Buy Cryptocurrency Coins

There are technically thousands of coins available but only a small number with any real useful purpose or vision of how they can actually benefit users. While all currencies have limited adoption at this stage, some at least have potential.

Price (24hr %)
The first cryptocurrency. It has limitations for transactions but it is still the most popular being secure, trusted and independent from banks and governments.
The leader in programmable money, smart contracts and decentralised applications. There have been many copycats but none have the community and level of adoption.
This is a specific digital coin running on a series of servers. XRP promises utility in handling cross-border transactions to compete with the SWIFT interbank payment system. Being controlled by banks, many question if it is a true cryptocurrency.
The first and most prominent hard fork of Bitcoin. A relatively liquid asset with low fees and a large network, though never approaching the influence of Bitcoin.
An innovative digital asset utilizing a fully decentralized consensus protocol called Ourobouros. The network aims to compete with Ethereum in offering smart contract functionalities. However it is lightyears behind Ethereum in terms of adoption.
An early alternative to Bitcoin, LTC aimed to be a coin for easy, fast, low-fee spending. LTC offers a faster block time and a higher transaction capacity in comparison to Bitcoin.
A multi-utility asset, linked to the diverse activities of the Binance Exchange. A token to pay trading fees, as well as participate in new asset sales, BNB now runs on a proprietary blockchain.
A network built to provide real-world data to smart contracts, in a fast and secure fashion. LINK serves as a utility token to pay for the network’s services.
A network built to work as a decentralized computer. EOS works as a fast, growing network offering decentralized gaming, finance, and other computational services. The network has the capacity of thousands of transactions per second, and there are no transaction fees.
Tezos, with its XTZ asset, is another competitor to Ethereum and possibly EOS. The network uses a list of delegates to produce blocks. Owning XTZ entitles users to a passive income through the process of “baking” coins, or holding them in a dedicated wallet to support the production of new blocks. XTZ also gives voting rights to owners.
Formerly known as Stellar Lumens, XLM aimed to be the open-source equivalent to XRP. Stellar has partnered with IBM to propose cross-border money transfer solutions. XLM also facilitates decentralized trading and fast, low-cost transactions.
One of the leading coins with veiled transactions. XMR remains one of the preferred modes for practically untraceable blockchain transactions. XMR usage may be problematic, as exchanges require KYC and eschew anonymous coins.
A network with 26 elected Super Delegates, built with the aim of offering fast, cheap transactions. TRX also facilitates the transfers of the USDT stablecoin, becoming an important part of trading and decentralized finance.
A complex network based on various node tiers, which rewards staking proportionately. VET owners also receive payouts in the form of VTHO tokens. The aim of VeChain is to offer an immutable, highly traceable blockchain record for verifying physical products such as wine, food, and luxury goods.
The Cosmos network offers an array of independent parallel blockchains. The ATOM asset can then aim for scalable fast transactions, by building an entire network of blockchains.
Once referred to as “the Chinese Ethereum”, NEO competes to be a reliable, fast network, based on delegated block production. The NEO asset also bears dividends in the form of GAS.
A network split off Ethereum in 2016, after the DAO hack. The Ethereum Classic network remained available to miners, by deciding not to implement a difficulty increase algorithm. The network is considered highly insecure due to its low mining activity, and has fallen prey to multiple 51% attacks and double spending.
Also carrying the MIOTA ticker, this asset relied on coordinating multiple wallets in a directed acyclical graph (DAG) instead of a blockchain. The IOTA project had problems with its hashing algorithm and later suffered from lost coins and connectivity problems leading to the need to re-coordinate the network in a series of updates. The IOTA community remains strong, aiming to achieve the coin’s initial usage as a tool to facilitate the Internet of Things (IoT).
Formerly known as DarkCoin, is a digital asset combining mining with proof-of-stake. Using DASH has the option to veil transactions and make them untraceable.
A relatively new crypto coin aimed at anonymous transactions. The project uses rigorous mathematical theory on zero-knowledge proofs, allowing transactions between veiled blockchain users. The technologies around the ZCash network and ZEC belong to the newly renamed Electric Coin Company.
