Some years ago, when i just began my journey in crypto currency, i made a lot of loses because i lack basic knowledge about crypto currency but today i can proudly say that i am doing great in crypto currency and i am also glad to help other people do better in the crypto space.
5 THINGS TO CONSIDER BEFORE BUYING ANY
CRYPTOCURRENC.
For those who dont know, purchase of cryptocurrencies is the modern day version of the gold rush, everyday more people are trying to secure a firm footing in the cryptocurrency space by either buying Bitcoin or one of the altcoins.
For many people, the train of Bitcoin has long left the station by virtue of its current price today which is above $14,000, this people are those who are looking at other Altcoins (Alternate Cryptocurrencies launched after bitcoin's success) that are affordable today to invest. The pack of altcoins is being led by Ethereum, Bitcoin Cash, Litecoin, Zcash, Monero and several others.
If you are interested in buying altcoins, here a five things to consider to help you make the right choice of altcoins out of the over 1000+ cryptocurrencies in circulation today apart from bitcoin;
1, Does it have an underlying technology, function or unique selling proposition?
Bitcoin came to being based on the block chain technology which today is finding application in several areas. It was adopted for its anonymity and ease of transaction but became slow over time due to wide spread use.
Ethereum's original rise came from its use as a means of executing smart contracts,this made it to be considered more usefull.
Litecoin is considered the direct replica of bitcoin but more faster in transaction.
There are altcoins that will be used for payment by gamers, some will be used for other things.
An altcoin that has an Underlying technology has tendency to be used more often, the widespread use of a currency leads to an increase in value.
An altcoin with a unique distinctive feature will capture a reasonable segment of the over $150 billion cryptocurrnecy market.
You need to ensure the cryptocurrency you are buying has an underlying technology or unique selling proposition, this is how you know it has potentials to rise.
2, What is the number of circulating supply?
One factor many people do not pay attention to is the number of circulating supply of the cryptocurrency.
From basic economics, we know that demand and supply has impact on pricing, when demand outweighs supply, the price of a good becomes high due to scarcity, when supply outweighs demand, the price drags or drops.
Any cryptocurrency with a circulating supply value in billions has a tendency to be sold at less than a dollar, it will likely remain below a dollar for a long time because it needs to
be scarce for it to increase in value. Some examples are IOTA, NEM, RIPPLE e.t.c investing in any of this is a long term strategy.
For a short to medium term returns on cryptocurrency investment, the altcoins with a circulating supply in the neighbourhood of millions have a greater potential for quick rise e.g Litecoins, NEO, OmiseGo e.t.c.
Always check the circulating supply before you buy any altcoin to determine if you are buying for short or long term.
3, Who has adopted it?
Bitcoin has been in circulation for more than five years but it was not increasing in value dramatically until many people started using it.
The use of bitcoin as an international means of payment without bank hassles for semi-formal and informal goods and services was what led to its spike in price.
East Asia is almost cut off from the world in terms of financial transactions, bitcoin has made doing business in Asia easier, China has a population of a billion, same as India, many
people in this countries are having a growing part of their population using bitcoin for daily financial transaction thereby leading to increased use.
Ethereum smart contracts was adopted by financial institutions(it is adopted by JP Morgan Chase, Microsoft and Intel), same as ripple, NEO was recently adopted by Microsoft for payment solutions, this was a major reason behind the NEO spike in price.
Although Ripple is backed by google, it has not taken off because of its number of circulating supply.
So you see why it is necessary to tick off all the boxes of the 5 things to consider before buying an altcoin?
4, What is its relationship with bitcoin and Ethereum?
This is for those who are into cryptocurrencies with a focus on immediate term gains, this people are those involved in trading cryptocurrencies in any of the exchanges, for this set of people it is important to know the relationship of the altcoin you are buying with bitcoin and Ethereum.
Does this altcoin rise and fall when bitcoin/
Ethereum rises in value? does it rise when bitcoin/Ethereum fall?
This information will require study of the market for days with an indepth understanding of trend analysis.
Understanding this approach will help the investor decide on the suitable currency pairs to trade with and how to trade.
5, What is its market capitalization?
The market capitalization is the total amount people have used to buy the cryptocurrency. A bigger market capitalization shows investors confidence in the coin.
Buying coins with low market capitalization is an easy way to get scammed, some currencies may be delisted from exchanges after a while leading to loss of investors funds.
Buy currencies with a high market capitalization to save your resources.
In conclusion, a new currency can grow faster if it has a good marketing startegy, an example is STEEM which is a few months old but has grown in value faster than currencies that are a year old because they adopted a strategy that rewards you for blogging on its website.
Before you buy the next set of cryptocurrencies, consider the points listed above and discuss with other cryptocurrency enthusiasts and experts.
Always remember to use google to ask the right question and get access to unlimited resource on any cryptocurrency you choose to buy.
Knowledge is power, be guided accordingly.
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