Currently, there are over 1,000 cryptocurrencies you can choose from to invest in. For this reason, it would seem to be easy pickings juts to find one that appeals as a good investment although there is much more to it than that.
Reasons You Should Invest and Reasons You Shouldn’t
The main reason no one should invest in a cryptocurrency is the from the FOMO effect. This Fear of Missing Out leads some people to invest without fully understanding what they are doing and how they should do it successfully. This is the reason it is said only invest what you can afford to lose.
It is at this stage a significant number of people have bought Bitcoin using credit cards or borrowed money by other means only to find, everything has gone wrong.
There are reasons why people still want to invest, and these are the founding of good investment practices:
- The concept of cryptocurrencies interests you and the future implications appeal to you.
- You support the fact how cryptocurrencies will come to play an important social role in the years to come.
- You can see local (Fiat) currencies will eventually drop in value and you wish to hedge your bets for when this happens.
Building Your Portfolio
When investing in cryptocurrencies, it is wise to spread investments across several coins. As many offer varying services, there will be highs and lows in their values, although they should average out over time.
The best way of doing this is to see what coins are available and the services which are associated with them. Following this methodology, you should be set for the longevity of your investments.
BTC will still be part of your portfolio as many coins are traded against this. Focus though should be on other altcoins from where there is still considerable potential for growth.
Any cryptocurrency which you choose to invest should consist of the following:
- A community of followers who believe in the coin and the services it offers.
- A robust and active team of developers
- The technical vision that is transparent and what they aim to offer is of great benefit.
There is no doubt anyone wishing to invest has to do some homework when looking at cryptocurrencies.
There are so many which have only been developed to jump on the BTC bandwagon and the FOMO syndrome from a developer’s point of view.
How Do I Purchase Cryptocurrencies
Although this is much easier than it used to be, it can still be confusing when you are thinking where to buy cryptocurrency. Luckily, there are numerous exchanges around the globe although choosing a reputable one is as important as selecting a distinguished coin.
An exchange which has a substantial background should be chosen and preferably in your home country if possible. There is also the fact some altcoins are not traded on every exchange.
For whatever coins you invest in, a secure wallet is needed. These ideally should be cold wallets and your keys stored offline. You should also make sure all your coins never remain on an exchange to be on the safe side.
To save a lot of legwork and giving you an example of the type of coins to invest in. Here are examples of altcoins that might be good choices to investigate further.
This coin is based on Ethereum and is developed by the Chinese. It brings a new algorithm which is based on consensus (Delegated Byzantine Fault Tolerance algorithm) compared to the current proof of work/ proof of stake algorithm (where some flaws arise).
NEO is also able to traverse multiple Blockchains and brings with it a decentralized storage solution to businesses and end users.
Recently this technology has been gaining quite a lot of interest. Now the Blockchain can be used as a service so businesses can use the Blockchain to secure a database or to create and execute a smart contract.
DragonChain uses a server-less approach while the originating company retains all their business data. This new concept is also highly scalable compared to some first-generation Blockchains.
This coin brings something entirely new to their approach. As the initial vision for cryptocurrencies was to be decentralized the Skycoin developers saw the internet is a centralized service.
Now the technology is in place to build a new internet by using interconnected nodes that increase security while helping retain user privacy.
It also fixes the mining problems by introducing a new consensus algorithm where transactions are processed by a web of trust rather than following current methods.
The nodes which build this network all interconnect wirelessly and have no need for the intervention of large ISP’s. This as an added benefit solves many of the net neutrality issues which are a hot topic at the moment.
This was created by an ex-Google employee who wanted a coin that was suitable for everyday purposes. It was developed form a fork in the BTC core client so is closely tied to BTC with some subtle differences which vastly improves the way it performs.
This coin has changed the algorithm which makes transaction methods more straightforward to perform (reduce bottlenecks), so the network becomes faster. Transactions fall from ten minutes with BTC to 2.5 minutes with Litecoin.
Is there Future Potential for Investment?
The above coins are a mere sample of coins that are available. Many altcoins offer the same sort of services as each other so choosing the best of the bunch can be difficult.
Currently, SKY and Skywire are one of the very few third-generation of cryptocurrencies which are in the stages of being introduced.
BTC and other current market leaders will still play an essential role although their investment potential could now be priced out of the market so any gains could be minimal.
Altcoins that offer value, or bring something new which will benefit the world other than being another payment service have real potential.