Cryptocurrencies may still be a mystery to most people, but there are all indications that their adoption to the mainstream is imminent. Here are some expert tips on how to analyse cryptocurrencies.
If you’re new to the crypto sphere and cryptocurrency investment, it’s easy to get confused by the many digital assets and the Ads promoting many of them. The following tips will help you choose where to begin and how to make comparisons between different cryptocurrencies and get on to a good start.
Learn the history
Bitcoin and Ethereum may be the most famous names in the world of cryptocurrencies, but there are several hundreds of others. Among the other renowned crypto include Litecoin, Cardano, Polkadot, Dogecoin, to name but a few. Take the time to go beyond the hype and study the history and performance of the currencies you’re interested in. Some of the factors you want to learn will include the following:
- How long it’s been around
- The currency’s performance and current exchange rate
The answers to those questions are crucial, especially when considering cryptocurrency to build financial reserves.
The global distribution
Ask yourself how popular and widespread your cryptocurrency of choice is and whether it’s found in many parts of the world. For instance, the recent decision by El Salvador to make Bitcoin legal tender and many institutions believing in it ensure that its reach is almost global. There is every reason to believe that several other countries could follow El Salvador’s example and help escalate the value of Bitcoin. You’re better off concentrating on currencies that have a broader appeal.
The Price and Market Cap
Any form of cryptocurrency investment will dig a hole into your bank balance. As such, you want to have an idea of your selected coin’s growth potential by looking carefully at its growth potential. A market cap is a graph showing a currency’s growth projection; a higher cap means that the crypto under consideration is more dominant than another. Always go for cryptocurrencies whose dominance is sustained over time since it’s a good indicator of the coin in the marketplace.
The Technology Used to Buy and Sell Currency
The process of buying, selling, or spending cryptocurrencies requires some form of technology. There are various ways to access cryptocurrency exchanges, the most popular way to access digital assets. Find out if you can link your digital wallet to your cryptocurrency exchange and the amount and type of security protocols available to facilitate secure transactions.
The more popular coins like Bitcoin can be accessed via Bitcoin ATMs, while in most cases, users can establish a digital wallet or use cash or debit cards to buy or sell cryptocurrencies. Don’t forget to ask about fees associated with using the different forms of accessing your digital currency of choice.
Ease of Converting Between the Crypto and Fiat Currency
It’s a good thing to have a cryptocurrency investment but better still when you’re able to convert it to fiat currency when you’re in need. From Bitcoin ATMs to cryptocurrency exchanges, you want the convenience to have your cash as soon as you need it, especially when you have an emergency. Your funds should be able to show up in your bank account in the quickest time possible.
Your Risk Level
All investment forms come with a certain amount of risk, and cryptocurrencies are not an exception. Some people prefer the less popular currencies with excellent potential but a proven track record, while others decide to go with the trending cryptocurrencies.
Remember to seek advice from trusted experts if you decide to move from one cryptocurrency to another. You may also want to diversify and invest in more than one type. Diversification may be the right approach if you know about managing your accounts and using the balances.
Cryptocurrencies are the buzzword right now, and many more people globally are becoming interested in them. Even as the new digital cash goes into the mainstream, you want to have a firm grip on the basics before you can invest your hard-earned money.
Tom is a freelance writer with over 10-years’ experience in content creation, blog writing, and SEO specializing in the blockchain and cryptocurrency niche. As a philosophical figurehead, he believes that to make our world a better place, we must invest in incorruptible products and procedures, of which Bitcoin and other cryptocurrencies are leading examples.