What should I look for before investing in a new altcoin?
There are many altcoin initiatives with ambitious white papers and beautiful websites. Unfortunately there are also many scams, the so-called scamcoins which are created to make a quick buck and then shut down. Before you invest, it is therefore a good idea to get to know a few things first. And never forget the golden rule: never invest money that you cannot afford to lose.
A few things to watch out for before investing in a new altcoin
- Is the team transparent? A team that presents itself openly on a website with a picture and a link to LinkedIn inspires more confidence than a team that remains invisible to investors.
- Is there a domain name registered for the new altcoin? The scamcoins I have seen over the past year have not had a domain name registered but only an announcement on the BitcoinTalk forum.
- Are the developers active? Developer activity is indicated by the number of updates in GitHub. GitHub is a popular gathering place for open source software. When a new altcoin has just been launched and there has been no activity in GitHub for a month, the question is whether development is still taking place on the new altcoin.
- Is there good support from the team? When you share a question or issue in the announcement topic on the BitcoinTalk forum, in the Slack or Telegram channel is there good support provided in a timely manner? A detached and reliable team will do everything possible to serve the potential investor and end user.
- Is there a clear white paper with roadmap available stating what the team plans to deliver in the coming year? If scamcoin is going to make money quickly then a roadmap and whitepaper may be too much trouble.
- How are the reactions within the communities? There are investors who have been around for years and also share their opinions on the Internet. It can do no harm to take such reactions into account when forming an opinion whether it is safe to invest or not.