When investing in cryptocurrency, one overlooked but important factor to look out for is utility.
Forget the flashy ICO adverts and look instead at how a cryptocurrency will be used. A high utility provides the following benefits to a cryptocurrency:
Improves liquidity
A cryptocurrency that is constantly being used, transferred and traded allows for investors to easily buy and sell said cryptocurrency. A cryptocurrency with a high marketcap may make you wealthy (on paper) but if it is not being traded enough, who will buy it off you?
Drives demand
A cryptocurrency with a legitimate use is a cryptocurrency that is needed and sought out by users who can benefit from its utility. It is also sought out by investors looking to profit from the cryptocurrencys demand.
Creates scarcity
The more a cryptocurrency is in demand the more it will be acquired by users, leading to less coins in circulation.