Going into 2026, stablecoins are no longer an experiment or a temporary workaround. They have become infrastructure. This article looks at why they exist, how they evolved, and how they are actually used across the crypto ecosystem today.

Why volatility still limits crypto adoption

For a currency to be practical, it needs to function both as a medium of exchange and as a reliable store of value. Most cryptocurrencies struggle with the second requirement. Price volatility remains a defining feature of the market.

Large price swings may be attractive to traders, but they make everyday usage impractical. Pricing goods, paying salaries, or settling invoices in an asset that can move several percent in a single day introduces unnecessary risk. That uncertainty alone is enough to keep most people and businesses on the sidelines.

This does not mean cryptocurrencies have failed. It means they were never all designed to function as money. Bitcoin, for example, prioritizes censorship resistance and trustless settlement, not price stability. Stablecoins emerged to fill the gap between these design goals and real-world financial use.

The early stablecoin era (2017–2019)

As crypto markets grew, exchanges needed a way for users to move in and out of volatile positions without constantly converting back to fiat through traditional banks. Banking access was slow, inconsistent, and in many regions unreliable. A blockchain-based substitute for dollars quickly became an obvious requirement.

The simplest solution was a token pegged to a stable asset, most commonly the US dollar. Tether was the first stablecoin to achieve meaningful scale, quickly becoming the dominant settlement asset across major exchanges. For traders, it effectively acted as digital cash that could be moved instantly between platforms.

These early fiat-backed stablecoins worked well in practice, but they also introduced clear trust issues. Users had to rely on centralized issuers to actually hold the reserves backing the tokens and to honor redemptions when needed. Transparency was limited, and concerns around Tether’s backing repeatedly surfaced.

During several major market cycles, Tether-related reserve uncertainty and “backing FUD” contributed to sharp sell-offs and heightened panic, as traders questioned whether the peg could hold under stress.

At the time, stablecoins were largely dismissed as a temporary workaround for traders. Few people viewed them as future infrastructure, and almost no one expected them to become one of the most critical components of the on-chain financial stack.

Stablecoins and the rise of DeFi (2020–2022)

As decentralized finance began to scale, stablecoins stopped being optional and became essential.

Lending protocols, decentralized exchanges, derivatives, and on-chain savings all needed a stable unit of account to function properly. Building these systems on top of volatile assets made risk management fragile and unpredictable. Without stablecoins, even basic financial logic started to break down.

This period drove the rise of crypto-collateralized stablecoins. Users locked volatile assets into smart contracts to mint stable units, trading capital efficiency for decentralization and transparency. The model worked, but only by requiring heavy overcollateralization to survive sharp market moves.

At the same time, algorithmic stablecoins gained serious attention by promising price stability without explicit backing. The most prominent example was TerraUSD (UST). In theory, its algorithmic design was meant to hold a dollar peg through market incentives. In practice, it failed catastrophically.

When UST lost its peg in May 2022, the Terra ecosystem collapsed within days, wiping out an estimated $40–60 billion in market value and triggering forced liquidations across the broader crypto market (Reuters).

The Terra collapse became a turning point. It demonstrated how quickly confidence-driven systems could unravel and permanently shifted how the market viewed purely algorithmic stablecoin designs.

How stablecoins are used today

By 2026, stablecoins are no longer just tools for traders and crypto natives. They are used quietly across markets and payment systems, wherever stability is more important than speculation.

They still play their original role in trading, acting as the default settlement layer on most exchanges. For traders, stablecoins are effectively digital cash. They make it possible to move capital instantly, manage risk, and stay inside the crypto ecosystem without being forced in and out of volatile assets every time the market turns.

Beyond trading, stablecoins have become a practical payment tool. They are widely used for cross-border transfers, payroll for remote teams and onchain commerce, particularly in cases where traditional banking is either slow, expensive, or unreliable. For international payments, stablecoins often settle faster and with fewer intermediaries than legacy systems.

What changed most in recent years is who is using them. Stablecoins are no longer just a retail or DeFi phenomenon. Trading firms, fintech companies, payment processors, and even banks now use stablecoins for treasury management, internal transfers, and cross-border settlement. In these contexts, stablecoins function less like cryptocurrencies and more like programmable settlement instruments that move value across systems without friction.

At the same time, stablecoins remain the backbone of decentralized finance. Lending markets, liquidity pools, derivatives, and structured products all rely on predictable units of value. Without stablecoins, most of these systems would be either impractical or significantly riskier to operate at scale.

This mix of retail use, institutional adoption, and on-chain finance is what defines stablecoins today. They are no longer an edge case or a niche workaround. They are the connective tissue between trading, payments, DeFi, and traditional finance.

The three main stablecoin models explained

1. Fiat-backed stablecoins

Fiat-backed stablecoins are issued by centralized entities and backed by reserves such as cash or cash equivalents. Each token represents a claim on a fixed amount of fiat currency.

This model is simple, liquid, and widely adopted. The downside is reliance on trust, regulation, and centralized control. In practice, however, this approach currently dominates because it works reliably at scale.

2. Crypto-collateralized stablecoins

Crypto-collateralized stablecoins are created by locking volatile assets into smart contracts. To protect against price drops, these systems require users to deposit more value than they borrow.

The result is a more decentralized and transparent model, but one that is capital-inefficient and sensitive to extreme market volatility. These systems appeal to users who prioritize decentralization over simplicity.

3. Algorithmic stablecoins

Algorithmic stablecoins attempt to maintain price stability through supply adjustments rather than direct collateral.

In theory, this approach is elegant. In practice, many purely algorithmic systems have proven unstable under stress. Once confidence breaks, restoring a price peg becomes extremely difficult. By 2026, this model is widely viewed as experimental and high-risk.

The real risks of stablecoins going into 2026

Stablecoins solve real problems, but they come with risks that are easy to underestimate.

