Valuation of crypto currencies

Crypto currencies can be used in multiple places for a variety of online transactions. Given that the price of crypto currencies keep rising and falling, this makes a great instrument for trading as well. The most common thing that most crypto traders do is to buy when a currency price falls and then sell when it increases. So with a small investment the trader would be able to take home good profits. One other popular trend is to pick out the best ICOs. ICOs or initial coin offerings are those events where a new company that wants funds would offer crypto tokens for sale. Traders would buy them and then later be able to trade them in several standard exchanges as well.

When you plan to buy a crypto currency the main question to ask yourself is – which crypto currency should you buy? You should understand the intrinsic value of the currency. Valuation of a currency and the valuation of an ICO is not straightforward. It would be a consolidation of various factors. Here are a few things to keep in mind when you valuate a currency:

  1. Mining methods

The method of mining the currency, ease of availability and the cost of mining would all matter when you compare two or more currencies. Some of the currencies are directly available to be purchased from several sources with FIAT currencies. Few currencies can be mined with online mining tools. If you have to spend a lot of time and money on mining for a currency then that would add to the cost of the currency. The profits made should be able to tally the expenses and outweigh them.

  1. How much is available?

The supply demand relationship might be a complicated one. But this relationship should be understood in order to find out whether the demand would increase and be followed by the increase in the price as well. Quantity theory is something that many trading experts follow. This takes into account the amount of currencies available to be mined at any given point, the cost of mining and the overall profits made.

When you valuate a currency make sure that you take more than just one parameter to understand the real value. This website gives a lot of information about the poplar crypto trading bots that are known to make the traders’ work simpler. These trading bots also save time so that even the busy professionals can get involved in crypto trading.