Crypto Investing – My method to select the best cryptos to invest

For many years, I have been investing in Small and Mid-Cap with huge growth potential. I am a tech guy who works as IT consultant, so in my day to day I help IT managers in their complex IT challenges and in other strategic technology issues, creating real business value and impact from technology. This knowledge and experience in technology has helped me as investor, in my constant search of interesting Small and Mid – Cap Tech companies with long – term potential.

A few years ago, I found out Bitcoin and blockchain technologies and, as many of you, I realized the strong potential of this technology. I noted it was the future (in fact, it STILL IS the future). As a consultant, I try to help my clients to improve their business with the value of this technology and, as an investor, I try to select the best cryptos to invest my resources. With more than 1000 alt coins in markets, that is not an easy task.

In this article, I would like to share with you the method that drives my research to select the right cryptos to invest. As you will see in the following lines, my method is a framework that helps me to decide whether a crypto is worth investing on it or not. It is not composed of a set fixed rules but a set of key questions you should answer before deciding investing. This framework is based on my experience of years investing on stocks, adapting the methods used on those markets to the crypto ones.

Firstly, before getting deeper into the method, I would like to highlight that selecting the right cryptos is not enough to success in the markets. To be successful on crypto world, and on any investment market, you need to be good at:

• RESEARCH & SELECTING THE RIGHT CRYPTOS. That is, as said, the objective of the post.

• SELECT THE RIGHT TIME. Essential, especially in a so volatile market as crypto one. You can be a long-term investor, as I am, but, in any case, there is no point in buying when the market is too high, nor when the market is completely depressed, as during last weeks / months. The resources are limited, so, at the end, for every dollar you invest, you need to be reasonably sure you buy the RIGHT CRYPTO at the RIGHT TIME.

• MONEY (OR PORTFOLIO) MANAGEMENT. This is probably the most valuable ability for an investor. In next articles, I would like to share with you my strategy to manage my portfolio of cryptocurrencies.

As previously mentioned, the method is composed of a set of questions to guide your research about a specific alt coin. To complete your research you should be able to answer all or most of those questions, otherwise, your research will not be complete and the risk of the investment could be higher than expected. Within this framework, the research is divided into the following five categories:

1. UTILITY & VALUE of the cryptocurrency in the market. In this point, I try to find out if the alt coin is useful for the world in any sense. So, I try to answer these kind of questions:

   • Does this crypto improve the market where operates in any term? For example: New business opportunities, better customer experience, lower costs, higher scalability, better business agility…
   • Do I see this crypto in the market? Do I believe in its business vision? At the end, I am a long – term investor, so if I do not believe in a specific project, I prefer to move my resources to other.

2. TEAM involved. Think that some crypto project are just a white paper and lots of promises. And you are lending them your money by buying its coins (not always exactly like that, but it is useful to understand what I try to say). So, you have to trust the team. Ask yourself if you would lend your money to that team.

   • Getting deeper into team involved, I search for:
     • Leader(s) of the project: experience and professional resume.
       • Ask yourself: would you follow them in professional career? Or, at least, would you work for them?
       • Big names are important in this category. Sometimes business is like football: if Messi in on your team it will be easier to win.
     • Dev team and dev leader. How many people are in the dev and operations team? Who is the tech leader? Which is his / her experience in crypto and in tech in general?
     • Other teams and team leaders involved. To success, you need more than devs. You need a structure similar to a tech company, including marketing, sales, alliances, customer services, financials, and etcetera. One important point I review when analyzing teams is the ratio between dev teams and others. I usually distrust crypto projects with a strong marketing & communication team and a small dev team. And, depending on the maturity of the project, I do not like teams without anybody at marketing & communication either.
     • Advisors. Big names are very valuable in this category. When a respectable professional act as advisor for a crypto project, he / she surely believes on it, which adds credibility to the project.
     • Investors or financial institutions. If strong venture capital companies invest on this project, you can bet it will success. In these situations, I always wonder: if those guys trust on a specific crypto project, should not I rely also on it?
     • Community. On crypto projects, a strong and large community is always a good signal, because of its capacity of influence, empower and promotion of the project.
   • You can find crypto projects without details of the core team members. My position for these projects is always the same: I immediately discard the inversion on this project (and stop researching about it, logically). For me this is incomprehensible. Would any of you imagine investing on a NASDAQ company whose CEO name is not public?

3. WHITE PAPER + ROADMAP + CURRENT SITUATION of the project.

   • It is essential to read and to understand the White Paper to understand the project. I insist: it is necessary to read and understand the white paper before investing on a crypto project.
   • And, if a project has no White Paper or similar yet? Just think a bit about the meaning of it.
     • It might mean that the project is on a too early stage. Investing on this situation can be gambling instead of investing, and this article is not about gambling. You can maintain this project on the radar, and review it to finish your research in a few months.
     • It might also mean that the project is not professional enough. In these situations, do you really want to invest on it?
     • When reviewing the White Paper, I keep a healthy skepticism about the project, asking myself question such as:
       • Do they explain their business vision? Have I understood it?
       • Do they clarify the tech fundamentals behind their business vision? Have I understood them?
       • Do they detail the roadmap to achieve the goals of the project? Does it seem realistic to me? (Note that this part can be omitted depending on the maturity of the project).
       • My general impression after reading the White Paper, that is: do I share their business vision and do I trust they will reach their goals on the dates planned?
       • It is very important to be demanding with the White Paper, trying to answer questions such as:
         • Is it only a marketing sheet or does it provide good tech fundamentals?
         • About the tech stuff, does it really provide something new or different to other similar crypto projects?
         • Do not forget that the goal of the White Paper is “to sell” the project to the community, but, is the White Paper “selling too much” the project, being unrealistic?
     • About the Roadmap. Very important to understand the key milestones of the project and the dates they will be ready. Everything is quite fast on crypto world, so dates are very important to analyze a project as an investor. If key milestones are too far in time, it could be interesting to consider other projects before.
     • Besides the roadmap, you need to understand the current situation of the project: Try to answer questions such as:
       • Is the project on production or on development stage? If the project is on production, does it already have customers / users? For example, one of the key point to invest on VECHAIN was that they already had real clients months ago.
       • Any other recent events or situations that might influence the long – term value of the crypto? For example, rebranding, alliance & partnerships, especial announcements of the crypto…

4. COMPETITORS. With more than 1000 altcoins on markets, it is highly probable to find several projects similar to the one of the research. Ask yourself always why. Why should I allocate my next investment dollar on this project instead of on the other? If you do not have an answer, you’d better review your research.

Once the research of a specific crypto is finished, you might wonder how many “positives” are needed to select that crypto for investment. Although there is no magic figure for that, I have to say that I have to be very comfortable with all the answers of the research to select one crypto for investing.

Once I have decided that I am going to invest on one specific alt coin, it is very important to choose the RIGHT MOMENT to do it. I would like to explain it in another article, as this one is getting larger than expected.

So, that's all folks. This is my method to pick the cryptos to invest.

If I could give you a single advice, I would tell you to use a method to invest only if you understand it and feel fully comfortable applying it. Therefore, if you like my method or some parts of my method, I’ll encourage you to use it. If not, you’d better search for your own way. But the most important point is that you must be fully comfortable with your rules.

I encourage all of you to reply. I am always trying to learn and to improve, and a community like this is the best help. Remember that the greatest part of this game is learning. This is all about learning.

Have a nice day.