Fiat-backed stablecoins depend on trust. Someone controls the reserves, someone answers to regulators, and someone ultimately decides who can access the system. In normal conditions this works smoothly. Under stress, that centralization can become a single point of failure, whether through freezes, redemptions being paused, or regulatory intervention.

Regulation itself is another growing variable. As stablecoins move closer to traditional finance, compliance requirements increase. This can improve transparency, but it can also limit how and where stablecoins can be used, especially across borders or in permissionless systems.

Depegging risk has not disappeared either. Even well-designed stablecoins can temporarily lose their peg during market stress, liquidity crunches, or sudden shifts in confidence. History has shown that once doubt spreads, price stability can unravel faster than most users expect.

Decentralized stablecoins avoid some of these issues, but introduce others. They rely on smart contracts, collateral management, and market incentives that must work flawlessly under extreme conditions. Bugs, oracle failures, or sharp market moves can still cascade into broader problems.

In practice, choosing a stablecoin is about trade-offs. Reliability often comes at the cost of centralization. Decentralization often comes at the cost of efficiency or simplicity. Understanding those trade-offs matters far more than chasing the idea of a “perfect” stablecoin.trol.

Stablecoins as infrastructure

Stablecoins were built to solve a boring problem, and that’s exactly why they’ve lasted. They reduce friction, enforce predictability, and quietly hold the crypto economy together.

If current trends continue, stablecoins may end up being one of the first blockchain technologies to see widespread adoption outside crypto-native circles. Traders noticed them first. Institutions followed. Payments and settlement are next. As regulation tightens and infrastructure improves, they are likely to become one of the main bridges between traditional finance and blockchains. Not flashy, but increasingly unavoidable.

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As virtual currency becomes mainstream and governments focus on digital assets, it is essential to know how to pay cryptocurrency tax and understand how different countries handle the matter.

General Tax Principles for Cryptocurrencies

While regulations vary, the following principles hold in most countries:

• All Crypto Sales and Trades Are Taxable: You must report losses and gains on all trades, especially when exchanging digital currencies or converting them.
• Failure to Pay Taxes Is Considered Fraud: In the US, for example, avoiding cryptocurrency taxes can result in a five-year prison sentence.
• Miners Are Taxed: Cryptocurrency miners must pay taxes on their earnings. Mining is also considered self-employment in some places, so self-employment rules apply.
• Not All Crypto-Related Activity Is Taxed: In some countries, investors are not taxed for buying and holding crypto.

Preparing for Tax Returns

When preparing for tax season, remember that it is your responsibility to keep your cryptocurrency records. Be sure to know all your transactions and trades. Record the market value of your cryptocurrency when buying or selling; otherwise, you will be taxed on the current value, which could raise your tax bill. Take note of your trade dates, how much you paid/sold for, the net loss or gain, and the cost of trading.

Understand the tax laws of your country on cryptocurrency and account for charitable donations, if applicable, as you could be eligible for tax relief.

How Different Countries Handle Cryptocurrency Taxation

The United States

The US treats all cryptocurrencies like capital assets, similar to bonds, property, and stocks. This means that the assets are subjected to capital gains tax regardless of how you use them. Trading digital currency for fiat is considered taxable, as is trading crypto. In the latter, you will be taxed based on the market rate when you traded.

Using cryptocurrency to get services or goods is also taxable based on the market value at the time of the trade. You will not be taxed for gifting someone digital assets within the gift tax threshold, transferring crypto from wallet to wallet, and buying the currency using USD. However, holding the currency for more than a year makes it applicable for long-term capital gains tax.

Europe

In Europe, most countries do not have specific laws for taxing cryptocurrencies. However, crypto complies with general local tax authority principles.

• France: Tax authorities consider cryptocurrency profits as capital gains, requiring a 19% tax and a 17.2% fee for social contribution. Profits from cryptocurrency mining are treated as commercial and industrial gains, earning a 45% tax.
• Germany: Cryptocurrency is considered an asset. The taxation scope varies depending on whether it is a business or private asset. Cryptocurrency held as a private asset receives a capital gain tax of 30.5%, applicable only if the sale and purchase took place in less than a year. Germany has removed bitcoin transactions from VAT.
• Sweden: Exchanging or selling cryptocurrencies is subjected to a fixed capital gains tax of 30%. Mining cryptocurrencies is treated as income from employment or business income and is taxed under the respective category.

Singapore

Businesses based in Singapore that trade in cryptocurrencies are taxed on profits, which are treated as income. Individuals and companies holding digital currencies as long-term investments receive no taxation because there is no capital gains tax in Singapore.

India

Cryptocurrency tax laws are not yet defined in India, but the country is taking a different approach. Instead of viewing digital currencies as foreign or as assets like in most states, India places cryptocurrencies under ‘goods and services,’ making them applicable for an 18% goods and service tax. This model is still under discussion. The Indian government has been skeptical about cryptocurrency and has banned its use in financial institutions.

Conclusion

There are more countries than this post covers. However, taxation generally falls into three categories:

1. Income-Based Taxation: Early adopters of crypto regulation tax based on income, viewing digital currencies as a source of corporate and personal income. Mining and trading earnings are considered ‘other.’ Germany is an example of such.
2. Capital Gains Taxation: This assumes cryptocurrency is a foreign currency. In most cases, only the amount gained via investment is taxed. Capital gains and property tax are treated more favorably than income, sometimes even reaching tax exemption. France falls under this category.
3. Unique Approaches: Countries like Singapore, India, and Sweden do not conform to the two classifications because they define cryptocurrencies differently or embrace controversial approaches to the currencies.

Cryptocurrency taxation is not universally agreed upon, and taxation will vary by country. It is worth remembering that investing in cryptocurrency is highly speculative and that cryptocurrency taxes are still in flux. You will have to do a lot of work in keeping your records and plan to repeat it every year you keep investing.

