How to find cryptocurrency: The Ultimate Guide to Finding Coins
Navigating the cryptocurrency space and finding promising crypto coins and tokens is not easy and often overwhelms people new to the space. Since Bitcoin came to life more than ten years ago, the crypto market has exploded in size, and the number of opportunities and available cryptocurrencies, coins, and tokens has become gigantic. Today, more than 10,000 digital assets are accessible 24/7 in the crypto markets, and this number does not even include NFTs, which became very popular in 2021 and 2022.
In this article, we at XDEFI wallet want you to understand the major crypto assets and provide a guide about finding and evaluating coins and tokens as a potential investment. The topics we will cover below are:
- What are cryptocurrencies?
- Popular crypto coins
- Is cryptocurrency a good investment?
- Where can I find new crypto coins?
- How to choose between new cryptocurrencies
- Which cryptocurrency should I invest in for 2022/2023?
What are cryptocurrencies?
Cryptocurrencies are a relatively new phenomenon. All crypto coins originate from the Bitcoin whitepaper, published by the pseudonym Satoshi Nakamoto in 2008. A cryptocurrency is a digital currency typically issued or created by one or more private actors and not a central authority. Crypto coins are based on blockchain technology which can be seen as a distributed ledger governed and operated by a decentralised worldwide network of nodes. Key characteristics of blockchain technology also apply to crypto coins:
- Transparent – Crypto accounts and all transactions are publicly viewable.
- Immutable – All blockchain entries are permanent and cannot be changed.
- Decentralised – There is no single actor that controls the network.
- Secure – Many operators and economic incentives secure a blockchain network, and there is no single attack vector compared to networks run in a centralised manner.
In more and more cases, crypto coins or tokens power the economy of a decentralised computing platform, as in the case of Ethereum with the native token ETH. The respective cryptocurrency is used to pay to secure the network operation as well as transaction fees. Smart contract-enabled platforms like the above allow “programmable money” to enrich crypto tokens with programmable behaviour.
Popular crypto coins
As we have mentioned, the number of available crypto coins on the market is astronomical and continuously rising. Still, some cryptocurrencies have become staples over the recent years and are worth being mentioned here.
- Market capitalisation: 367B U.S. dollars
Bitcoin is the original inspiration of all cryptocurrencies and is the most popular and well-known cryptocurrency. Bitcoin is one of the few remaining crypto coins that relies on Proof-of-Work (PoW), which means that it is mined by a huge amount of dedicated computers solving complicated cryptographic operations.
Its current value is worth more than one-third of the total cryptocurrency market. Over the years, Bitcoin has also seen the strongest adoption in the established financial markets, so it can be traded like a traditional asset on multiple platforms worldwide.
- Market capitalisation: 159B U.S. dollars
Ethereum refers to a smart contract-enabled blockchain and a cryptocurrency. The Ethereum network is based on a whitepaper written by Vitalik Buterin in 2013 and has been operating since 2015. The most prominent blockchain network also offers decentralised applications (dApps), with hundreds of those dApps already live and thousands of developers worldwide building more of them. Ethereum is an all-purpose blockchain, which means it supports a wide range of use cases, from ICOs (Initial Coin Offerings) to NFTs (non-fungible tokens) to Decentralised Finance (DeFi) and multiple additional applications.
Ether (ETH) is used to secure the network based on its recent transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS) consensus, and it is also needed to deploy smart contracts and pay transaction fees on the network.
- Market capitalisation: 43B U.S. dollars
Binance Coin or BNB is a crypto coin issued by the popular cryptocurrency exchange Binance. Originally, BNB was created as a utility token exclusively for the exchange itself (e.g. holding BNB granted discounted trading fees and other benefits). Today, it is also the native currency of the BNB Chain, which supports smart contracts and is especially popular for blockchain-based games. The supply of BNB is continuously reduced as Binance uses 20% of its profits to repurchase and “burn” BNB tokens held in its treasury.
