Characteristics of a good cryptocurrencies




  • The 1st cryptocurrency introduced in the market was Bitcoin and it was invented in 2009 by Satoshi Nakamoto. The market doesn’t know the actual identity of Satoshi Nakamoto, but the groundwork laid by the invention of Bitcoin paved the way for other digital currencies.
  • It also led to the growing acceptance of cryptocurrencies as both an investment opportunity and as a medium of exchange, how to securely transfer money from one currency owner to a different digitally and without the employment of traditional banks or financial institutions.
  • Cryptocurrencies are designed to function as money, an alternative to the fiat currencies of the planet, many of which are in various stages of erosion through inflation or are in danger of government seizure.
  • Greece, a country with a forty-five-income tax rate, seizes over 900 bank accounts per day. The island nation of Cyprus, a budding financial centre, suffered the consequences of Greek debt defaults, forcing Cyprus’ government to seize depositor’s funds to stay solvent.


Cryptocurrencies offer several advantages in comparison with traditional banking, money transfers, and fiat currencies.

  • Many cryptocurrencies have been designed, keeping in mind the factor of privacy, along with the controls to obscure the identity of the sender and receiver of cryptocurrency funds. Only cash provides similar anonymity.
  • It’s important to notice that some cryptocurrencies, like Bitcoin and Ethereum, are only pseudo-anonymous. Once one is in a position to connect a cryptocurrency address to your identity, they’re able to view all the transactions you’ve made there with the crypto address.
  • Cryptocurrency owners use a wallet to access their currency and receive or send funds from a particular wallet address that uses a secret key for access.
  • Some use such exchange in order to store currency, even though this practice contains additional risk. The record of the currency exists on the blockchain with a replica stored on every full node, a computer that keeps a ledger locally and syncs with other computers online.
  • Your money isn’t in an exceedingly single bank, or perhaps several. Such a decentralized nature of cryptocurrency makes them less liable to seizure or localized risks, thereby reducing the chances of fires or hardware failures. The information isn’t just stored off-site, it’s copied worldwide to all or any full nodes.
  • Bitcoin features a fixed supply. Over 17 million Bitcoin are in existence. Such a fixed supply, in return, provides Bitcoin and other cryptocurrencies, the similar characteristics as gold, silver, or other precious metals.
  • Unlike U.S. Dollars, British Pounds or the other fiat currency, after the total supply is in circulation, the availability will never grow, devaluing the currency’s buying power.
  • Smart contracts. Most all cryptocurrencies have the feature, which discourages duplication with fiat currencies.


  • Cryptocurrencies include an inventory of considerations that will help investors make safer investments. Since the blockchain industry remains in its infancy, most cryptocurrencies are highly volatile.
  • This being said, some cryptocurrencies, like stablecoins, offer low-risk investments with higher returns than riskier investments like property.
  • Market adoption – Awareness for Cryptocurrencies is growing, but most of the main target has been on Bitcoin. Relatively few retailers accept cryptocurrencies for payment, but there are some.
  • announced in 2017 that they’d accept cryptocurrencies as payment. Payments are going to be limited to Bitcoin, Ethereum, Litecoin, Dash, and Monero, giving the opposite 1,500+ cryptocurrencies the cold shoulder.
  • Obsolescence – As many as 1,000 cryptocurrencies have failed already, with more currencies certain to follow.
  • The foremost common failure exists at the time of Initial Coin Offering (ICO) or shortly thereafter, where many of the coins tend to find a crowded marketplace for coins with similar characteristics to existing offerings, causing scepticism among investors.
  • In another case, the ICO itself was just a cash grab, with the founders running off with investor funds. Currently, ICOs are unregulated.
  • Abandoned Projects – Most of the investment, made to cryptocurrencies, is mainly concentrated on a comparatively small group of coins.
  • Without investor interest, projects tend to be abandoned, thereby leaving investors with essentially worthless digital coins.


  • Adoption rate – Cryptocurrencies tends to have high speculative investments and thereby lead to the biggest gains among newly introduced coins or coins whose technology is unique to the market, for instance, Dogecoin.
  • More cautious investors may prefer to examine the adoption rate, focusing portfolio investment on cryptocurrencies that are currently utilized in real-world transactions.
  • Market cap – Most of the time, the market cap of a given cryptocurrency tends to go hand-in-hand with liquidity. Fledgling cryptocurrencies do not get market, thereby preventing investors from exiting the position profitably.
  • Promising new technology – Ethereum and Polygon witnessed stratospheric gains in 2017 due to their innovative technology built into their respective platforms.
  • Security or Anonymity Features – Technology in the form of smart contracts, being founded in Ethereum and a number of other cryptocurrencies, is used to make transactions safer.
  • Some cryptocurrencies like Monero place a robust specialize in anonymity, obscuring the identity of the sender and receiver of funds.
  • Industry utility – Ethereum and Polygon are some of the examples, with utility beyond an easy medium of exchange.
  • Ethereum is that the base layer of the decentralized finance revolution and Polygon is that layer 2 where transactions and smart contracts can execute at scale.


  • If you’re new to cryptocurrencies, it would be better to invest only working capital and thereby build a portfolio using widely traded cryptocurrencies. Initial coin offerings may be tempting.
  • Almost as common may be a precipitous fall following the ICO. Many of the new investors have found themselves without any option.
  • If cryptocurrencies are here to remain, some superb opportunities are likely to exist among the foremost commonly traded currencies, while also minimizing risk thanks to abandoned projects or lack of liquidity.

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Rajput Jain & Associates is a Chartered Accountants firm, with it's headquarter situated at New Delhi (the capital of India). The firm has been set up by a group of young, enthusiastic, highly skilled and motivated professionals who have taken experience from top consulting firms and are extensively experienced in their chosen fields has providing a wide array of Accounting, Auditing, Taxation, Assurance and Business advisory services to various clients and their stakeholders. Rajput jain & Associates, a professional firm, offers its clients a full range of services, To serve better and to bring bucket of services under one roof, the firm has merged with it various Chartered Accountancy firms pioneer in diversified fields. We have associates all over India in big cities. All our offices are well equipped with latest technological support with updated reference materials. We have a large team of professionals other than our Core Team members to meet the requirements of our prospective clients including the existing ones. However, considering our commitment towards high quality services to our clients, our team keeps on growing with more and more associates having strong professional background with good exposure in the related areas of responsibility.

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