Cryptocurrency is no longer a new thing to see almost everywhere you look. That can leave many people in the mindset of wondering if they should get into it or not. The problem is, many newcomers look into it a little, and have no idea where to start, and which of the ~5,400 currencies they should begin to look at. That is why, in this article, we are going to go through a guide about how to research cryptocurrency, and hopefully give you a little more insight into it.
That doesn’t mean, unfortunately, that it won’t be a bit of a harsh ride at first, especially if it is your first venture into the realm. Even if you have some experience with trading Forex, there is one huge dissimilarity. That is that standard currencies do not fluctuate anywhere near as much as cryptocurrencies. With Forex, you are only looking at a tiny percentage of change. However, cryptocurrency can change up to 50% in a single day, sometimes even more.
The one thing that you need to do when you are considering cryptocurrency is research, as the title suggests. The more that you can research, the more likely you are going to be to make good investments, and good investments mean profit.
How To Research Cryptocurrency
There are many ways to research cryptocurrency, and each of them has its own benefits and downfalls. However, they are all dependant on your personal trading style. Yes, trading styles work in the same way with cryptocurrency as they do with any other trading, whether it is Forex or stocks. So, from now on, we will give you the ways in which you can research each cryptocurrency, and you can pick and choose which suits you.
Before we do that, though, please note that the more you know about them, the better.
Look at The Cryptocurrencies Available
Unless you have a particular affinity with a specific cryptocurrency, such as ETH (Ethereum) or BTC (Bitcoin), then you may want to have a look through the list of them. That step is not particularly necessary, but if you use coinmarketcap.com, you will see various information for all of the cryptos that there are.
Some of the information there will probably go over your head a little at first, but the more that you look, the more you will understand it. However, what it will do is show you some of the statistics that you want to see, such as the price, volume, and percentage increase/decrease over 1 hour, 24 hours, and 7 days.
Use Social Media
Honestly, it is not very often that I will advise people to look on social media for any sort of “real information.” We all know that there is a vast amount of fake news and misinformation spread on the platforms. However, with the sheer number of people who use them, you can see where (which cryptocurrency) and when the crowd is heading. The more people who buy specific crypto, the more the price will increase, to an extent.
Still, there are some platforms that you should look to, and some that you should stay well away from, such as YouTube, as they are now filled with affiliates promoting things only because they get paid.
Believe it or not, one of the platforms I actually advise you to look at is Facebook. There are so many people on there that you can see very well what the crowds are doing. However, that doesn’t mean that you should just look at your feed and go with what anyone is saying. There are two groups that I would suggest that you use at the beginning:
Crypto Trader News. - At the time of writing this article, there are 56,058 members, and 53 new posts in the last month, with 4 of them today. With ten moderators, you know that you are not going to be getting into a barrage of misinformation. There is also no promotional posts in this group, which is a good point, as promotions tend to make people sway towards something that they otherwise wouldn’t want to.
Crypto Coin Trader. - This group is a bigger one than Crypto Trader News, with over double the number of members, and five more moderators. Furthermore, there are a lot more daily posts and a zero-tolerance to spamming/scamming, unapproved advertising, and referral links. One of the issues for beginners and this group is that they state that participation is required. So, if you are a complete newcomer to the world of crypto, then you may need to wait a while until you have a perspective to provide.
Twitter is a lot more reliable than many social media platforms, providing that you follow the right people. The issue is, there are a lot of people that you can follow, and that can be difficult to find the right people. Luckily for you, we will start you off with five of the top accounts that you can look at. Then, from there, you can start to explore on your own a little.
@aantonop (Andreas M. Antonopoulos). - Andreas is a wealth of information, and he is the author of seven books, all bar one, revolving around internet money and cryptocurrency. He also tours the world talking about Bitcoin, which means that you know you will be getting useful information.
@iam_preethi (Preethi Kasireddy). - Preethi has been around cryptocurrencies in various ways for a long time. She was also a Software Engineer with Coinbase back in 2016, and now the founder of TruStory, a new social media platform.
@Super_Crypto. - Super Crypto has some very outward and realistic views in the crypto space. However, first of all, this person is not to be confused with the unregulated investment company. Yet, although they are not too regular in posting, they have some fantastic information about the crypto space and how other stock prices affect it.
@CarpeNoctom (Josh Olszewicz). - If you are looking for technical tips and information, Josh is your go-to. He gives you graphical representations and works through his thoughts based on them—definitely someone to follow if you want some technical tips.