Created based on a Shiba-Inu meme, DOGE remains a staple in the crypto space. DOGE shares its mining activity with Litecoin and has an unlimited supply. The coin is often used for tipping, but also for trades and for fast and cheap transactions.
BAT, in connection with the Brave browser, aimed at tokenizing online ads. BAT was later accepted as collateral within the Maker DAO protocol, backing the dollar peg of the DAI stablecoin.
A fast and highly decentralized digital asset with a grass-roots community. DGB offers significant liquidity and low fees. DigiByte is more than a faster digital currency. It is an innovative blockchain that can be used for Digital assets, smart contracts, decentralised applications and secure authentication. DigiByte has become one of the safest, fastest, longest and most decentralised UTXO blockchain in existence.
Formerly an Ethereum token, ZRX is now an asset on a dedicated network. 0x is an exchange protocol that is instrumental to decentralized finance operations. The 0x protocol allows developers to build automated exchanges for tokens.
The THETA token is a utility asset that aims to serve a decentralized video streaming platform. Theta is also a protocol allowing third parties to build their own decentralized video services.
The ICON project was conceived by a South Korean business team. The aim of ICON is to build interconnections between blockchains. The project utilizes the ICX digital coin.
OMG is an asset built for the specific purpose of emulating financial transactions, while scaling the capabilities of the Ethereum network. OMG is one of the networks chosen to carry the USDT dollar-pegged stablecoin.
The Augur project and the REP token construct a decentralized predictions marketplace. REP allows decentralized betting on events outcome. Trading and owning REP may be limited for US nationals, as Augur is considered a form of gambling and subject to restrictions.
The QTUM asset aims to combine the security of Bitcoin with the agility and smart contract capabilities of Ethereum. QTUM record-keeping mimics the Bitcoin UTXO (unspent transaction output) model. Unlike Bitcoin, QTUM is not mined, but new blocks originate from coin staking, or holding onto coins to secure the network.
The Decred (DCR) project combines the security of mining with masternodes that add another layer of verification. DCR aims to be a convenient form of digital cash.
The LSK asset serves to create a blockchain-based application platform, utilizing JavaScript to tap into existing developer talent. The LSK asset carries voting rights, to elect some of the 100 block producers that secure the network.
Formerly known as RAI Blocks, this is a highly decentralized digital asset. Transactions propagate using the Directed Acyclical Graph (DAG) technology. Initially, NANO was distributed through a faucet to encourage decentralization.
The Waves platform is a competitor to Ethereum, considered one of the most innovative decentralized networks. The Waves platform allows the tokenization and decentralized trading of any asset. The other aim of the Waves decentralized network is to create Web 3.0 tools.
Filecoin is a sub-organisation of protocol labs, was founded in 2014. Filecoin serves both as a data storage network as well as a bitcoin based electronic currency. Since its launch file coin has been backed b 24 investors.
Developing a high throughput blockchain. Zilliqa (ZIL) is a token developed in the year 2017. Zilliqa is mainly based on the concept of Sharding and primarily aims at improving the scalability of the cryptocurrency networks as in case of Bitcoin or Ethereum. The white paper mentions that the transactions speed would be approximately a thousand times more than that of Ethereum network.
Polkadot is a next-generation blockchain protocol connecting multiple specialised blockchains into one unified network. Designed as part of a broad vision for a web that returns control to individuals over internet monopolies. Polkadot builds on the revolutionary promise of previous blockchain networks while offering several fundamental advantages.
Known as the Ethereum of Japan, NEM is a decentralized platform aiming to serve as a record-keeping mechanism. NEM utilizes the XEM asset, offering an enterprise-grade blockchain with applications in supply chain management and tracking.
Algorand is a technology company that built and developed the worlds first open, permissionless, pure proof-of-stake blockchain protocol that, without forking, provides the necessary security, scalability and decentralised financial businesses to embrace the world of frictionless finance.
