The greatest problem with understanding cryptocurrencies lies in the fact that it’s an umbrella term which requires you to acquire knowledge on as many different rules of the market as possible in the shortest time span. Time is of the essence because some of the cryptocurrencies are progressing so fast that, by the time you get the information you’re looking for, it may no longer be actionable. Therefore, you need to learn the basics and then figure out which metrics and portals are worth tracking. Here’s a short guide that might help you out with this.
1. Look into market fundamentals
Earlier on, we spoke about the importance of grasping the basics and it doesn’t get any more relevant than market fundamentals. For instance, the first thing you need to look into (once you’ve discovered a new cryptocurrency) is the total amount of coins in circulation. Then, you need to compare it to the value of the market cap.
Once you’re done checking this basic information, you need to look into the market that this particular coin is trying to disrupt. For instance, if it’s gold we’re talking about (as is the case with DGX tokens) you need to understand that the maximum value this token can achieve is a percentage of the total value of this market. With gold, the market cap is at the staggering $7 trillion, which leaves so much room for growth.
The next thing you should look into is the issue of the technology behind the cryptocurrency in question. For instance, every renowned cryptocurrency company should have a whitepaper published on their website, regarding the most important technical aspects of their coins and tokens. The quality of writing, the level of in-depth analysis and their aims as a company and cryptocurrency trend should be the three main points you should focus on. If the coin in questions shows any sign of sloppy work in one of these three areas, this might serve as an indicator of its reliability as a trend.
3. Specialized portals
Another thing to keep in mind is the fact that specific trends (like ICOs) and technologies (like blockchain) usually have portals handling topics related to them in-depth. The Blockchain Review portal is a perfect example of a website that handles these topics. By finding several such reliable formats, you can not only get up to date with all the latest changes but even stay informed of any changes made in the industry.
4. A closer look at the community
One major issue that people often tend to neglect is the fact that the people behind a cryptocurrency always have a reason to present their coin or token in the best light. On the other hand, when it comes to the community, the situation is completely different. After all, the loyalty of the community, their faith and their commitment are factors that will determine the value, stability and reliability of the coin in question. With all of this in mind, it would be simply foolish to ignore the immense power behind it. Therefore, you should visit forums and even become an active member, asking away any question that might interest you.
5. Survey the competitors
The ability of a certain coin to triumph and grow in value may depend on the competition as well. Nevertheless, you need to realize that not all cryptocurrencies are direct competitors, just like companies in different industries can never be compared. What you need are coins that share the value of the same cap, those implementing similar technological trends or even those promising the same thing. This kind of survey can help you not only avoid a potentially bad investment but also find a superior coin worth investing in.
6. Governmental action
At the very end, it’s time to discuss the elephant in the room. We’re, of course, talking about the governmental action in form of regulations that are currently weighing in on the world of cryptocurrencies. Sure, some may find that bringing official government institutions into the world of cryptocurrencies may make them more secure and legitimate. Nevertheless, what they often forget is that the decentralized, unregulated nature of cryptocurrencies was what lured people in in the first place. Still, the latest regulations (or at least talks of regulations) might be worth keeping an eye out for.
As you can see, staying on track with cryptocurrencies is much easier than most people initially assume. However, like with any new topic, it might be a bit rough to penetrate the new matter in the right way. Once you figure out which topics, trends and metrics take priority, your job of keeping up will become much easier.