppose you want to learn more about how you can invest in blockchain; here are some questions it’s essential to answer before going down this road.
Do I know what I am investing in?
Blockchain has grown in popularity over the last few years – and how businesses can use it has also become more diverse. People can rely on blockchain to purchase digital currencies like Ethereum and Bitcoin, invest in non-fungible tokens, or purchase other types of digital assets. They can also use blockchain technology to boost their company’s effectiveness and security.
Before putting your money into something, you have to research because each form of technology has unique considerations. Therefore, you must understand what makes blockchain different from the others and its implications on your finances. Before buying blockchain-based assets, you should ask questions like How much resources you are willing to spend to learn about blockchain. Do you have knowledge of how to negotiate? Do you know what documentation is necessary for investing in blockchain? What liabilities do you expose yourself to in case your investment goes wrong?
Proceed with this investment only after you answer these questions. An investment plan is also necessary because it functions as a roadmap in the process.
Is the blockchain project I want to invest in reliable?
Unfortunately, blockchain projects and businesses still have no regulatory framework, but most countries require companies to get authorization. You must research the internet to find out when the company was founded, who is behind it, and if its previous projects reached success. You don’t want to invest your money in a project no one has ever heard of. Even if some new projects could skyrocket overnight and drive enormous profits, you should spend only a limited portion of your finances on new and experimental projects. Put the most of your money into seasoned projects. The blockchain might be a new technology, but it’s been on the market for a couple of years now, and some projects have shown resilience during bear markets. These are the assets that should capture your attention because they have greater chances to provide a return on investment.
Get in touch with other investors who spend money on the projects you find interesting, as they can provide you with the necessary information to determine if they suit your investing style and needs.
The team behind the project you want to invest in should have a relevant background in the sector. They must have worked before with cryptography and distributed networks. As a project supporter, you want credible and consistent communication from its developers. Don’t put your funds into something you lack information about. The project should be evident on the internet, and you should easily find information about it on channels like Telegram, Discord, WeChat, and its official website and social media channels.
What sector is the blockchain project aiming to approach?
Blockchain technology has evolved so that it can enter almost any market. However, in some sectors, it brings more advantages than in others. Blockchain projects usually target industries like advertising, decentralized app development, smart contracts networks, shared economy, and payments.
You should determine if the industry the project aims at is relevant to your investment portfolio. Do you want to diversify your investment portfolio with commodities from that respective sector?
Does it make any sense to use blockchain to solve that particular problem?
The project you are interested in promotes the idea that it solves a particular problem. Before unquestioningly trusting it to bring a solution, you must question if blockchain is the solution. It could promise solutions to almost anything, but you must figure out if other technologies could perform better. Does the blockchain project have a real utility in the world? What is its role in the circular economy?
What is the stage of development of the project?
In what development stage is the project? The best-case scenario is investing in a seasoned project that has already resulted in results. However, these projects tend to require more funds, and you might lack resources if you’re a beginner investor. Another option is to join a project in the early prototype phase but with a strong community that believes it can solve an issue. Have the developers released parts of its code on review platforms for experts to review and provide feedback?
The stage of the project tells you how risky investing in a particular commodity is.
How does the blockchain project stand apart from its competitors?
Before investing in any project, but especially in one based on new technology like blockchain, you need to evaluate the competition existing in the market. You could lose your funds if you make an uninformed decision, so it’s worth comparing similar projects. Researching is a mix of checking its scalability, technology, and how easy it is for someone to use it. Its real-world utility can make or break its success, so don’t ignore it. Who knows, you could find another project more suitable to your investing style during research.
Parting words
Blockchain projects will only check some of your boxes ideally, but some will prove more suitable to your investing style. Answering the above questions could help you identify those most promising.
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