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The global economy is going through an unprecedented movement due to the coronavirus outbreak. It has hit hard forevery business and financial market. It has a massive negative impact on most industries, and many people have lost their jobs.
Additionally, many investors also see negative numbers in their portfolio. Most of the investors are now looking for alternative investments, and many investors are headed towards the crypto market.
If you want to invest in the crypto market, read this article to choose the right cryptocurrency.
Choose the Correct Cryptocurrency
Before investing in any cryptocurrency, it’s essential to know a few critical things to help you choose the right one. Here are five simple steps to select the correct cryptocurrency.
- Know About Different Types of Cryptocurrencies.
- Choose the Types
- Conduct a Background Research
- Find the Real-World Application
- Join a Crypto Community
Once you choose your cryptocurrencies, then you need to select a crypto exchange or trading platform. If you want to invest in bitcoin you can visit this site. Now let us understand the factors in detail that are mentioned above.
Know About Different Types of Cryptocurrencies
For complete beginners, a cryptocurrency is a form of virtual currency backed by a peer-to-peer network for decentralized transactions. Bitcoin, Ethereum, Litecoin, and thousands of other cryptocurrencies are there. However, cryptocurrencies can be classified into two main categories.
- Crypto coins
- Crypto tokens
Any cryptocurrency you discover in the market can be either a crypto coin or a crypto token. Well, crypto coins are the cryptocurrencies that have their blockchain network. That means they are backed by a decentralized network, and the system operates through that crypto coin.
On the other hand, a crypto token does not have its blockchain network. It is generally issued by a third party blockchain network that provides decentralized solutions to businesses.
Generally, businesses that want to offer their shares to the public can also provide digital currencies to seek crypto solutions from a third party blockchain network. Ethereum is a popular blockchain network that provides such services to businesses.
Choose the Type of Cryptocurrency
In the first step, you have learned about the two different types of cryptocurrencies. Now you need to choose a varietyof cryptocurrency. For that, here are a few things that may help you choose the right kind of cryptocurrency.
- Crypto coins can be traded in a crypto exchange, when the value of the coin, you can gain the profit and withdraw from your crypto wallet.
- Crypto tokens operate slightly differently, and there are two types of crypto tokens utility tokens and security tokens.
- Security tokens are offered to the public through ICOs as similar to the IPOs in the stock market. But ICOs are a little complex than IPOs.
- A product or service backs utility tokens. For example, Basic Attention Token (BAT) is a popular token offered by the Ethereum network for digital advertising.
So if you want to trade cryptocurrency at a crypto exchange directly, then choose crypto coins like Bitcoin, Ripple, Ethereum, Litecoin, etc.
Conduct a Background Research
Next, you need to conduct a background research of the cryptocurrencies you want to invest in. Go through their official websites, and search them in different social platforms to know about their legitimacy and future value.
Find Real-World Application
Figure out whether the cryptocurrency is solving any real problem or not. For example, Ripple and Litecoin is a cryptocurrency that is used for international transactions.
Join a Verified Crypto Community
When you join a crypto community, you can learn about different cryptocurrencies and can get many investing strategies from crypto experts.
Conclusion
Follow the above steps before you choose a cryptocurrency. Once you choose it, try to understand the risk involved in it and discuss with the community members to get more investment ideas. Lastly, don’t hesitate to ask your queries and share your opinion on this post.