There is also plenty about taxation that is yet to be figured out. For example, many countries are unclear about how to handle tokens and cryptocurrency airdrops. It is a good idea to consider using crypto tax software when preparing to file your returns.

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The terms bear market and bull market are generally used to describe the direction a market is trending. To be more specific; Whether the market is heading up or down. These terms are typical reflections of investors’ feelings regarding the market. Usually, you will see the market value go up in light of good news and fall in the light of bad news. Other times, other factors will affect the market in unforeseen ways, such as “pump and dump” groups where a group strategically buy large amounts of a cryptocurrency to drive up the price.

NOTE: We advise against participating in such groups as more often than not this leads to the group owner dumping tokens on the members after making them pump the price.

Bull market

A bull market is used to describe a market where the market cap is increasing. Usually, you will see the term used when there is a stable increase in the price of an item. This means that trust in the market is high and investors feel optimistic about the state of the market. You can be a bullish investor if you plan to buy and keep your objects in the long run. This is safe and will be able to generate profits in the future.

The story of the bull market

The term bull market (Bullish Market) originates from sometime around 1714, but there are many versions of where the term originates. One theory is that it comes from the way a bull attacks its opponents. An ox lowers his head and uses his horns in an upward position so as to push them into an opponent. In the market, this applies when the market is low and begins to rise. In order to throw his opponent into the air. That is, a bull market comes when the market has been low so as to rise quickly.

Bull blood sport

Another theory that originates from the Elizabethan era in the late 16th century. At this time there was a sport called bull-baiting. This was a brutal sport where spectators saw a castrated bull being attacked by a group of dogs. This sport was banned in 1835. This is correlating quote well with the period the term first became known so many assume that this is where the term arose.

The Bull Board

Another theory comes from the London Stock Exchange. This stock market was established during the 17th century, which fits well with the year 1714. During the first years of the stock market, on the bulletin board traders brought up their trades called a bull.

How to identify a bull market

A bull market can be recognized by using a few key factors beyond just observing a consistently increasing trend. These factors do not always match, but are simple driving rules you can look for to identify a bull market.

Basic economy.

Supply and demand. In a bull market, there is a lot of optimism and confidence, so you usually see strong demand for a resource with a limited offer. Not many investors will sell since trust is high and many want to get into the market. Because of this, prices will increase.

Economic health.

When an economy is healthy, people will have more money to spend. A bull market can be a consequence of a healthy economy as investors have more money to spend on investment objects.

Human psychology.

Do you see negative news about your favorite currency and notice that the value decreases? This is due to simple human behavior and psychology. The thoughts and feelings of an investor acting on the market are an important influence on whether the market is rising or falling. In a bull market, trust is high and investors are optimistic about gaining profits.

For long-term purposes, use your preferred trading platform to keep track of recent trends and where bull market occurs. You can also find important news regarding bull market data to see how the market responds to different news and thus be better prepared to invest when similar news is being proposed.

Bear market

Bear market (bearish) describes a market that falls in value. The opposite of a bull market; When you see a consistent decline in the price of an asset you have probably identified a bear market. In this market, trust is low, which steers many investors away from investing in the asset.

As with the bull market, the term bear market originates from approximately 1714. The first theory of such market terminology stems from how the bear attacks. Imagine a bear waved with big paws up and down; knocks down his opponent. This symbolizes the downward trend we see in the bear market.

The Bare Board

Following the creation of The London Stock Exchange, traders posted offerings to buy shares. When the demand for stocks was low; the board was bare. This is said to be the origin of the term bear market; when the market was down.

How to identify a bear market.

A bear market can be identified in the same way as a bull market just with opposite details. One can see that the value of an object is in a consistent decline. The following factors are relevant to analyze if the market is bearish.

Basic economy.

In a bear market, the offer is high and demand low. In basic economics, this means that the price falls. This means that more people will sell than to buy.

Economic health.

A bear market can sometimes be associated with a weak economy. Investors want to spend less resources in weak economic times; A downward trend may lead investors to venture even further away.

Human psychology.

Human emotions and psychology govern the market. Sometimes one will find a bear market when market stability is at it’s worst. This may be blamed by other contributing factors such as fear, uncertainty, and doubt (FUD). Investors can, at such times, move their money to more stable objects. As the market is unpopular, this can damage investor trust and lead investors to stay away from the object. This leads to a fall in prices in the market.

A bear market can be a good time to start using some market indicators to see if an asset is oversold. This gives investors the opportunity to invest in promising assets at discounted prices.

Conclusion: Looking at historical market trends will be useful to identify bull vs bear markets.

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In this short article, you will find a description of some of these words.

Bear Market / Bearish
When you expect a bear market, you would expect that prices will go down.
Bearish means the same one example can be:
“I’m really bearish on bitcoin for the time; therefore I will be going over to fiat for the time being to buy back in later.”

Bull market / Bullish
The opposite of bear market / bearish, so one has the belief that the market will go up. Read this article to learn more about bear-/bullmarkets

Fiat
Fiat money is money without an internal value. There are money (coins and banknotes) issued by the central bank and declared to be money. However, the central bank does not have coverage (e.g., gold reserves) to redeem them in real terms. It is solely the belief that the next buyer in the range will also accept the money as a means of payment that makes them money. The word “fiat” comes from Latin and means “let it happen.”

Rekt
Say you’re almost ruined in a trading context.
Example:
“My Bitconnect investment got rekt today; I lost 90% of my original value”.

Exchange
An exchange market that offers to buy and sell cryptocurrency against other cryptocurrencies / Fiat.

Whale
Someone who owns absurd amounts of cryptocurrency.

Margin Trading
You “magnify” the intensity by betting the direction the market will go. NOTE: Very risky even for traders with years of experience, you can risk losing everything yourself with small movements in the market.