A blockchain platform designed for business. Ardor has a circulating supply of 1 Billion ARDR coins and max supply of 999 Million. Upbit is the most active market trading it. Ardor provides the blockchain infrastructure for business and institutions to leverage the strengths of blockchain technology without having to invest in developing custom blockchains solutions. Instead, Ardor offers a main chain that handles blockchain security and decentralisation plus customisable child chains that come ready to use for various business applications.
Avalanche is built by using groundbreaking consensus protocol, AVAX is the first smart contracts platform that confirms transactions in under one second, supports the entirety of Ethereum development toolkit, and enables millions of full block producers.
Aims to solve the issue of scaling. BitShares, formerly known as ProtoShares (PTS), is an industrial grade "crypto-equity" peer-to-peer distributed ledger and network based on a delegated proof of stake algorithm. It was created in 2014 by visionary Dan Larimer (Bytemaster), co-founder of Steemit, EOS and Cryptonomex. BitShares is based on Graphene, an open source C ++ blockchain implementation, which acts as a condense mechanism.
Utility token for BitTorrent. BitTorrent was initially conceived by Bram Cohen, a peer to peer protocol for users to transfer files around the world. The BitTorrent Token, a TRC-10 token is created on top of the TRON blockchain platform as a way to extend the capability of BitTorrent. The toke is added to introduce some economics feature on BitTorrent for networking, bandwidth and storage resources to be shared and traded.
Blockstack is a way to put users back in control of their digital lives. This is a new internet for decentralised apps where users own their data directly. Blockstack is an open-source and developer-friendly network fro building decentralised apps and smart contracts.
The Elrond Network is a public blockchain created to. provide high-level scalability, interoperability, and high throughput. The goal is to create a decentralised network that can provide the same or better performance when compared with centralised networks, while also providing users with a greater privacy.
A cryptocurrency for building blockchain games. Enjin coin is a cryptocurrency for virtual goods created by Enjin. Enjin is the largest gaming community platform online, with over 250,000 gaming communities and 18.7 million registered gamers. The Enjin team is designing the coin completely around gaming with the goal of it being the most usable cryptocurrency for the industry.
Hedera Hashgraph is a DLT project and an innovative variation of a standard blockchain on the basis of the technology called directed acyclic graph (DAG). Hashgraph supports decentralised applications, and it is based asynchronous Byzantine-Fault Tolerance consensus.
Helium is a digital currency and blockchain network that focuses on improving supply chain logistics in the construction and infrastructure sector. HNT, is a new cryptocurrency hotspots earn for providing and validating wireless coverage and when devices on the network connect to the internet through hotspots.
An alternative to blockchain which may be good for building dApps. Holochain enables a distributed web with user autonomy built directly into its architecture and protocols. Data is about remembering our lived and shared experiences. Distributing the storage and processing of that data can change how we coordinate and interact. With digital integration under user control, Holochain liberates our online lives from corporate control over our choices and information. Holochain enables any device to have its own chain based ledger system.
Horizen is a privacy focused blockchain that is a fork of Classic which was itself a fork of Zcash. As such it is one of the privacy coins that makes use of Zcash's ZK-snark technology. The highly advance privacy technology makes use of Zero Knowledge Proofs.
A blockchain that uses a 'proof of believability' algorithm. IOST is building an ultra-high TPS blockchain infrastructure to meet the security and scalability needs of a decentralized economy. Led by a team of proven founders and backed by $40 million from world-class investors, including Sequoia and Matrix, IOST aims to be the underlying architecture for the future of online services. Anyone is able to participate in every layer of our system, from using services on our blockchain to running a node and validating transactions
IoTeX (IOTX) is the private "blockchain-within-a-blockchain" scalable solution for powering the Internet of Things (IoT) It is designed to connect the physical world of internet devices block by block, and will be both fast and scalable thanks to the unique Roll-DPoS consensus mechanism. IoTeX also brings to bear a lightweight technique for preserving privacy.
A platform for building 'smart chains'. Komodo is an end-to-end blockchain infrastructure solutions provider. Consistently recognised as one of the world’s most innovative blockchain projects, Komodo is developing technologies at the cutting-edge of the blockchain industry. Komodo’s tech enables seamless cross-chain interoperability among all federated blockchains. Every blockchain built with Komodo is also connected to 95% of chains outside the federation via atomic swap technology.
