Which Cryptocurrency is Worth Investing,
"Which cryptocurrency is worth investing in?" is what every investor who wants to make a profit in the cryptocurrency market has always wanted to know.
Mr. Market has no way to tell you which cryptocurrency will make a profit,
and you shouldn't even blindly listen to the "blank cards" reported by others.
Regardless of investing in any product, you must understand the risks and profit methods. If you
don't understand, you should not touch it first, at least until you have a certain level of understanding.
How to judge the value of a cryptocurrency?
Cryptocurrency investment (or speculation) has become more and more popular recently. Bitcoin, the
most representative of which has an overall market value of more than 800 billion U.S. dollars (statistics in September 2021), but this is only one of the many cryptocurrencies that many people invest in.
Cryptocurrency is a currency built on blockchain technology. Therefore, before delving into how to judge the value of a cryptocurrency, it is recommended that you make sure that you have a basic understanding of blockchain. You can read: About blockchain, You should at least know these things
In the entire cryptocurrency market, there are thousands of cryptocurrencies such as Ethereum and Litecoin.
They have their prices, demands, transfer speeds, and handling fees. They even use different blockchain technologies. Various factors are involved. It may affect the value and future of a cryptocurrency.
Therefore, Mr. Market will share next, what should be done to properly evaluate the value of a cryptocurrency in the face of a lot of noisy cryptocurrencies, while avoiding investment risks or the embarrassment of fraud.
In this article, Mr. Market will tell you:
Homework 2: Research what innovation the blockchain project can bring
Homework 3: Evaluate the value of cryptocurrency in the project
Homework 1: Read the blockchain project white paper
No matter which cryptocurrency you are interested in, the first thing to do is to read the white paper of the blockchain project.
If you still don’t know what blockchain has to do with cryptocurrency,
You can read: The difference between blockchain and cryptocurrency (under construction)
White paper refers to an authoritative report, used to explain, resolve or make decisions.
It means that the white paper helps readers understand the content of the project, what kind of problems to solve, how to do it, and the long-term goals for the future.
In short, reading the white paper on cryptocurrency can give you two benefits to making investment decisions:
As a possible investor, it is natural to understand the value of this cryptocurrency and the financial ecosystem behind it.
If you find that a cryptocurrency white paper is unclear and difficult to understand, it may also mean that you are not clear enough about its value. This is the same as the concept of other investment products. It is recommended not to touch products that you do not understand.
Homework 2: Research what innovation the blockchain project can bring
If the plan can bring concrete and effective applications to the current financial environment, it will naturally be more valuable if it is commonly used in cryptocurrencies.
ccc
A good plan needs to be able to solve privacy rights, have development potential, and complete community collaboration
The best example is the project implemented by Ethereum to improve the disadvantages of Bitcoin in the past (such as miner transaction confirmation fees, the upper limit of quantity, etc.),
attracting developers from all over the world to join this project, which makes Ethereum an application With the most blockchains, the Ether (ETH) that passes through it will naturally rise.
In other words, you can judge whether a cryptocurrency has investment potential through the value of the problem solved by a project.
Collect several foreign forums and sort out several popular blockchain projects at present (2021).
The following are the most discussed ones:
Matic
Binance
Smart
Chain
Fantom
Polkadot
Solana
(Reminder: This is just to sort out the highly discussed items in the current article, not a recommendation. These plans are also constantly being promoted and changed, and new plans will continue to be added.)
Homework 3: Evaluate the value of cryptocurrency in the project
As for how to specifically evaluate the value of a cryptocurrency?
William Mougayar, the author of the book "Blockchain Business Applications: The Prospects, Practices, and Applications of Next-Generation Network Technology", gives a specific structure that allows us to understand the value of a cryptocurrency more systematically.
6 roles for evaluating cryptocurrencies
Mougayar believes that cryptocurrency can understand a cryptocurrency from the following three aspects:
Utility/Role
Purpose
Features
He also divided the possible utility of cryptocurrency in the ecosystem into six roles, each of which is to solve a certain problem and achieve a certain goal, and the characteristics of the way to achieve the goal are also one of the charactertheirics of the evaluation.
The following table shows Explain the six roles of cryptocurrency proposed by Mougayar:
Rights (Right) utility: The amExchangeryptocurrency held represents the holder's right in the system, such as voting rights.
Transaction (Value) utility: Encrypted cExchangean helps both buyers and sellers of system transactions to conduct transactions.
Toll utility: The holder can use cryptocurrency as a payment tool to obtain certain functional services in the system.
Function: Everyone who holds cryptocurrency can enjoy more service experience in the system.
Currency (Currency) utility: The cryptocurrency can represent value whether in its system or another system.
Earnings utility: Cryptocurrency can bring financial gains to investors.
There are many types of cryptocurrencies issued on the market, and
each cryptocurrency has different functions and positioning.
When evaluating cryptocurrencies, you can start from these six roles, and you can further judge whether their purpose and characteristics have investment potential. (As in the following table):
The more roles of cryptocurrency, the greater the utility and value
The more roles a cryptocurrency can play, the greater the utility and value it brings to the ecosystem, and usually more investment value;
For example,
a certain cryptocurrency may also have payment unit benefits such as fee payment reductions and participation in specific projects to share profits.
Or a certain cryptocurrency can be used as the role of initiating smart contracts and paying fees.
Each cryptocurrency has unique functions and meanings. If you are interested, take the time to study it.
But if you still can't understand the role of the cryptocurrency after reading the white paper, or
you can't find more than two roles, you should consider other cryptocurrencies to invest in.
ccc
Why do you say that the fewer roles a cryptocurrency can play, the less you should invest in it?
To answer this question, we must first have the concept of Token velocity.
The speed of circulation here, to a certain extent, can correspond to the degree of people's recognition of the value of the cryptocurrency.
When people continue to hold cryptocurrency without selling it, the liquidity will be very low; on the contrary, if people sell the cryptocurrency in exchange for other kinds of cryptocurrency or fiat currency, then the liquidity will be high.
No comments