How to select a cryptocurrency? Deciding in the right way is the first step into your investment journey. There is no single best option for you to choose from, but there are the best cryptocurrencies for some instances. First, you must find out which one is suited for your scenario.
Most of the best cryptocurrency options available are in the top 50 market cap of cryptocurrencies. While the smallest market cap of cryptos probably has not delivered on their promises. Or even have questionable use cases.
That is why small market cap cryptocurrencies tend to be riskier than large market coins, such as Bitcoin or Ethereum. Bitcoin, for example, is the best crypto to use as a reserve asset since it is widely adopted and has a finite supply.
The best cryptocurrencies to invest in have a solid team backing them up. That is why it is so important to research: so you can discover all the information about your crypto, in which case you’d better read the cryptocurrency’s white paper.
That way, you can understand how crypto works and its intended use.
How to Select a Cryptocurrency: Hot Tips
1. Do your research on cryptocurrencies
Before you even create an account that is the first and most important step into the trading life, thoroughly research the exchange, you will choose. Dig deep into their past and look for potential negative stories.
What does the exchange promise? Have there ever been problems with security in the past? If so, how did the exchange solve them? What do other traders have to say about the exchange? Take your time, do not make any rash decisions as far as information is critical when entering to digital currency world.
One way to make well-informed decisions on How to select a cryptocurrency is by joining the Fat Pig Signals Telegram Community.
FatPig has a team of professional traders that will help you read the charts and crack the codes of the best cryptos in the market, but they also send you daily updated trading signals so that you are always up to date on the market news.
2. Be Cautious with Your Choice
When you are searching for a cryptocurrency, it is essential to acknowledge frauds and scams as one of your most significant risks. They can have a substantial impact on individual investors. It is not unusual for digital currency exchanges to be hacked, compromised, or collapse.
But how can you ensure that the cryptocurrency exchange you are choosing is safe? First, there must be a physical address associated with the exchange because without knowing where your exchange is based, you will not know the legal ramifications of your investments. Also, if your account ever gets hacked, it is easier to solve the problem with the exchange and any other authorities that need to be involved if you have an actual physical address.
3. Higher Security is the Way
The harder it is to create your exchange account, the better! If it is too easy to open up your account, that probably shows this particular exchange may not be very trustworthy. Imagine if your digital investments suddenly go missing? It’d be way more difficult to track down and retrieve your money.
No matter what cryptocurrency exchange you choose, the best idea is to keep most of your digital assets in a cold wallet as an offline storage service which is often an option for stoked coins.
4. Acknowledge Possible Fees and Pairs
After carefully researching and going through all the possible cryptocurrency exchanges, you finally choose the best investment option. That is good, but now you should also analyze how each exchange will impact your financial life.
Two factors that frequently distinguish exchanges are the currency fees and pairs they offer. Usually, cryptocurrency exchanges include a fee for each transaction, which can either be based on the size of the transaction or in the level of your activity or, in some cases, they may be unrelated to both factors.
It is important to learn about these fees and understand how they could impact your investment assets based on your trading style.
Are you going to be trading every day? If the answer is yes, it would be interesting to consider an exchange with a small fee per transaction. But, even if you do not intend to be that active on your cryptocurrency exchanges, you should be aware that the fees you will need to pay are associated with different transaction types.
Another consideration is the crypto pairs and new exchange offers. Coinbase, for example, offers a relatively small variety of digital currencies for its users. Although Coinbase is excellent about safety and user experience, it may be interesting to look elsewhere if you are looking for some more obscure altcoins.
Make sure you understand how your investment and trading practices will be related to the features of your exchange.
The DeFi Scenario
Some of the hottest altcoins of 2021 are decentralized finance (DeFi). Usually, one can build DeFi tokens on Ethereum’s blockchain and exchange banking functions with codes.
Year finance, Compound, and Uniswap, for instance, have gone up over 500% in the past six months. Altcoins means any cryptocurrency that’s not Bitcoin.
The top 5 DeFi tokes in market capitalization order are:
- Uniswap (UNI)
- Aave (AAVE)
- Synthetix (SNX)
- Maker (MKR)
- Solana (SOL)
It is important to point out that non-DeFi altcoins have also had a significant value rise over the past year.
Ethereum is today the largest altcoin by market capitalization since it has risen from U$90 to over U$1.800 in less than a year. Investors have noticed the altcoin due to its various financial applications built on its blockchain.
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