How to create a portfolio of cryptocurrencies
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How to create a portfolio of cryptocurrencies
The graph of the exponential growth of the cryptocurrency market, compiled by experts from MIT
When used properly, altcoins can be powerful investment tools. The exponential growth of the cryptocurrency market is largely linked to the success of the largest altcoins, such as ether, XRP and litecoin. Now there are thousands of different altcoins. On the one hand, this gives the investor unlimited freedom of action on the market, on the other — makes the most responsible approach to choosing the right asset.
Poorly managed cryptocurrency could collapse and lose value in the blink of an eye what happened to Bitconnect. That’s why before you freeze on your choice, you need to look into that. Let’s get acquainted with the most basic concepts of crypto-currency market, without which knowledge it is impossible to begin to build your portfolio.
Compare the total volume of issue and number of tokens in circulation
If you want a professional approach to build your cryptocurrency portfolio, you need to understand how it will affect the market value of your asset the ratio of total emissions and the number of tokens currently in circulation. It’s just a matter of supply and demand. The more demand, the higher the price. If demand exceeds supply, price will always increase.
For example, the total amount of bitcoins is 21 000 000 BTC. After it is mined 21 million bitcoins, their production will stop. Now in circulation are 17 193 875 BTC. This means that miners will have to get at least 4 million bitcoins. Since the number of tokens in circulation, approaching to the total volume of emissions, it is logical to assume that as the deficit rate of BTC will rise.
The same principle applies to investing in altcoins. Even with a large demand, the price of the cryptocurrencies are unlikely to grow if great offer. It’s like the old saying about selling snow to the Eskimos. If miners have to produce billions of tokens, then in the long term, growth in demand will be easily satisfied without sharp increase in the rate of the cryptocurrency.
Examine the decentralized platform
It should take into account certain differences pertaining to the field of management. From decentralized projects, there is no President, and all the controls community. These projects are open source, and most of them can be checked using the Github service.
Decentralized platform is the Foundation of the cryptocurrency market, and many believe that the whole ideology of Cryptoprotected built on the idea of decentralization. No BTC from your office. Bitcoin is simply a mathematical formula that exists in Cryptoprotected. This is what makes BTC a “genuine peer-to-peer payment system,” the article said Satoshi Nakamoto.
The decentralization has its drawbacks that you need to consider when developing a reliable cryptoperthite. The main drawback is that you have no one to claim damages if you cheated scammers or you accidentally sent your money. There is no office where you could send a complaint and no refund is also not provided. If you are dealing with decentralized cryptocurrencies, such as bitcoin, errors with bloccano can be costly.
Explore centralized platform
Centralized cryptocurrencies are managed like a normal company. Such projects usually have a President and a head office where to go. Centralized cryptocurrencies try to comply with the requirements of Supervisory authorities. Examples of such cryptocurrencies are Neo and Ripple, which is created taking into account likely future regulatory requirements.
Have a centralized cryptocurrency also has its drawbacks. And that’s the main one: the developers have full control over the creation and use of these tokens. There were cases when the network was hacked, and instead to endure large losses, the developers preferred to make hardwork and create a new currency, devaluing the old. This is what happened to the air in June 2016. The result is a separate the ether (ETH) and Ethereum Classic (ETC).
Rate the project
Read the White Paper of the project you want to invest. Do not invest money in a project, the purpose of which is clearly and thoroughly explained in White Paper. This is a very bad signal and the most risky way of shaping your portfolio.
In the White Paper provides a brief overview of the situation on the market, and there needs to be said, why there is a need for the emergence of such a platform. In addition, there will be a technical section that contains information about the internal structure of the platform. Experienced investors prefer to invest in projects with open source. This means that the community can evaluate the work of developers and help them, making the code more efficient and reliable.
In a good White Paper also included a road map showing how the company plans to develop at different stages. There will be a section “Team”, which will contain information about leadership qualities and the experience of the developers. Contact the team on social networks and ask them your questions. If they will tell you, it’s a good sign, showing that the project is actively developing.
Follow the latest news
The value of cryptocurrencies can greatly depend on what they write about it in the crypto media. The best cryptocurrencies have featured prominently in the news for their teams actively talk about how to develop these projects. Always check the accuracy of news, which can increase the rate of a particular cryptocurrency, for example, if we are talking about what this cryptocurrency was trading on a major exchange.
Responsible approach to the formation of a cryptocurrency portfolio
Blockchain has made a technical revolution in various fields of activity. In the coming months, crypto-currencies will continue to gain popularity and we can expect further growth in this market. Follow the advice from this article and responsible approach to the formation of their cryptocurrency portfolio, choosing the most promising options.