Crypto tokens are more popular than ever, thanks to a combination of media attention. Large companies such as Paypal announcing their support has helped increase their profile.
This increased attention has brought a misunderstanding to the masses. Many believe that crypto tokens are a get-rich-quick scheme, which isn’t the case. People lose their investments because they haven’t conducted proper research.
Having an understanding of crypto token properties and value is a must. Taking risks requires risk assessment first. So here’s a guide to understanding crypto token values beyond their current price.
How Do I Find Crypto Token Values?
There are plenty of ways to find the value of a crypto token. The best place for digital currency prices is CoinMarketCap. As it’s known, CMC is the go-to website for live prices and comparing tokens side by side. As a beginner, As a beginner, use the main charts to see the prices. But it has a wealth of other features that allow for a more detailed analysis.
If you have registered for an exchange, you can use their prices to see how much a token is worth. The exchange price is right for tokens you already on but won’t get you far with researching other tokens. That’s where CMC is more useful.
CMC shows historical values, trend patterns and breaks these numbers down. Understanding how to interpret this data is vital. One exchange might show a token twice the price, but it becomes more volatile and risky if it has low volume.
What Influences a Digital Currency’s Worth?
As with any other commodity, it comes down to supply and demand. But it’s the properties of the currency that determine by how much and why. Most digital currencies have limited supply, unlike FIAT currencies such as the US Dollar, which have an unlimited supply.
At the time of writing, there is 18 million Bitcoin in existence. Yet up to 4 million are missing in unretrievable wallets. Lower volumes of Bitcoin means increased competition, which in turn pushes the price up. Opposingly, there are tokens called stablecoins, created to mimic traditional currency.
And understanding the currency itself is vital. A centralized token, like a bank, has little in the way to prevent manipulation and volatility. Decentralized, on the other hand, requires a democracy that can reduce volatility.
You can find out more about understanding value calculations at swapfol.io. Their blogs are an excellent starting point to delve deeper into these topics.
Research Cryptocurrency Before Investing
It’s best to look at a guide to each crypto token before choosing to invest. For those without trading experience, research the essential principles of how to trade.
Without this knowledge, you’ll make all the wrong decisions. And you won’t learn from your mistakes because it won’t be obvious where you went wrong. Only invest what you can afford to lose.
For more financial tips and legal advice, keep reading our articles.