Going long
A margin trade – you earn if the price increases.

Going short
A margin trade you earn if the price drops.

ATH
Abbreviation for “All time high.” Thus a new value peak has been reached.

ICO
Abbreviation for “Initial Coin Offer,” a startup company requests funds to develop a service or product. You will receive “Coins / Tokens” in exchange for the donation that can yield returns in the long term if they are directly linked to the product/service.

Altcoin
All other coins/tokens that are not Bitcoin.

Shilling
Someone who advertises for a cryptocurrency, and in most cases with great unrealistic promises.

FOMO
Abbreviation of “Fear of missing out”. Is often used to describe people who throw themselves on the wave when something starts to rise in price.

FUD
Abbreviation of “Fear, uncertainty, and doubt.”
People often use abuse FUD by pointing out baseless allegations against something to make the price sink (and then buying in themselves).

Pump and Dump
Can happen to both well known and completely unknown coins and tokens, it suddenly shoots high in price and then falls back quickly. Most often it ends up much lower than it started.

Bagholder
Someone who still keeps an altcoin after a “pump and dump” for the price is too low to sell. Can also describe Altcoin’s who do not have an active team anymore and have prospects.

Marketcap
The total value of a given cryptocurrency.

It is calculated by taking the total amount of a cryptocurrency with the price of one unit of the cryptocurrency.

Example: Bitcoin is currently worth $ 7426.76. There are now 17,162,450 Bitcoin in circulation.

Price per Bitcoin 7426.76 * Number of Bitcoins in Circulation 17,162,450 = Marketcap $127 461 053 913

ROI
“Return on investment” The percentage on how much you have earned compared to what you have invested initially or how long it will take to go in zero / profit.

Example: You buy a Bitcoin miner, it costs $ 2000. You will earn $ 50 a week after expenses on this miner.
It will take 40 weeks before you reach ROI and you have the same amount left that you initially invested.

HODL
Slang term for hold.
Originates from a mispelled thread on the forum Bitcointalk in 2013. BTC had been crashing and the original poster decided that he was no trader and was going to hold his assets no matter what, and posted a thread called “I AM HODLING.

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When going through the process of finding the best cryptocurrency to invest in, there is a lot of information to get into. Here at ICOshock, we try to gather this information in an easy-to-understand manner, which makes you better equipped to start your investment trip. One of the most important things you should do before putting your money into any cryptocurrency is to do a basic analysis of the projects you are interested in.

You can of course be very lucky and shoot the golden bird by pure guess. However, if you have faith in the crypto and blockchain technology that supports them, you should spend some time on your investment. In this guide we will show you how to do a good analysis of cryptocurrency. Read on, so you can take safer and more informed investment decisions.

NB! You should never invest more in crypto than you can withstand losing.

Where do you start when you invest in cryptocurrencies?

The amount of information available about investment in and analysis of cryptocurrency can be perceived as quite overwhelming. Here are the three most important things you should begin to put in.

First and foremost: Do you really know what cryptocurrency is? Or are you primarily interested in investing because you’ve heard about the Bitcoin millionaires who became filthy rich in just a few years? All investments are, of course, about returns. Nevertheless, it’s important that you know what you are considering putting your money into.

A cryptocurrency is a decentralized currency whose transactions (in most cases) are carried out on top of a blockchain. A blockchain is a decentralized network for transactions run by users worldwide. Cryptocurrencies are secured by cryptographic principles and is, to the very highest degree, digital currencies.

Even though cryptocurrencies are growing rapidly, there are still few countries and companies on a global scale that accept the units as payment for services. Cryptocurrency has a long way to go in order to work in conjunction with existing financial systems and structures.

Because the cryptographic currencies are decentralized, the currency units are also unregulated. This means that the price may vary greatly. It’s not unusual to see price variations of tens of percent in just a few days. Nevertheless, the trend has been rising since the first cryptocurrency was launched by Satoshi Nakamoto under the name Bitcoin in 2009.

The cryptocurrency market is in an explosion

We definitely hear most about Bitcoin and Ethereum in the media. But did you know that there are over 3,000 different cryptocurrencies in the market? And it’s not as if it stops there; new crypto currencies are being launched at a furious speed. The crypto exchange market is in an explosion.

This means that you as an investor must keep track of the sysacs – in any case, if you are interested in investing in more than just the crypto giants. Be aware that you will have a wealth of choices before you start investing, so you’re a bit better prepared. There are a number of different projects that look very similar to each other. In addition, there is huge variation among project types.

Think of cryptocurrency as a whole new world economy where all voids are to be filled. If you are looking at the number of services available worldwide, it’s not hard to understand why the cryptocurrency market grows so fast. Entrepreneurs tend to be the first and best on the pitch, and there is no doubt that the number of cryptocurrencies will continue to increase.

Invest in projects you have faith in

Therefore, it is important that you as an investor choose projects you have faith in. Take a good look at the functionality of the cryptocurrency. Then you can think through which areas you think might best fit the new technology. In such a turbulent market it is important to have ice cream in the stomach, and the easiest way to achieve this is to have faith in their investments.

Be prepared for the existence of many different variants of crypto currencies, once you have decided to invest. This is a bit like choosing service providers, such as mobile subscriptions or power providers. Crypto is not new anymore and therefore there is great competition, also within different sectors.

Here are some cool questions to ask yourself when choosing the type of cryptographic projects you want to invest in:

Why do I believe in this cryptocurrency within this area?

• Are there any examples of successful crypto currencies within the area already?
• Is there a lot or little crypto competition competition in the sector I have chosen?
• Have the cryptos in the area I have chosen to start rising in value
• How does market history look like crypto currencies in the sector I’m considering investing in?

Step by step: How to analyze cryptocurrency

Then you have some simple first steps to follow to begin with your investment project. Now we’ll go through exactly how to analyze the cryptocurrency once you’ve chosen them.