Kusama is based on the same code as polkadot, however its very early unaudited release.Kusama is more than just testate because it's intended to be a test bed for new features as more of them get implemented in polkadot through landing first on Kusama. Once people have gotten a chance to experiment with those new features in Kusama and everything looks fine, they will eventually move over to polkadot.
A cryptocurrency that allows people to make collateralised debt positions. Maker is a smart contract lending platform that enables users to take out loans by locking-in collateral in exchange for Dai. The Maker token has two core functions: i) governance and ii) recapitalization. In terms of governance, MKR token holders are responsible for monitoring, participating, and voting on proposals or changes to ensure the overall health of the Maker protocol. This is done via two types of polls which are executed through smart contracts: i) proposal polling and ii) executive polling.
NEAR protocol is a decentralised application platform designed to make apps usable on the web. The network runs on a Proof-of-stake (PoS) consensus mechanism called Nightshade, which aims offer scalability and stable fees, fees for processing transactions and storing data.
Oasis Network is a decentralised blockchain network built by oasis labs that enables secure and private data sharing and control. The blockchain infrastructure has two main components. Consensus layer: a scalable and secure Delegated Proof-of-stake consensus algorithm run by a decentralised set of validators.
Targeting enterprise adoption and use of blockchain technology. Ontology is a new high-performance public blockchain project and a distributed trust collaboration platform. It provides new high-performance public blockchains that include a series of complete distributed ledgers and smart contact systems. Ontology is a blockchain framework supporting public blockchain systems and is able to customise different public blockchains for different applications.
Yet another stable coin tied to the US dollar. Paxos Standard (PAX) was created by Paxos, a financial technology company on a mission to modernize finance by mobilizing assets at the speed of the internet. Paxos was the first virtual currency company to receive a charter from the New York State Department of Financial Services. As a chartered limited purpose trust company with fiduciary powers under the Banking Law, Paxos is able to offer regulated services in the crypto-asset and virtual commodities space.
Planning to make it easier for merchants and customers to use cryptocurrency. Pundi X is the project that wants to make spending crypto as easy as a credit card. Creators of the NPXS token hope that it will one day be used on their Ethereum-based Point-of-Sale devices. This approach could give basic banking services to underdeveloped regions like Latin America and Indonesia. One of the most notorious pain points in crypto is the ability to actually make purchases.
A platform for creating your own asset. Ravencoin is a blockchain specifically dedicated to the creation and peer-to-peer transfer of assets. Just as Monero is solely focused on privacy, Ravencoin specializes in asset transfer – nothing more, nothing less. Although you can exchange assets over other blockchains, like Bitcoin and Ethereum, that’s not their intended purpose. And the lack of specialization leads to problems that are specific to transferring assets.
Also trying to create interoperability between different blockchains. Ren Protocol is a permissionless and trustless protocol that allows users to transfer tokens across different blockchains. Ren’s core product, RenVM is focused on building an interoperability solution for Decentralized Finance (DeFi). It was formerly known as Republic Protocol and originally wanted to be a “dark pool'' decentralized exchange project. A “dark pool” is considered to be an exchange in which financial assets are first matched and then traded on an order book that is private.
Serum is a decentralised cryptocurrency exchange built on the Solana blockchain. Unlike other DEXes, Serum features order book based trading like centralised cryptocurrency exchanges. It can handle between 50-65 000 transactions per second, which is the current TPS of the underlining Solana Blockchain.
A decentralised cloud storage platform. Sia is a decentralized cloud storage platform similar in concept to Dropbox and other centralized storage provider where instead of renting storage space from a centralized entity, clients rent storage space from other peers. The only difference is Sia uses blockchain to facilitate transactions Nodes provide storage to clients using the Sia blockchain as contracts. Before storing the data, the data is encrypted into many pieces and uploaded to different hosts.
