Understand some important things before investing in cryptocurrency

The last few months have been volatile for cryptocurrencies. Their prices rose sharply due to tweets, comments on social media and the advice of people who did not know much about some cryptocurrencies. After this, like any other asset class, investors started buying into it.

In less than a week, the cryptocurrencies market has fallen by more than $ 600 billion due to negative news and chaos. Many retail investors are at a huge disadvantage. Such situations have been seen previously in other asset classes.

Its fundamentals must be understood before investing in cryptocurrency. We are giving information about this here.

View project

Each project that launches a coin or token creates some aspect related to quality. These aspects are given in whitepaper. A whitepaper is a technical document that each project puts on its website for potential investors. In this, the technology used by the project, the solution given by it, its plans and the supply and distribution of its tokens are explained.

Along with the information of the project, one should also see the track record of the team that is running the project. Necessary skills and expertise are important in this.

By knowing how the tokens will be distributed by the project and how the funds from those tokens will be used, investors can understand whether the coin should be mined or not.

Financial information

Like shares, before investing in cryptocurrency, stability, returns, liquidity and volume traded should be taken care of. Market capitalization in cryptocurrency is calculated by multiplying the supply in the circulation by the current price.

Blockchain

Crypto tokens are based on the blockchain and their data is readily available. Because of this one must consider blockchain analysis of each token. Many websites provide data associated with it but it should also be confirmed from other sources including running a node for the network of choice.

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