More and more people are entering the cryptocurrency market lately. But what we sometimes forget is that cryptocurrencies are an investment that definitely involves risk. Buying cryptocurrencies without studying the projects on which they are based, their white paper and some basic technical information is like not knowing what you are getting and risking your money unfairly.
You should pay attention to some basic things before proceeding to buying cryptos. Here are some things to look out for when buying cryptocurrencies.
Market capitalisation
Before buying cryptocurrencies, one thing you need to know and pay attention to is the market capitalisation of the currency. In essence, this indicates how much it is worth to buy a cryptocurrency. For example, the market cap of Bitcoin, the number one cryptocurrency, is worth about $1 trillion. This means in very simple terms that all the money invested in this cryptocurrency is a total of 1 trillion. This way you understand how “stable” a cryptocurrency can be and how many have chosen it.
Do your research
If you are a beginner and do not know how the cryptocurrency market works, all you need to do is invest in the biggest projects first. Bitcoin and Ethereum are currencies that in theory will not easily lose their value. The large market capitalisation they have does not allow large fluctuations in their price.
However, the smaller the market cap, the greater the risk involved in its investment. Remember that many have lost a lot of money by investing in low-capitalisation cryptocurrencies that have not been researched. In other words, they did not know if they were useful in blockchain technology and if they were worth it.
White paper
Buying cryptocurrencies without reading their white paper is definitely a mistake that can lead to a loss of profits as you will not really know what it is about. Each cryptocurrency has its own white paper, which lists the objectives of each cryptocurrency and what its project aims at. The cryptocurrency and its function are described in a few words.
In any case, do your own research and invest your money in cryptocurrencies that are not “bubbles” ready to burst!