A cryptocurrency is not the same as the underlying blockchain
In the first place, it is important that you understand that cryptocurrency and blockchain are two different things. They hang close together, yes. But one is not the same as the other one. When investing in cryptocurrency, you also invest in the underlying blockchain. Therefore, in order to analyze cryptographic currencies it is important that you also analyze the blockchain project they are linked to.

Bitcoin was the first cryptocurrency and it was launched in 2009. Back then, the blockchain was designed just to support financial transactions. Thus, Satoshi Nakamoto did not imagine that the Bitcoin blockchain would be used for anything but shopping with Bitcoin. The vast majority of cryptocurrencies launched today do not follow this structure.

Now it is common for the cryptocurrency to be just one small part of the larger blockchain-project that is being developed. At Ethereum, for example, the main focus is smart contracts and decentralized applications. The renowned cryptocurrency ether (ETH) supports this operation, but a cryptographic currency is by no means the main focus.

Therefore, when analyzing the cryptocurrency, you must go a little deeper than just looking at the economic development trend. In addition, you will learn about the blockchain project, which in reality is where your money ends.

Research through several good  information sources

Once you’ve decided on a crypto and read about the underlying blockchain project, you can begin your analysis. Knowledge is power, and this is definitely also the case with cryptocurrency. Therefore, you should find more reliable sources of information to teach you more if this is something you should invest in or not.

The best place to start is on the project website. Here you will often find more types of documentation that outline objectives, vision and rollout plan. The best document to read is the so-called white paper document. This will give you a thorough and understandable review of how the project looks, as well as how the cryptocurrency should work on the blockchain.

After learning more about your investment option directly from the source, it’s a good idea to start looking elsewhere. Forums like Reddit, Steemit, and Bitcointalk are all good places to start. You can also get a good deal of information on the blog of the blockchain project, if any. Remember to watch out for people that are ‘shilling.’ Shilling is when someone is creating hype around a coin to increase its value. This is a regular occurrence that can be done by the team of the project, holders of the tokens that want to increase their value as well as bounty hunters, people who “promote” a coin in reward for tokens. 

As you read, it’s important that you find out if you get more or less faith in the project you are considering investing in. Investment is of course about obtaining sufficient information. But you should have a good stomach feeling about where you place your money as well.

What void does the cryptocurrency fill?

Once you’ve learned more about the cryptocurrency you’re considering, there’s one question you should ask yourself: What makes this cryptocurrency unique? As we have already seen in this guide there is a huge selection of cryptos to choose from. You as an investor should make sure that there is something special about the projects you choose.

This is primarily about identifying which existing void on the market the current cryptocurrency fills. What real problems can it, and the blockchain project that drives it solve? Can you find examples of consumers who would use the cryptocurrency?

Think of cryptocurrencies as service offerings on an already saturated market. New businesses are being launched in all the world’s industries all the time. Whether they survive or do not act basically if they come with any competitors do not already deliver. Such is the case with cryptocurrencies as well, and price developments will depend entirely on a potential demand.

Look at the price development for the cryptocurrency

In conclusion, take a look at the price development for the cryptocurrency (s) you are considering. Knowing more about the background of the project and identifying real market needs makes it easier to look at such a development. If the price has already “exploded”, as with Bitcoin, it is less likely that it will explode again.

If, on the other hand, the cryptocurrency has had an upward trend over a period of time that indicates stable growth, this could be a better investment option. You should further look at whether the price is only related to general market variability (for example, if Bitcoin goes up or down), or if it develops in response to removal of fixes and the like.

Ideally, one should look at the cryptographic currencies that grow when the underlying blockade project comes with new updates. This means that the value of the project and the value of the currency are closely linked. If the project offers something the market wants, the crypto price will continue to match project development.

In terms of price development, it is also crucial that you do not forget how turbulent the crypto market is. These are totally unregulated currencies that will rise and fall at an enormous pace. In order for you to sleep well at night, that’s why you should be well educated about what kind of blockchain project you’re really investing in.

Good characters to keep in mind when analyzing cryptocurrencies

To distinguish the cliff from the wheat with regard to crypto there are some signs you can look for. We take three good signs first and see three bad signs in the section below.

Vision documentation: White paper, rollout plan, and objectives

Vision documentation for the different blockchains is definitely an important place to begin with to gather information. But they can also give you an insight into whether the project you are considering is favorable or not. Look for the following things to review the documentation:

Whitepaper: This is basically like a corporate plan or a corporate vision for the blockchain project. The document should say something about the technology behind the project, but should also include sections about why the cryptocurrency and the blockchain stand out. If you find a well-written and solid white paper, this is a strong sign that you can count on the project.

Roadmap: The unfolding plan for the blockchain project will depend on when in the project you start investing. If you invest early in the launch phase, you will be given the opportunity to see how the management plans to implement the technology they have developed. This can give you good hints if the rollout plan seems logical and thoughtful.

Objectives: Does the cryptocurrency you are considering invest in plan to outperform Bitcoin or Ethereum? Should it become the world’s largest cryptocurrency in just a few years? Of course it is nice to dream, but it is important that the goals of the project are realistic. Look for goals that relate to the rest of the documentation in a sensible manner.

Who is behind the cryptocurrency?

Although the cryptocurrency market is growing enormously, it still represents a relatively small market when viewed in a global perspective. It also means that the market is a fairly small network, where there are both good and bad rumors.

When analyzing the blockchain project associated with the cryptocurrency, it’s a good idea to familiarize yourself with who is behind it. Are these competent people? Do they have experience from other cryptographic projects? Why have they chosen to launch the cryptocurrency? You should trust the people you invest in.

Furthermore, it is important to always verify the identity of the management and the team behind the cryptocurrency. There are a tremendous amount of scams in the cryptographic world, most often at the stage of investment. The scams are becoming more and more sophisticated, and it is therefore common to find both false pictures and documentation. Do a search on Google and LinkedIN on key people in the project to verify that their identity is correct.

