The cryptocurrency market has existed for about a decade already, and it all started with the Bitcoin project (BTC). For those who are rather new to the term, a cryptocurrency is defined as a digital currency transferrable from one person to another. Since its launch, tons of players have already joined the market. At the same time, many people want to learn how to know what cryptocurrencies to invest in. If you’re thinking of investing, knowing the fundamentals would be a great help. Below are some tips to follow on how to know what cryptocurrencies to invest in.
Cryptocurrency: How It Works?
Cryptocurrencies can be exchanged from one person to another via the worldwide web without a middleman. It’s like a bank or a government and is considered the wild, wild west of the digital world. It’s like asking a kid to watch your dog without having to pay in cash. It’s decentralized. The government or a bank does not control them (how they are exchanged, their value, or how they are produced).
Cryptocurrencies are stored in a digital wallet. Usually, you use an app or through a vendor where you buy your coins. Your wallet is like a lock that gives you a private key or like a unique code to digitally “sign of” purchases. It serves as proof that the exchange was valid or legit.
Cryptocurrencies work on a blockchain technology, which is like a long receipt that keeps on adding and growing with every exchange. It keeps all the transactions that ever occurred in a given cryptocurrency.
Can You Use Cryptocurrencies?
Most individuals see cryptocurrencies as investments. However, spending cryptocurrencies could become well-known as they gain trust. Many online retailers also accept them, and any two persons who appreciate them can trade them for goods and services. Although some retailers are still testing to use Bitcoin as a legit source of payment, cryptocurrencies are still on the border. Read on for some easy tips on how to know what cryptocurrencies to invest in later.
Investing in Cryptocurrencies: Bad or Good?
Cryptocurrencies promise to be non-manipulatable money for the entire world. Users and advocates alike see a bright future in which Bitcoin or other cryptocurrencies would replace Dollars, Euros, and others and create the first free and hard world currency.
There are good reasons to invest, and figuring out how to know what cryptocurrencies to invest in would greatly help.
- You want to protect your net-worth from the downfall of the Dollars that is assumed by many to happen.
- You are a supporter of its social vision – free and hard money for all.
- You like and understand the technology used behind it.
However, if there are good reasons, there are also bad ones. Most people fall victim to the hype of the cryptocurrency-bubble. There’s always someone who is attracted by the FOMO (fear of missing out) and buying out massively in the hopes of making quick money without understanding how to know what cryptocurrencies to invest in. Never do this. Learn first before investing.
Early-stage investors of Bitcoin and Ethereum made tons of money in pure profits. Stories like these flooded the web and made more people join the crypto hype. However, as more and more people flooded the market, the inevitable happened. The crypto market took a great plunge, with many people who invested in lost their life savings. This article will guide you to make a smart investment.
Cryptocurrencies are volatile. They exceed other investment classes, and they’re not your usual investment. Plus, there is always a risk that your country may ban cryptocurrency trading. If this is the case, you should make your peace with not liquidating your crypto assets. The lesson here is the only risk as much as you can afford to lose.
There Are Other Coins Aside From Bitcoin
Up until late 2016, there was only Bitcoin and not much besides it. If you wanted to invest in cryptocurrencies successfully, Bitcoin was the way to go. However, things have changed. While it is still the most popular and dominant, Bitcoin’s share in the crypto market swiftly fell in 2017 from 90 to 40 percent. The reason is, while it remains the undisputed king of crypto, tons of people are questioning its future use.
Remember the Coin’s Use Into the System
The first task you have to do is to read the cryptocurrency whitepapers. It may not be as exciting, but you need to put in the work before reaping the benefits.
Reading the cryptocurrency whitepaper will give you great benefits:
- You will be more informed about the coin and the utility it will bring into the system.
- You will know that a poorly written whitepaper is usually a good sign of understanding whether the project is worth investing in or not. If the team can’t simply explain their token’s true utility, it’s probably not worth investing in.
The whitepaper is the bread and butter of all ICOs. Simply put, it can tell potential investors all the things they need to know about the project. So, it shouldn’t be overlooked.
Watch Out for Signs of Scam
Stable coins usually have a clear technical vision, a dynamic development team, and a strong, devoted community. On the other hand, bad coins promote obscure technical benefits without telling them how to reach them. They have a community that focuses on getting rich more quickly.
Check out their team’s profile. It does not matter if you would be a stalker-ish. You must put in this effort so you won’t waste your money, time, and effort into investing later.
Also, an ICO that promises or ensures “guaranteed returns” on their investment and profile is a scam. Any cryptocurrency investor worth their salt will advise you that there are no assurances or guarantees in the crypto world.
There will come a time when cryptocurrencies might be authorized and world-widely used. But for now, you have to be safe and be smart. The get-rich-quick schemes appear too good to be true because, indeed, they are. The truth is, the road to building your wealth should slow and steady. Millionaires don’t do it overnight and build their wealth through risky and highly-volatile investments like cryptocurrencies. Study and learn how to know what cryptocurrencies to invest in and how the crypto world works so you can invest with confidence. Know more about cryptocurrency here!