There are tens of thousands of cryptocurrencies, with new ones emerging daily. Cryptocurrencies like Bitcoin and Ethereum have gained mainstream attention, making crypto a central topic in many public conversations.
Due to this, interest in crypto trading and investing has increased significantly. However, due to the volatility of the industry and the risks that come with it, it can be difficult for beginners to get started.
This article aims to guide crypto traders and investors in choosing investment currencies. We will also discuss recommendations on reliable sources for finding cryptocurrencies.
Factors to consider
While investing in cryptocurrencies can offer significant profits, it also carries high risk and volatility. For this reason, it is essential to evaluate which cryptocurrencies are worth investing in.
Here are some factors to review and consider before deciding to invest in cryptocurrency:
Market capitalization
A cryptocurrency’s market capitalization (sometimes abbreviated to “market capitalization”) is one of the first factors to consider when choosing a cryptocurrency.
You get this number by multiplying the total number of coins in circulation by the market price of the coin. The resulting figure gives a general picture of the total value of the coin, which can influence investors’ decisions.
For example, you take the current Solana Price and multiply it by its circulating supply to get its current market cap of $9,023,310,992.
Crypto websites and markets often categorize coins based on their market capitalization. However, it is important to consider factors such as the volatility of the coin, the technology behind it, and even the support of notable figures, could affect this figure.
Supply of parts
While some cryptocurrencies have unlimited supply, others have limited coins in circulation. Coin supply can significantly affect its value. The lower the supply, the more difficult it may be to mine a particular cryptocurrency.
Limited supply can lead to shortages, which can increase the value of individual coins. For example, Bitcoin, the most popular cryptocurrency, has a limited supply of 21 million coins.
The more people invest in it, the more the value of each coin increases. Given its limited supply, increased demand for a specific currency will often cause its prices to skyrocket.
White papers
When deciding whether a crypto coin is worth your investment, it is crucial to review its white papers. Many cryptocurrencies are gaining popularity for various reasons, but lack a solid foundation to ensure their longevity and ease of use.
A cryptocurrency white paper is similar to a business plan. It explains cryptocurrency to potential investors, miners and traders. White papers typically contain the following information:
- the project’s objectives
- The token economy
- Some products
- Features
- Development team
Reading the white paper of a coin allows you to understand how a cryptocurrency works in relation to the blockchain. This also allows you to assess whether the team behind a particular part has put significant effort into ensuring the part performs as expected.
Utility
Another important factor to consider before investing in a cryptocurrency is its usefulness. The more a coin is used in practice, the higher its value potential.
A part’s use cases will determine whether it will be widely accepted. Can you use it to buy goods and services? Is there a market to trade this specific coin?
Check the use cases for a part and read articles and literature about it. Crypto experts and analysts have likely discussed the performance of certain coins in the market. This knowledge will help inform and improve your investment decisions.
Where to find cryptocurrencies
If you spend any reasonable amount of time on the internet, you’ve probably encountered conversations about cryptocurrencies.
While there are several places you can find and invest in crypto projects, the scene is also rife with scams and bad actors. Here are some reliable places to find existing cryptocurrencies or invest in new projects:
Cryptocurrency Exchanges
Cryptocurrency exchanges like Kraken are one of the most reliable ways to find cryptocurrency investments. These platforms act as brokers, providing individuals with the tools and technology to buy and sell crypto tokens.
Popular crypto exchanges include:
- Kraken
- Binance
- Coinbase
- Gemini
Data aggregators
A crypto data aggregator serves as an information base for the crypto market. These websites and platforms offer relevant information on established and emerging cryptocurrencies and crypto projects.
The information you get from these data aggregators can help you evaluate your investment prospects and compare them to each other. They also offer relevant information on the state of the crypto sphere.
Some of the best-known crypto data aggregators include CoinMarketCap and CoinGecko.
Social networks
The teams and developers behind crypto projects need to commercialize their products and vision. Social media has become a great platform to attract attention and attract potential investors.
Some platforms where crypto enthusiasts congregate include Facebook, Twitter, Reddit, and Discord. Exploring these sites can help you discover new tokens and learn about existing ones.
You can also easily read news and discussions around specific crypto projects, which can help you make informed decisions.
Make informed decisions
Although investing in crypto can be profitable and exciting, the market can be volatile and risky. Doing your due diligence and research can help you filter out scams and make sound investment decisions.
Warning: This is a paid version. The statements, views and opinions expressed in this column are solely those of the content provider and do not necessarily represent those of Bitcoinist. Bitcoinist does not guarantee the accuracy or timeliness of the information available in this content. Do your research and invest at your own risk.
