Bitcoin and other cryptocurrencies are going mainstream and their adoption will continue to grow. For investors who missed the Bitcoin boom of 2017 or those who want to take a step back from investing in Bitcoin, this is an excellent opportunity to position yourself for a possible rebound in the future. Many of the cryptocurrency platforms will continue to grow, and investors can now start to use the platforms to save, invest, and pay their taxes.
This investment strategy also works with other cryptocurrencies such as Ethereum, Dash, Ripple, and others.
Most of the world’s internet users are finally waking up to the idea that crypto currencies are the future of money. Most of these platforms are already easy to use. Most users would rather store their money on a cryptocurrency platform rather than hold their money in an online bank account.
2021 is the year that is likely to see a large number of new coin offerings (ICO). If you have been thinking about investing in cryptocurrencies, now is the time to make your move. This is the year that it will become easier to buy and hold cryptocurrencies.
Investing in cryptocurrency also enables investors to contribute to the “resistance” movement. There are already many different cryptocurrencies designed for making donations, such as Electroneum. There are also other cryptocurrencies that make donations by buying and selling other cryptocurrencies.
Blockchain technology has already brought together a coalition of governments, startups, and individuals who are trying to change the world by changing money. The blockchain is the digital ledger which keeps track of who owns what on the cryptocurrency and how it moves from one owner to another.
As cryptocurrency prices go up, there is a belief that governments are being forced to enforce basic financial principles. Blockchain technology already facilitates this goal. This is an opportunity for investors who want to contribute to the “resistance” movement in the US, which is led by blockchain technology.
Alo Read: Best Cryptocurrency To Invest In 2022
There are many different ways to value a cryptocurrency. One of the fundamental methods is to value each coin based on its mining potential and supply.
First, it’s necessary to calculate the mining potential for a cryptocurrency and compare it with the total number of coins that can be mined at the time of the valuation. Most cryptocurrencies have the same mining potential as the number of coins that can be mined at the time of the valuation. For example, Bitcoin and Ethereum have an equally high mining potential as the number of available coins.
Next, it’s necessary to calculate the total supply for a cryptocurrency and compare it with the total number of coins that can be mined at the time of the valuation. For example, most cryptocurrencies have a much lower number of coins than their total supply. For example, Ethereum has only 27 million coins, and its total supply is only 18 million coins. Therefore, its supply equals the total coin supply. For Bitcoin, the total supply equals the total number of coins that can be mined at the time of the valuation.
Below, I’ve included a table that shows the mining potential and the total supply of the top cryptocurrencies in terms of supply. The results can be viewed by choosing one of the cryptocurrencies from the column on the right.
Cryptocurrency Mining Potential and Total Supply
|Cryptocurrency||Mining Potential||Total Supply
( millions )
|Bitcoin||373 ( millions )||21,690|
|Ethereum||27 ( millions )||3,668|
|Bitcoin Cash||3,878 ( millions )||2,860|
|Litecoin||3,878 ( millions )||2,860|
|Monero||7 ( millions )||1,418|
|Dash||10 ( millions )||2,472|
|Stellar Lumens||49 ( millions )||10,031|
In the tables above, I’ve listed the top cryptocurrencies based on their supply and mining potential. When you compare the two figures, you’ll find that they are remarkably close.
Cryptocurrency Supply and Mining Potential
Cryptocurrency Supply Total Bitcoin 2,481 Ethereum 2,481 Bitcoin Cash 2,489 Litecoin 2,482 Ripple 2,593 Bitcoin cash (BCH) 3,364 Ethereum 3,468 Bitcoin (BTC) 3,629 Litecoin (LTC) 3,650
In the table above, you can also see that the cryptocurrency supply and mining potential are converging. This is the most important point to consider when trying to determine a cryptocurrency’s valuation.
Although a “cryptocurrency” can be defined as any type of digital currency based on the blockchain, the four main types of cryptocurrencies are Bitcoin, Ethereum, Ripple, and Monero. Bitcoin is currently the largest cryptocurrency in the market. Since it was first created in 2009, Bitcoin has experienced a stunning increase in value from $0.30 to $45,615. Based on the supply and mining potential, it is also the most powerful cryptocurrency in the market.
Since Bitcoin was created, it has experienced a dramatic surge in value. Its price has been increasing at an exponential rate. Currently, Bitcoin’s value is about $45,615. It may increase to a little over $47,000 by the end of 2021.