Solana is a cryptocurrency project with a radically different approach to how blockchains work. It focuses on an element which is very simple: time. It seems introducing a decentralised clock to a cryptocurrency blockchain makes it more efficient than anyone could have possibly imagined. Solana is a high-performance cryptocurrency blockchain which supports smart contracts and decentralised applications. It uses proof of stake consensus mechanism with a low barrier to entry along with timestamped transactions to maximise efficiency.
Terra is a blockchain protocol that uses fiat-pegged stable coins to power price-stable global payments systems. Terra native token, LUNA, is used stabilise the price of the protocol's stablecoins.
The TomoChain blockchain and product ecosystem enable development of high-performance projects. An array of original features and protocols is designed to support speed, privacy, usability, and liquidity needs all inane platform.
Wanchain aims to decentralise the financial industry by moving all value and asset transfers onto the blockchain. The Wanchain is a blockchain that connects other blockchains, facilitating value trades between any of them using proxies.
The UNI token allows token holders to participate in the governance of the protocol. Key decisions such as usage of the treasury or future upgrades can be decided through a governance vote. Uniswap is a decentralized exchange (DEX) that makes it easy for users to swap an ERC-20 token for another ERC-20 token without the need of a centralized intermediary. With a DEX, traders do not have to deposit their tokens on an exchange and be exposed to the security risks of a centralized exchange. Users just need an Ethereum wallet like Metamask and they can immediately start swapping tokens.
Aave is a decentralized money market protocol where users can lend and borrow cryptocurrency across 20 different assets as collateral. The protocol has a native token Aave, which is also a governance token that lets the community decide the direction of the protocol in a collective manner. The lenders can earn interest by providing liquidity to the market, while borrowers can borrow by collateralizing their cryptoassets to take out loans from the liquidity pools.
SUSHI is a governance token that enables community governance over SushiSwap and it offers SUSHI rewards to those who stake their tokens. SushiSwap is a decentralized exchange that allows users to swap cryptocurrency for another cryptocurrency. It is considered decentralized because no single entity controls the protocol and it is operated by smart contracts. Because Uniswap's code was completely open sourced, Chef Nomi took the code and modified it by adding a governance token, SUSHI. Further popularizing the yield farming movement during the summer of 2020. For that reason, SushiSwap is widely acknowledged as a fork of Uniswap due to its identical functions.
COMP tokens are mainly used for protocol governance. COMP holders can suggest, debate, and implement changes to Compound - without relying on, or requiring, the Compound team whatsoever. COMP also allows its owner to delegate voting rights to an address of their choice. Compound is a decentralized blockchain protocol that allows users to lend or borrow selected cryptocurrencies. It establishes money markets by pooling assets together and algorithmically setting interest rates based on supply and demand of assets.
YFI is the governance token for the Yearn Finance protocol. It can be used to vote and receive cash flows from the fees earned by the protocol. YFI initiated the first community-fair-launched token distribution, giving out 30,000 tokens to early protocol’s users by a surprise yield farming announcement back in 17-July-2020. YFI can be obtained by buying them from exchanges such as Sushiswap or Binance. You can find YFI trading on various centralized and decentralized cryptocurrency exchanges.
KNC stands for Kyber Network Crystal and it is the governance token for the Kyber Network. Kyber Network is a decentralized exchange that provides on-chain liquidity that is applicable to any application, enabling value exchange to be performed seamlessly between different ERC20 tokens. Kyber Network aggregates and maintains on-chain liquidity through a dynamic reserve pool whereby this pool contains all of the reserve entities in the system. Having multiple entities in the pool prevents monopolization and keeps exchange rates competitive.
Ocean Protocol is an ecosystem for sharing data and associated services. It provides a tokenized service layer that exposes data, storage, compute and algorithms for consumption with a set of deterministic proofs on availability and integrity that serve as verifiable service agreements. There is staking on services to signal quality, reputation and ward against Sybil Attacks.

