How to Choose a Cryptocurrency to Invest In
Ever since Bitcoin blew up, every tech savvy startup attempted to release their own coin. A lot of them made some serious mistakes. People who didn’t really understand cryptocurrency bought into coins that didn’t have any actual value or application — they just bought them because they were cryptocurrency and it seemed cool at the time.
What people failed to think about is the utility of each coin. Cryptocurrency can be used as money. When you’re buying a coin, you aren’t investing the same way you would in the stock market. You’re exchanging currency for a different, untraceable type of currency. These currencies work for different things, and how useable they are affects whether or not they’re worth your real cash.
What Can the Cryptocurrency Be Used For?
Investing in a new type of coin won’t do you much good if no retailers accept that coin. Dogecoin, for instance, is only worth a fraction of a penny. There are well over 100 billion Dogecoin in existence. Since barely any retailers that accept cryptocurrency accept Dogecoin, that makes the coin virtually useless. This contributes to its low value.
Then, there are coins like Ethereum, Litecoin, and Monero. These coins have higher values because they’re easier to use. Coins that have limited reception by retailers sit somewhere in the middle. Tether, for example, calls itself a stablecoin. One coin is one dollar, and they hold their market that way. They’re trying to make the exchange from real money to cryptocurrency easy and exact, but because most people are attempting to profit from cryptocurrency, they’re having a hard time catching on.
The coin you buy should be useable. Before you purchase any coin, be sure that enough retailers recognize it as a payment method. If no one is willing to accept it, the coin won’t grow much in value.
When is the Right Time to Buy a New Cryptocurrency?
Let everyone else make their mistakes first. Watch new coins closely. It’s best to buy them after their value has seen substantial growth. Hold onto them for as long as you’re comfortable with. If the growth seems to stop or fall out, sell your coins. If the growth continues steadily and the little dips aren’t heart-wrenching, buy more.
