I’m a Crypto Investor: 5 Coins I Would Never Invest In
Written by
Sean Bryant
Edited by
Gary Dudak
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If you’re trying to diversify your portfolio, cryptocurrency is an option. Crypto has been gaining popularity because of the decentralized nature of the blockchain. Many countries, like Canada, Singapore, the United Kingdom and the United States, have already taken the initiative to adopt crypto as a formal currency.
However, before you purchase the first coin you come across, it’s important to conduct thorough due diligence. There are dozens of different types of crypto to choose from. After speaking with Patrick E., a crypto investor since 2019, we’ll look at five coins he would never invest in. But just remember, this isn’t financial advice — always consult with your financial advisor if you have any questions.
Dogecoin (DOGE)
“Dogecoin started as a meme back in 2013,” said Patrick. “The rapid popularity of Dogecoin attracted social media attention and investments by high-profile individuals like Elon Musk. Despite its popularity, Dogecoin seems to fall short in a few areas. For one, Dogecoin lacks a competitive advantage when compared to the nearly 20,000 of other offerings.”
Additionally, the never-ending supply of Dogecoin could undermine the appreciation potential. Similarly, Dogecoin is primarily used in tipping culture, not to facilitate large transactions. This coin makes the list because of the above factors and the heavy reliance on social media hype to remain relevant.
Hex (HEX)
Hex was created in 2019 by Richard Heart as a certificate of deposit (CD) alternative. CDs generally have lower returns than the S&P 500 and other investments, yet Hex advertises itself as unlocking astronomical returns for its investors. So far, this has not been the case.
“The process of purchasing Hex is also more complex than other crypto investments,” Patrick explained. “First, you need to purchase Ethereum. Then, you need to exchange the Ethereum for Hex tokens. With no clear utility or revenue generation, this crypto is filled with red flags.”
FTX Token (FTT)
FTX was a token created by Sam Bankman-Fried. However, back in 2022, FTX filed for bankruptcy following a multi-billion-dollar fraud scheme by Bankman-Fried. In total, FTX customers lost around $8 billion, while equity investors lost another $1.7 billion. Despite an $11 billion forfeiture order to repay victims, you might see some FTX tokens floating around.
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“The collapse and bankruptcy filing of FTX makes FTX tokens worthless and volatile,” Patrick said. “Any coins that appear to be heading for a downward decline or bankruptcy should be avoided. If you come across an FTX token, avoid the investment.”
Shiba Inu (SHIB)
Have you ever heard of Shiba Inu? Shiba Inu is another meme coin that took off in 2020 thanks to an anonymous creator who goes by Ryoshi. With no face behind the company, Shiba Inu lacks transparency in its operations, development team and leadership at the helm. In addition, Shiba Inu does not have a competitive advantage or differentiation.
“The primary use of Shiba Inu is for payments,” said Patrick. “The lack of value proposition doesn’t support a long-term appreciation play for investors looking for large gains. Historically, coins with rapid ascent fizzle out and face steep declines, potentially foreshadowing a challenging future for Shiba Inu. If you’re looking for an appreciating coin, look elsewhere.”
Cardano (ADA)
Cardano was formed back in 2015 by Charles Hoskinson, aiming to be a decentralized application development platform. Despite having a multi-billion market cap, Cardano seems to struggle compared to other crypto offerings, with the price remaining flat for months at a time. A rally or rebound never seems to materialize for it.
“With Cardano struggling to find a near-term solution to its declining price, the long-term future for the coin does not seem positive,” said Patrick. “In addition, Cardano’s business model is heavily reliant on user engagement and trade volumes, which have remained moderate over the past few years. Most of Cardano’s projects seem to gain little to no traction, indicating fading demand and a subsequent price drop on the horizon.”
The Bottom Line
So, are you ready to make your first crypto investment? If so, be sure you fully evaluate the coin before making an investment. Not only do you risk losing your initial investment, but investing in the wrong company could compromise your personal information. Look for companies with full transparency in development and operations.
Additionally, companies need adequate security and a real-world purpose to make solid long-term investments. With over 20,000 coins on the market, you have options when it comes to investing. Take the time to evaluate all of them.
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