Bitcoin, Ethereum or Dogecoin? How to choose the right cryptocurrency for investing, Guide, Tips, Architecture
Bitcoin, Ethereum Or Dogecoin? Choose the Right Cryptocurrency for Investing
1 Jul 2021
By market capitalization, bitcoin is the largest cryptocurrency in the industry but that has not stopped the development of other cryptocurrencies which has the potential to be the next bitcoin or even bigger than that. There are different other cryptocurrencies in the market such as Ethereum, Litecoin, Bitcoin Cash, Dash Ripple, Indian Polygon, Cardano, Polkadot and many more.
Now many potential investors would have been wondering how they can create their crypto-index to diversify their investments. At Bitcoin Profit, we have tried to exemplify some parameters to use and rate any crypto coin before putting your money on them.
Factors to consider before making crypto-investment
Total Supply and Circulation
Before you apply to invest in any coin, you need to check out the market capitalization and total circulation of the coin. The supply of any coin signifies the maximum number of coins that enters the market while its circulation is the total number of coins available in the market. If a coin is not infinite, then, based on the demand and supply theory, anything which is not scarce may not command a good price, provided there is a good demand. Which would make that coin a bad investment.
Look at price movements
The price movement of any coin can give you a breakdown of the behaviour of the coin. Taking close observation would tell you the story of any coin before you invest. You must have heard about Dogecoin which was created as a joke/meme coin but thanks to Elon Musk, its price had a vertical climb. Now, whether dogecoin was used as a ‘pump and dump’ coin or would be a part of mainstream coins, only time will tell.
Also, avoid investing in a meme coin as that is not investing, but gambling. If your risk profile allows, go for it, but not otherwise. Avoid those coins which trend because of some influencers or speculators. Of course, this may not always be the case, given how the cryptocurrency world operates.
The people behind any type of cryptocurrency is one of the most important factors to observe before making any investment. The success of any company depends on a good CEO and a good leadership team. Similarly, you need to be assured of the people behind the curtains and their vision. You need to check whether the founders are personally invested in their coins or the project and what their prior experience or track record they’ve gathered over the years.
To successfully transition into the financial space, ICOs require a white paper, which defines the purpose of the coin, the technology behind it, the working methodology, and the overall vision. It spells out the fundamentals that can be evaluated and one should never invest in coins before reading the white paper. Your chances of picking up the winners will increase substantially with the number of white papers you read. They can tell you a lot about their realistic plans, vision, supply and circulation, use cases, and so on.
The technology used to build the project matters in terms of knowing the edge against corruption. ICOs such as Ethereum operates using smart contracts which are used to hasten transaction and to predict the market in the financial and banking sector.
So, you have to look out for those disruptive technologies that are quickly becoming the biggest cryptocurrencies. They possess a potential threat because they are solving a real problem and if someone develops a better solution, they will get replaced. Hence, it has to be constantly monitored.
Bitcoin, Ethereum Or Dogecoin Cryptocurrency Conclusion
Investing in cryptocurrencies is a highly risky affair and should not be done without proper analyses of your risk profile, your potential investment and the government’s laws surrounding that investment.
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