How to Identify The Next Bitcoin
I’m often baffled at the amount of people investing in every random cryptocurrency out there without doing a little research first. Our favorite projects are not likely to become the next Bitcoin or the next Dogecoin. Bitcoin’s rise to value was slow and took multiple major economic events to catapult it to extraordinary values. Dogecoin was an overnight explosion of interest. Moving from joke to wealth maker in a span of 3 days. For all those who missed the train, here is how you identify the coins which will reach high values.
The Total Supply of the Coin
Always take a look at the total supply of the coin to determine how much availability is out there. A very simple economic principle is cost is driven by supply vs demand. One of the coins I believe has the potential to be the next Bitcoin is Maker. Maker has a total supply of 991,339 coins. This is far less than Bitcoin’s total supply of 21,000,000. Therefore, with a high amount of demand for Maker, we can expect to see astronomical values much more quickly given the limited amount of coins available. Let’s look at another example. Stellar Lumens has a total supply of 105.44 billion coins. It would require more than double the market cap of Bitcoin to be worth any serious money for low funds investors.
The Market Cap of the Coin
Market Cap describes the total value invested into the coin. Bitcoin previously held a market cap of 1.1 trillion. This was greater than many nations on the planet and basically forced people to pay attention to the cryptocurrency. A high market cap means people are buying the product and that it controls a large share of the overall market. Similar to businesses, the higher the market cap, the more productive or active the cryptocurrency is likely to be. However, if the supply of the product is relatively easy to come by, the market cap will need to be extraordinarily high for the value of one unit to also be high. So always take a look at the market cap and the total supply of the coin.
The Popularity or Renown of the Coin
Popularity is a key ingredient to increasing the value of something. Bitcoin was the first cryptocurrency and is well known across the world. Alt-coins are less renowned but are building in presence. Popularity helps drive demand, which increases the market cap and diminishes the total available supply (raising the value of the coin in the process). As we saw this past Spring with Dogecoin, popularity caused a bunch of people to go invest in a meme, which ultimately led to inflated prices. Popularity manipulation is also how pump and dump schemes end up occurring so make sure you are doing your research on a coin before you invest.
The Logic and Technological Soundness of the Coin
In order for a cryptocurrency to see growth, it needs to also be technologically sound. To discover the veracity of a cryptocurrency’s technology, you need to read the white paper. Almost every single asset listed on an exchange or marketplace should have a white paper. The website alone does not count as a white paper. For Algorand, you can easily find the white papers along with a roadmap for what the organization behind the cryptocurrency’s development is planning over the foreseeable future. If the coin does not seem technologically sound or have potential real-world uses, then it’s more likely to not achieve a high value or maintain it.
Conclusion
While it’s not easy to find the next big winners, you can bet that coins with lower total supply, high market cap, and high demand (popularity) are likely to rapidly increase in value. There are several coins with lower total supply, such as Elrond, Monero, Dash, Maker, and Kusama, to name a few. Investigate each of these coins on your own time and then determine which are likely to gain rapid popularity over the next few months to years. Remember, you want to buy whole coins for ensured growth.
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