While it’s true that coins like Bitcoin and Ethereum are dropping in value, the reasons behind the falling prices are reassuring for investors. The truth is, many are exchanging for Fiat in order to buy gifts. So, holders shouldn’t worry too much just yet.
Finding the best crypto to invest in is quite difficult, especially considering the prior example. Sometimes a coin can jump or fall, seemingly at random. However, in many cases there are logical reasons attached to a coin’s value changes.
Considering all the various types of cryptocurrencies, not to mention all the factors behind each that maneuver their popularity in the market, it’s easy to get lost as a beginner. If you’re considering alternative investments, and crypto coins are one of them, the four guidelines below will help you choose!
Buyer Availability
In the world of crypto, a coin’s value is heavily related to the capacity and velocity at which it can become liquid. Liquidity is essential when investing in blockchains. If you hold an asset that can’t sell, then its value drops in various forms. First, because people see that you can’t sell, they lose interest. And, because you can’t sell, you’re forced to drop the sale price even further.
Before investing in a coin, make sure there’s plenty of demand in the market for that coin. Otherwise, in the future, you won’t find buyers and you’ll be stuck with a somewhat useless asset.
Some Form of Utility
Utility is another major player in terms of value determination. Blockchains like Cardano and Ethereum are currently very popular thanks to their utility. Both chains let users create apps, smart contracts, and other novel technology that works on a decentralized network.
If a coin has utility, it might be worth looking into. Someone might, for example, Buy Cardano with the expectations that it might someday find implementation in an essential industry.
Healthy Distribution
Altcoins are the lesser known alternatives to popular cryptocurrencies like Bitcoin, Cardano, and Ethereum. Many have skyrocketed in value, turning small investors into millionaires overnight. However, there’s usually a strong correlation between popular altcoins and their distribution.
Coins that have poor distribution are usually a no-go. If you scan a blockchain and see that one wallet holds more than 70% of all of the coins on that blockchain, you should probably stay away.
Completely Decentralized
This point might seem obvious, but it’s worth mentioning. It’s essential that you look into coins that are completely decentralized. One example you might want to avoid is VeVe, an application from Disney that lets users buy collectables with their gems. However, Disney is in complete control of the gems, and can block, limit, or ban users at their discretion.
Additionally, holding “coins” on VeVe forces you to stay in their ecosystem. You can’t trade for other coins, and currently can’t exchange for Fiat. You should opt for coins that allow easy exchanges for other coins.
Finding the Best Crypto to Invest In
It’s hard to sift through the numerous coins available while trying to find the best crypto to invest in. And, because the crypto space moves so quickly, one can quickly get lost. So, it’s smart to stick to the aforementioned guidelines. Find a coin with plenty of interested buyers, that has some form of utility, is well distributed among owners, and is completely decentralized.
Hopefully this article helped guide you on how to invest in cryptocurrency. If it did, make sure to take a look at the other content on the site!