Since their inception, cryptocurrencies have been plagued with heavy scrutiny and controversies. The question of its viability remained at the forefront of discussions for a long time. However, the narrative has changed, with many industries accepting its utility. For instance, you can use crypto to fund your online casino account.
Cryptocurrency is gaining widespread acceptance as more people invest in crypto and blockchain. It is touted as the future of finance and investment. The world is tilting from traditional saving methods and investing in digital assets and portfolios. You should join in.
But before you do, you must know that thousands of crypto coins are on the market right now; rummaging through the right one might be a Herculean task. However, do not worry. Here are five steps to help you choose the right coin to invest in.
Before investing in any cryptocurrency, you should know its market capitalization value. Market capitalization is the final value of a company’s shares of stock.
In crypto, the market cap can be found by multiplying the total number of coins mined by the price of a coin at a given time. It is a valuable metric that indicates the possible growth of a cryptocurrency and whether it is financially wise to buy compared to others.
In a nutshell, the market cap helps you determine the value of a cryptocurrency to know whether it is worth investing in. If the crypto or token has a high market cap value, then it’s a worthy investment. The higher the value, the bigger the “coin.”
Current supply, otherwise known as circulating supply, is the total number of cryptocurrency coins or tokens accessible by the public and circulating in the market.
Due to the volatility rate of cryptocurrency, the circulating supply of a particular cryptocurrency can increase or decrease for some time. This is, of course, affected by quite a several factors.
For instance, Bitcoin’s current supply will gradually increase until reaching its max supply of 21 million coins.
The current supply of a particular coin can be used to calculate and determine its market capitalization. This is generated by multiplying the current market price by how many coins are circulating. (market current price multiplied by coins in circulation)
For instance, if a cryptocurrency has a current supply of about 2,000,000 coins and is traded at $2.00 each, the market value would be around $4,000,000.
A whitepaper is a document that explains important information about a blockchain or cryptocurrency project (the main features of the cryptocurrency, the technical specifications, and the problem that the cryptocurrency intends to solve).
It’s a popular way of explaining to potential investors how a project works and what problems it aims to solve in the most straightforward form. Summarily, a white paper is akin to a business proposal.
In plain terms, the document explains to the investors the relevance of the project or product, what investors stand to benefit from, and how it will be worth the effort in the long run. So, you should always check the whitepaper before considering buying into the project.
A utility token is a crypto asset issued during an initial coin offering (ICO) which allows token holders to perform a specific function on the network. They give certain perks, like passive income opportunities.
Investors can gain exclusive access to the project’s products and services by holding a utility token. Ultimately, utility tokens have a greater chance of surviving the current crypto bear market.
Examples of cryptocurrency utility tokens you can invest in are Non-Fungible Tokens (NFTs), the Metaverse, Play-to-Earn Rewards, etc.
Indeed, cryptocurrencies haven’t gained as wide acceptance as fiat currencies; the growth over the years has been tremendous.
Many countries now accept cryptocurrencies like Bitcoin, Ethereum, and other cryptocurrencies for transactions. With accessibility growing, we can only expect more innovative ideas to enter the fray. As a result, it has become more exciting, and cryptocurrency has become more attractive.
However, research the market value of the cryptocurrency you want to buy before investing in it. Some coins have little or no discernable value. Investing lump sums in them will bring you losses. If you must invest, invest in currencies with the potential value to attract investors.