A beginner’s first steps have to be cautious. The market is highly volatile and a beginner’s strategy has to be good. But with so many coins out there, where should one start?
If you are a fresher in the market, the first coin that you will hear a lot about are Bitcoin and Ethereum. As one can clearly see, Bitcoin has been a hot topic since its birth. As evidenced by the market capitalization and trade volume, Bitcoin, no doubt has emerged at the center of a growing digital currency market in the past decade, whereas Ethereum is a part of its evolution, introducing smart contract technology and opening up the possibilities of decentralised applications (DApps).
Bitcoin (BTC), has been the most stable cryptocurrency. From the past decade until today, Bitcoin has shown its potential as a store of value, something which many other coins have failed to do. This makes it the most accessible coin for crypto traders, with more exchanges, software implementations, and entrepreneurial effort in support of its model, creating a far more liquid and secure asset.
Ethereum is slightly different from Bitcoin. ETH is a blockchain platform designed to allow other projects to run what are termed ‘smart contract protocols’, which enable the automatic execution of a given task if certain agreed conditions are met. Ethereum was launched in 2015 by Vitalik Buterin and since has been a powerhouse, spearheading many developments in the space and leading the way for last year’s ICO boom.
There are currently over 1,000 ERC-20-based cryptocurrencies implemented in the market today – over 60% of all token models – a number which dwarfs competitors Neo and Stellar and demonstrates the resounding impact of the Ethereum concept.
A Word on Altcoins
It is known that investing in altcoins can prove to be lucrative, but a first-time investor can easily be convinced of forthcoming value by misleading market capitalizations and relative inexpensiveness, or might overzealously hedge against potential losses – scenarios which can result in bag-holding once a token’s value unexpectedly drops off.
But you should know that investing in altcoins id not necessarily bad. In fact, many of them represent future technologies that may prove to be just as important as those of Bitcoin and Ethereum. However, their higher risk/reward ratio is enough to make them an unfavorable move for new crypto investors.
Lastly, keep in mind that even secure crypto investments lack the insurance-backed standard of traditional equities – and only invest an amount you are prepared to lose.