- Market capitalisation: 13B U.S. dollars
The Cardano network is an ambitious project designed to be the logical next evolution of Ethereum. The project is centred around Ethereum co-founder Charles Hoskinson who propagates an academic approach towards blockchain technology and cryptocurrencies. Cardano aims to become a highly-scalable platform to run smart contracts that again support a wide range of use cases. Cardano’s native digital currency ADA has been around for many years and is among the crypto coins with the highest market cap.
- Market capitalisation: 8B U.S. dollars
Dogecoin is a Proof-of-Work cryptocurrency just like Bitcoin but it has a very special history. Dogecoin was originally created as a lighthearted joke for crypto enthusiasts by software engineers Billy Marcus and Jackson Palmer. Its name is based on a once-popular meme around the misspelt word “doge” which refers to a Shiba Inu dog.
In 2021, Dogecoin became hugely popular as it was hyped both by the infamous WallStreetsBets group on Reddit and also by Tesla CEO Elon Musk.
- Market capitalisation: 68B U.S. dollars
Tether, with the coin ticket USDT, is a USD-denominated stablecoin which means that the value of 1 USDT is pegged to 1 U.S. dollar. Stablecoins became more and more important as trading vehicles and to easily go in and out of crypto positions. Therefore they are paired with crypto tokens on both centralised and decentralised exchanges (e.g. a typical trading pair would be BTC-USDT or ETH-USDT). Tether is the most widely traded stablecoin with close to 70 billion U.S. dollars in market cap. It is run by the same company that also operates the popular cryptocurrency exchange Bitfinex. The company promises that every USDT can always be redeemed for U.S. dollars backed by a mix of cash, cash equivalents, commercial papers, corporate bonds and other collateral.
Is cryptocurrency a good investment?
The question of whether crypto coins are a good investment is not a simple one, as it depends on your personal investment strategy and risk tolerance. Crypto is a very volatile and high-risk investment built on the still nascent blockchain technology and works primarily outside the highly-regulated traditional financial markets. Everyone interested in buying crypto coins should be aware of this. But risk also means that cryptocurrencies offer potentially high returns, and we shouldn’t forget that the number of people interacting with crypto is constantly growing.
High returns potential
The higher the risk, the higher the potential return is a fundamental principle of investing. The crypto industry is only about ten years old and is still in its early stages. Most people and investors have not yet been exposed to it in practice.
This also means that everyone engaging with or investing in crypto or the Web3, in general, is an early adopter, betting on mass adoption in the future. Being early also means that future growth can be exponential, as we have seen in many examples like the internet, cloud computing, streaming, and many other tech-focused industries. In the last ten years, crypto has seen higher return rates than any other investment class.
A growing community
Despite challenging crypto market conditions, we can still witness substantial growth in the crypto community. More and more builders, developers, marketers and investors are discovering the crypto space and leaving high-paying jobs in world-class companies to work in Web3. Thousands are building the next generation of blockchain-powered applications to innovate and make existing solutions more efficient and inclusive.
On the user side, we can also see increased adoption on the user side. Chainalys’s 2022 Global Crypto Adoption Index Report highlighted that “global adoption remains well above its pre-bull market 2019 levels.” The report also showed increased interest, especially in emerging markets like Vietnam, the Philippines and India.
Not all crypto coins are the same
Investors have to be aware that not all crypto coins will increase in value when the general crypto market is turning bullish. As thousands of cryptocurrencies are trading in the market, not all are the same. Many projects have true value propositions, while others are just meme coins or offer only questionable utility. It’s, therefore, crucial to find the right crypto coins to invest in and analyze them thoroughly before investing.
Where can I find new crypto coins?
Finding new and promising crypto coins is not easy in today’s world, which is overloaded with information. Choosing suitable, trusted sources to get information about any crypto project and their respective tokens is the first step to staying up-to-date in the crypto markets.
Let’s have a look at the most critical information platforms.
Crypto data aggregators gather and display essential information about crypto projects and coins and are especially important to understand a token’s supply, market cap and tokenomics. The best-known examples are CoinMarketCap and Coingecko.
Social Media and especially the platforms Twitter, Discord and Telegram are the key information channel for most crypto projects. Users can get the most up-to-date project information and interact with the team and fellow community members. Twitter can also be used to get notifications from market researchers and crypto news services.
