Expanding my Crypto Portfolio #1 - Choosing Parameters

To reach a conclusion at a conclusion in how i will choose a cryptocurrency to expand my portfolio, i will have to create a process of choice, because due to the huge number of blockchain projects that currently exist, it is necessary to create a filter that allows me to compare them.

Defining the investment plan

The cryptocoins market is extremely volatile and uncertain, and even though some of the projects have a promising future, there is no guarantee that any of the many unknown factors will eventually kill some of them.

So I will define some rules about how I will carry out my entries and exits of the positions of these coins:

• Initially, I will only acquire 1 coin per sector.
• The first review point will be at the end of 2018, when I will re-evaluate all open positions, and close them. It may be that depending on the development (across technology and functionality) i may keep some of them.
• The second review point will be after 1 year of the currency acquisition, based on the same considerations as above
• I will not set any stop Loss
• If a very large price increase occurs, I will consider closing the position, taking some or all of the profit.

The idea behind this strategy is to look for blockchains that have great potential in the long run, not just short-term trade gains

The process of choice

1 - Defining the sector

As I had mentioned in [first part of this experience](https://steemit.com/cryptocurrency/@phgnomo/expanding-my-crypto-portfolio-1-creating-the-process), each blockchain / criptocoin have a proposed solution to a problem, and consequently can be divided into sectors, or categories.

The first sector I will choose is based on a post i wrote here on Steemit, where I randomly choose one of the 1600 existing crypto-coins, and I try to understand what the proposal is.

The first currency I wrote about was DADI, which has a proposal to provide web services through cloud computing processed through a blockchain.

So for this first acquisition, I'll look for coins that have a similar proposal for cloud computing .

The idea of ​​cloud computing fits in well with the blockchain concept, since in theory, the service would become safer and faster because there are no concentrated points of failure.

2 - Finding Competitors

There are several websites that categorize crypto-coins, such as cryptoslate and i'll use them as a reference to find out what other cryptocoins have similar proposals for cloud computing.

Cryptocoins / blockchains that have the same proposal are:

• DADI
• Boosteroid (ICO)
• aelf
• iExec RLC
• Golem
• SONM
• DFINITY (ICO)
• Holo

3 - Scoring Criteria

For a comparative evaluation, it is necessary to define the criterias and assign a weight to each of them.

In this first part I will define what the criteria will be, and later I will define the weight for each one.

3.1 - Purchase Availability

Crypto-coins listed in the industry can be found in the following situations:

• Available for purchase in exchanges
• ICO not started
• ICO in progress
• ICO closed and available for purchase in exchanges
• ICO closed but not yet available for purchase in exchanges

The situations listed above already work as an elimination criteria, as it is not possible to acquire currencies that are not listed in exchanges, or are not with ICO in progress

Therefore, from the list of currencies found in the sector, will be eliminated:

• Boosteroid - ICO closed but not yet available in exchanges
• DFINITY - You will not hold an ICO, but a private fundraiser

Besides this elimination due to the impossibility of acquisition, I will establish here the first criteria of punctuation:

How many Exchanges / Pairs the cryptocurrency is available for trading.

A greater number of Exchanges / Pairs allows for greater availability (and a greater possibility of sale in the future), as well as greater credibility, since the exchanges (not all) have some criteria to accept the inclusion of the cryptocurrency in the negotiations, therefore it will have a higher score.

Using Coinmarketcap as a reference, the availability of exchanges / pairs of the currencies chosen are:

	DADI	ELF	RLC	GNT	SONM	HOT
Qt of exchanges	14	31	20	51	20	4

3.2 Market Capitalization

A currency with higher market capitalization means that there is more money invested in it, and therefore serves as a trusted thermometer for investors in general.

However, a large capitalization does not mean that the project will be successful, but only that more people are relying on its future value increase.

For the classification of this item I will use the currency position in Coinmarketcap, the better the position, the better the score.

Since the capitalization of each currency is variable over time, until the completion of this article it is possible that i will review this item.

3.3 Trading Time in Markets

Although the blockchain lifetime is not a guarantee of long-term success, an older cryptocoin has a longer maturation time, and may have already undergone better protocol development.

The benchmark for this criteria will be the trading time of the markets, as it is a common reference point between currencies.

This criteria will not have a very large weight, because although it is a risk reduction item, it is not a good indicator of future value.

	DADI	ELF	RLC	GNT	SONM	HOT
Total trading days	81	141	386	539	329	11

3.4 Market Capitalization vs. Trading Time Ratio

If a project presents a future possibility of growth / success, more people will seek to acquire the crypto-currency over time.

This generates a relationship between the market capitalization and the existence time of the blockchain.

If over time, market capitalization increases, it means that more people are believing in that project, and consequently, adding more money to that market.

If over time, market capitalization reduces, it means that fewer people are believing in that project, and consequently withdrawing money from that market.

Moreover, if a currency manages to acquire a larger capitalization in less time, it is a sign that the market has confidence in the development of that technology.

Using this logic, I created an index derived from the last two items, which will be calculated as follows:

(Trading days / Market capitalization)

In this way, the greater the number, but well positioned the currency will be.

	DADI	ELF	RLC	GNT	SONM	HOT
Cap / day trading ratio	0.2125984	2.4310345	2,9922481	11.222167	2.6967213	0,1222222

In the next article I will detail some other criteria of analysis, such as market forecast and technical points of the project.

See you soon.