Cryptocurrency Charts: Dissecting and Analyzing

There are several investment opportunities available to you. These different kinds of investment opportunities will vary from property to fine wine. One of the latest kinds to consider is known as cryptocurrency. There are hundreds of cryptocurrencies available although only a few receive attention. Much like investing in a stock, it is critical to understand the currency and know how to read the cryptocurrency charts before investing in it. With the sheer number of investment opportunities, it is important to know what one is for, how it will be used, and if it will remain a viable financial option in years (or even months) to come.

What Is Cryptocurrency?

A cryptocurrency is a digital currency. It uses a computerized encryption technology to regulate the creation of digital units. Each unit (such as a dollar) can only be unlocked with a special series of codes. It uses what is known as a block-chain code method for encryption (which is where the “crypt” portion of the cryptocurrency word comes from). With a block-chain, each number in the encryption code represents a link in the chain. Once the first number is known, it opens a link to the second. In order for someone to steal the digital currency, they must identify the first number, open the link, then move onto the second and so on. It’s like cracking a safe within a safe within a safe (with numerous safes). This is why it is not only difficult to steal cryptocurrency but to track it. Cryptocurrency charts are used to track the performance of such a currency.

Zero Tracking

Financial security is of critical importance in the modern world of finances. With so many companies reporting the loss of financial data and credit information being hacked, businesses are looking for ways to prevent this and to cut any kind of financial tracking. This is where cryptocurrency comes in. It is difficult to track movements and purchases made using cryptocurrency.

Mining

There are a few different ways to get a cryptocurrency. The first is to simply buy it. It pegs the currency at a specific price and, to obtain the currency, you pay the holder of the currency the established value. This works in a similar fashion to buying a stock. The higher the demand for a specific currency, the more money is needed to make the purchase. If there is less of a demand, then less money will be required to buy it.

When buying the currency, there is not a transfer of a physical object. The images you see online of coins featuring a “B” logo are not real. These are just used to represent cryptocurrency. The currency itself is all digital. So, when you buy or obtain cryptocurrency, you are buying nothing but a computerized code to open the digital currency (in essence, you are buying made up numbers which are given value).

The second method for obtaining a cryptocurrency is to “mine” it. Mining the currency occurs anywhere over the Internet. A computer program identifies where the currency might be located and begins to use a string of decoding systems designed to try to identify the numbers used within a currency sequence. Once it identifies the first number of the “chain,” it will then move into the next one. With so many other people online mining for cryptocurrencies, it does become more of a challenge to locate and identify the currency.

Some currencies have an established limit to the total number that can be in circulation at one time. Others do not have any kind of pegged number. Those that are limited are easier to obtain, although the realized value is often less because investors want a currency that is limited in quantity.

Usage

A cryptocurrency is not created simply to transfer traditional money into a digital format. With hundreds of digital currencies currently in use, there is no reason to create so many forms if it is just to convert one kind of currency to the next. Instead, it is designed for a specific use or to improve upon a current currency.

Sometimes, the currency improves security during certain purchases. Bitcoin, for example, came about to improve financial transactions and to make it easier to move money without it being traced. Other currencies work in a similar fashion, like within a video game community, or to improve the transfer time (some currencies are actually built on top of bitcoin to speed up the transfer rate, so there are currencies built on top of currencies).

How to Read Cryptocurrency Charts

Reading cryptocurrency charts does not differ from reading stock charts. When you look at the information, it will display a line graph that runs horizontally. It will fluctuate with the rising or falling value of the currency. The charts work much like a stock where you look at the value on one day and compare it to the next day (or previous days).

With cryptocurrency charts, you can look at wider displays of performance, depending on how long the currency has been around. This includes looking at how it has performed, not on a day-to-day basis, but on a week-to-week or month-to-month basis. When investing in a cryptocurrency it is very important to know how to look at cryptocurrency charts and how to determine whether it is the right currency for an investment.

Cryptocurrency charts will also include not just the peak value and the low value, but if there is an established number of max units available at one time. Some may allow 500 million units of the currency at once. Others may be more limited at 50 million. There are other currencies that have no limit at all. This is all part of the information you need to consider before investing and the cryptocurrency charts will provide you the details.

Tips on Using Cryptocurrency

One of the biggest problems people have with a digital currency and looking at cryptocurrency charts is assuming a digital currency will always be an investment. They hear the attention these currencies are receiving and pump their own money into it without looking into which currencies are performing well and, most importantly, if the currency will last.

Use the Cryptocurrency Charts

A digital currency is not regulated. This means if suddenly people decide it has no value, then the currency has no value. It’s not like gold where it will always have some kind of value or property where you’ll be able to buy and sell it. If the community looks at a currency and thinks they don’t want it anymore, you are stuck with nothing more than a series of computer numbers you can’t use for anything. So, putting money into such an investment requires understanding how a cryptocurrency is going to perform into the future.

Identifying the Right Investment

There are two tips you need to use when identifying the right digital currency investment opportunity. The first is reading over the cryptocurrency charts. These cryptocurrency charts will give you some idea as to how it is performing, how it has increased in value over the past weeks or months, and what it has come from.

​Research

The second point you need to take into consideration is research. You need to research the currency and this goes beyond just looking at the cryptocurrency charts. You need to identify who created the currency. Do they have experience in the digital currency world or a proven background in finance? If they don’t, why are they creating one and do they have developers who know what they are doing? Again, if they don’t, this is a red flag.

You also need to look at why the individual or company created the currency. It needs to have a specific purpose different from other currencies and must be used to solve a problem. If they just created it to make money why are others using it? There is zero purpose behind it which means it will not have a long shelf life. It is fragile and may become a financial loss. Instead, you want a currency that has a purpose and is used to improve what people do. The more people it helps and the bigger the concern it addresses, the more likely it will last into the future, which means it is a better investment opportunity.

​Conclusion

One of the latest additions in the world of investments is cryptocurrencies. These digital currencies have popped up, and although they have been around for years, the currencies are only now taking in the massive attention other investment forms have received. However, before you decide to start moving money over into the digital currency world, you need to know what to expect, what to look for, how to read the investment charts, and whether or not it is a good investment. Once you have determined these points of concern, you can begin to select the right cryptocurrency for your personal investment needs.

There is a great deal of information on the Internet to figure out if this is a good investment for you, personally.