Cryptocurrency is big news. These alternative digital currencies – not to mention the blockchain technology they’re built upon – have revolutionized the way we do business, how we transfer money around the world, and even how you pay for things with your mobile phone!
From an obscure thing, not many knew about, crypto soon became a hot topic to talk about in the finance world. If you want to dive into the world of crypto trading you will want to do some research using websites like business2.community to keep up to date with current market trends and news. This can help you decide which trading platform to use and what currencies to invest in. Here are a few things to keep in mind to help make those decisions easier.
Investment Decision in Cryptocurrency
To make an informed investment decision in cryptocurrency, it is important to know how to analyze cryptocurrencies. Fundamental analysis, technical analysis, and on-chain analysis are the three most popular types of cryptocurrency analysis. Fundamental analysis involves examining all the available information about a digital asset, including quantitative financial metrics and qualitative measures. When choosing a cryptocurrency, it’s important to learn about the project and its vision, as well as review important data points such as circulating supply, total supply, and maximum supply.
1. Choosing A Platform
The first thing you have to consider is on what platform are you going to trade cryptocurrencies. As the ever-evolving cryptocurrency market continues to take off, trading platforms are appearing everywhere. Some of these are more complex than others, with different types of interfaces and features that you should look into before deciding on one.
While it’s always a good idea to do your research when making a big investment, looking at what other people have to say about the platforms you’re interested in is a smart move – especially when it comes to the big names. For example, a thorough Bitcoin IRA review will let you know all the pros and cons of having a crypto-related individual retirement account.
In the same vein, a cryptocurrency trading platform review will let you know what others think of their experiences with these. Think about your goals, what your risk tolerance is, and how a certain platform correlates to those things. Once you bring it down to just a handful of platforms, you can focus on other things like fees, security, and customer support.
2. Market Fluctuation
Just like with any other investments, cryptocurrencies are subject to market fluctuations. As a general rule, the most popular coins are the safest investments, however, even Bitcoin dives from time to time. To make an informed decision on which coin is right for you, you need to look at the bigger picture and the trends that seem to have the most impact on the value of a cryptocurrency.
Consider how current or upcoming events can impact the fate of a digital currency. This includes factors like an Initial Coin Offering (ICO) or any upcoming projects. The regulations certain governments are starting to implement when it comes to cryptocurrency have a big role in the market value, as do the projects that prominent coins are working on.
How much money do you need to start with crypto?
Many crypto exchanges set a minimum trade, often around $5 or $10. Some trading apps may have even lower minimums. But be cautious; some platforms charge significant fees for small cryptocurrency trades. They could end up taking a substantial portion of your investment as a fee. Always check the fee structure to ensure you’re aware of any potential impact on your smaller trades.
In short, it’s a good idea to take a look at the larger picture when you’re analyzing cryptocurrencies, and then try taking a closer look from there.
3. Starting Capital
Of course, you can’t decide on what a good investment is without taking a look at your starting position. For starters, how much money can you invest comfortably? What is your initial goal? How much do you hope to make from the investment, and what timeframe are you working with? Once you establish that, then you can go ahead and move on to more advanced topics like market fluctuation.
Considering this is a volatile market, it’s a good idea not to expect immediate profits right away – cold, hard logic tells us that a good investment is going to take time, and if you’re not prepared for that, then it’s easy to get discouraged. That said, the most known coins like Bitcoin, Ethereum, and Litecoin are great options that you can feel comfortable with, however, they are also among the expensive ones.
If your budget allows for it, it can be a great starting investment. On the other hand, if you’d prefer to ease your way into the market with a cryptocurrency that has a lower price, then coins like IOTA and Ripple may be worth your time.
4. Who Is Behind Cryptocurrency?
The cryptocurrency behind an altcoin can tell you a lot about it. For example, Dashcoin and Ethereum Classic were founded by Evan Duffield and Vitalik Buterin respectively. This creates an image of transparency – not only do we know the names of these founders, but we also get an idea of who is behind the coins and what their purpose is.
When you know who’s on the team and what their plans are, you can better assess how reliable the coin is – and if it’s worth your investment or not. You can look at their history to see how many successful endeavors they’ve had previously, what their level of expertise is, how ambitious they seem, and how transparent they are.
While there are a lot of cryptocurrencies out there, not all of them have team members you know about – and if it’s not a known coin that has tracked well for a while now, you might want to steer clear of those.
5. Security
Security is a big thing that you’ll want to consider before deciding on what cryptocurrency you’d like to invest in. Since these are digital assets, they aren’t always as secure as some people would think – especially if your investment isn’t held offline.
Investors often face the threat of hackers breaking into their cryptocurrency accounts and making off with their assets. This emphasizes the crucial need to choose an altcoin with robust security features. For example, some coins come with two-factor authentication for your wallet – all you have to do is make sure it has this kind of protection before using it.
In addition, cold storage may be something you want to take into account, which means that your coins will be held offline and therefore safe from malicious individuals.
6. Read The White Paper
As new coins come out, they usually come with a White Paper. This is the document that sets out what they want to accomplish, and why they need funding in the first place. It’s a good idea to read this carefully and see if it offers anything new and innovative when it comes to cryptocurrency. It can also give you more insight into how exactly the coin will work, what its goals are, and what the team behind it wants to achieve. Reading up on this can give you a better idea of how serious the coin is about what they’re doing and whether or not you should invest in it or not.
With the cryptocurrency market growing by the day, it can be hard to keep track of what’s up and coming. This is why you should always learn more about what coins are out there, and how they compare with each other to make sure that your investment is not only safe but also profitable. With these 6 things to consider before investing in a cryptocurrency, you should be well on your way to finding the right coin for your first investment.
