Cryptocurrency is having the same impact in the world that the gold rush had in the 19th century. Many people are interested in becoming part of the crypto world. The number of people who wants to be invest, and trade crypto is rising daily.
When contemplating investing in crypto currency, most beginners swoop in without sufficient knowledge of what digital coins is about. The rationale behind such moves comes from the hype and price action surrounding crypto currency at the moment. Hence, these newbies end up regretting their action.
In this article, we shall discuss things to look put for in any crypto. What we shall discuss here will enable any investor navigate the market better. Below are basic things you need to know about before investing in any crypto.
White Paper
White paper is an enlightening essay published by a company or a non-profit cooperation to enhance or underscore the features of a solution, product, service that it provides or intend to provide. A whitepaper works as a method of submitting government policies and legislations and watching general reaction of the public these legislations.
Often, white papers exist as sales and marketing document to attract or encourage potential clients to learn more about or buy a specific commodity, service, technology. So white papers are prepared as a marketing tool before sales, and not as a user manual or technical document created to give support to the user after they have bought something.
Most white papers are written for business-to-business (B2B) marketing bases. For example, a white paper can be written between a manufacturer and wholesaler. A white paper helps notify and urge the other party that a certain product or technology is better for handling a particular business issue.
In the case of crypto, white papers explain why a particular digital coin is better than the other. It helps beginners know what makes a certain crypto better than the other. You can find the white paper of any crypto on www.coninbass.com, or on the site mobile app.
While reading a white paper, you need to look out for how the technology works. For example, the Bitcoin white paper tells you in a concise manner what problem Bitcoin intends to solve. Also, while reading a white paper, look out for who needs the project.
Use Case
New investors need to read the white paper because it functions as a prospectus that provides essential details of the project. Therefore, they will know what they are getting into before investing.
It is a boring process but for an investor, it is your obligation to comprehend every detail of the asset you want to put your money into before making a move – is the undertaking solving a problem? Is it a security token? Is this coin a utility token?
All these questions have answers contained in the white paper. Plenty crypto are used for other things besides paying for what you buy or services enjoyed. Crypto can serves as a store of value. Thanks to the potential power of the blockchain technology, a large range of use cases beside traditional financial trade are seen as the quantity of applications rise at rapid rate.
To understand what the use of any crypto should be, you need to check for what you can use the crypto for, or the problems it wants to solve. There are websites to check for this: bitpanda.com is a good place to start.
Objectives
This is another crucial thing a potential investor need to know about. It is essential to ask – what will this coin do? Crypto have more than enough purposes and you need to know as many as possible before investing in any of them. Some of the objectives of crypto include:
- Establish easier and faster local and global financial transactions which makes the fees of the transaction almost nothing.
- Help people to become their own banks and offer them the independence to use their money. The step is vital to the survival of unbanked countries.
- The blockchain smart contracts have a variety of use cases which include energy sector, music, trading, e-commerce, digital advertising etc. A potential investor needs to look at each of these sectors to know if they are interested.
With crypto, it is best to be sure of what the coin intends to provide before swooping in and investing in it. The objectives should tell you what makes a particular coin different from others in the market. Hence, you should know the specific benefit they want to provide. New investors can learn about the objectives of each coin they want to invest in on crypto economy organization.
Basic technical analysis
When it comes to crypto, technical analysis look for habits in the market data to enable investor recognize trends which will help them predict the future of the market. Technical analysis is the “big picture” methodology that evaluates financials, user-community, and future utility. In simpler terms, technical analysis is interested in the historical performance of an asset in the market.
To accomplish this, prices of an asset is evaluated over time and trading volume. Investors can get the hang of how the market looks at the particular asset they want to purchase: Is the price rising or falling? Is it traded in large quantities or not?
These are basic questions that simple technical analysis will ask and provide answers to afterwards.
Therefore, technical analysis is more like a number -driven stand to decision-making. It suggests that the market has concluded the work of incorporating all the known data through the current price and volume of trade done on a particular crypto. You can find simple technical analysis on Tradeview.com
The simplest technical analysis for a crypto is candlestick charts. It is easy to read if you pay close attention to it. You will see rectangles that come in red or green color with lines coming out of the top or bottom. The size of the candlestick, lines, and color provides vital information to any investor.
The top and bottom of the diagram's main rectangle indicates the opening and closing prices of a particular crypto for the day. The color green, or red suggests an increase or decline in price respectively.
Market Cap
The market capitalization of a crypto refers to the total value of the coin that has been mined. All an investor needs to look out for in market capitalization is to calculate it by multiplying the number of coins in circulation at the moment by the current price of a single digital coin. Investors should consider market cap as a way to gauge how reliable an asset may be in the future.
Similar to the way a larger ship will navigate a bad weather better than a smaller one, a crypto with larger market capitalization has a higher chance of being a stable asset than one with a smaller market capitalization in the long run. In addition, crypto currencies that has smaller market caps are vulnerable to the rapid changes of the marker which means huge gains and heavy losses can come faster with them. You can find market capitalization for any crypto on Coinbase.
Market Volume
Market volume of a cryptocurrency implies the volume of the particular coin found on the present price index page. Hence, it is the sum of the amount traded in last 24 hours. Maker volume is crucial indicator for investors and traders because it deduces the future profitability of a particular coin. To understand the market volume of a coin you have to track the price movement in the last 24-hours.
You can monitor prices for a day, week, months on COIN360 app.
Conclusion
Before you can invest in crypto as a newbie investor, it is crucial to understand the points explained in this article. These points can determine your success or failure as an investor in the long run, which means you can avoid the loss of your investments if the things discussed here are well understood.
Basic Rules Reminder: Learn before you invest. Invest what you can afford to loose. Join sound Crypto investment forums.
We wish you the best in your future endeavors.
Thank you!
Disclaimer: None of this is meant to be construed as investment advice, it's for informational and educational purposes only. The sites mentioned in this article are provided for informational purposes only. I have not received any compensation for the cited references.