How to Recognize the Best Investment Opportunities in Cryptocurrencies

Recognizing the best opportunities among cryptocurrencies is a mix of technical knowledge and caution. Cryptocurrencies, led by bitcoin, became one of the hottest assets in the past decade. Their obscure beginnings on cryptography forums, and their early adoption by gamers and nerds did little to predict the appeal of BTC and a myriad other assets, forming their own hot, risky market.

Over the years, a handful of models for significant returns emerged:

  • Long-term holding of digital coins, leading to unexpected price appreciation;
  • Short-term trading;
  • Token sales for new projects, with the potential for significant price appreciation of the token;
  • Lending and collateralized lending offering APR higher in comparison to bank accounts;
  • Staking, or holding onto crypto coins in exchange for passive income.

For years, BTC and its copycats and contenders looked nothing like an investment opportunity, except for a few lucky or prescient early adopters. The rise of BTC to nearly $20,000 and its ability to command a price of thousands of USD could not be predicted from its humble beginnings, trading at $1 a decade ago. While past performance does not guarantee future price growth, the rise of BTC happened during a decade of generalized market boom across all asset classes.

The rise of crypto assets happened during an unprecedented period of low interest rates, quantitative easing, and a decade of growing wealth and appetite for risk. But for BTC and all other coins and tokens, it was not all smooth sailing. In fact, BTC started to show a pattern of quick gains, followed by protracted bear markets. So while crypto coins could achieve outlandish gains, the risk was real. BTC was capable of wiping out 86% of its value within a few short weeks.

Cryptocurrency investment thus holds opportunities for fast gains, interspersed with severe market crashes. It is best to approach the crypto space with awareness of this potential for fast losses.

Finding investment opportunities while avoiding pitfalls should focus on:

  • Technological soundness and avoiding hacking risks by gaining awareness of blockchain technology.
  • Looking for liquidity, community and indicators of public interest, including exchange volumes, social media engagement and if a coin is fairly distributed or monopolized by the developers or early bulk buyers;
  • Transparency and potential legal and taxation problems stemming from the investment;
  • Common sense check on outlandish claims, overpromising returns and signs of a Ponzi scheme.

Crypto Price Action: Asset Bubble or Real Opportunity?

Because of the relatively volatile price action, the crypto space was often called an asset bubble. However, after multiple boom and bust cycles, crypto trading proved remarkably resilient.

The infrastructure around crypto coins gradually improved. Despite glitches and hacks, exchanging and trading crypto assets continued to evolve, attempting to mimic traditional markets. While still unregulated, exchanges started to impose internal rules to avoid some of the worst market exploits.

On the surface, crypto prices showed signs of being a bubble. In late 2017, mainstream attention to BTC helped bring about an absolute price peak. During that time, new buyers borrowed and sank cash into an overheated market. With easy cash still available, irrational exuberance took hold and BTC indeed went through a bubble phase.

But after correcting deeply, BTC and other assets showed resilience. Interest in trading continued to evolve in new forms. Crypto assets started to show they are here to stay, presenting an opportunity for an alternative type of investment.

How Bitcoin Grew so Powerful

The beginnings of Bitcoin were humble, with only a handful of computers making up its nascent network in the early days of 2009. Since then, the first and still leading digital coin acquired its reputation as “digital gold”, and became influential in many aspects. Soon, digital coins also gained value as a tool for international remittances, where other types of payment systems faced limitations.

One of those aspects is mining, or the creation of new coins and the process of recording and securing new transactions. The Bitcoin network is so large, the machines that make it up consume more electricity than Austria. Since 2013, mining new BTC became increasingly competitive, leading to the creation of vast data and computation centers, known as “mining farms”. No other digital coin has the same computational power, thus making BTC the most tamper-proof coin in the world.

In the case of BTC, anyone trying to compete and produce more coins will need to make a large upfront investment in machines and a source of electrical energy.

The high mining cost of BTC is one of the reasons the coin has value - its scarcity. Only 900 BTC are produced each day, a valuable resource offering large-scale, borderless transactions. However, scarcity alone does not explain all of the greed for BTC. Yet the strong brand, the track record, and increasing curiosity increased the influence of BTC.

