All right, here it is, actual investment advice, but please keep in mind, this is not investment advice, this is simply the method that I use.

evaluating cryptocurrencies

• Will this currency significantly outperform the dollar and the risk-free rate?

• What are the risks?

So I actually have a process for answering these questions now. Outside of blurt, one of my work functions is to evaluate cryptocurrencies for investors.

Will it outperform the dollar?

Well, I usually answer this question by looking at supply-related functions. The question is basically: is inflation fixed and algorithmic? If yes, then it passes this test.

But there's more to this, currencies have what's called a currency area, and strong currencies have an expanding currency area, and in cryptocurrency, this basically refers to the community. So the next item is - - is the community strong, and expanding?

If the answer is yes, then it passes this test.

The next item relates to technology and security.

Is the technological setup of high quality?

Is the product secure?

Again, we are looking for yeses to both of these.

evaluating risk

So in most cases, in cryptocurrency, the risk to invested capital is in fact total loss of funds. So what you're looking for is a determination of the likelihood that that might happen.

The questions on technology, security, community, and supply all serve to inform this vital item.

Investments have what's called a risk free rate.

The risk-free rate is the rate at which your wealth can grow while taking no risk to your funds. Typically things like government bonds are thought of as setting the risk-free rate, so we can say that currently the risk-free rate is somewhere between 1 and 3% per year and in some places, where negative interest rates have been implemented, it is actually below zero.

then, what you're doing is making a determination of whether or not the potential gains posed by a certain cryptocurrency investment, is worth taking the risks that you have identified.

Now, to develop this, I have made a number of failed investments.

I've also done quite well on some others, and after a while you develop a bit of a feeling for the right set of factors.