The emergence of cryptocurrency as an investment instrument has been a fascinating phenomenon in the last decade. The craze around crypto and the profit people made out of it in the past must have reached you. Venturing into the novel crypto space can be thrilling and even rewarding, but a lack of critical understanding of the space can lead to disaster. Brent Xu categorically explains three critical factors to weigh before going into crypto investment.
Just because your friends or your boss recommended do not buy or invest in any crypto coin. To be precise on your returns, you must understand and study the market capitalization of a coin. Some coins are cheap or less expensive. Often newbies fall for the temptation of buying more units of it, thinking its price may shoot up like bitcoin in the future. That is often wishful thinking,” says Brent Xu. To know the market cap of a coin will give a tentative idea about how much value it reflects and how much is the growth potential in the future.
“Researching into the fundamentals and objectives behind a given crypto coin will keep your investment safe and profitable,” maintains Brent Xu.
With the crypto industry booming, we see many new cryptocurrencies coming up every fortnight. Most of them are here to ride the booming wind and take advantage of hype and speculation without any real problem-solving objective or foundation. They are scams. So, it is important that you study the Use Case of the coin to understand the practical utility and sustainability as regards what major problem the cryptocurrency chain/platform fixes or how its growth prospect amplifies. The method will help zero down on the right coin for the optimum result.
Lastly, understanding the whole process of buying, selling, exchanging, and storing mechanism in the cryptocurrency ecosystem is crucial before you dive in. Most important is securing your wallet with a unique private key that allows you sovereign access to all your currency. “In the same breath, one must understand the work of seed phrase that helps in creating the private key as well as recovering your wallet in case of any fallout,” says Brent Xu.
Brent Xu is a bitcoin investor and is currently engaged in curating a DeFi project on the Ethereum blockchain.