Trading Crypto: Fair Value, Risk, and Dangerous Pumps

For all of the hype and brand influence, there is no formula or set guidelines to estimate the fair value of crypto assets. Markets are still unregulated and there are no trading stops or rules for order books.

A coin could move up from fractions of a cent to a few dollars, on nothing but greed and hype. In the summer of 2020, the phenomenon of daily booming decentralized projects showed that valuations in the hundreds of millions could come by within days. The volatility of those assets is extreme. So-called DeFi coins took over the market, creating wild price fluctuations, as in the case of the SushiSwap token.

For BTC and more established coins, price fluctuations are not as dramatic. Years of trading have established more reasonable boundaries and price expectations. Older coins go through bull markets, but rarely offer an increase of 1,000%.

Models exist to suggest BTC may trend in a certain direction, such as the stock-to-flow model. Stock-to-flow derives from the idea that BTC behaves as a scarce commodity, hence its decreasing block reward over the years will correlate with price increases.

Others base the fair value of BTC on its high cost of production, which ranges between roughly $3,000 and $10,000 per coin.

Still, crypto markets have often behaved in ways suggestive of coordinated pump operations. Evidence of such activity includes bot-generated orders, as well as tracking transactions that suggest large-scale owners, or “whales”, try to sway the market.

Trading activity, whether coordinated or not, is in the end the final determinant of an asset’s price. Having a consistently liquid market means some of the leading assets, such as ether, bitcoin cash, or XRP, can preserve relatively stable values. For other coins and tokens, the process of price discovery is often much more turbulent.

Bitcoin Futures and Price Fluctuations

For years, BTC traded on a spot market. But as markets matured, exchanges started offering futures products, betting on BTC price moves with leverage. This increased interest in BTC trading, allowing anyone to take a position and possibly make significant gains.

Futures, however, remained extremely risky. Based on BTC spot prices, futures often led to liquidations when the asset changed direction rapidly. BTC has been known to liquidate short positions by climbing by $1,000 and more within an hour. Reversely, long positions have been liquidated by a rapid price crash. This cycle of liquidations has continued for years, and most traders remain aware of the risk.

Futures trading with leverage remains one of the most liquid markets, with BitMex announcing volumes in the billions of dollars. However, the potential for rapid liquidations and no regulations to trading crypto futures makes this opportunity highly risky.

What are Stablecoins and How They Affect Cryptocurrency Prices

Digital assets rarely trade against real-world currencies, as in the early days of unregulated exchanges. For that reason, a substitute to cash settlements appeared in the form of tokens worth exactly $1.

The first stablecoin, Tether (USDT) appeared in the summer of 2017, and quickly expanded its influence. The increased supply of USDT also coincided with the rise in BTC market prices. The supply of USDT grew from a few million tokens to above 13 billion, becoming the chief source of liquidity for most leading assets. USDT forms pairs on most well-known cryptocurrency exchanges. A full list of dollar-pegged coins can be found with comparisons in influence and coin supply.

Stablecoins reportedly reflect real demand for crypto assets. The need for stablecoins arose after regulators in China, but also in the US and the EU, started to tighten the rules for trading BTC directly against fiat. Unlike fiat, a stablecoin such as USDT can move to any address across the globe, almost without delay. This borderless value transfer opportunity also helped create arbitrage opportunities.

Token Economics and Crypto Investments

Tokens are the most agile digital asset. Unlike bitcoin, tokens do not require a special investment, and can be created almost immediately through code. Tokens exist on top of crypto coin platforms, but Ether is the most prevalent technology to carry those assets.

The advantage of tokens is that they can represent value in multiple economic models. From in-game purchases to digital collectibles, tokens are the most abundant source of investment opportunities. Unfortunately, they are also the riskiest possible path to returns.

Tokenomics, or token economics, relies on new investors that believe in the value of those assets. As discussed before, the value of crypto assets comes from scarcity, trading, and from general hype. In the past three years, tokens have shown price growth of as much as 1,000% per day. But during a bear market, roughly 99% of tokens lose more than 99% of their value.

Types of Tokens

Tokens have a few varieties. They can be differentiated by the platform they run on - Ether, Waves, NEM, and many others.

