The cryptocurrency market is historically very young, and the vast majority of players in this market are newbies. Many of them don’t know the basics of investing at all. They just hear about the potential for a large return on investment in the coin, buy it, and hope for the price to rise further. This way of investing has the right to exist, but in fact it is very unreliable. Before changing all of your assets, make sure you have a compelling reason to do so.
Amount of Coins in Circulation and Total Supply
First of all, check the total circulation of the coin you are interested in and the number of coins in circulation. The total supply refers to the maximum number of coins that will ever be mined. Accordingly, circulation means the number of already mined coins available on the market. Unless a coin is limited, it is likely to be subject to inflation. For example, the total supply of bitcoin is limited to 21 million coins, while its closest competitor Ethereum does not have such a limit.
Price Movement History
Track changes in the price of a coin over the entire period of its existence. Check out future OMG network price prediction. This will help you understand how the asset price compares to its real value.
A rather eloquent example is the story of the meteoric rise of Dogecoin, a coin-meme that has rapidly risen in price under the influence of Elon Musk. At the time of this writing, the rate of its clone has also skyrocketed. The future of Dogecoin is quite uncertain right now. Whether it will remain a purely speculative asset, or will add to the list of major cryptocurrencies – time will tell.
Investing in assets whose trend is so heavily influenced by influencers is no different from gambling. The final decision is your choice, but don’t invest more in it than you can lose without putting your wealth on the brink of financial disaster.
Technology
Among the factors for the possible success of a cryptocurrency, the underlying technology plays a huge role. You should be aware of how the coin you are interested in differs from the competition. Among the most prominent examples is Ethereum, one of the best cryptocurrencies in terms of technology. Implemented on the Ethereum platform:
- Smart contracts that facilitate the exchange of values;
- Creation of decentralized applications;
- Ethereum Virtual Machine (EVM) technology.
Thanks to these technical innovations, Ethereum quickly gained a high position in the cryptocurrency market.
White Paper
The release of a new cryptocurrency is usually accompanied by the release of a white paper. It describes:
- Technology;
- Purpose of projects;
- Principle of operation;
- Shared vision.
Before reading the official document, you should not make an investment decision. Yes, it may not be very easy due to the abundance of specific terms, but the more carefully you study the official information, the more likely you are to find the best cryptocurrency to invest in. If there are too many spelling mistakes in the white paper, the developers set completely unrealistic goals, and the document itself gives the impression of being too ambitious – it is better to refrain from investing.
Team and Community
The success of any project depends on the leadership. Find out who exactly is behind the project, whether the founders are investing their own funds in the project and what their previous experience is.
The second important factor in the success of the coin is the support of the followers. People’s faith and interest in a particular coin drives its exchange rate. Take the time to explore the forums and followers of your chosen coin. The more active the community, the more reliable the coin and the higher its value.
Bottom line
All cryptocurrencies are high-risk assets. Therefore, their part in the investment portfolio should not exceed 5-10%. Choose wisely the coin to invest in.
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