Cryptocurrencies as an asset class have been in the consciousness of many investors since 2021 at the latest. Strong price increases arouse expectations – and greed. "Bafin has just warned against crypto investment tips via social media channels," says Hartmut Giesen, digitization expert at Sutor Bank in Hamburg .
"A clear sign that newcomers to the market currently have to be particularly careful not to fall for scammers."
This can be prevented with little research in the right places outside of social media.
In principle, cryptocurrencies should only ever be a small part of a long-term investment strategy.
"The risks are high, the fluctuations enormous and investors have only done well with a few of the now more than 17,000 cryptos"
says Giesen. On the other hand, crypto assets have firmly established themselves as an asset class and will continue to have their place.
"These are mainly the large, established cryptos such as Bitcoin or Ether"
says expert Giesen.
"So these are the first choice for beginners."
Even more experienced crypto investors like to grab the top 20 crypto currencies, measured by market capitalization. Their advantage: If the market capitalization is high, the manipulation of the prices is also very difficult and only possible with a lot of effort.
Meme coins offer the greatest danger
Because this manipulation of the courses is what the Bafin warns against: so -called meme coins are only issued with the aim of making them known quickly, collecting a lot of money and making their inventors rich in this way.
"The tips for this very often come via social media channels or via messenger services"
like Giesen.
"Often these are also the only channels through which communication takes place."
If a meme coin manages to start a wave and increase the price, the masses will follow, spurred on by influencers, and the price will continue to rise. "But these price gains are usually not sustainable," explains Hartmut Giesen. The course soon collapses – in the worst case, investors get nothing.
Research can quickly bring clarity to the value of cryptocurrencies
The value of cryptocurrencies is not easy to determine. They are always related to a blockchain or an application running on a blockchain as a software program. The bitcoin blockchain is actually the closest thing to a currency: it produces and manages bitcoins. And their price is based only on supply and demand, there is no inherent value. In the case of Bitcoin, however, a large number of private and institutional investors have now “agreed” that the cryptocurrency has established itself as a store of value instrument. Demand, and therefore price, fluctuates, but Hartmut Giesen believes it is very unlikely that prices will plummet despite the lack of inherent value.
“The Ethereum blockchain, in turn, is a platform on which software, so-called smart contracts, run.”
So there is an intrinsic value of ether, which is measured by how much the Ethereum blockchain is used by developers for smart contracts. Because the Ethereum blockchain is actually a platform for many applications in the areas of decentralized finance, NFT or Metaverse, investments in ether have increased significantly in recent months.
Other cryptocurrencies in the top 20 can be analyzed in a similar way. Some fall into the same category as Bitcoin, such as the fun coins Doge or Shiba Inu, others into the Ethereum category, such as Solana , Cardano or Polkadot . Information about which blockchain or which application is behind a coin or token can be researched. Coinmarketcap, for example, offers information, specialized information services such as Messaria categorize coins and tokens according to categories such as Defi, Web3 or Metaverse and offer further information.
"And if you want to delve further into the analysis, you can find out first-hand about the strength of communities"
like Giesen. For example, developers meet on the Github platform to develop software together. Most crypto projects are also represented there.
"There you can see how many developers are working on the further development of the blockchain or a project based on it," says Giesen. "And these are much stronger indicators of the value of a coin or token than likes on Instagram or YouTube."
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