Unlike fiat money, most cryptocurrencies have a limited supply, capped by mathematical algorithms

In the beginning, there was only one—the mysterious and elusive crypto, bitcoin—birthed from the digital realm in 2009. But soon, thousands of others joined the space, each with its own unique purposes and promises. As these cryptocurrencies multiplied, so too did the hype surrounding them. They were no longer just a means of exchange, but an investment opportunity, a chance to strike it rich in the volatile world of digital assets. Here are the top 10 factors that drive people to invest in cryptocurrencies

Market Capitalization

One way to select your next crypto investment is to look at the current market capitalization. This will not only show which cryptos are ranked the highest right now but also the curve of their value. Be aware of events around the world that affect the prices of cryptocurrencies. Consider this when you decide – it can be both a pro and a con.

Supply of Coins

Always take a look at whether or not there is a limited supply of the particular coin. Figure out how many coins are already in circulation and how many it's possible to mine. This will affect the price of the cryptocurrency in the long run. Bitcoin is a great example. It has a limited number of coins. But as more people invest in it, the demand increases as the supply is limited. At some point, there will not be any more Bitcoins to mine, and if the demand is at the same level, the value will reflect that.

White papers

You should always make sure that the crypto you're considering investing in has a white paper. The white paper is a document with details about the coin, its utilities, and its purposes, as well as the technology behind it. This will not only give you important information on the coin but also assure you of its legitimacy of the coin. In general, it's important to be particularly aware of the legitimacy of coins and brokers in the crypto market today.

Utility

One of the important factors that can make all the difference in a cryptocurrency's value is its utility. In the coin's white paper, you can see its use cases. This is an essential factor when it comes to attracting investors and users. So, if it has some high-quality use cases or great potential for more use cases, it's a plus for your investment. The same thing goes the other way around. If the coin's use cases are dropping, the value will do the same.

Crypto Portfolio

Investing in cryptocurrency requires investors to spread their money across various digital assets. The assortment should include potentially less volatile cryptos, and some volatile, yet high-reward assets like Bitcoin. Keeping a diversified portfolio will help investors endure profits for a longer period of time.

Crypto Developments

Cryptocurrencies are based on blockchain technology that is open-source. It provides investors with the ability to check out the latest developer activity to get a better glimpse of how the crypto might prove useful in the days to come.

Private Keys

Investors might not always remember the passwords to all their crypto wallets; however, it is critical that they remember and protect the private keys. Experts say that one of the best ways is to handle crypto funds through a hardware wallet that will not require any internet connection, making it less vulnerable to attacks.

ICOs

Initial coin offerings became quite popular a few years back. However, ICOs became one of the primary hunting grounds for naive investors. ICOs can be extremely risky, hence, investors need to go through the whitepapers of cryptocurrencies on their respective websites before plunging into it.

Crypto Exchanges and Wallet Services

Investors need to look for trustworthy crypto exchanges and wallet services, through which they can handle their crypto funds and investments. The rising popularity of cryptocurrencies gave birth to several new crypto exchanges and wallet services, however, choosing the right one might make investors quite overwhelmed.

Your Risk Tolerance

Last, but not least, is the level of exposure that you can tolerate. You need to be particularly careful about this one; make sure you do not invest more money than you need to otherwise you could end up with a serious loss that could affect your future plans.