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How to invest in the crypto world?

Author: LB 2021-02-02 68

Since Bitcoin appeared in 2008, the cryptocurrency industry has undergone a very significant transformation. The Bitcoin whitepaper was published in October and the first block on the Bitcoin blockchain was verified in January and in a short period of time alternative currencies (altcoins) were released to overcome some of the imperfections that were found in the original concept of Bitcoin. With the covid-19 crisis crypto assets are gaining more attention than ever before and we have already witnessed a few market frenzies and in spite of the alarming bubble-like idiosyncrasies we all know of, market prices are still rising. But what other aspects are there when we want to talk about cryptocurrency investments? Naively buying a currency in order to sell it to someone else for a higher price might lead to temporary gains for a few lucky participants, however this is definitely not a sustainable strategy. Let’s see what other options we have!


Recently, I have been investigating the crypto world and I have actively been looking for investment options with controllable risk. Currently, I am in the phase of experimental research and setting aside the naive buying-and-selling investment strategy, I came to a conclusion that there are at least two options left for us who want to invest in cryptos in 2021. Both of these require a very deep understanding of the underlying technology. One very straightforward option is to invest in ICOs or Initial Coin Offerings and the other option is to create an ICO using one’s own capital.


Well, let’s start with a first option. ICO is very similar to traditional IPOs. To put it simply, in 2021, the technological advancement of blockchain based technologies, fundraising is easier than ever before in history. Moreover, these ICO are basically unregulated, so nobody can really ascertain your motives and the way you execute your project. This is obviously a double edged sword, because if this is true then ICO are extremely risky and in fact many investors lose their money by blindly giving it away to precarious project owners. On the other hand it is also true that some of the ICOs turn out to be very successful and miraculous ROIs are not rare in this completely new field of investments.


How to evaluate an ICO?


Well, unfortunately I am unable to give a comprehensive guide on this question, but I am going to share my thoughts and some of the experiences I had when I was looking at certain new ICO projects.


So in order to do this, I used the following site: https://topicolist.com/, and I randomly selected two projects and investigated them. The first one I looked at was basically an implementation of a cryptocurrency based casino. It caught my attention, because it sounded like a good idea and I was curious whether it was an active project or something more like a scam.


The first thing that is expedient to do is to download the ICO’s whitepaper and analyze the document for a little while. I did this with the crypto casino and after some research I found that the project is to be set aside.


My main concern was the following. The authors in the whitepaper used elementary mathematics to derive their ROI model and most of their data was taken from random blogs. My second step was to open their site. Only to find that their site was down and I could not even access it. With this level of professionalism, I do not think that many investors were convinced and I guess the project atrophied.


The second project was much more interesting, because their whitepaper looked much more professional, they did a very detailed market research and their site was accessible. You can check their website at: https://mindsync.ai/.


So basically the idea of MindSync is to create a platform for AI and machine learning experts and for corporations or research groups who would be posting questions and tasks to be solved by the experts. This idea could kill two birds with one stone, because AI experts could earn money by solving tasks and corporations would not have to set up a complete AI team or a machine learning department. In addition to this, MindSync is developing a software component that would enable GPU owners to efficiently utilize their hardware.


GPUs in the crypto world are mainly used for Ethereum mining, because of the stupendous ROI Ethereum miners can earn these days. This is due to the fact that video cards are not suitable for Bitcoin mining anymore and the mining of Ethereum is currently done solely on GPUs. But the blissful era of GPU mining will eventually come to an end, and this will happen when the Ethereum network switches from POW to POS. When this happens, GPU owners will experience a significant dip in their profitability and they will have to look for alternative options to utilize their hardware.


The software component developed by MindSync will enable GPU owners to switch between cryptocurrency mining and very intensive computational tasks to optimize their hardware’s output. In 2021, if someone wants to rent one hour of GPU power from Google or Amazon, he has to pay somewhere between 1 and 2 dollars. This cost could be reduced significantly with MindSync’s solution, so both GPU owners and those in need of machine power could profit from this new idea.


Clearly, ICOs greatly differ from each other and if you want to manage your risk, understanding the given ICO project in detail is of utmost importance.


The other option for those who are interested in pursuing entrepreneurial endeavours is to launch a cryptocurrency or blockchain based project. In order to do this, you need more than money, because simply by having money nobody is going to build your MVP. You have to have great organizational skills and you need connections too. When you are thinking of launching an ICO, make sure that you have everything planned out properly. For me, being a potential investor it is very important for the project to be understandable and I think the first step to achieve this is to create a neat whitepaper.


Obviously, the second option requires much more effort, but it also comes with a more manageable risk, than just simply investing into someone else’s ICO. Which one would you choose?


Author: LB


Illustration: pixabay.com


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