Topic: Help me understand the cryptocurrency market - page 5. (Read 664 times)

Three principles of safe investment
You should start with this. Cryptocurrencies are a system based on freedom, and there is no freedom without responsibility!

The first rule of safe investment: invest as much as you can lose. Investments can be divided according to the degree of security. Cryptocurrencies are considered risky for two reasons. Firstly, due to the possibility of state interference, and secondly - due to the possibility of virtual theft. Just like before the second threat, you can protect yourself (about this in the further part of the article), so there is no insurance against decisions of democratic politicians.

The second rule: diversify the products in which you invest. The fact that Bitcoin can be gold 2.0, and Monero's most anonymous way of storing money does not mean that you have to buy cryptocurrencies for all the savings! Just as it is not worth keeping all the money in one bank, it is just as risky to invest in one product.

The third rule: think long-term. Putting PLN 1,000 in bitcoin in 2009, today you could draw almost 100,000. zł. However, if during the great drop in value in 2013 you would get scared and pull out money, you would lose most of your capital.

Cryptocurrency is a valuable resource, it is used as a payment to people in all their transactions, exchange, money transfer and shopping. Now many people are investing in it for profit. Buy Bitcoin prices when the market decreases and keep it until the price is high. There are different coins in the market, you will invest in the best bet.

At first, bitcoin is used as a payment for games,then it moved to the one of asset.Now many people inverse their money in bitcoin than in Gold and Silver. The simple reason for this is percentage of profit in bitcoin is greater than the gold and silver.You can inverse in bitcoin with 10$,it is additional advantage.

you will find many coins people term as crapcoins. because they are premined/not mined. no cost of creation. their purpose or function is not proved.
99% of coin announcements and ICO (initial coin offerings) are in this 'crap coin ' category

next is to look at which coins have stood the test of time of sustainability. look at what they do, how they are used and by who. the three main functional coins that have purpose are bitcoin litecoin and ethereum.

bitcoin and litecoin are more like currencies and are MINED (actual cost to create)
ethereum is more like contract agregators/ escrows for other functions.. ethereum is moving to PoS(costs to create are going to be near zero)

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i wont go through the whole list of coins as there are 1500+ of them and 99% of them are crapcoins as i said,

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next would be to look at the prices of the coins. if you dont want to do the maths of cost of mining. the simplist thing would be to IGNORE the all time high(ATH) price of a coin first.
and instead when looking at the charts. take any period length.. EG 6 allotments if only a couple years of chart-12 monthsallotmnts of many years of charts
and find the all time LOW of each period and draw a line between each of those ATL's .
there you will find good indication of where 'VALUE' is. because no one is foolish to sell for less than it cost them to obtain it.

again for emphasis ignore the ATH (bubble price).. look for the ALT(value waterline)

then that will help you guage comparing ATL of most recent period, evaluate if all periods are on a upward or downward movement.

then compare the most recent ATL to the current price
and then comparing the current price to the ATH price

you can then see if the price is at a nice discount (near value) or if its way too much of a premium(near ATH)

first i think you need to learn the basics of finance.. excuse any sarcasm.. its meant as humour not arrogance, so smile while reading what im about to say.

traditional currency redeemable for gold? .. umm.. hello 1930's where have you been?
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'intrinsic' value. is based on the labour needed to own it..
EG cost to mine gold/btc/crypto. and also its function or purpose adss some intrinsic value to the currency held.

for instance traditional currency. USED TO (generations ago) be backed by gold which value came from the cost to mine gold.
these days traditional currencies intrinsic value is only backed by minimum wage. EG US/UK min wage is ~£$7.50 meaning a £$10 bank note is intrinsic value of 1 hour 20 minutes of sweat laabour.
where by law if you do 1 hour 20 minutes of obvserved/provable labour (employment) you will get £$10 atleast
....
yes in traditional currencies, and in gold markets the PRICE is not exact and fluctuates. but that is called speculation..

speculation is the bubbly bit of foam ontop of a value waterline. speculating can inflate or pop which is why PRICES change, but the underlaying VALUE is more stable
this is why at times of massive speculation. they say something is in a bubble period. because there is more bubbles than underlying value (price is more then double value)

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a bubble does not mean a currency/property/market is fake. it just means the PRICE is over inflated.
houses are real and houses have and always will have value. but the housing market has had bubble periods
..

what you will find is that in crypto's HOW the coin is released to the community shows its intrinsic value and gives you a good starting point to calculate it.
periodic release coins are not all thrown out in one go. they are released slowly. giving it value as there is not a full supply right from the start
pre-mine coins are a term where the coins already exist befor public release and literally thrown out to the community. usually worth less value because of it

mined coins. involve actual computational work to be done. this can add costs like electric, equipment and time.. which usually means value would be higher(imagine robot labour) we call it (PoW) proof of work

stake coins. involve no 'work' as such. just proof of minimum investment to then be trusted to sign/validate. whereby its not labour lost but if the signer makes a mistake they lose the investment they used a proof. usually this means the coins value is less because the labour/cost is small. (imagine pre-nup/divorse papers, cheat and the wife takes it all) we call it (PoS)proof of stake

then there comes the featurs and utility.
some features are defined as unchangable(indelible, natural, esssentia) set in stone features. such as the coin supply(scarcity) which can add to the value.

but then there are features that can change and that then starts going into the speculative 'foam on top the water area'

You already have a pretty good understanding from what you have said.

I think it's important to realize that crypto-currency is an emerging new asset class, it's hard to compare it to any existing assets.

Aside from that understanding the crypto markets is a whole different beast, these markets are brutal and are insanely volatile, my best advice would be to not invest anything that you are not willing to look at like a retirement account that you wont touch for years.

Wish you the best of luck, could be a good time to buy by the way, markets have really been dipping hard lately.

From my little knowledge. Cryptocurrencies are primarily used to buy and sell goods and services, though some newer cryptocurrencies also function to provide a set of rules or obligations for its holders.They possess no intrinsic value in that they are not redeemable for another commodity, such as gold. Unlike traditional currency, they are not issued by a central authority and are not considered legal tender.
I need help in understanding the crypto market and investment advice in order to  invest effectively  on bitcoin market