Decentralised Finanze or DeFi is a relatively new category in crypto. The term describes smart contract-based platforms or protocols that are not controlled by a central authority but still offer investment and trading opportunities known from the traditional financial markets. Most DeFi platforms also have native tokens used for governance purposes and capture a part of the platform’s revenue.
Exchange traded funds (ETFs)
If you don’t want to interact with crypto or Web3 directly, you can also invest into the wider crypto ecosystem through traditional financial instruments like exchange traded funds (ETFs), futures markets or similar. Some of these funds invest directly into the most established crypto coins. Others offer indirect exposure through investments into crypto-related companies like exchanges.
Crypto exchanges are still to go-to-platform for many crypto investors. Most of them do not only offer a simple way to buy and sell crypto coins but also provide educational content for free and inform their customers about new investment opportunities. The biggest crypto exchanges are Binance, Kraken and Coinbase.
Initial Coin Offerings (ICOs)
ICOs have been one of the biggest catalysts for the crypto boom in 2017. For the first time, they allowed people to invest in a new crypto project without the need for an intermediary or geographical restrictions. After the initial hype, the number of ICOs decreased mainly for regulatory reasons. Still, similar formats like IDOs (Initial DEX Offerings) and IEOs (Initial Exchange Offerings) grew in popularity. Typically, these offerings are the first time the public can buy a project’s tokens.
Non-fungible token (NFT) marketplaces
NFTs became widely popular in 2021, with some trading for millions of dollars. NFTs are a way to digital proof the ownership of an underlying asset, most of the time referring to digital art. Therefore, NFTs are a subset of digital assets and another potential investment target for people interested in Web3 and can be stored in an NFT wallet. NFT marketplaces, like OpenSea or Magic Eden, that allow the trading of non-fungible tokens have established themselves over recent years. Also, we have already talked about crypto exchanges offer exposure to NFTs.
How to choose between new cryptocurrencies
If you have identified a set of crypto coins that you are interested to invest in, it is crucial to conduct your personal research on each of them. In most cases, they are connected to a project or product which can be analyzed like any other company or offering in the traditional world. Here are some factors to look into when doing such research.
Crypto coins can underpin a myriad of use cases, from community funding to decentralised trading platforms or real estate tokenisation. Understanding which use cases the designated project is trying to solve and who is competing in the same area is the first step to evaluating a crypto project’s potential.
Every project needs to solve a specific problem, otherwise where is the added value? Make sure to understand this problem and how much improvement the project is offering to users. If you can’t find or understand the problem or think the improvement is only marginal, better do not invest in it.
Solving a real problem is not enough; a project also needs a large enough market willing to use its solution and pay for it (via a subscription or a fee, for example). For you as a potential investor, it is essential to understand the market size and also the willingness to pay for the respective service.
Crypto coins offer an easy way for investors to get exposure to new growth opportunities, but they are also highly unregulated and offer little investor protection. This has led many scammers and amateur entrepreneurs to join the space to raise money for false or highly unprofessional projects. It’s, therefore, better to spend time researching the project’s core team and their experience before making any investment.
Before you invest into any crypto coin or NFT, make sure you understand its supply and future emission schedule. If possible also gather information about potential private investors that invested into any seed round and their unlock schedule.
Which cryptocurrencies should I invest in 2023?
The core question is what cryptocurrencies you should invest in in the coming months. But only you can provide the answer to this question. Suppose you don’t have enough time to research new projects in detail. In that case, it is probably better to stick to well-established crypto coins like the ones we mentioned earlier. If you are willing to spend a significant amount of time digging deeper into new rising stars, you already have a competitive advantage over other investors. You can also decide to invest in a mix of so-called “blue chip tokens” and new high-risk crypto coins. Ensure you also understand the meta environment at your research time, as timing is crucial for any investment.
We have looked at the crypto market in general, some well-known crypto coins specifically and provided you with all the information you need to start your journey in finding suitable crypto investments. The next step is for you to think about your investment strategy and risk appetite and decide on the amount of hours you want to spend in investing into the crypto market. We wish you all the best and safe travels!