When people find out I am a crypto journalist, the number one question I get is, “What coins should I buy?”

Another popular variation: “Should I buy X?” and oftentimes, X is a coin that, unfortunately, has a lot of hype but true in-the-know crypto people would never buy. Instead, it’s just insiders “dumping” on the traders they call “retail” — meaning unsophisticated investors.

For more obscure coins, these can be actual “pump-and-dump” scams in which groups of people will buy a coin early, then organize in chat groups to create hype around it, and then once the price has reached a certain level of breathlessness, the insiders will cash out, leaving retail “holding the bag” — meaning the coins whose value is now plummeting.

For these big name/big market cap coins that seem to appeal to total newbs but not to insiders, many in the industry have speculated that some of the hype is paid, since it does not seem organic to those who actually work in crypto.

Indeed, the coins I’m most likely to be asked about by random acquaintances are exactly these coins — big market cap coins in the top 10 that, if this were the stock market, you might reasonably surmise were quality simply by virtue of their ranking.

However, crypto is so new, that the high-quality vs. the low-quality coins have not been sorted yet in that way, and right now, in the top 10, there are definitely a few that many of my most astute investor sources would not say deserved those spots.

So here’s my short guide on how not to get dumped on by sophisticated crypto investors and to answer your own question: “Which coins should I buy?”

1. Do your own research.

If your research strategy is to ask a random person you barely know what coins you should be buying, you should not be purchasing anything. You would think this is obvious, but based on the number of times mere acquaintances ask me this question, apparently it’s not.

If you have to rely on someone else to know what to buy and when, then you will not know when it makes sense for you to get out, nor when there’s some news involving this coin that would change the picture for your investment.

An acquaintance once asked me if I had any advice on what cryptos he should buy. I said, “Do your own research.” Only after a minute did I realize that he thought I’d rudely told him that I wasn’t going to give him advice — not that that was my best tip.

But my best wisdom on what coins you should buy is that you should do your own research.

As implied above, if you’re going to put your own money into something, it doesn’t make any sense for another person to decide for you what that should be unless they know your full financial picture and are qualified to give such advice (and you’re paying them for the service).

And besides, if you lose money based on their recommendation, then it will definitely strain the relationship. But honestly, you won’t have anyone to blame but yourself for not knowing more about your investment.

2. Know some basic facts about what you’re buying and how it fits into your own financial goals and risk tolerance.

If you don’t know in your own mind and heart why you are buying a crypto — if you can’t explain:

  • what it does
  • how it works
  • why it has value
  • why you think it’s at a good price now that will go up in the future
  • how/why it fits into your portfolio and risk profile
  • when you’ll sell it
  • and many other things

then you should not be buying this coin.

If you’re totally new to crypto, take a step back to learn generally what crypto is about, what gives it value, how the various tokens differ from each other, why you personally might prefer one over the other, and then think about how all that fits into your personal financial goals and risk tolerance. Then maybe you could start to pick one crypto over another.

As for the question of why any particular crypto might have value and whether the price is good, that’s a much longer discussion that I’ll have to address more in-depth later, but briefly, you’ll want to understand things like developer activity in that network, the “crypto economics” or “tokenomics” of the system (meaning, how the incentives of the coin are tied to its price), the circulating vs. total supplies, what the allocations are to the founding team and possible investors vs. the general public, potential regulatory issues, etc.

Too many people approach crypto like a get-rich-quick scheme rather than trying to understand it a bit first. This is a revolutionary new technology that is going to play out over decades. Think about how long the internet has been shaping our lives. With blockchains, it will be the same. Don’t rush put money in because you’re in an emotional, FOMO state of mind.

Maybe instead of thinking about it from an investment perspective, just try using it a bit first as a way of getting your feet wet and making smart decisions with larger amounts of money later on.

3. Figure out your security first.

As I wrote the other day, the history of crypto is littered with stories of people who have had their coins stolen or phished or hacked, or who themselves lost their own tokens or tossed them out or forgot/lost relevant passwords or their “seed phrase” or their private keys.

This means that in addition to knowing what you will buy, how much of it makes sense for you to buy, and why you’re buying it, you need to know how to secure your crypto first.

Do you trust yourself to secure it and not lose your private keys? Would you rather trust an exchange? If so, which one? And how do you keep your exchange account from getting hacked?

Do you understand how your behavior with your crypto will have to differ from your behaviors with traditional banking money? Have you set up new email addresses, phone numbers, 2FA (not by SMS), etc.? Do you have it engrained in yourself to never trust a url that comes your way via text or email or in a group chat? If you don’t know what I’m talking about, read my previous article on crypto security, in which I cover this in-depth, or check out the Facebook Live video I made in which I discuss the same issues.

On the video, someone commented that the information I gave scared him off from buying crypto ever. There’s no need to unnecessarily make this scarier than it seems. A lot of people are in crypto and manage not to get hacked. It just took learning some new behaviors the way we’ve all learned to use things like web browsers, messaging, photo and video apps, and social media.

It’s not rocket science. But it is a new world. There’s no need to be afraid, but there’s also no reason to be stupid about it. Educate yourself and dive in.