How to pick the best crypto to invest in 2020?
In this article, we will share with you how we pick the projects with quality, mettle and long term potential.
Less than 1% of the current crypto projects may succeed. That means, from over 6000 projects in the market (at the time of writing and growing), under 100 projects may actually succeed. Of these 100 projects, there is no guarantee as to which of them will be around in the next decade.
Those that make it all the way into the next decade will thrive beautifully and can hand riches to a patient investor.
As they say, “the market always moves money from the impatient to the patient ones.” That is a cardinal rule of any market. Those who buy winter merchandise in summer and patiently wait for the winter, make more money than those who try to time the market by buying and selling in winter.
We believe that the selected 5 cryptos (and the wild card entries) have a handsome chance of not only surviving but thriving in the coming decade, and can help turn a small investment into handsome returns. More on this at the end of this article.
Needless to say, these cryptos are outside of Bitcoin and Ethereum, which at this point seem to be the most obvious foundation of the crypto space. We always hold at least .1 BTC and 1 ETH in the honor of what they have done to the space.
Distilling some 6000+ projects to a manageable list is a herculean task, especially to pick the projects that have the chance to be here in the next decade. And longevity becomes an important part of that distilling process.
This longevity is crucial in crypto space, because:
- Longevity in crypto should translate to stupendous gains.
- Longevity also means these cryptos will go through a lot more BTC halving cycles than most, and if history were to repeat itself, this should translate to a natural asymmetric increase in value.
- Longevity means an opportunity to get on the ground floor of a potentially lucrative investment.
For these reasons, focus on projects that will survive and thrive long enough to benefit from the massive adoption of the crypto space.
Helping you ‘catch the fish’
As they say, you can feed a man a fish or teach him how to fish and you help him for life.
In that spirit, here are the important aspects we look for in a project so that you can apply these aspects to your own favorite current or future projects.
Most important aspects you should look for in a project
Ultimately, five main aspects drive the project’s success or failure:
- Solves a problem
- Collaboration (aka Partnerships) plus penetration
- Addressable market size
- Revenue model
Let’s explore what to look for in each of these aspects.
Solves a problem
Bitcoin, the first successful blockchain project, solved the issue of trust. Ethereum helped execute smart contracts on a blockchain platform, which later evolved into a platform for ICOs.
For the market to accept any project, it has to solve a real problem that people care about.
But there is an exception to this rule.
If a project can solve some latent demand that does not yet exist in the market, then the project gains the first-mover advantage.
That is what happened with Ethereum.
Ethereum created a platform to invest in ICOs, which created huge demand for ICO space. Ethereum then cashed in on the demand by providing a solution. By the time others realized and tried to address the ICO market, Ethereum had already dominated the space.
Platforms that provide novel solutions to an existing problem also do well.
Key aspects to look at when thinking about the problem that a project solves:
- Is this problem real or made up?
- Is there a first-mover advantage?
- Is it easy to understand and use the solution?
- Is there going to be a latent demand for the offered solution?
- Are there competitors who are better connected with strategic partners and alliances (connections sometimes matter more than the project itself, unfortunately)?
The bigger the problem and the more unique the solution, the greater are the chances of success.
Ideas are worth nothing unless executed.
Execution depends 100% on the team working on the project. That is why the second biggest component in selecting a project is Team. Some might argue that the team itself is the biggest aspect, but think about Bitcoin. We still don’t know who created it, but the problem it solves and the way it executes is what made Bitcoin what it is today.
When looking at the team, you want to think about following aspects:
- Experience: How experienced is the team? Do they have real-world experience? Being good at programming is a great skill, but you must have someone on the team who complements it with managerial abilities. In business, there is never one indicator of success—every skill counts.
- History of execution or exits: With few exceptions, if the person pitching the project has no prior experience in either kick ass development or successful business ventures, then chances are they are just trying to swindle you out of your hard-earned dollars. One of the reasons we love Celsius is because Alex Mashinsky is a Wall Street veteran with multiple exits under his belt. He knows what he is talking about and has the right business acumen to carry out a business plan. He is also well connected and can create momentum in the market. Not every project will have people of Alex’s caliber, but you want to be mindful of the technical abilities, integrity, experience, principles, mission that drives them, etc.
- Reputation: This is the age of social media. Do any of the team members’ accounts reveal a questionable reputation? If a successful entrepreneur has a history of failed startups, we take that as a positive sign, generally. That is because the person has tried much and gained different experiences. But if the name is associated with any scams or some type of conspiracy, you will want to tread cautiously. Binance would not have been what it has become if not for CZ. Take CZ out of Binance and that exchange will join the scores of wannabe exchanges out there. What sets it apart from other exchanges is CZ’s relentlessness to bring crypto to the masses.
- Followers & fans: Crypto is a relatively new finance space. This means projects need fans and followers who support them and their successes. There are many projects that aren’t worth much on their own merit, but they have thrived in the market purely due to their large fan base. You can find a lot of examples of single-use case projects that could be wiped out of business by the U.S. Government introducing a digital dollar, but still do very well in the market because of the undying love its followers/fans shower on them.
Partnerships and penetration
It takes a village for a project to succeed. Even good projects could fail if they don’t establish solid partnerships and projects.
- What kind of partnerships does the project have?
Is the project welcomed in its space? Does it have the backing of companies that could become its customers in the future? Partnerships are crucial in the crypto space for projects to lift each other as they explore the markets. Without proper partnerships and cooperation, projects can find themselves out of business quickly.
- What kinds of exchanges is the project listed on?
We have seen hundreds of projects with great potential, great teams, and amazing use cases but with no market. Without market, the project loses its liquidity, and without liquidity, it cannot meet its day-to-day operational needs. A project doesn’t have to be listed on Coinbase to be viable (although it helps), but it needs to have a decent market cap and activity to be relevant. We recommend looking at projects with at least $1 million in trading volume (the higher the better).
- Brand name association
What associations does the project have? Not one of the 5 we have listed in the report but a great project in its own right, Hedera Hashgraph has recently added Google to its governing council. There are many projects in crypto space which are bridging the gap between traditional markets and the blockchain/crypto space.
Addressable market size
Even when your solution, execution, team, and partnerships are amazing, if the total size of your addressable market (AMS) is limited, then it automatically limits your project. You want to have a company that addresses problems in a niche that is big enough to sustain the project. When the niche has room, it gives a chance for multiple projects to thrive while a smaller addressable market will limit the project’s success. A minimum of a billion-dollar AMS is a great start, especially if there are not a lot of “good” solutions in space.
Projects could be the best in solving a problem, but you need an amazing team to execute partnerships with brand names, and a market size that is beyond decent. Despite these factors, if there are no buyers for your service, the project will fail (unless you have 100 billion tokens worth something that you can freely withdraw each month like some projects do).
Having a sustainable current and/or future revenue model is key to a project’s long-term viability.
Using these same criteria we have picked 5 projects from the entire crypto market that we think have a great potential to 100x in the coming decade.
Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.
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