Cryptocurrencies, led by Bitcoin, first emerged in 2009 as a way to offer a decentralized, secure, fast, and cheap way to send money to other people. Since then, the so-called digital currencies have gained massive public support from all sorts of individuals ranging from financial experts to small-time speculators. The underlying blockchain technology is also considered by many as the greatest invention of all time next to the internet. Even with the number of challenges, negative criticisms, and disbelief, the cryptocurrency market is still continuing to grow, setting a new total market capitalization record of $800 billion in January, almost 50 times the value at the same time last year.
If you have finally decided to buy your first cryptocurrencies, you should make it a point to carefully manage your risks and invest only what you can afford to lose. You should also take note of these five important tips for deciding what cryptocurrencies should you buy.
Look at the market capitalization of the coin.
Analyzing the recent and historical prices of cryptocurrencies is the first step to knowing which particular coins and tokens are worth buying today. Besides the price, you should also look at the market capitalization of the coin. One unit of a coin might not be as expensive as Bitcoin, but if it has a much larger supply, then it would be less likely for the price to go up 10 times in just a matter of weeks. This is a common mistake among beginners, buying coins because they are cheap without looking at the total supply.
Comparing how supply is controlled is also important.
Some coins like Bitcoin has a fixed amount of supply; which means that the price is expected to go up with the future increase in demand. Other coins have theoretically infinite amount of supply which can cause their value to become less is the supply increases faster than the demand.
Do your own research on the purpose of the coin.
Another common mistake committed by beginners is buying a coin which has recently gone up in value. This practice, termed as FOMO (fear of missing out), is notorious for causing huge financial losses to unknowing investors in just a matter of hours or minutes. Do your own duty to research on the coin, its developers, and the community supporting it.
Diversify and don’t get limited to only a few choices.
While it may be ideal for beginners to start with relatively stable coins such as Bitcoin, Ethereum, Litecoin, and Ripple, take note that you are not limited to them. There are actually hundreds of other coins which you can speculate on. The tip to getting huge profits in cryptocurrency world is to find hidden gems and fairly undervalued coins.
Take note of the exchanges where they are available.
The last tip is to familiarize yourself with the exchanges where the coins are up for trading. Doing this would make it easier for you to convert cryptocurrencies into fiat money and vice versa. Coinbex is a fast, completely safe, and anonymous trading website which you can use to buy and sell cryptocurrencies. Visit coinbex.com now to know more about this great cryptocurrency exchanger.
Author: Rover Jones