Hi,
I've been encouraged (well, not that nicely, but I choose to take the positive part of the message) to do my research and choose a coin instead of just putting my rig for rent for others to use.
As a newcomer, this is a daunting task. There are hundreds of coins out there, each with their ecosystem, technology and specificity, and the usual trail of misinformation, FUD and general trolliness that you find in a tech environment, especially since money is involved. Some people want to keep this game for 'people in the know'. Some believe so much in their coin they trash everyone else. Some voluntarily spread misinformation for their own gain.
I just spent a few hours on cryptsy, trying to get a feel of the evolution of a coin's value, compared to BTC. There is a clear pattern for the majority of altcoins: a meteoric rise at launch thanks to the hype, the occasional pump and dump, and a stabilization later at a low value. This information doesn't really help to choose a coin, but it can help to avoid one. You don't want to pick a coin just because it has a great value during a pump and dump.
So what are good criterias to pick a coin to mine (remember, this is from a miner's perspective, not a trader's)?
- Technology. This is the one that naturally attracts me the most because it hits closest to home. But a good technical base isn't everything. We see shitty products with great hype everyday, and great products struggling because of bad PR. That's marketing 101.
- Community. If the coin has a good community, you can hope it will last, maybe?
- Ecosystem. What can you actually do with that coin, apart from trading it for others?
- Pure technical analysis comparing the coin's difficulty, your hashrate on that algo and the coin's value. This is basically what autoswitch/autoconvert multipools do. So I don't really see the point of doing the same thing just to avoid a few % fees.
- Comparison sites like whattomine? At first glance, it doesn't list any Quark coin, which seem to be - by far - the most profitable algo at the moment. So... not a great start.
- Diversify with a site like hamsterpool. Mining several coins and holding them, hoping one will succeed?
I will systematically ignore posts that are off-topic or non-constructive, and I encourage everyone to do the same. Also try to avoid posts that just say 'you are wrong' without adding anything to the conversation. Let's keep this thread on topic: How do you choose a coin to mine?
The following rant drifted off from the main question in the subject line, buit I guess the
short answer is whatever is most profitable at the moment.
The process for investing in a coin is very similar to choosing a stock and basicaly depends on your investment
goals.
If you want to pick a new altcoin for the purpose of holding it for the long term you really need to invest a lot of
time doing your homework. It's a lot more difficult than picking a stock. Stock trading is heavilly regulated and
requires companies to file reems of docunebts about the company's assets and operations. There is no such
documentation crypto coins.
The lack of regulation also attracts a certain sub-class of people who don't like to play by the rules. Although
pump and dump schemes are common in the stock market the scammers have a much easier time in crypto.
Most long term stock investors buy large established stable companies with predictable growth and steady income.
There aren't any crypto coins that even come close.
Another factor to consider is what can you buy with the coin. Well not much. You can play poker and go shopping
on the silk road but that's about it right now. I haven't seen any take up by online retailers. In fact a local pub
hosting the only Bitcoin ATM in town stopped accepting BTC for beer purchases. Very sad.
That doesn't leave a lot of ways to invest in crypto. Whether mining or buying on an exchange the fact remains
what do you do with the coins once you acquire them? you could choose to hold the largest, most established
coin but that is still highly speculative. You could trade in and out of fiat or altcoins based on technical analysis.
There isn't any fundamental analysis possible due to the lack of verifiable information.
Considering the typical lifecycle of most coins, as you noted, the sweet spot is when a coin is new. The
obvious strategy is to mine and instadump before the initial hysteria wears off. This is what multipools
excell at, except that the time between mining and exchanging coins results in a reduction in payout.
It's a lot of work to keep on top of every new coin that gets released, setting up a wallet, making
sure there is an exchange where you can trade it, determining which coins have better mining payouts, etc.
I don't mind paying a fee for someone else to do all that work. This reduces my time investment but not my
profit because time is money.
We all hope that crypto catches on in the real world but even if it does I don't see a future for altcoins. At most
I see 2 or 3 coins possibly rising up and becoming mainstream.
Online electronics retailers should be at the forefront of crypto currency adoption. They already have a large
geek client base and provide a gateway between the geek world and mainstream. But how would they manage
currency exchange? They don't have to now because the credit card companies take care or if. Any mainstream
acceptance of crypto currency would require buyin from banks and credit card companies and that would
attract the attention of government regulators which could be both good and bad. Will it ever happen? Who knows?
And one final note, don't forget about the tulips.
