What does it mean that choice is greater than effort? It means choosing an excellent currency. Change is the biggest constant in the currency circle. Three dimensions for everyone to choose excellent coins

So, how to pick out the coins with great potential in the vast sea of ​​digital currencies? Before talking about specific technologies first, it must be reminded that:

How to choose a valuable currency is a science. Don't make a decision just by looking at indicators, plans, news, or recommendations from others. These are all external things, and they are more likely to be deceptive.

The blockchain projects behind many currencies in the currency circle are far from being implemented and have no value at all. If the underlying technology of the currency cannot meet the set expectations, it will be basically nothing after the consensus fails.

The elimination rate of the top ten currencies by market capitalization in 2017 and 2021 reached 70%

Just know that the obsolescence rate in the digital currency industry is very high.

The timing of investment is very important. Do not try to reap the dividends of potential coins from beginning to end.

When asked how to choose a currency, the mainstream view is to invest in mainstream currencies.

This includes: Bitcoin, Ethereum, Ripple, Bitcoin Cash, Litecoin (LTC), Adacoin (ADA), Dash (DAS), etc.

Among the 7 mainstream currencies counted in total, only 4 have the peak price of this bull market higher than the peak of the previous bull market; only 3 have the current currency price exceeding the peak of the previous bull market. Therefore, even if you think you have picked a potential currency based on your own judgment, never think that you can reap the currency's rising dividends from beginning to end. And if you buy at the top, even mainstream currencies are very likely to go through a bull-bear cycle without unwinding. Coupled with the extremely high obsolescence rate of digital currency. Holding a currency for a long time in the currency circle may be a very risky thing if you choose the wrong one. So the timing of buying is very important.

Don’t expect a universal currency picking method that is “one size fits all”. The digital currency industry is changing rapidly, with ups and downs changing rapidly. It is too easy to overturn by applying models and copying methods.

So, is there any effective way to pick coins? 3 dimensions for reference:

1. Fundamentals, this is the most basic thing.

Don’t believe too much, including the official website, white paper, team background, technology updates, media attention, capital support, etc. Fundamentals are the basis for verifying a project and the way to check whether a project can enter the preliminary round. For example, if a project does not even have an official website, or the official website is rough; the white paper is logically confusing, has no focus, is flashy, or is even directly plagiarized; or if none of the team members are technical, or there is no information at all when searching the Internet, such a project will What do you expect it to do?

Digital currency is an area that relies heavily on technological research and development. Because if a currency wants to be valuable, it is crucial whether its underlying technology can develop applications with practical significance. Then a team with a collection of technical experts is much more reliable than a team with professional titles such as MBA and business administration. In addition, when judging project technology, another important and obvious indicator is whether the project's Github code frequency is high. For example, the Bitcoin github code is active all year round.

And if the Github code of a certain project has not been updated for several months. That means there is basically no progress on the project.

2. Release. Including the issuance structure of the currency, the exchanges on which it is listed, trading volume and market capitalization.

The issuance structure, that is, how the tokens are issued and distributed, and what proportion of the market circulation is accounted for; the greater the proportion of the currency held by the founding team and its associated top investors, the greater the probability that the currency will be promoted and cut off by the banker. More importantly: understand whether the tokens issued by the project will be subject to inflation in the future. The higher the inflation rate, the greater the possibility that the value of the tokens you hold will be diluted. After issuance, it also depends on which exchanges the project tokens are listed on. Exchanges in the digital currency field are also divided into three, six or nine levels. The larger the exchange you are on, the stricter the currency listing requirements, and the greater the reliability of the currency. The point is, the more exchanges you are listed on, the higher the acceptance of the currency in the industry, and the better the liquidity of the currency. In addition, to judge the liquidity of the project currency, the indicator that must be looked at is the 24-hour trading volume of the currency. Why the liquidity of a currency is so important is that in terms of coin investment, the greatest value of a currency comes from transactions. When a currency has a price but no market, it means it is priceless.

3. Market value.

The larger the market capitalization, the more funds and consensus the currency attracts. But looking at the market value, the short-term market value is not an important criterion for a currency to be repaid, but whether the market value at the time of issuance meets valuations and expectations. This requires us to talk about the third point, how to value currencies.

Valuation: What is a potential currency? On the one hand, if the market value is lower than the valuation, the currency will have the potential to grow; on the other hand, if it has growth potential, the currency will have the ability to continue to grow. For example, in April this year, the platform currency suddenly exploded. It’s because Coinbase, known as the world’s largest digital currency exchange, is listed on Nasdaq. The market value once reached hundreds of billions of dollars. The benchmark Binance has better data performance: more users, larger transaction scale, and better profits (Coinbase’s profit in 2020 is US$320 million, and Binance’s profit is US$800-1 billion). But the market value is even lower. Binance’s market capitalization in March was only over 40 billion.

Summarize:

When many digital currencies are issued, blockchain applications have not yet been implemented, so the valuation depends on the project’s innovation and future value. But this kind of valuation judgment will appear to be quite difficult. It depends entirely on personal experience in the industry and familiarity with projects. It is highly subjective and cannot be quantified at all.

And these are just some dimensions of tapping potential currencies, not all of the judgment of project potential. Currency value judgment and potential exploration are multi-dimensional, dynamic, and continuous observation processes. It cannot be achieved overnight. Therefore, it must be said: it is not suitable for novices to explore coins with high potential at a very early stage. As a stable investor in the digital currency industry, Bitcoin and Ethereum, which are mainstream and have large market capitalization, are still the first choices.

The most important step in the stable holding or fixed investment investment method is of course to choose the investment target, but it does not mean that the target cannot be changed midway, because no one can guarantee that his judgment will be correct once and for all and does not need to be revised (to have this level, also should have made a fortune long ago).