HOW TO INVEST IN CRYPTO-CURRENCIES IN 2017? 11 THINGS TO KNOW BEFORE YOU BEGIN
You have no doubt seen the explosive growth in the value of crypto-currencies like Bitcoin or Ethereum - or more generally, that of the total capitalization of virtual currencies. And some of you may be biting your fingers for not investing in time to take advantage of these hikes.But it may not be too late to invest in crypto-currencies, even in 2017! Because cryptocurrencies are only in their infancy. We can probably imagine that their value should continue to rise in the months and years to come. Then there are many other crypto-currencies whose creation is much more recent, and which may hold a significant upside potential.Attention: investment in cryptocurrencies remains extremely uncertain. We suggest you spend only what you could afford to lose. Here are 11 things to know before you start!
1. The meteoric rise in the value of crypto-currencies ...
With already more than $ 100 billion in total capitalization, the value of cryptocurrencies is growing extremely fast.
By comparison, Carrefour is worth around 18 billion euros, and L'Oréal 105 billion euros. And while Bitcoin is still first in terms of capitalization, it is far from being the only player: it now weighs more than 40% of the market. New crypto-currencies, more efficient, and with wider areas of application have emerged over the months: Ethereum, Ripple, Stratis, ...
2. ... but these are still confidential
This is perhaps the point that makes crypto-currencies a great investment vehicle. Most people have not heard of Bitcoin or Ethereum yet. They still do not know what the blockchain is. Because no simple access application has yet really pierced the market. Imagine when that will be the case ... It must be said that, for the moment, access to these assets is still difficult. The SEC rejected for the second time a Bitcoin ETF project, which could have made investment in this cryptocurrency more accessible.
3. Cryptocurrencies are assets almost like the others
Investing in crypto-currencies is quite similar to a conventional investment in commodities such as gold, diamond, iron, etc. What must be understood is that these conveniences derive their value from their utility. Indeed, they are used every day by individuals and companies. Crypto-currencies, if they do not constitute tangible goods, will also be useful: in financial transactions, in the execution of contracts, ... It is above all this utility in which it is relevant to invest, asking the following question: does the cryptocurrency that interests you bring real added value?
4. To constitute an attractive asset, a cryptocurrency must have a significant use value
It is not by buying crypto-currencies randomly, hoping that they will bring you an important return, that you will be able to make profits. The ideal is to look for currencies that will solve a problem. The larger the problem they are tackling (where the intended target is large), the greater their potential value.
This is the case, for example, with Ethereum, with which one can imagine thousands of concrete applications. To run these applications, individuals and businesses will need to buy ethers - which will increase their prices mechanically, beyond a mere speculative effect. Other currencies are less ambitious, but are aimed at a wide audience. This is the case for example Monaco, which will offer a payment card to easily pay for purchases with cryptocurrencies. Or Monero, which aims to guarantee the anonymity of its users. In summary: it is important to focus on the technology of the corners in which you will invest.
Do they use proof of stake or proof of work?
What is their real added value compared to other "competing" currencies on the market?
Do they allow developers to create related applications (as is Ethereum or Stratis)?
5. Many cryptocurrencies have no interest
And yes. With more than 4300 different crypto-currencies in circulation, it is clear that most of them do not have much interest. Imagined by Internet users looking for quick wins, we can think that they will not last long.
Examples ? Currencies such as LePenCoin or PutinCoin seem to be far from being attractive investment opportunities.
Our advice: be vigilant before investing in cryptocurrency. Strive to find out from several sources to make a wise investment.
6. To invest well, you must be well informed
This is a direct consequence of the emergence of crypto-currencies with no interest at the technological level: we must be cautious. It is important for a crypto-investor to use the internet to inquire before proceeding to the acquisition of a numerical value. But it is better to make your own opinion, than to rely on the recommendations of a single investor. Look for example this very advised advice concerning Ethereum (it dates from June 2016):
Those who listened to him and did not acquire ether because he traded at 11 or 12 euros must now bite his fingers following the meteoric rise of his course ...
Here are some points that can help you evaluate the potential of a cryptocurrency:
Discussions on the "subreddit" of the currency, as well as the "metrics" reddits, which make it possible to take the temperature of the craze caused by a technology.
BitcoinTalk, which is the reference forum to keep abreast of the news of crypto-currencies. Each of them has a dedicated thread, which assesses the enthusiasm of investors. It also makes it possible to ask questions to the community, in order to obtain additional information.
7. Which teams are behind the project?
It's a little similar to what a business angel will do when planning to invest in a startup. If the value proposition of a company is important, the teams behind it are just as important.
Hence the need to focus on people who are hiding behind a digital asset:
How many developers are there? What is their experience? What are their past successes?
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Are prestigious advisors involved in the projects and advising the company's executives?
8. Two different investment approaches
Do you have some money to invest? Two approaches are available to you:
Daily trading: it will be to be responsive, and take advantage of the volatility of different cryptocurrencies to make a profit. But if you have no experience in this area, it's probably not the right strategy to adopt.
Bet on the long term: you form a small wallet of crypto-currencies (between 2 and 5). Values in which you believe, with a certain ambition, a team of powerful developers, significant potential, ...
And you wait. 6 months, 1 year, 2 years, ... Ideally, you have invested money that you do not need urgently - and if all goes well, time will come for you. Even in case of decline, you "force" to keep all your "corners". This is the best thing for us to take advantage of crypto-currency growth.
9. Do not look that the price ...
Often, beginners tend to compare crypto-currencies with each other ... by comparing their price. They will think that a corner sold at a higher price could capture a larger volume of investment.
It would be wiser to compare the total capitalization of these currencies with each other to find out what their total "value" is.
For example, we can compare NEM and DASH:
An NEM unit costs nearly 1000 times less than a DASH. But it can be seen that the number of NMS in circulation is much higher, and that the capitalization of the first currency is higher.
There are many other things to consider:
Was there an ICO (fundraising) before marketing? At what price were the tokens offered?
Is the currency deflationary? Is the creation of new money limited as the years go by?
10. An alternative: ICOs, to invest before everyone else
The ICO (for "Initial Coin Offering") are proposed before the placing on the market of a cryptocurrency. It can pay big ... or not.
Indeed, several "tokens" saw their value collapse once their introduction on the main trading platforms.
Our advice: it is important to be well informed, and to favor investment in cryptocurrencies that rely on a solid technological base.
Interested? Feel free to visit the TokenMarket site to see all the ICOs in which it is possible to invest.
11. What are the best crypto-currencies in 2017 to invest? 4 ideas
Apart from Bitcoin and Ethereum, there are hundreds of crypto-currencies with interesting potential.
But here are the four that we think are the most promising:
Ripple
Dash
Ubiq
Stratis