Has the cryptocurrency established itself with good partnerships?

It is true that cryptocurrency is traditionally in opposition to the established. But the fact is that if a cryptocurrency is going to work well, especially now that the competition is so tough, it needs a small footing at existing institutions. This may be within different industry sectors or that the project has good relationships with, for example, a government.

That’s why it’s always a good sign if the cryptocurrency you’re considering already has gotten good business partners. It is even better if these partners are larger companies that will give the cryptographic project more credibility and greater access to an existing consumer market.

It may also be useful to check whether the cryptocurrency is recognized and respected among the rest of the cryptographic market. Certain projects are known to have good relationships with their competitors; others struggle with the opposite. It is a good idea to go for investment currencies that in any case do not have any enemies in the market as a whole.

Bad characters to keep in mind when analyzing cryptocurrency

These were the good signs you should look for when analyzing cryptocurrency. Let’s go through the warning lights you should be extra aware of.

Lack of documentation and unrealistic plans

We were so far into this before. The documentation of a blockchain project says a lot about the project’s potential for success. But there are also a lot of cryptos and associated projects that lack documentation completely. In most cases, this is a terrible sign.

You should think about cryptographic currencies you analyze as you would do with any other business. What would you have thought about a major investment that had no documentation about their plans on the website? Or who communicated in a bad and incoherent way? If you are a smart investor, you are unlikely to have put your money into this type of business.

As we mentioned earlier, you should also pay particular attention to unrealistic plans and objectives. If the project is completely way over their heads in their claims, you may have a fraud. But it can be equally bad to invest in a cryptocurrency whose management does not understand limitations. Stick to those projects where you yourself believe that management can achieve what they say they are going to.

Too much competition

A cryptocurrency must do more than just ‘be the next Bitcoin or Ethereum’. Remember that you are looking for the unique projects that stand out in the crowd. This does not mean ideas that are identical to existing cryptocurrencies on the market.

Excessive competition within the intended sector of a blockchain project is a sign that the team behind has not thought carefully enough through its plans. Then they aim to float on the success of other cryptio investors to a much greater extent than to create new value themselves. And if we are, to be honest, there are no new cryptos that suddenly will pass Bitcoin or Ethereum. If you do invest in a cryptocurrency that is in a exessive competitive industry, make sure to pick the most promising one, or spread your investment on several of them, as most of them are not going to last.

Look for cryptos that aim to stand on their own legs. As long as the project has identified an area of potential to grow and comes with innovative solutions, it has a chance.

Poor potential for growth

Unless you are an investment expert yourself, we understand that it is difficult to assess the growth potential of a cryptocurrency you are looking at. Nevertheless, there are certain things you can follow to identify which cryptos have potential or not.

First and foremost, in many cases, it is risky with cryptocurrencies that have too many currency units. You may have heard that Bitcoin has a maximum number of devices of 21 million? When a cryptocrurrency is programmed for the first time, it will most often set such a maximum number. But in many cases, it’s much much bigger than just 21 million.

This can be problematic in terms of market demand. For example, if there are 100 billion units of a cryptocurrency, the market demand needs to be big for every single device to have any significant value.

Another bad sign is whether a cryptocurrency has had a slow growth since its startup. Of course, this can of course turn around. But, most of the time, slow growth means that the project lacks something essential to establish itself on the market. Take a look at the cryptographic currencies you analyze against the rest of the market. Then you will get an overview of whether they follow the trend or not.

How to choose cryptos for analysis

Now you know a lot more about analyzing cryptocurrency than most people. Then you only have to pick out some cryptographic currencies for analysis so you can start investing in this groundbreaking market.

What do you believe in?

This is the most important question you should ask yourself as an investor. What do you really believe in? You do not have to be professional to have thoughts about the projects you are talking about. Basically, we recommend you to go a little after your stomach feeling.

It might be good to start with some areas that you already feel comfortable with, or at least have an interest in. What do you think will affect future consumer demand? Is it trade? Easier and more efficient handling of personal information? Communication?

The crypto exchange market has exploded and continues to explode in many ways. This means that you can find cryptocurrencies that belong to almost any market segment. To get through the entire analysis we recommend in this guide, it might be smart to read about something you’re interested in?

Here are some of the key areas of cryptocurrency and blockchain today:

• Decentralized applications
• Money transfers and access to banking services for all around the world
• Handling sensitive information (patient information, voting etc.)
• Decentralized trade (sale of property or other digitized values across borders)
• New economic systems (systems that aim to replace existing and traditional financial systems)

Which cryptocurrencies stands out in the crowd?

If you know which areas you want to dip into, start exploring the cryptocurrencies found here. Then, the next step is about trying to identify which ones stand out in the crowd.

A simple strategy here is to find out which cryptocurrency is greatest in your chosen investment area. For example, if you are looking for decentralized applications, the natural answer will be Ethereum. When you know who the king is, it becomes easier to look at the opponents who come with innovative ideas.

Compare the slightly smaller cryptos you believe in against the regents. Do they offer something new? Are they coming with new functionality? Is this solid? Do they have a more extensive, or more focused, project in mind? Comparing the newcomers with the most established crypto currency within a particular area makes it easier to distinguish the good investment opportunities from the good ones.

If you follow the steps in this guide, you are well on your way to making a solid analysis of the cryptographic currencies you are considering investing in. We recommend that you take good care of time now so that you can feel confident about your choices. Then, just wait and follow market developments in the time to come.

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Coinbase is one of the world’s largest, most well-known cryptocurrency exchanges. Here you can easily buy Bitcoin, Ethereum, Litecoin, Bitcoin Cash, and other popular cryptocurrencies. Below you will find a quick guide to getting started with Coinbase’s cryptocurrency trading.

