Investing in cryptocurrency is a dicey game because we all know how volatile cryptocurrencies can be. A coin worth $10 now may be worth half the value the next minute or less. These changes are not automatic in themselves, they are activated by humans who are transacting all with the mind of making some profits. These actions by humans or bots created by human and assigned the trading function are a response to several things which could range from speculations to a depth of feasibility study and research.
In which ever case, different people have their own personal indicators that prompt their impulses or decisions. In any case, always make your personal researches and never depend on forecast and predictions of "experts" as they can be wrong. Token prices like other market commodes respond to demand and supply curve and also obey some economic and market theories. These theories must be understudied, understood and then applied organically and with caution.
Few days ago, I was discussing crypto investment with a friend and he mentioned how he bought into a DeFi project due to the high yield that it promised. Unconsciously, the first words that proceeded from my mouth were "how secured is the blockchain?" His response were somewhat assuring as he expressed his caution in the investment move. According to him, the profit margin were just too juicy to be lost, though, he made a tiny bid.
Investopedia would define profit as the financial benefit realized when revenue generated from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity in question. This means that the amount sunk into the investment must be completely recovered with additional gains. SOme investments are made without being conscious of the taxes, in the case of crypto expenses, commissions. Profit is calculated as total revenue less total expenses.
When we talk about security in crypto investment, we would actually be looking at the tendency of having you balances zeroed, or the vulnerability of the blockchain to hacks as well as the level of decentralization of governance that gives every user a voice. There is a popular saying in the crypto space "not your keys, not your crypto".
I conceptualize a sustainable investment as that satisfies profit conditions while not undermining the possibility of system accommodating future investors. I love Blackrock's definition which views a sustainable investment as investing in a system which pioneers better ways of doing business, and creating the momentum to encourage more and more people to opt in to the future we're working to create.
Maintaining a healthy cycle in investment is important. The cycle which allows for new investors to jump into the business is a healthy one. When a system does not permit an entry of new investors, then it cannot be assured of longevity.
While some investors are much careful about how much profit, they'll draw, do they consider for how long that return would be possible. I'd prefer a tiny profit margin running consistently over a long period of time than a "big" spot turnover.
While we're on the lookout for profitable ventures, we should never lose sight on the security of the system we are investing through. We're taught in Engineering that he who works safely (securely) lives to work another day.
I would be glad to share thoughts with you on what indicators you consider in a crypto investment. Profit or Security? Let's maximize the comments section of this blog post.