As prices reach higher, the market situation for cryptocurrency is increasingly comparable to that of dot-com companies at the turn of the century. When this mania subsided, companies without business models and millions of dollars worth of investment crumbled.
The situation in the cryptocurrency market is no different. Not much is known about the amount of 1,385 coins available on the market today but they are still held at a value of billions of dollars. For example, Dogecoin, a cryptocurrency intended to parody the bitcoin boom, has an estimated $ 1.6 billion, as of this writing. A coin has no explicit liability or defining factor. (See also: Bitcoin Vs. Litecoin Vs. Dogecoin.)
Nolan Bauerle, research director at CoinDesk, says 90% of cryptocurrencies today will not survive market crashes. The survivors will manage the game and maximize profits for first-time investors. And that amount is significant if one could not believe RBC Capital's market value of $ 10 billion in cryptocurrencies.
But identifying survivors in cryptocurrency markets is easier said than done. No single currency has acquired a common catch or is close to achieving it. Even bitcoin, the world's most important and popular cryptocurrency, suffers from measuring problems, such as high transaction fees and slow-moving networks. (See also: 3 Beware of Watch Cryptocurrencies
Knowing Cryptocurrency
The first is the experience of the founders and teams of the project. The world of cryptocurrencies and blockchains may be fast but its roots lie in the established industries. For example, intelligent Ethereum contract tokens are used to connect items within established industries. Like this, experience stories.
"If a member of a project team does not have crypto or blockchain information, the investor should ask: does what they have done before qualifying them for the project? Have they at least been involved in the same industry," said Gray.
Investors should also apply the terms of the donation. Two key points to consider in this regard are the increased value and the amount of money that investors receive. The general metrics used in stocks do not apply to this test. This is because cryptocurrency markets are changing the traditional marketplace where their creators can ask for support before they have a stable customer base or product tracking.
"If one wants to change the whole world of finance, and they only collect $ 5 million, that would be a huge discrepancy between what they want to do, and how much money they collect," explains Gray, adding that the opposite is true. In other words, the clearer the focus of a company, the better its prospects.
Finally, investors need to look at the technology itself. "If it's just a theory, white paper, without anything built up, you'll only get stuck in the belief in the team, and in that case, you'd better be a really good team," said Gray. "If a team builds a product, how does it work?"
There is a caveat in this test. Brukhman claims that cryptocurrencies are among the most unpopular blockchain applications. "We don't know exactly that," he said, referring to how markets could be disrupted by cryptocurrencies.
So Which Cryptocurrency will Survive?
A good place to start with 20 best-selling cryptocurrencies. It is easy enough to determine some of the top survivors on this list, in the event of a crash in the cryptocurrency markets. Bitcoin is a real cryptocurrency and emerges quickly as a value store. Its blockchain and codebase have also spawned shoots, such as Litecoin and Bitcoin Cash. They both want to be the preferred cryptocurrency for everyday processing. Ethereum's world of distributed applications or Dapps is fast gaining momentum and is responsible for the killing of tokens, such as Populous, built outside of its platform.
Others, like Dash, have also had similar claims and recorded threads in emerging markets such as Zimbabwe and developed economies such as Spain. NEO may turn into a black horse. It is geared towards a smart economy and is working in partnership with the Chinese government to expand the cryptocurrency ecosystem within the country. It also announced a high-level partnership with Microsoft China and worked with the Japanese Ministry of Economic Affairs.
Lowering the list, however, indicates cryptocurrencies where investors will need higher risk tolerance. For example, TRON, a recent cryptocurrency, has no product in place and its founder has no experience. Similarly, Request Network says it is the future of commerce but that idea itself is the latest foundation from another online fundraising service. The white paper cryptocurrency announces many cases of use of its currency, from the Internet of Things to online payments and the use of the business concept of government regulations. But there is little value to be gained by having a partnership or experience in those areas.
Investing in cryptocurrencies and other primary financial services (“ICOs”) is very risky and deceptive, and this article is not an investment recommendation by an investor or author to invest in cryptocurrencies or other ICOs. Since individual circumstances vary, a qualified professional should be consulted at all times before making any financial decisions. Investopedia does not make any representations or warranties regarding the accuracy or performance of the information contained herein. From the date this article was written, the author has small amounts of bitcoin, bitcoin currency, and ether. It is unclear if you have other bitcoin forks.
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