Part 1 – How to create an account on Coinbase

Click on Coinbase.com and start creating an account, if you use this link you get (and I) Bitcoin for $ 10 free if you buy Bitcoin for more than $ 100.

1.1 How to create an account

When you click on the link to Coinbase you will see a screen like this. Fill in the information about you and click on “Sign up”

You must then verify your email, log in to your email and click on the link

When you have done this, you can log in to Coinbase to complete your account. Now all that remains is to add ID and payment options.

1.2 Verify ID on Coinbase

Before you can add payment options, you must verify your ID, click and select which ID type you want to use to identify yourself. Here you can choose between Pass and Driver’s license.

When you have selected the type of identification paper you get the choice of how you want to submit this, here you just take a picture of the front page and the back of the driver card:

Once you have submitted this it will take some time before you can confirm that the ID is valid. In my case, it took no more than 3 minutes. Once the ID is verified, you can proceed to add payment options

1.3 How to add payment options in Coinbase

Remember to fill in your address under “My profile” before proceeding to add payment options. Enter your profile and select “Payment Methods” and then click “Add Payment Method”

Payment options on Coinbase

Here you can choose between 2 different payment methods, either bank transfer or debit/credit card.

If you choose cards you can buy/sell immediately, bank transfer takes a little longer, but can be most beneficial for higher investments. Anyway, I would recommend you add a bank account so that it is ready for the day you want to withdraw money from Coinbase (see 1.4).

For card payment, fill in the card information in the form (note the fee for the purchase/sale of the cryptocurrency)

When you have finished clicking on “Next” and you are ready to buy Bitcoin (or any other listed crypto)!

If you are facing issues regarding depositing/withdrawing funds or have a coinbase pending purchase, you can simply Call Coinbase from the number listed in the link. 

1.4 How to withdraw money from Coinbase

When you sell Bitcoins or other cryptocurrencies at Coinbase, the money will be transferred to your account. It is therefore okay to set this up right away, as it takes some time to get it verified. Click on the “Add payment method” again and select bank transfer.

You will then receive information on verifying your bank account. You do this by sending a tiny foreign payment to Coinbase (Like 0.15 Euro) with the information provided (Remember your reference in the payment message). Once the bank account is registered, you can sell and withdraw the money from Coinbase to your bank account. The money will be in account 1-2 days after.

1.5 How to send Bitcoin to another wallet in Coinbase

You can also send Bitcoin to another wallet than in Coinbase (this is often recommended if you are to keep the cryptocurrency for a long time). You can do this easily by going to “Accounts” and clicking “Send” under the cryptocurrency you want to send.

Part 2 – How to Buy Bitcoin at Coinbase

This may be the world’s shortest guide on how to buy bitcoin because once the account is created and ready, it is the world’s smallest case to buy Bitcoin in Coinbase. Just click on “Buy/sell”, select cryptocurrency, payment method, amount, and click “Buy”.

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You need to figure out the risk model and learn how the cryptocurrency index fund works to decide if it is right for you as an investment model. Fortunately, there are businesses like crypto.index.nl that can help you overcome the disadvantages of traditional crypto investment options. You need to understand what exactly you are investing in, though. 

The core philosophy of the cryptocurrency index fund is making high returns without the risks of handling individual cryptocurrencies. The fund tracks capitalization, price, and performance among other variables for several cryptocurrencies and uses the data to calculate the performance index of that group. 

What is an index fund? 

An index fund is a group of assets that the investor buys together. The assets will have something in common and will be rebalanced often. An index fund can come from a subsector. For example, the crypto world could be based on digital assets from sports, science, and technology, or even utilities and energy. 

When you own a share of a fund, you own the specific assets, cryptocurrencies, or stocks that make up the index. That way, the fund is a portfolio to allow you to invest in several assets. When some dip and some appreciate at any one given time, you are shielded from shocks from a single source. 

Generally, the goal of the index fund is to offer lower operating costs and diversified exposure. They rely on specific standards and rules to keep working in different market conditions. Index funds have proven to be effective long-term strategies for investment since they have low costs of management compared to mutual funds. 

Cryptocurrency index funds

The cryptocurrency market is dynamic. Even though the financial world is used to tracking Bitcoin prices, which swing dramatically throughout the day, investors can have a hard time doing this in real-time. 

The crypto index fund provides an easier way to invest in crypto assets, especially if you are not familiar with the nitty-gritty of cryptocurrency. The crypto market is only 11 years old, and you can be forgiven for not knowing all the factors that influence the price. 

When looking for a crypto index fund, look for the following characteristics:

• Ability to track total market cap for the crypto market with a reasonable strategy
• Sufficient liquidity for you to redeem underlying assets quickly and fast
• Access to ordinary investors
• An experienced team behind the index fund
• Low fees
• An ability to track the index
• 100% of underlying assets held by independent and qualified custodians

How then does the index fund work? 

Investing in a crypto index fund is like buying shares. Fund managers will use their advanced algorithms or expertise in analytics to set rules and manage the fund for you. That way, you reduce the work you have to do and have a diversified portfolio to spread out risk. You protect your investment against market volatility. 

Advantages of crypto index funds

Reduced risks for investment – By making the investor’s portfolio diverse, crypto funds minimize exposure to market volatility. Index funds are also handled by experts, which translates to more favorable returns. 

Simplified investments – Index funds allow you to track performance for specific coins in the market based on research. The fund handles the complicated overhead for the investor. 

Low cost of investment – Crypto index funds are more active and larger than individual tokens. In the crypto market, investing for individual coins can incur hefty fees over time. Index funds provide low trading fees, leaving more of your money in the market. 

Disadvantages of crypto index funds

Barriers to entry – Traditional index funds limit access to accredited investors. Crypto index funds do not waive the requirement. A few have a minimum investment amount for the initial investment. 

