Wed. Apr 24th, 2024

How much do you need to know about Cryptocurrencies before investing

about Cryptocurrencies

Nowadays almost everyone is talking about investing in crypto. We’ve all heard of the craze and we’ve all seen at least one person who became rich from their cryptocurrency investments, however many crypto investors tend to keep a little secretive about the subject, which is why it can be a little tough to get into touch when you’re a beginner about Cryptocurrencies , as most of the time you have to learn it all by yourself, and there’s quite a lot to it.

How does Crypto work?

The way crypto works is someone creates a currency with a certain set of code that states how much liquidity there will be. Once the coin is released to the public, it is marketed and sold at a starting price which is usually very cheap. Once people get to know about the coin and buy it, the liquidity pool drops and the market cap rises. The more people buy and hold, the higher the market cap becomes and the higher the value of the coin rises, since it’s becoming more and more scarce from the main source. Then when someone sells crypto, there is an increase in liquidity, which makes the currency cheaper to buy. Since people are always buying and selling, it’s like a giant roller coaster that depends solely on how much other people are going to buy or sell from that certain coin after you have bought some of it for yourself. The bigger the buys and sells are, the wider the price can fluctuate, and the more you hold, the more you are affected by these fluctuations. 

Different types of cryptocurrencies;

When looking up the crypto market, you will hear four major classifications of different cryptocurrencies,which are; Major Coins, Meme Coins, Altcoins & Shitcoins.

Major cryptocurrencies are those that lead the market with the largest market caps on the planet. We’re talking about the big boy players in the crypto market, like Bitcoin (BTC), Ethereum (ETH), Dollars Tether (USDT), Binance coin (BNB), Cardano (ADA), and more. These coins have such a high market cap that their fluctuations have become very minor since there are so many people holding the market strong. For example bitcoin has a market cap of 700 billion and currently costs around 37,000 dollars a pop.

Meme coins are cryptocurrencies inspired by memes which are generally released at a massively low cost and tend to be a lot more volatile than major cryptos like the ones mentioned above. These coins are 100% community driven and completely depend on social media and marketing in order to make money for their investors. Finding the right meme coin at the right time could potentially make you a millionaire, but if you don’t sell at the right time you could lose it all in a matter of seconds, all it takes is a few whales to kill a meme coin for good and make you lose your whole investment.

Altcoins is a term that refers to any type of crypto which isn’t bitcoin, Ethereum, litecoin, and avalanche are examples of some of the best altcoins. Meanwhile, the phrase “shitcoin” refers to a cryptocurrency with little or no value or a virtual currency that has no apparent or evident use. 

At the end of the day when deciding between which of these you should invest in, it’s all about how fast you want the action to happen. The higher the market cap, the slower the fluctuations will happen, besides that, there’s not really much difference to the outcome between any of them, they’re all utilising the same new technology and they all have massive heaps of potential. It’s also very important to not go all out when it comes to placing your money into these coins as just as much you can make a profit with them, you can come out with a loss. It’s also suggested to keep an open mind to always researching the industry you want to invest in thoroughly, so that you always know what you’re getting into, and when to get out.

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