The simplest, but not the most effective, and certainly not the fastest way to create a financial cushion or save money for a large purchase is to save part of your income. Investing is a more progressive and profitable approach.
Cryptocurrencies have already become a fairly popular investment instrument.
However, due to its specific nature, the choice of an asset and the choice of an investment strategy should be approached responsibly.
How to choose the best coin for investment?
The first cryptocurrency, Bitcoin, has been around for almost 15 years and still plays first fiddle in the market.
It is a leader in all market indicators and is traded on almost any cryptocurrency exchange.
But over the years, a lot has changed. According to CoinMarketCap, the number of cryptocurrencies is already approaching 2 million.
The total market capitalization is just over $1 trillion, with 670 cryptocurrency exchanges operating online. The choice is huge and therefore difficult.
First of all, you should proceed from your own goals, financial capabilities, and risk tolerance.
The same coin can be an excellent tool for aggressive trading, but completely unsuitable for long-term investment, and vice versa.
When it comes to medium- and long-term investing, you should pay attention to the following characteristics:
Market capitalization
The TOP 10 by market capitalization now includes Bitcoin, Ethereum, BNB, Ripple, Solana, DOGE, Cardano, TON and dollar stablecoins: USDT and USDC.
Bitcoin and Ethereum account for approximately 57% of the market capitalization.
These are the blue chips of the cryptocurrency market, and some of the money can be invested in one or both of these coins.
Coins from the TOP 10 are quite popular and are widely represented on various crypto exchanges.
It is important that they form trading pairs not only with stablecoins, but with other cryptocurrencies.
The exchange of BTC to USDT is possible on any platform, but if you wish, you can find a platform where you can buy, for example, Solana for BTС.
Additionally, top coins are considered to be the lowest risk coins. However, for this reason, expecting rapid growth of thousands of percent from them is at least naive.
This applies to the greatest extent to stablecoins, the value of which is pegged to the US dollar. A potential exception could theoretically be TON, a newcomer to the TOP-10.
Total and current coin supply
Each individual cryptocurrency can be classified as a deflationary or inflationary asset.
For example, the total supply of BTC is limited to 21 million coins, and 19,254,475 BTC have already been mined so far.
At the same time, the demand for Bitcoin continues to grow, and the supply decreases. Thus, the very nature of Bitcoin creates favorable conditions for increasing its value.
When deciding which cryptocurrency to invest in, it is important to consider the total supply and the number of coins already in circulation.
White paper
The white paper is the main technical document accompanying any cryptocurrency, except in rare cases where the coin was created as a joke, such as DOGE.
The white paper describes in detail all the characteristics of the coin, including the purpose of the project, the goals it sets for itself, the technology, the economics of the token, and so on.
One of the key signs of a serious project is clearly defined goals and stages for achieving them.
In addition, realistic goals are important. If the white paper is drawn up correctly, then this is already a positive signal about the project, which can be considered as a potential investment target.
Over time, by monitoring the progress of the project, you can evaluate how successfully the vision outlined in the white paper is being realized.
If the developers follow their plan, the value of the coin usually increases, and this may be the basis for increasing investment in this asset.
Possible uses
Bitcoin was originally created as an alternative means of payment, but in the modern world, it has become more of an investment tool than a common currency.
The main use of Bitcoin is its role as an investment asset. The closest “relatives” of BTС also acquire other functions.
For example, converting USDT to XMR makes sense to maintain the confidentiality of the user’s financial information.
Ethereum, on the other hand, has become the foundation for the development and implementation of decentralized applications.
At the moment, the Ethereum blockchain is actively used to create new cryptocurrency projects, develop decentralized crypto exchanges and numerous other decentralized applications.
The potential use of the Ethereum blockchain is only growing, and this gives reason for optimism about its future prospects.
The more use cases a cryptocurrency has, the more widespread and in demand it can become, which in turn helps to increase its value.
It is important to remember that investing in cryptocurrency is a strategic process.
As you gain experience and knowledge, you will be able to manage your capital more effectively.
However, it is important to always be aware of the risks and never invest more than you are willing to lose.
