There are hundreds of coins now in the cryptocurrency market and new coins are released almost on a daily basis. It is important that you equip yourself with the right knowledge to identify a real online investment program from the scam ones. The ratio wouldn’t favor the real ones though as there could probably be just a handful of real investment programs versus hundreds of scammers out there. Cryptocurrency is a powerful system. It is designed NOT to be a ponzi scheme, but what makes it great also made it to be a vehicle for scamming. There are lots of online programs out there that use the word cryptocurrency or bitcoin just to attract investors.
So how to identify the real from not?
First, you need to know the basics of cryptocurrency and digital currency. Cryptocurrency has its own blockchain as its backbone. Blockchain allows the cryptocurrency to operate on its own, be adopted by 3rd parties, be listed in exchanges and many more. The blockchain must be transparent to the public and all transactions are visible and untampered just like what Bitcoin has.
Digital currencies on the other hand may not have their own blockchain and they are more centralized in nature meaning 3rd party systems cannot adopt them and all the running systems are created by its founders. This makes digital currency from unknown company or source more likely to turn out to be a scam because once the founders decide to stop operating, there’s no way for you to encash your digital assets. Most digital currencies as well depend on referral system so referral rewards are usually on the high side. They also have an overly stated high ROIs so to attract new investors.
Cryptocurrency is decentralized by nature. If your asset is in your desktop or mobile wallets and the founders decide to stop, you will still be able to encash your digital assets via selling them to 3rd party exchanges. The more 3rd party systems there are, the more stable the cryptocurrency becomes. This makes the economy of the coin becomes more fluid and independent from a single or central entity.
But not all cryptocurrencies are legit. There are roughly 800 cryptos out there but maybe you can only have a dozen or 2 with actual usage. As stated earlier, cryptocurrencies have a lesser chance of becoming a scam compared to digital currencies with centralized approach, but it can still turn out to be a scam or be a failure due to a number of factors: the way it was designed, the developers’ action after releasing the coin, and the realization of its future projects.
Creating a cryptocurrency is the easy part, building a solid community behind it is hard. The success of a cryptocurrency depends on its community. Without its community, the cryptocurrency will soon fail and the price will dwindle until panic selling happens in 3rd party exchanges. Most cryptocurrency experts look at how the coin was created, which includes if it is POW or POS, its inflation rate and the volume.
POW or Proof-of-Work allows users to mine the coin or basically get it for free by just using some software on their computer. (which was how bitcoin was back in the early days.) The problem with POW ( aside from you get it free at first using just your computer) is that it becomes more difficult to mine as years go by – so bitcoin nowadays can no longer be mined by just a computer alone as you need specialized devices or so called miners that cost a couple of thousands US Dollars to mine small amounts of bitcoins. But POW coins are attractive to the miners as the earlier you mine the coin, the easier it can be mined , which results with you getting assets just by using your miners.
Then there’s POS or Proof-of-Stake that requires a miner to be just a simple software in the computer which is your very own wallet that you installed in your computer. The good thing about POS is that the amount of free coins that they will get depends on how high the inflation rate the coin has. If the stated inflation rate of the coin was designed to be at 50% per annum, it means the amount of free coins they will acquire per year by just keeping their coins in their wallet will amount to 50% of their total holdings. So a user with 10,000 number of coins will get 5,000 new coins in a year which you will receive on a daily basis in small amounts. It might sound good that a higher inflation will provide a better to benefit its users – but you have to take note that these new coins could turn out to be sold in the exchanges for quick money which might hurt the price of the coin in the long term. As a coin with a volume of 100 million, this means that there will be free 50 million coins that could be sold in the exchanges over the course of 1 year. And of course the total volume, too high total volume must be justified same as a very low volume could hinder the distribution of the coin. This will depend on how you plan the coin to be used. If you plan the coin to be used by millions of users then a high volume could be needed or else you need to have a very high increase in pricing just like bitcoin. It can be best looked into by basing it in the market cap of the coin which is computed by its price per coin multiplied by its volume. Bitcoin reached a high market cap despite a low volume because of its very high price. You can check the market cap of different cryptocurrencies over at www.coinmarketcap.com.
TOA is designed to be POS, a low inflation rate of 2% with a volume of 8.8 billion.
So if it was properly designed, does it mean it will be a sure make-me-rich type of investment?
Nope. It depends on how you spread your cryptocurrency and make it usable by the public or the community. You need to make it appealing to investors, programmers and general users by providing the systems that they can work or use with. So how will TOA approach these sectors? Investors need to see the realization of the roadmap or the future projects. Programmers would want the coin to be easily available for them to use in their own systems so they can create other interesting websites that accept TOA. In doing so, they could profit in doing for example, a simple e-Commerce website with them selling items, but instead of accepting Bitcoin only or other cryptocurrency, would rather use TOA and Bitcoin – perhaps due to the fact that TOA is easily programmable or can be adopted to their systems and only a few coins provide those via APIs (Application Programming Interface).
General users want a coin that they can use in many systems or online services, so providing them with several 3rd party service providers’ partnerships like 3rd party payment systems, 3rd party online wallet providers, etc. would be a real advantage. And, of course, providing them our own services that they can use their TOA with will be the best approach.
We need the community and early investors’ support in order for all of this to become a reality.