Early Crypto Misconception - There are no "cheap" coins or the "next bitcoin".
Last night my coworker, all jazzed, starts telling me how he wants to put about $200 each into about 5 different cryptos.
"Cool," I say, "which ones?"
He gets out his phone because he can't remember any of them and starts listing. I mention that Cardano might be a promising project but I could tell he didn't know anything about these coins/tokens he wanted to buy so I asked, "Why these? What do you like about them?"
He says, "Well I was looking for ones around a dollar or less so they have room to grow. And I was picking ones with a high market cap." Uh....yeah so many things wrong with that statement there I had to share with Steemit.
First off, if a coin has a high market cap already but is still under a dollar, we can assume that it probably has high number of coins in circulation. Take XRP (Ripple) for example; because it has a pool of 100billion coins, we know that it will never reach the heights that bitcoin could with its 21million supply of coins. For ripple to ever even hit something like $20, it would have to have a market cap in the trillions, so, it is actually impossible for ripple to ever reach the heights of bitcoin. Once we see this, we start to understand that we care more about percentages. A coin worth $110 that goes to $120 is going to be more profitable than the 30cent coin you know nothing about dropping to 15cents. Also, a coin could already have had 1000% gains by the time it reaches a dollar and maybe its maxed out at this point but you don't know because you don't actually know anything about the project. So please, make sure there is a strong development team, make sure there is utility, don't judge coins by their price or market cap or media hype. Think Critically before investing because the truth is that roughly 90% of crypto projects in 2017 failed....do not be a sucker who puts your money into one of those. Make sense?
We've all been there. Excited, eager, foaming at the mouth to make the next right investment now that we are sold on this new and blockchain stuff and we don't want to get left in the dust. And honestly, those of us that have been paying attention to this wave a little longer are just as excited that everyone else is Finally starting to listen to us! Validation...sure a little bit, however I find myself trying to share knowledge so that newcomers can avoid some of the pitfalls of the learning curve (don't tell me you haven't lost some $ due to ignorance at some point you guys...you lie!). So for any newbie traders reading now, a few basics to remember are:
-Always have control of your private keys. This means downloading wallets for coins rather than leaving them on exchanges all the time. There are plenty on online tutorials to google if you do not know what this means.
-Never buy at all time highs. You'll get caught at the tail end of a waves and it's going to lead to panic-selling. Buy red Sell green!
-If it looks like a pyramid scheme, it IS one. Stay away. Do more research
Thanks for reading. Please upvote and share etc. to encourage me to keep on steeming. Still getting the hang of Steemit so far. I'll comment and follow back.
I wanted to add an image so here is this sweet crypto alien. Enjoy!