Technology in coins
When it comes to payments or try to find crypto signals, the main focus here is on: Bitcoin, Bitcoin Cash, Bitcoin Gold, Litecoin and other Bitcoin forks. Considering smart contract technology, the first cryptocurrencies to look out for are Ethereum, Neo, Ethereum Classic, Stratis, and Qtum. In the field of data encryption in the course of payments based on the distribution ledger – Monero, Dash and Zcash.
In making affordable and fast payments, the Ripple cryptocurrency is perhaps unmatched.
While the Lightning Network technology, for the most part, is inherent only in the newest cryptocurrencies, due to the fact that it itself is still being tested by developers. Considering each of the coins, it is necessary to pay attention to the capitalization, which will tell us not only how many users trust it, but also allow us to determine how quickly it will grow.
Capitalization as a factor of reliability and growth rate
If you look at the cryptocurrency market from the end of 2016 and the end of 2017, you can see that despite the jump in the price of Bitcoin from $ 750 to $ 20,000, its closest pursuer Ethereum showed much more spectacular growth, having a smaller capitalization. While in percentage terms Bitcoin has grown by more than 2000% over the year, Ethereum, with a tenfold lower level of capitalization and an initial price of $ 11, reached $ 900, adding 4000% in the same period. This means that with an equal investment of $ 750 in each of these two cryptocurrencies, you would have earned $ 19,250 by buying 1BTC, or $ 61,380 by buying 68.2 ETH.
Of course, then at the end of 2016, the high level of capitalization of Bitcoin played a decisive role in the eyes of investors, which was the reason for their choice in favor of a more reliable and preferred cryptocurrency. However, preferring reliability over perspectivity, some paid the $ 42,000 price tag. Therefore, when choosing an asset for investment, relying on capitalization, one must remember not only about reliability, but also maintain a balance between risk and reliability.
Balance in cryptocurrency portfolio
After you have made a decision, having made a choice in favor of a set of five, ten or more cryptocurrency assets, you should correctly distribute your capital between them. Based on the same example of Bitcoin and Etherem showing us a comparison of investments in two different technologies, we can see that if an investment of $ 1,500 was equally distributed between them, your profit would be more than $ 80,000, whereas if you made the distribution in a ratio of, say, 90/10, investing only $ 75 in Ethereum, your profit would be on the order of $ 44,000. However, of course, the choice is yours – to distribute capital equally or to focus on one cryptocurrency, investing in “weaker” assets, hoping that they may show growth.
Crypto-portfolio subject to revision
The cryptocurrency market is the most dynamically developing and rapidly growing market in the world, the situation in which is changing so rapidly that an investor is always required to be attentive and ready to act. Every day, more and more new technological solutions in the field of Blockchain application come to the market, starting to compete with developments that have already occupied a certain niche. Therefore, there is always a danger that an innovative technology that you thought was promising a month ago may become obsolete today. As an investor, you simply have to make sure that coins that are carriers of outdated technology leave your cryptocurrency portfolio as soon as possible, and newer and more promising coins take their place. This should be done regardless of which investment style you choose: short-term, medium-term or long-term. The portfolio should be audited and revised at least once every two weeks, constantly monitoring the market for the emergence of new, more innovative technologies that have come to replace obsolete ones.