Tens of thousands of cryptocurrencies exist, with new ones emerging daily. Cryptocurrencies like Bitcoin and Ethereum have gained mainstream attention, making crypto a central topic in many public conversations.
For this reason, interest in crypto trading and investment has grown significantly. However, due to the industry’s volatility and accompanying risks, it can be challenging for newbies to start.
This post aims to guide crypto traders and investors in choosing currencies for investment. We’ll also discuss recommendations on reliable sources to find cryptocurrencies.
Factors To Consider
While investing in cryptocurrencies can offer significant profits, it also comes with high risk and volatility. For this reason, it’s essential to evaluate which cryptocurrencies are worthy of our investment.
Here are some factors to examine and consider when deciding to invest in cryptocurrency:
Market capitalization
A cryptocurrency’s market capitalization (sometimes shortened to “market cap”) is one of the first factors you should consider when choosing a cryptocurrency.
You arrive at this figure by multiplying the total number of coins in circulation by the coin’s market price. The resulting figure provides a general picture of the coin’s total value, which can influence investors’ decisions.
For example, you take the current Solana price and multiply it by its circulating supply to get its current market cap of $9,023,310,992.
Crypto websites and marketplaces often rank coins by their market cap. However, it’s important to consider factors, such as the coin’s volatility, the technology behind it, and even endorsements from notable personalities, could affect this figure.
Coin supply
While some cryptocurrencies have an unlimited supply, others have limited coins in circulation. The coin supply can significantly affect its value. The fewer the supply, the harder it may be to mine a particular cryptocurrency.
A limit in supply can induce scarcity, which may raise the value of individual coins. For example, Bitcoin, the most popular cryptocurrency, has a limited supply of 21 million coins.
As more people invest in it, the greater the value of each coin becomes. Given its limited supply, greater demand for a specific currency will often cause its prices to skyrocket.
Whitepapers
When deciding whether a crypto coin is worth your investment, examining its whitepapers is crucial. Many cryptocurrencies gain significant popularity for various reasons yet lack a solid foundation to ensure their longevity and usability.
A cryptocurrency whitepaper is similar to a business plan. It explains the cryptocurrency to potential investors, miners, and traders. Whitepapers usually contain the following information:
- Project goals
- The token’s economics
- Products
- Features
- Development team
Reading a coin’s whitepaper allows you to understand how a cryptocurrency works in relation to the blockchain. It also allows you to assess whether the team behind a particular coin has made a significant effort to ensure the coin works as intended.
Utility
Another significant factor you should consider before investing in a cryptocurrency is its utility. The more uses a coin has in practice, the greater its value potential.
A coin’s use cases will determine whether it becomes widely accepted. Can you use it to purchase goods and services? Is there a market for trading this specific coin?
Check a coin’s use cases and read articles and literature about it. Crypto experts and analysts have likely discussed how certain coins perform in the marketplace. This knowledge will help inform and improve your investment decisions.
Where To Find Cryptocurrencies
If you spend a reasonable amount of time on the internet, you’ve likely encountered conversations on cryptocurrencies.
While there are several places where you can find and invest in crypto projects, the scene is also rife with scams and malicious actors. Here are some reliable places to find existing cryptocurrencies or invest in new projects:
Cryptocurrency exchanges
Cryptocurrency exchanges like Kraken are one of the most reliable ways to find cryptocurrency investments. These platforms act as brokers, providing individuals with the tools and technology to buy and sell crypto tokens.
Popular crypto exchanges include the following:
- Kraken
- Binance
- Coinbase
- Gemini
Data aggregators
A crypto data aggregator serves as a base for information surrounding the crypto market. These websites and platforms offer relevant information on established and emerging cryptocurrencies and crypto projects.
The information you get from these data aggregators can help you assess your investment prospects and compare them with one another. They also offer relevant insights into the state of the crypto sphere.
Some of the most well-known crypto data aggregators include CoinMarketCap and CoinGecko.
Social media
The teams and developers behind crypto projects need to market their products and vision. Social media has become an excellent platform for them to gain attention and potential investors.
Some platforms where crypto enthusiasts gather include Facebook, Twitter, Reddit, and Discord. Exploring these sites can help you discover new tokens and learn about existing ones.
You can also easily read through news and discussions around specific crypto projects, which can help you make informed decisions.
Make Informed Decisions
While investing in crypto can be profitable and exciting, the market can be volatile and risky. Doing your due diligence and research can help you filter out scams and make sound investment decisions.