What makes a good altcoin in 2014?

Everybody is looking for the next cryptocurrency that’s going to take off. There are plenty to choose from already, and new coins are releasing almost daily. So what makes for a good altcoin?

It’s a question that’s very difficult to answer in any certain terms. When we look at success stories such as Dogecoin, it really demonstrates that most any coin can come from nowhere and achieve huge things.

What I can offer, though, is a few of the things I believe you should look for when you are assessing whether or not a coin might be worth watching, or maybe even investing in.

What’s new or different about the coin?

One of the most fascinating things about the altcoin scene is that it’s essentially a giant theatre for experimentation with cryptocurrency. This means that a coin which innovates or does something different is going to immediately garner a certain amount of interest from the community.

New technology or algorithms are obviously some of the most obvious innovations, but it could also be something else such as targeting a specific purpose or any other number of changes.

Of course, doing something out of the ordinary can be a bad thing on occasions, so always be sure that the reported innovations are actually beneficial and realistically achievable.

It’s never going to be impossible for a generic clone of another coin to come along and somehow become massively popular, but with coins releasing at the rate they are currently it’s going to be harder and harder to gain recognition by the day.

Where’s the community?

A brand new coin can be forgiven for having a small community, but I believe community involvement is the single most important thing for the success of a cryptocurrency. Different coins seems to have communities located in different places (Reddit, BitcoinTalk, etc.), and wherever it is you’ll probably want to track it down if you’re researching a coin.

Is the community growing? Is the community active? Are they participating in the coin’s growth and development? Are they welcoming to newcomers? These are all key questions, as with something decentralized like a cryptocurrency the community is essentially what decides a coin’s future. Community members with varying skills, who are willing to give a little time for the benefit of the coin, can work together to achieve all sorts of things.

With most of the big exchanges and services adding new coins based upon voting systems, this is another area where a strong community can be invaluable.

What are the developers doing, do they appear competent?

Every coin needs the ability to continually evolve as this still new idea spreads across the world, and doing so is often going to require a good group of developers. Check that the developers are active, and that they appear capable of the task at hand.

A coin can look great one minute, when everything is going smoothly, but if something does suddenly go wrong it’s important that there is somebody there who can fix it. Not being able to quickly attend to an issue is going to lead to a very fast decline in confidence from anybody who was supporting it.

It’s also important that the developers are communicating with the community, and that their actions reflect the wishes of the community. If a developer loses the support of the community, then it’s highly unlikely it will ever lead to good things.

What will I be looking out for this year?

There are a few areas in particular where I feel opportunities are there to be capitalised upon in this coming year, so I’ll finish with just a few of them:

• Proof of Stake: PoS coins are something that many people very interested in, while others are very wary of the idea altogether. This disparity leads me to believe there’s a space in there somewhere for somebody to come along with a modified version of proof-of-stake that can address some of the concerns at present.
• Anonymity features: Internet users are becoming ever more careful about who they share their data with, and there’s many reasons why somebody may wish to do the same with their money. I think people will be very attracted to any coins that introduce or adopt some kind of anonymity features in the coming year.
• Reward schemes: I don’t think it’s long before we see a big company that decides to create a cryptocurrency used as a replacement for an existing reward points scheme. Just how something like this might be implemented remains to be seen, but it would have many eyes on it should it be attempted.
• Ease of use: While all coins are striving to be as accessible and easy to use as possible, I feel something brand new could come along at any time and completely change the game. This could be in the form of a service for an existing coin, but could also be built into or added to the very coin itself — making this now superbly simple to use currency an instant success. It may not happen this year, but when it does it will be big.

That’s just a few of my thoughts on the matter, I’d love to hear what sort of things you are looking out for when you are checking out different coins in the comments below.