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18/09/2017

Investing In Cryptocurrencies

The popularity of Bitcoin and its meteoric rise over the years has investors turning their attention and money to cryptocurrencies. Cryptocurrencies offer investors high returns in the long run but are sometimes risky due to volatility on online exchanges. It is being regarded as the biggest investment in recent times. Cryptocurrencies and blockchain projects are achieving astronomical valuations due to their rising popularity. The current total market capitalization of all cryptocurrencies is around $150 billion. This trend seems to be only growing larger and a lot of early adopters of cryptocurrencies have made considerable profits. Initial Coin Offerings (ICOs) offer investors the opportunity to earn supernormal profits on the coins up for offer. Investors need to predict which cryptocurrencies will sustain growth and continue to provide gains.

Unique Idea

Blockchain is a technology we have already spoken about and it can be used for a variety of reasons. Bitcoin was established as a “decentralized currency” and it revolutionized the online currency space due to its status of being unregulated. Now, many coins are popping up with same idea and functionality, but the market is not buying into it anymore. Investors should look for coins with unique uses and functions that could provide sustainable growth in the long run. An example is Steem, a cryptocurrency that people can earn through its social media platform called Steemit, just by creating and curating content.

Distribution

Each coin has a smart contract which has information such as how much of the coin is available, how much can be mined, and whether unsold coins will be destroyed. Usually, the scarcer a coin is the higher is its value in the market. This is why only certain quantities of coins like Bitcoin can be mined at a time. To gain an advantage, investors should have all information about ICOs, availability of coins, amount in the closed pre-sale, function, and mineable amount.

Blockchain

New ICOs must be launched from an existing blockchain, unless they plan on building their own. The chain that the coin is built on determines which existing cryptocurrency one will use to participate in the ICO. A project using Ethereum’s blockchain will require Ether to purchase the new coin. Thus, at first it will be exchangeable only with Ethereum and no other cryptocurrencies. If it uses an obscure chain such as NEO, this could put a cap on price.

Here are some interesting cryptocurrencies to keep an eye on-

Ethereum –

  • Both Ethereum and Bitcoin use the blockchain network as a platform, but they differ in their purpose as Etheruem uses blockchain to support the programming codes of decentralized applications (DAPPs)
  • ETH price remained in an uptrend and moved a few points above $270 against the US Dollar.
  • There is a crucial bullish trend line forming with support at $266 on the hourly chart of ETH/USD
  • The pair might continue to gain pace and could even break $280 in the near term.
  • Ethereum price is gaining bids and pace against the US Dollar and Bitcoin, and now ETH/USD is preparing for a move above the $280 level.
  • Ethereum has the second largest market capitalization of all cryptocurrencies at $29 billion, behind only Bitcoin

Antshares-

  • Antshares is a Chinese blockchain implementation similar to Ethereum
  • It is very similar to Ethereum in the way that it supports DAPPs, but it gains adavantage in the fact that it does it in many more languages than Ethereum can support
  • Western markets have only just begun to realise the profitability potential of Antshares, and are investing in it hoping for another chance at Ethereum-like profits
  • It is still in its developmental phase and most of its information is in Chinese. Which means it is very undervalued and has high potential

Tether-

  • Tether is a cryptocurrency designed to be at par with US Dollar (1 USDT = 1 USD)
  • Its Market capitalization is at $403 million.
  • Any change puts many exchanges under strain as prices on these exchanges fluctuates unpredictably
  • An article has also been published about discrepancies in Tether’s balance sheet. This would reduce public trust
  • This cryptocurrency is useful when the market is going to crash, to convert all your currency into USDT. Right now, the market is stable

Basic Attention Token-

  • Basic Attention Token radically improves the efficiency of digital advertising by creating a new unit of exchange between publishers, advertisers and users. It all happens on the Ethereum blockchain.
  • The value of the token is based on user attention, which simply means a person’s focused mental engagement.
  • The current price is at $0.225484 and market capitalization is $225 million

Steem-

  • Current price is $1.30 and market capitalization is at $312 million
  • Steem is a cryptocurrency users can earn by creating and curating content on its social media platform, Steemit
  • Some can use it to earn extra cash, while some can use it to monetize growth
  • Post and comment rewards are split 75% to the author and 25% to the curators. A 50/50 split of STEEM Power and liquid tokens are awarded to authors and commenters 7 days after a post or comment is made. 100% STEEM Power rewards are optional for posts. Post authors can also choose to decline payouts.

Ripple-

  • Ripple is currently trading at $0.219447 and its market capitalization is the third highest of all cryptocurrencies at $8.4 billion
  • Ripple is an open-source digital payments systems with no access fee restrictions, as well as a digital currency used within its system.
  • Ripple seeks to make international online transactions quick and efficient. Transaction fees are insignificant and settlements are done almost instantly.
  • The coin differs from other cryptocurrencies as it is pre-mined.

Monero-

  • Current market price is $114.55 and market capitalization is at $1.7 billion
  • Monero is an open-source cryptocurrency that specializes in privacy and decentralization.
  • It runs on CryptoNote, a blockchain platform different from Bitcoin’s.
  • Darknet markets such as AlphaBay have adopted the coin, due to its focus on privacy
  • It is easy for amateur miners to use as it utilizes GPUs instead of CPUs.

Other factors that an investor should look at include doing a background check of the team behind the cryptocurrency. If a cryptocurrency expert is backing a coin, it is a good sign. Since cryptocurrencies belong in the online space, investors should regularly check online communities such as Reddit and Bitcoin.org, where followers of various coins come together. Cryptocurrencies are closely related to the amount of buzz they create, as it determines their eventual price during an ICO. Word of mouth is an essential tool for coins but it can also be manipulated in the form of “bounties”, coin-based rewards to people who spread good word about the coin.

 

By Nishad MUKHERJI

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