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What are the characteristics of a good cryptocurrency?


There are currently over 6,000 different types of cryptocurrency in circulation. For someone new to cryptocurrency, it can be an overwhelming task to identify the best coins to invest in. But just like human beings, cryptocurrencies also have certain qualities that differentiate good from evil.

Do you remember the (un) famous piece Squid Game? It went from 1 cent to $ 2,856 per coin in just a week before the scam revealed itself when the developers ran off with an apparent $ 3.38 million, according to a website. popular technology.

Here are the top seven characteristics you need to look at when valuing cryptocurrencies.

1 – Security

Your cryptocurrency should be chosen with your financial security in mind. The ideal cryptocurrency will have security built into its native design. This means that in addition to 2-factor authentication and complex passwords, it will also include built-in security features to prevent it from being hacked.

While you don’t need to dig deep into the technical aspects of your cryptocurrency, you should do some basic research to make sure that it has a number of built-in security features to prevent it from falling. be hacked by sophisticated means.

2 – Stability

Seeking stability in the cryptocurrency world can sometimes seem like an oxymoron. After all, a cryptocurrency will only be truly stable if people, organizations, and countries decide to use it, which seems a long way off.

This does not mean that cryptocurrencies like Ether and Bitcoin are not stable. The ideal cryptocurrency finds its stability over time, as the number of transactions made in this currency increases, which is exactly what happened with these two cryptos. Choosing cryptocurrencies that follow this pattern is a good way to invest in them.

3 – Scalability

The scalability of cryptocurrency refers to the number of transactions that can be processed or confirmed per second. Today we prefer to pay online rather than deposit a check due to the time difference in transaction times.

Blockchains use different methods to settle transactions, although the best are also the fastest. Check out the forums that deal with this issue and choose the cryptocurrencies whose transactions are processed as soon as possible.

4 – Supply

The main problem with ordinary or fiat money is that you can print as much as you need. Some people have already sounded the alarm about an upcoming debt crisis due to the easy money that has been printed to support savings during the Covid-19 lockdowns.

Cryptocurrencies, however, can escape this supply problem. Most, in fact, have a fixed number of parts that will someday exist. Bitcoin, for example, can have a maximum of 21 million existing coins and no more.

Other coins, mostly newer, also “burn” cryptocurrency tokens by sending them to inaccessible wallets. This limits the total number of cryptocurrencies available and makes them more valuable over time. WazirX recently hosted its sixth coin burn event where it burned 5,933,333 WRXs equivalent to INR 74.8 crore, bringing its total of coins burned to 21,786,665 worth over $ 47 million.

Having a cryptocurrency that regularly takes such steps to keep a fixed number of coins in circulation is a good indicator of a strong cryptocurrency.

5 – Decentralization

The whole idea of ​​cryptocurrency is to empower people instead of a holding organization. One of the defining characteristics of Bitcoin is that no one knows who created it, despite attempts to uncover Satoshi Nakamoto’s identity.

Some cryptocurrencies, on the other hand, try to move away from this decentralized nature of the blockchain in an attempt to manipulate their currency. If you ever learn the identity of a person or organization behind a particular cryptocurrency, sell it right away. Even if it’s not directly related, still remember how the Squid Game scam went.

6 – Request

This one is pretty straightforward. Pick a cryptocurrency that actually has demand. By demand we mean that the cryptocurrency is in the news and has the potential to grow over time through word of mouth and other means such as media coverage, availability on exchanges such as WazirX, etc. The idea is the sooner you invest in a cryptocurrency, the more it appreciates in value as others start to discover it.

7 – Use cases

An important aspect of cryptocurrencies is how to use them in the same way that you might use currency to buy and trade goods and services. This is something not many people think of when buying crypto, but if you think about it, having the chance to pick up something worthwhile with your crypto is actually quite an interesting prospect.

For example, you can collect NFTs with Ether and open up a whole new world of possibilities. This is better than just picking up a crypto and HODLer it below its value valuable enough to sell it for a good price. Basically think of cryptos as a way of what they can do for you rather than just a way to buy and sell for the right price.

Now that you know what qualities to look for while choosing a good cryptocurrency, which ones would you add to your portfolio. If you haven’t already, open your crypto account with a trusted exchange like WazirX and start your crypto journey today.

This is a partnership post.


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