There are also fungible and non-fungible tokens. The fungible ones can serve as means of payment, or a representative of value. Non-fungible tokens are specially coded to represent a digital item, usually an image. Owning the token also means owning the rights to the image. The non-fungible token technology stands behind crypto collectibles such as CryptoKitties or other types of cards. Just like other tokens, collectible items can go up in value exponentially, then crash as soon as interest wanes.

Utility Tokens

Most token-based projects will strive to explain the need to issue their own digital asset. Usually, some form of utility such as paying for network fees or storage will serve to explain away the token. According to project founders, the token will go up in value as there is more demand for the service.

While some tokens do indeed rise in value, utility tokens do not guarantee returns.

Security Tokens

Security tokens appeared in 2019, as an answer to increasing regulatory scrutiny of utility tokens. After multiple launches of new assets, which closely resembled IPOs, the US Securities and Exchange Commission started to explore the nature of those assets. Multiple projects were fined, because their tokens resembled securities, or promised passive income, a form of dividend, or other types of returns.

While owning a token does not promise a share of the business, the actions of the US SEC caused startups to move to a new standard, security tokens. Those tokens aim to fulfil the requirements for issuing securities.

As of 2020, there are very few security tokens, and only a handful of exchanges try to list those assets. Security tokens nevertheless remain promising for extending crypto investments into the mainstream.

How to Start Trading and Investing in Cryptocurrencies

The best approach to investing in crypto assets is to gain solid knowledge of wallet technology. Being able to store bitcoin safely and securely opens the doors to multiple investments. Wallets are accessible as mobile or desktop software, or as special hardware devices offering even better security.

The next step is to establish an account with one of the available exchanges in your jurisdiction. For the US, Coinbase is the go-to crypto exchange. Karken is yet another option. For Europe, options include Binance, CEX, Bitpanda, Kraken, and other international exchanges. Korean exchanges like Upbit and Bithumb remain highly active in Asia, and OKEx is highly prominent on the Chinese market. Limitations may apply and most exchanges will require some form of identity verification.

The best approach to buying or trading crypto assets is to avoid investing a sum you cannot afford to lose. All crypto assets are highly volatile in comparison to traditional investments. However, some types of investment schemes and tokens are much riskier than others, relying on short-term hype and pump-and-dump events. The best approach is to look at a coin’s price history and decide if the risk is worth it.

Some of the older digital assets remain more liquid, though their price action is slower. Newly created tokens may look hot, but they can also crash within days. The best approach is to diversify and avoid over-investing in the hottest new assets.

Be aware that new tokens pose challenges in using wallets, and are more prone to hacking and loss. BTC so far remains one of the most secure coins, with well established wallets.

Tools for Cryptocurrency Investments

Here is how to start learning about pricing and trading, and possibly discovering investment opportunities in crypto. Tools to trade or buy and hold are available through multiple platforms. Some of the most well-used resources include:

  • - generalized information on price, volume, availability for most coins and tokens;
  • - detailed cryptocurrency information and specialized metrics;
  • Weiss Ratings - an attempt to rate crypto assets based on technological and market factors;
  • CoinGecko - detailed data on coins and tokens;

Bitcoin and Mainstream Investment Tools

While the most straightforward investment is to buy cryptocurrency outright through an exchange, there are also approaches that use mainstream investment tools. In the case of bitcoin, ongoing attempts to build an exchange-traded fund (ETF) for the US market were mostly met with denial from regulators.

But for European investors, it is possible to buy bitcoin through the Exchange-Traded Product Bitcoin and Ethereum trackers. Traded on NASDAQ Nordic exchange, those tools expose users to BTC price risk, without owning the actual coins.

For US investors, one approach is to use the Grayscale funds, which sell shares correlated to the market price of BTC and a handful of leading digital coins.

The third group of mainstream products are futures contracts derived from the price of BTC. The leading futures opportunities come from the Chicago Mercantile Exchange, and the Bakkt exchange. So far, adoption remains relatively weak in comparison to direct interest in purchasing through exchanges like Coinbase.