Tips for choosing a cryptocurrency: Here are six important factors

Cryptocurrency is a popular digital currency these days. Apart from being a medium of exchange, cryptocurrencies are also widely used as investment assets because their prices are increasing due to high market demand.

Currently, there are more than 6 thousand cryptocurrencies available in the market. The many choices of course make us confused, which is the best cryptocurrency? How to choose the right cryptocurrency to invest in? To understand more deeply, let's look at some tips for choosing cryptocurrencies in the following article

Factors to consider when choosing a cryptocurrency

Here are tips for choosing the right cryptocurrency by paying attention to several fundamental factors such as the origin of cryptocurrencies, how it works, market capitalization, price history, to netizen conversations.

1. Origin of crypto currency

When you want to research cryptocurrencies, you need to first find out where they came from. The reason is, each type of currency has its own history.

Bitcoin, for example, is a pioneer cryptocurrency that was published in 2009 by someone under the pseudonym Satoshi Nakamoto. A few days before launching Bitcoin, Satoshi Nakamoto published a paper describing a peer-to-peer financial system. The aim is to provide a financial scheme that is transparent and without involving bank or government authorities.

Some time later, Satoshi Nakamoto stopped being involved with Bitcoin development. He handed over the management of the currency to Gavin Andresen, who eventually became Lead Developer at the Bitcoin Foundation.

Meanwhile, the Ether coin came a few years after the issuance of the first Bitcoin. Vitalik Buterin and his colleagues launched Ether in 2013 because they wanted to create a cryptocurrency that not only acts as a medium of exchange, but can also represent real assets such as stocks or property.

In the following years, various variants of other cryptocurrencies emerged as alternatives to Bitcoin. Cardano published in 2017 seeks to solve environmental issues that have become critical of Bitcoin.

By knowing the origins of cryptocurrencies, you can understand more about the purpose for which the coin was created and the extent of its potential in the future.

2. How the cryptocurrency system works

It is important to know how cryptocurrencies work. The reason is, this technology will determine its usefulness and growth potential in the future.

Bitcoin uses blockchain technology with the Proof of Work (PoW) method. This means that everyone can compete to mine Bitcoin by solving complex algorithms. Whoever manages to solve the algorithm, then he will get a reward in the form of coins. However, to mine you need a large amount of electricity and a computer with high specs. Therefore, Bitcoin can be said to be energy-intensive and not environmentally friendly.

Unlike the Proof of Stake (PoS) method applied by Cardano and Solana coins. PoS allows you to mine Bitcoin by storing coins that you have had on the network for some time. As a commission from this, you can get a wage.

This technological system could affect the popularity of cryptocurrencies in the future. If we compare the two working methods above, it is likely that the PoS method will be more popular in the future because of these environmental issues.

3. Market capitalization

Market cap is all crypto assets circulating in the market. By knowing the market capitalization of a cryptocurrency, you can understand how much public interest is in the currency. In addition, this indicator can also be used to measure growth over time. To date, Bitcoin, Ethereum, and Binance Coin are the three coins with the largest market cap.

4. Currency price history

Although the price of cryptocurrencies is very volatile, their movements will form a trend when viewed in the long term. Therefore, historical currency price information is important for those of you who want to make a profit from investing in cryptocurrencies. To analyze currency history, you can use technical analysis with trend line indicators, resistance and support levels, to moving averages.

5. Community chat on the internet

Cryptocurrency prices are heavily influenced by market sentiment. One way to predict market sentiment is to observe community conversations on the internet about cryptocurrencies. That way, you will know people's perceptions about the currency. You can also monitor the social media posts of influential people. For example, Elon Musk whose Twitter tweets often have a big influence on cryptocurrency prices.

6. News about cryptocurrency

News about cryptocurrencies in the media can also affect investor sentiment towards cryptocurrencies. An example is news about the latest government regulations and other important events.

That's an explanation of tips for choosing cryptocurrencies and the factors that must be considered. Doing research before entering into a new investment instrument is the right thing to do. As an investor, of course, you must know what "goods" you will buy later. Hopefully the information above is useful, yes!