Small returns in short timeframes – You should not jump into crypto index funds if you want quick returns to leave the market. They work better if you intend them to be passive long term investments. 

Price management – Index funds offer low management costs, but they still have a management fee. 

How to invest in index funds

Cryptocurrency index funds will vary dramatically in the structure of management, but they have some commonalities. When planning to make an investment, consult a specialist to know how different index funds work before investing, more so if you need a lot of starting capital. 

Investing in a particular fund can mean buying a token that encompasses all coins or picking stocks that match your portfolio preferences. When selecting an index fund, choose one that tracks the market cap closely. You need this information because the crypto market moves fast. 

Think about the liquidity as well. You should be able to redeem your underlying assets in value as soon as you can. If you made smaller investments, look for funds that offer non-accredited investor services. 

How index funds compare to mutual funds

Mutual funds and index funds are both investment fund types. An index fund is different from a mutual fund, though.

A mutual fund involves active participation. You make daily and other times, hourly investment decisions. Managers have to pick fund holdings actively. In an index fund, the process is passive. Sometimes there is no need for human involvement in determining what investments to use. Some funds are preset to track a number of cryptocurrencies and rebalance after every, say one month. 

Mutual funds try to exceed a related benchmark index. The fees will be high because the management is aggressive to get high returns. For index funds, the idea is to match the returns for a related stock market index. The fees are lower than those of mutual funds because there is a high automation degree, and the approach is passive. 

Crypto index funds work well for the investor who wants a passive income in the long term. Top index funds will help you reduce risk exposure and volatility and to gain a decent return in the long-term. However, no investment is risk-free. Crypto funds have different rules to meet various needs. Consult with a specialist if you are new. 

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A dear child has many names and you will find this kind of trading referred to as gearing, margin trading, stock credit or leverage. In short, margin trading is to invest borrowed money.

There are several players who offer gearing with cryptocurrencies. Here you must be aware that there is an extreme risk associated with this.

What is gearing?

Gearing an investment would mean to borrow money from your brokerage house to invest a larger amount of money you have available. By taking up credit you will, even with a relatively modest equity, invest large amounts and get a correspondingly high return when you hit. We enter the gear as a ratio such as (1:10).

If you have $1000 in equity and invest them in an altcoin that is credited $100 with a gearing on (1:10) you invest $10,000. If the stock price rises 10% from $100 to $110 you would have earned $100 (10 * 10) , but since you dig a margin trade and could buy ten times more shares, you earn $1000 (10 * 100) instead .

It is easy to see how gearing may seem alluring to many. The general man in the street usually does not have much equity that can be invested, and then gearing is the only way to earn the really big amounts. Some online brokers offer gearing up to 1: 400! Then you can make investments with $40,000 yourself with only $100 in equity. This is not recommended for cryptocurrency trading.

Risk of margin trading and leverage

As most of us know, return and risk go hand in hand. Margin trading gives accelerated profit when you hit, but it also provides equivalent accelerated losses when the market goes wrong.

Looking at the example above, by allowing the crypto rate to decline by only 10% to 90kr, you have suddenly lost the entire amount you invested. If the stock price drops more, you end up owing more money than the original investment.

There is therefore considerable risk associated with high gearing and one should be very aware of what choices are made before committing margin trading. It is recommended to read up on trading strategies beforehand to increase the chance of sucessfull trading. Timeforcrypto.com is a good source for information about trading for beginners through their podcast and blog.

Many of the webmasters will not be responsible for a greater amount than what is stated on your investment account with a given online broker. This can thus help secure you from uncontrolled losses when margin trading. If you reach the boundaries where the loss is similar to the capital you have available, usually the position you have ended immediately and the loss will be realized (liquidated).

Example for margin trading

Imagine that you do a trade with a 1: 100 margin. In this case, you invest 100$ in something, and with maximum gearing you can afford to trade with 10,000$ even if you only bet a hundred bucks.

This is an extreme example, and with such a high gear you will rarely succeed. On the other hand, it may make sense to use some gearing in some cases. A trader rarely needs to leverage hundreds of times the investment.

If you are going to trade with margin trading you must of course choose a web broker who offers this. Also, one should find a web broker that allows as high gearing as you want, as most crypto brokers offer fairly low gearing.

If you only want to try this without taking any risk, they also have an exercise account where you can trade fictitious money through a free demo (the above mentioned services offer a free demo of their services).

Where can I do margin trading?

There are several solid online brokers that offer magrin trading for cryptocurrency. Below we list a couple of them. All the players mentioned here are solid, safe companies that are strictly regulated and where your investments are completely safe.

Bitmex

Bitmex is the most liquid crypto margin trading platform in the world and allows its users to trade some of the most popular cryptocurrency pairs. At Bitmex, you can trade with up to 100x margin, and all contracts are done in Bitcoin (BTC). Here you can margin trade Bitcoin, Bitcoin Cash, EOS, Ethereum, Tron and Ripple.

Link: Bitmex.com/

eToro

A somewhat unusual webmaster that has become incredibly popular. It is based on a social platform where users can see what trades everyone else is doing. You can even set your settings to automatically copy the users with the best return. It is discussed passionately around the subject and there is much to learn here.

Etoro offers trading with the following cryptographic values: BCH, BTC, DASH, ETC, ETH, LTC and XRP

Link: Etoro.com

Plus500

One of Europe’s largest online agents. Here you can trade anything from cryptocurrencies, ETFs, options, CFDs, commodities, currencies, stocks and funds. They give you a gear of up to 1:50 which should be more enough for any reasonable person.

Plus500 has a well-developed trading platform for browser, desktop and smartphones. They offer more than high gearing and a wide range of trading opportunities and analysis tools.

Plus500 offers trading with the following cryptocurrencies: BTC, BCH, ETH, LTC, XRP and IOTA

Link: Plus500.com

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