If you’re new to investing in cryptocurrency, there may be a few things that you aren’t familiar with. Investing in crypto isn’t as easy as dumping money on multiple coins and hoping that you gain a profit after a year.
Today, we’ll be telling you which cryptos you should be taking a look at, knowing how to properly analyze the intrinsic value of a coin, and how you can successfully gain profit off of investing in cryptocurrencies! ****THIS IS NOT FINANCIAL ADVISE AS IT’S PROVIDED FOR EDUCATIONAL AND ENTERTAINMENT PURPOSES ONLY*****
Weighing The Intrinsic Value of a Cryptocurrency
Before you invest in the coins that are currently leading the rankings for top gainers, you have to think of it strategically by weighing the intrinsic value of the cryptocurrency. This doesn’t just mean weighing the rate at which it’s increasing its value but also considering the importance of the coin itself and its prominence in the current market.
Make sure that the cryptocurrency that you’re investing in has value and a hold of the market, not just a coin that temporarily rises in value just to fall into obscurity months later. The way you estimate the intrinsic value of a cryptocurrency is by taking a look at three factors—the supply, how difficult it is to accumulate the crypto, and the value or impact it has on the market.
Supply
The value of a cryptocurrency is based on how many coins are circulating in the market. Suppose the supply of a coin is finite like it is in the case of Bitcoin; the value of the coin increases. The fewer coins there are in circulation, the more you’re going to profit off of investing in it.
This concept pairs with the next factor: the difficulty of the mining process that comes with obtaining the cryptocurrency.
The harder it is to obtain a coin, the higher its value is going to be. If a coin is easily obtainable, its value is going to plummet. Mining for cryptocurrencies like Bitcoin is a lengthy process, so its value is so high in the first place!
The Prominence of the Coin in the Market
In rare cases, the value of the cryptocurrency doesn’t come in how scarce it is or how difficult it is to mine. Ether or Ethereum is one of these special cases. Ether is the second most valuable coin because of how scarce it is, and on the contrary, there’s no cap on how many Ethers there can be in the market.
The reason why Ethereum is so valuable is because of its network. Ethereum is also a blockchain platform that automates transactions between users without the need for third-party apps by creating what’s called a “smart contract.”
The applicability of Ethereum is what gives the coin so much prominence in the market. The fact that there are over 2700 decentralized apps only further solidifies this point!
Cryptocurrencies You Should Invest In & Their Intrinsic Values
When it comes to profitability in the present, and future years, these cryptocurrencies are what you should be keeping an eye on!
Bitcoin
Bitcoin is a staple in the cryptocurrency market. As the first form of decentralized currency to ever exist, it has experienced exponential ups and downs throughout the years. However, recently Bitcoin’s value has only been going up.
Because bitcoin halves the number of coins you can mine for every four years (or 210,000 coins mined), the chance of inflation happening and making the price plummet is highly unlikely.
Ethereum
As explained earlier, the Ethereum network’s smart contracts make Ethereum a good cryptocurrency to invest in. Smart contracts make transactions a lot cheaper, faster, and easier to do without the need for a third-party actor to step in.
The intrinsic value of Ethereum comes in its smart contracts and how much support it has from other services that can make it work faster!
Conclusion
The world of cryptocurrencies is a difficult area to tread in. Making sure that you’re well-informed before making investments is the first step to mastering the crypto market! Be sure to visit often for more crypto news and great content.
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