Why Invest in Cryptocurrencies And Why Not?
Besides what was already said, there are three major good reasons to invest in cryptocurrencies. First, because you want to hedge your net-worth against the fall of the Dollar imperium, which is assumed by many people to inevitably happen at some time. Second, because you support the social vision behind cryptocurrencies, that of a free and hard money for the whole world. Third, because you understand and like the technology.
However, there are also very bad reasons to invest in cryptocurrencies. Many people fall victim to the hype surrounding every cryptocurrency-bubble. There is always somebody captured by FOMO (fear of missing out), buying massively in at the peak of a bubble, just in hope to make quick money, while not understanding cryptocurrencies at all. That’s a bad reason. Don’t do this. Learn before you invest.
What Cryptocurrencies Should I buy? Building your Portfolio.
The former only crypto has been Bitcoin. Up until late 2016 Bitcoin was the cryptocurrency, and there was not much besides it. If you wanted to invest in the success of cryptocurrencies, you bought Bitcoin. Period. Other cryptocurrencies called “Altcoins” have just been penny stocks on shady online-markets, mostly used to keep miner’s GPUs working, pump the price and dump the coins.
However, this has changed. While Bitcoin is still the dominant cryptocurrency, in 2017 its share of the whole crypto-market has rapidly fallen from 90 to around 40 percent. Many people saw this coming as a result of the growing popularity of Ethereum and the ongoing self-tearing of the Bitcoin community over the blocksize issue. This again shows that it is important to keep your eyes open and listen to what the communities say.
If you want to invest in cryptocurrencies, Bitcoin is still a standard item of every portfolio but it is no longer the onliest asset. In every well-balanced crypto-portfolio today you find other coins, like:
A good starting point to put together your portfolio should be the website coinmarketcap.
• Ethereum
• Firstcoin
• Litecoin
• Dash
• Electroneum
• And more
Here you see the “market cap” of all relevant nations. Market cap means the value of all token available. It is not a perfect metric, but likely the best we have to recognize the value of a cryptocurrency.
If you want to have a balanced portfolio at one point in time, it might be a good strategy to simply reflect the ten most valuable currencies in your portfolio. More interesting however is it to take some time, read about those coins, decide, if their vision gets you and make this to the base of your asset selection.
Some on smart contracting, like Ethereum and Ethereum Classic, and some on scaling payments, like Firstcoin. Some coins, like Ripple or Nem or Bitshares, seem to be less open and decentralized as Bitcoin and other coins.
The cryptocurrency markets are a blazing, often confusing ecosystem, in which you find thousands of chances to win a lot of money and to lose it. Every day gives birth to new coins and death to some old coins. Every day sees some coins heavily falling, and some vertically raising.
If you buy altcoins, there are some rules to discriminate the good from the bad. Good coins have a transparent technical vision, an active development team, and a vivid, enthusiastic community. Bad coins are in transparent, promote fuzzy technical advantages without explaining how to reach them, and have a community which is mostly focused on getting rich. Maybe the worst shatter of cryptocurrencies are the MLM coins, for example, OneCoin, which target the technical uninformed with a multi level marketing system, promising to be the next Bitcoin. Beware of them!