The strength of Bitcoin depends on a number of factors, including the total supply of Bitcoin, the total number of coins that can be mined, and the total number of coins in circulation. When viewed on the basis of these three parameters, the total supply is on the same level as the total coin supply, which indicates that Bitcoin’s price will continue to increase at an exponential rate.
Ethereum also has a relatively low supply and a relatively high mining potential, which are both good signs for investors. It is also experiencing a dramatic surge in value, from around $800 to more than $3,800 in 2021.
Similar to Bitcoin, Ethereum’s growth has been on a similar trajectory. Its price has been steadily increasing from $800 to $3,800 over the last 12 months. However, Ethereum’s value is currently more than double its value at the beginning of 2021.
Next, Ripple has a high supply and a high mining potential, which indicates that it is one of the most powerful cryptocurrencies in the market. It is currently valued at about $0.85 per USD. Based on the mining potential, it has the potential to increase to more than $8.00 in the near future.
Also Read: How to Trade Forex
Monero is the fourth cryptocurrency in the market. Since it was first released in 2014, Monero has experienced a meteoric rise in value, from around $30 to more than $300 in 2018. As with the other three cryptocurrencies, the reason for this growth is because it has a high mining potential.
In conclusion, it is important to note that when evaluating the strength of cryptocurrencies, the total supply and the mining potential are very important. If a cryptocurrency has a low supply, it could face significant competition from new coins and will likely be worth less than it is today. On the other hand, if a cryptocurrency has a high supply, it will face limited competition from other coins and will likely maintain its value.
Want to know more about how possible you could mine or accumulate any of the listed cryptocurrency above? You Should Read this..
Evaluating Bitcoin and Ethereum
Considering the relative strength of Bitcoin and Ethereum is also important. In this case, the two cryptocurrencies are not very similar because they have different traits. Bitcoin is relatively undervalued at the moment. Based on the relative strength, it is also worth considering the possibility of Bitcoin going to zero. On the other hand, Ethereum has been priced at a high level. So, investors who believe in its future will likely choose to invest in Ethereum. This is because it is the most valued of the four cryptocurrencies.
Consider the following table, which provides a more detailed analysis of the relative strength of Bitcoin and Ethereum:
Several indicators, such as the total supply and the mining potential, indicate that Bitcoin has significantly higher potential for value appreciation than Ethereum. If Bitcoin has similar potential for growth as Ethereum does, then there is a significant possibility that Ethereum could go to zero, which may lead investors to sell their Bitcoin holdings to buy Ethereum. However, with a very high mining potential, it is more likely that Bitcoin will experience a similar growth potential than Ethereum. Based on the relative strength, investors can choose to buy Bitcoin or Ethereum based on their preference.
Ethereum and Bitcoin Investors should also consider the relative level of these cryptocurrencies in the market. Ethereum is currently trading at a high level, which indicates that it is more valuable than Bitcoin, while Bitcoin is still below the price of the second most valuable cryptocurrency. If a Bitcoin investor believes that Bitcoin will likely experience a similar growth potential as Ethereum, it is likely that they will want to buy Ethereum as well. On the other hand, if a Bitcoin investor believes that Bitcoin will likely experience a similar growth potential as the second most valuable cryptocurrency, Ethereum, it is likely that they will want to buy Bitcoin instead.
In the long term, it is important to note that Bitcoin has seen a sharp rally from the beginning of 2018. At this point, it is probable that the rally will not last as Bitcoin’s value may have reached a plateau. As Bitcoin and Ethereum have both experienced huge volatility over the last year, investors should be aware that the returns in this market are not guaranteed. So, it is important to keep in mind the possibility of Bitcoin going to zero and the potential value of Ethereum going to zero. In addition, the long-term trajectory of Bitcoin and Ethereum is not necessarily bullish, as both are still very volatile and will continue to experience wild volatility in the future.
Disclaimer: The information presented in this article is for informational purposes only and in no way should be construed as financial advice or recommendations to buy or sell any stock. Please always do further research and do your own due diligence before making any investments.
Every effort has been made to present the data/information accurately; however, the author does not claim 100% accuracy. The stock portfolio presented here is a model portfolio for demonstration purposes.
While I believe the trend is your friend, the trend can be very cruel to your wealth; just remember that in the end, the trend does not matter.