Before you invest your hard-earned money into any cryptocurrency, be it Bitcoin or something else, remember that the only money you have entirely under your control is fiat cents. Even if you feel like nothing is holding back fiat dollars from being spent, once you truly realize how easily they can be printed out of thin air by central banks, you’ll start to see that all currencies are risky. No one has a crystal ball to predict their future value.
When researching a cryptocurrency, it’s important to remember that not all cryptos are created equal. Like Bitcoin and Ethereum, some have been around for years and have proven themselves to be reliable investments. Like Bitconnect or Onecoin, others are scams that you should stay far away from. Do your research before investing to make sure you’re putting your money into crypto that has real potential.
Reasons To Research On Crypto Trading
Cryptocurrencies are held by individuals and organizations all over the world. Bitcoins, the first and most well-known cryptocurrency, were created in 2009 and had a total market cap of $137.8 billion. Ethereum is the second-largest cryptocurrency with a market cap of $45.5 billion. Bitcoin and Ethereum aren’t the only cryptos on the market, though. Over 1,300 different cryptocurrencies are currently in circulation, and more are being created every day. Because of this, it’s essential to do your research before investing in any cryptocurrency. Luckily, you can get all the crypto information at morecrypto.com, a resourceful guide on buying and exchange reviews. Some of the reasons you should research particular crypto before investing include:
The Coin’s Purpose
You’ll still find people who think crypto was created solely to provide anonymity for criminals, but the truth is that many cryptos are completely legitimate forms of currency. Some, like Litecoin and Ripple, were created as payment systems. These currencies aren’t designed to help you avoid taxes or hide your identity; they’re built to make it easier for you to pay for goods and services.
The Coin’s Development Team
Crypto development teams are sometimes anonymous, but there are still a few cryptos that have transparent leadership. Do your research before investing if you want to know who the people behind the crypto you’re considering buying are. The best development teams will release detailed information about their goals and plan to achieve them.
The Coin’s Transaction Time
Generally speaking, transaction times will be faster for cryptos designed to serve as payment systems than currencies. This is because they prioritize getting their transactions processed to enable prompt payments. Cryptocurrencies that act like real currencies take priority over quick-processing crypto assets.
As with most things in life, you get what you pay for regarding cryptocurrencies. If the fees seem too good to be true, there’s probably something fishy going on, and it could cause your investment to tank at any moment. You’ll typically find lower fees associated with cryptos like Bitcoin and Ethereum compared to those meant for everyday use (like Litecoin). Investing in crypto with high costs is a risk you should consider avoiding.
The Coin’s History
Cryptocurrencies are highly volatile, and their prices can change drastically in a concise amount of time. It’s essential to know as much as possible about a coin’s history before investing in it. For example, if you’re thinking about buying Bitcoin, you’ll want to know how much it’s worth now, how much it was worth a few months ago, and how much it could be worth in the future.
The Coin’s Community
The cryptocurrency community is vast, and it’s constantly growing. If you’re looking to invest in a particular crypto, it’s essential to research the coin’s community to understand how active they are. The more active a community is, the more likely the currency will have a positive future.
The Coin’s Future
Cryptocurrencies are only valuable if people are willing to trade them. The strength of a cryptocurrency’s community is a good indicator of its long-term potential. Pay attention to things like the size and activity level of a coin’s Reddit or Telegram communities. For instance, if crypto doesn’t have a significant social media presence, it might not be worth buying.
The Coin’s Acceptance
Cryptocurrencies are only valuable if they can be used as currency. If no merchants are willing to accept cryptos as payment, their value will drop significantly. This is why it’s important to research which retail outlets accept the cryptocurrencies you’re interested in before investing in them. For example, retailers that already accept Ripple include Steam and Microsoft, while Ethereum-accepting businesses include Overstock and Newegg.
The Coin’s Technical Details
Cryptocurrencies are complex, and you don’t need to be an expert in investing in them. However, it’s essential to understand the basics of how they work. For example, you should know what Segwit is and why some cryptocurrencies implement it. It would help if you also understood blockchain, how mining works, and whether the crypto you’re considering buying has a maximum supply.
Let’s take a look at Ethereum. This crypto was created to facilitate smart contracts between individuals on the blockchain. Ethereum has one of the most oversized market caps in all of crypto, sitting close to $45 billion at the time of writing. It’s used mainly for its ability to execute Turing-complete smart contracts anonymously on its global network, but that isn’t Ethereum’s only feature.
The currency allows for decentralized apps (Dapps) that are entirely censorship-resistant due to their decentralized nature. Dapps are applications that use consensus protocols rather than servers to function. Say you wanted a place where users could post content without fear of censorship. Ethereum would be an excellent choice because it’s decentralized and has a large community of developers working on it.
Asking yourself these questions before investing can help you make smarter decisions. This is why it’s essential to do your research before trading cryptocurrency. If you’re unsure what kind of coin you want to invest in, start by researching the cryptocurrencies that have been around for years and have proven themselves reliable investments. Another step would be to find out who created the cryptos you’re considering buying and whether or not they plan on releasing detailed information about their goals and development progress.