Elon Musk's List of Crypto Assets in 2021

Elon Musk is an influential figure who invests large sums in several crypto assets, namely Bitcoin, Ether, and Dogecoin. The founder of the Tesla company is indeed known as a supporter of the idea of ​​​​a crypto currency.

Not only that, the statements issued by Elon have a great influence on the sentiment of cryptocurrency investors. For example, in 2021, Elon has uploaded pictures of shiba inu puppies on his Twitter account several times. This gesture caused investors to flock to the Shiba Inu coins and sent the price skyrocketing.

Not surprisingly, many people are looking into the coin that the SpaceX CEO owns because of its influence in the crypto market. Let's look at the review of Elon Musk's crypto assets in this article!

Crypto assets owned by Elon Musk

According to Elon, he invested large sums in the cryptocurrencies Bitcoin, Ether, and Dogecoin. Here's a review of each.

Bitcoin (BTC)

In July 2021, Elon Musk admitted that he invested a large amount in Bitcoin. Although it can easily influence the market, he claims he will still make long-term investments in this one currency. Elon does not believe in the scheme of raising prices, then selling them, as many bookies do.

This could mean that Elon believes the value of Bitcoin in the long term will continue to increase, despite price volatility in the short term. Elon's support for Bitcoin is also evidenced by the gesture of Tesla, Elon's electric car company, which accepts payments using Bitcoin.

Bitcoin is a pioneer of cryptocurrencies that use the blockchain network as the basis of its technology. Transactions with this technology allow us to transact without the intervention of third parties such as banks and the government so as to minimize abuse of authority.

The advantage of Bitcoin is that it is a transparent but secure system. Unfortunately, many critics argue that Bitcoin is energy-intensive and not environmentally friendly. Hence, various alternative currencies called Altcoins emerged to solve this problem.

Ether (ETH)

The price of the Ether coin had jumped dramatically after Elon admitted to investing in Ether. The value of this currency rose 12 percent in one day.

Ether is a crypto asset that is an alternative to Bitcoin which is built on the Ethereum blockchain. One of the advantages of the Ethereum blockchain over the Bitcoin blockchain is its financial product variants.

You can only make transactions and store assets in Bitcoin. Meanwhile, Ethereum provides features that allow you to carry out more complex financial transactions such as accounts payable, project payments, to derivative asset transactions.

Dogecoin (DOGE)

On November 1, 2021, Elon tweeted that he wanted to build a campus that could be paid for with Dogecoin. Elon's post received an enthusiastic response from netizens, thinking that it was a good idea.

This is not the first time Elon has discussed Dogecoin in a tweet. Previously, he had mentioned Dogecoin several times and made the price go up.

Dogecoin is a crypto asset that originally appeared as a joke on the internet to poke fun at the speculative prices of cryptocurrencies. However, in the end the currency with the shiba inu dog logo was realized into real currency. Founded in 2013, Dogecoin is growing rapidly due to its strong online community (Reddit and Twitter).

Predicting crypto market sentiment from Elon Musks statement

At the end of March 2021, Tesla accepted Bitcoin as a means of payment. This makes the price of the currency soar. In mid-May 2021, Elon announced that Tesla would no longer accept Bitcoin payments due to the huge energy use issue of BTC. The announcement made the Bitcoin price drop drastically.

In mid-June 2021, Elon announced that Tesla was accepting Bitcoin again. As a result, the price of Bitcoin has increased again.

On another occasion, Elon posted a picture of a shiba inu dog that sent the price of the Shiba Inu coin soaring. Afterwards, Elon clarified that he only invested in Bitcoin, Ether, and Dogecoin.

The incident above shows how much influence Elon Musk has on the price movements of crypto assets. So, you can use Elon Musk's statement to predict crypto market sentiment.

You can do this by following Elon Musk's Twitter account. After that, keep an eye on the account's tweets, especially those about cryptocurrencies. Also analyze comments from Elon's tweets. Validate the possible increase in the price of crypto currency via news channels or through the Google search engine.

Of course there are many factors that affect the price of crypto. This step can be one of the considerations in technical analysis of crypto prices related to market sentiment.