What Cryptocurrency to Buy: A Detailed Guide
With the growing popularity of cryptocurrency, the number of different digital assets is increasing every day and is now in the thousands. It is very easy to get lost in such a variety, and on the contrary, selecting the right cryptocurrency to buy is difficult.
This article will tell you how to choose a digital currency for investment and mention some promising cryptocurrencies.
What crypto to buy, and what is the benefit of investing?
Due to substantial price fluctuations in the market, it is not easy to answer the question, “What is the best crypto to buy?”. The coin price may grow at a frantic pace today but collapse in a week. However, it may rise higher than before in a couple of weeks. On the other hand, these fluctuations make electronic money so profitable because they can increase the initial investment not by 5% but by as much as 50% in a short time.
Also, entering the market is quite simple, and literally, anyone with Internet access can do it. You do not need to look for a broker or have thousands of dollars on your balance to take your first steps in trading. Another advantage of investing in cryptocurrency is the high pace of trading. You will spend only a few minutes buying or selling a specific asset.
It can bring significant profits, but it is very difficult to choose an investment object due to the instability of the exchange rate. To decide what cryptocurrency is best to buy, you need to carefully analyze the projects that interest you.
Token or coin: difference & advantages
First, let’s figure out what types of crypto to buy now and their significance for investors.
A coin is a cryptocurrency that has its own blockchain. This category includes well-known Bitcoin and Ethereum. Basically, coins are used specifically for fast and secure money transfers. Due to having their own platforms, these currencies are more independent and flexible than tokens. Also, coins can be mined.
A token is a cryptocurrency built on an existing blockchain. This category includes Tether, Dogecoin, Shiba Inu, and so on. The use of tokens is limited to decentralized applications for which they were initially created. But it is also a plus. If the application is relevant and in increasing demand, its token’s price will also grow. This type of digital money is highly dependent on the blockchain where it was built but is less susceptible to a 51% attack.
It is impossible to say whether it is better to buy coins or tokens because they have different purposes, strengths, and weaknesses. A coin can be many times better than a token to perform a specific task and vice versa.
How to choose which crypto to buy now
To discover promising assets, you need to be interested in new projects and news about the existing ones. If the token developers offer some unique and useful technology, the chances are high that the price of their cryptocurrency will start to rise.
The community may largely influence the currency rate. Due to the audience’s support, DOGE, which was created simply as a meme token, eventually rose in value. General excitement around the project or some big investor’s interest can also indicate what crypto to buy now. After all, the more people invest in this currency, the higher its price will rise.
How to choose a promising project
There are several criteria to evaluate the project’s prospects:
- Development team. Do they have experience in blockchain technology or other projects? What are their ambitions, goals, and values? Is this team able to give the world something new and worthwhile?
- Community. Look through the project’s social networks, how often the developers publish news, talk about updates, how active their subscribers are. If you do not see any activity, this is a signal that the token is likely to go down.
- Technologies. When it comes to a coin, pay attention to what benefits its blockchain can offer. Higher transaction speed, enhanced protection against hacker attacks, or something else?
- White paper. It is the official document of the project. It contains all the information about its technologies, goals, ways to achieve them, ways to maintain its cryptocurrency’s liquidity. If you see that the document is poorly written, makes unrealistic promises, or does not explain how exactly the goals will be achieved, then it is probably not the good crypto to buy now.
- Roadmap. It is a project development strategy that looks like a diagram and displays the stages and approximate dates when they were or will be completed. You need to know when key events will occur and how successfully the team is already moving along the intended path.
After analyzing all this, you will understand what the project has to offer, whether it will be of interest to investors (including you), and if it will be able to achieve its goals.
Studying the market
Even if the white paper looks promising, the market situation may differ. Here, you need to pay attention to the following indicators:
- Exchange rate graph. How often and how much does the price fluctuate? Is there a long rise or fall? Price fluctuations are regularly repeated for many cryptocurrencies, for example, Bitcoin.
- Exchanges where the asset is listed. The more of them, the better. If an asset is traded on one exchange only and suddenly disappears from it, you will no longer be able to sell it.
- Price. Some traders buy cheap cryptocurrencies at the very start and wait for them to grow in price.
- The number of issued coins. The fewer of them on the market, the higher the demand and price. Over time, the number of coins will grow due to miners’ work. Many projects burn (liquidate) part of the currency to maintain its liquidity.
Market indicators are the best adviser on which cryptocurrency to buy. So always analyze the market situation before purchasing an asset.
Which crypto to buy for the long term
While some traders are looking to make quick profits on short price fluctuations, others are thinking about what crypto to buy today in order to maximize profits in the long term. In trading, investments for 3-5 years are considered long-term. Due to the rapid dynamics of the cryptocurrency market, it is better to invest for several years in assets that have already proven their reliability.
Such assets include Bitcoin, Ethereum, Solana, Cardano, Polkadot, and others.
Bitcoin (BTC) is the most accessible crypto to buy. It is the very first and most famous cryptocurrency. It is also the leader in terms of market capitalization. Although it has some drawbacks, such as low scalability, it is still a brand in the world of digital currencies, and its influence is comparable to that of the dollar in the fiat world.
Ethereum (ETH) ranks second in terms of capitalization. Unlike BTC, this crypto coin provides a platform for creating decentralized applications based on smart contracts. More than a thousand applications have now been developed on its basis.
The Solana (SOL) project also provides a platform for smart contracts and features high transaction speed thanks to the Proof-of-History algorithm.
Cardano (ADA) operates on the Proof-of-Stake algorithm, which makes the mining of this coin as environmentally friendly as possible. The transaction speed of ADA reaches 250 thousand per second.
Polkadot (DOT) is a project that provides a framework to unite different blockchains and transfer various data or assets from one blockchain to another.
Although all these cryptocurrencies look promising for long-term investments, we cannot give financial recommendations and advise definitely to invest in them. Study the market and make your own decision.
Which crypto to buy today: hot assets of 2022
If you do not want to wait 3-5 years for profits, you can focus on investing in newer cryptocurrencies that are just entering their growth stage. At the end of 2021 – beginning of 2022, such assets include MATIC, LUNA, NEAR, and SAND. This list is also for informational purposes only, not direct recommendations on the best new cryptocurrency to buy.
Polygon (MATIC) is a platform for scaling the Ethereum network and developing its infrastructure.
Terra (LUNA) is a blockchain that specializes in creating stablecoins. Its native token, LUNA, is used to stabilize the prices of these stablecoins.
NEAR Protocol (NEAR) is a convenient blockchain for creating dApps. It has eliminated the drawbacks of its competitors: poor compatibility, low throughput and transaction speed.
The Sandbox (SAND) is a virtual world where you can create, buy and sell digital assets. The platform is focused on implementing the concept of play-to-earn and uses the SAND token for this purpose.
Cryptocurrency is growing even more popular. The market is overflowing with thousands of assets, but not all of them can bring you profit. To select suitable investment objects, you need to study the projects, the surrounding news, and, of course, the market.