@TurrDemeester (Tuur Demeester). - Having as many views as possible is ideal when you are trying to research cryptocurrency, and Tuur is the man for a macro view with insights and data to back it all up.
Personally, I like Reddit anyway. However, almost all of the cryptocurrencies that you want to research will likely have a subreddit. r/Bitcoin has nearly 1.6 million users, and over 5,000 of them are active almost any time of the day. There is also a FAQ section that will provide you with a lot of information. Reddit is a notoriously unforgiving social media platform when it comes to simple questions, but that is probably because they have outstanding FAQ sections, most of the time.
Make sure that you look around well before you ask anything, but most of the time, if the questions are explained well, and thought out, there are a lot of people who will offer you advice.
Look Into Token Economics
Once you have got an understanding of a cryptocurrency that you think you would like to dive a bit further into, start taking a look at the economics of that specific token. As an example, we will look into the economics of BTC. First of all, search for “bitcoin economics.” Here are some of the things that you need to look for:
- Token Share. - The creators of the tokens will always hold a share of them, that is a given. However, it all depends on the percentage that they hold as to whether you should consider buying them or not. For example, if the founder holds over 50% of all tokens, does that seem like you should purchase, or is it too much? With the BTC example, Satoshi Nakamoto probably owns around 6-7% of all BTC. Therefore, you know that you are not going to be giving him all of your hard-earned cash.
- Release Schedule. - It is not always easy to find the schedule with exact dates as to the release of cryptocurrency. However, you can usually find estimates by the year. BTC released their first block in 2009, and until now, they have released twelve. Yet, they have four more release projections, one a year, until 2024. That means they are not holding them all tied up for a long time.
- Value Obtaining. - How do the tokens obtain value? The more ways in which they can gain value, the better. In the case of Bitcoin, they have value because they are useful as money.
While there are some other factors that you may want to look into, these are the primary three. If you can’t find them only by searching for “bitcoin economics,” or whatever currency you are looking for, you can search for the individual terms:
- Bitcoin token share
- Bitcoin release schedule
- How does Bitcoin obtain value?
You should now have an understanding of how your money will work a little better.
As you saw at the beginning of the article, there are well over five-thousand cryptocurrencies that you need to trawl through. However, it is not only the name that you need to look for. You also want to know what makes them unique.
For example, Ripple (XRP) has an entirely different framework to that of BTC, because all of the coins have already been mined before release. That means there is no creation of the currency, only release, and removal into the system. As another example, Litecoin has a quicker block generation, meaning there is less waiting time for transaction confirmations, and the global payment network is consumer-grade CPU decodable.
There are a lot of others that have a lot of unique factors, and finding one that you like is certainly something that you should not overlook.
How To Research Cryptocurrency - Privacy
Privacy is one of the most sought-after commodities in the cryptocurrency realm. However, unfortunately, they are not all the same. Some are much more secure than others. For example, Monero (XMR) uses ring signatures, stealth addresses, and conceals the transaction amount. While that alone may not be your deciding factor, you should take the time to see how secure and private your interactions will be with the crypto of your choice.
While you may think that this should be in the social media section, I believe that a community is a lot more than people posting on the internet. Take your time and look through the communities of each cryptocurrency that you are researching, as you will find ones that suit you as a person more than others.
Some of the currencies will have communities that only consist of more experienced people, which, in a way, is a good thing. However, when you go into those communities with a newbie mindset, you may find that you are pushed out pretty quickly. That can be a very demoralizing thing to happen.
While you are researching the cryptocurrencies, you are likely to find out a lot of information anyway. However, you need to spend some time looking through the news of the coins so that you can ascertain whether it is a project you want to invest in. For example, you are just about to put a lot of money into BTC, and you find that Satoshi Nakamoto has abandoned it (which he hasn’t!), you are likely to have alarm bells ringing about the future of the coin. Therefore, you would be unwise to put your money in, as the price will plummet. As I said, though, that is an example, and there is no rumor that he is abandoning it.
How To Research Cryptocurrency - Conclusion
The more time that you put into researching cryptocurrency, the better informed you are. The better informed you are, the more profitable your choices will be. While there are a lot of things that you need to think about, it will get easier as you learn about them. Try getting a notepad and writing down what you find so that you don’t have to remember it all. Furthermore, don’t try to fit all of the research into one day or even one week. Take your time, and do it properly; you will be rewarded.