As a crypto related blog, we often get questions from users asking us for our opinions on various alt coins. People want to know what our investment recommendations are. We are always hesitant to answer. We feel that investments are a personal decision and that everyone should do their due diligence and research the coins they are investing in. However, that’s much easier said than done.
Sometimes you get caught up in the hype of latest and greatest fad coin and watch everyone seemingly doubling and tripling their investments in a matter of hours. Then, you decide… what the heck… by the time I research this, I’ll miss the boat. So you get caught up in the mania and drop some cash on some unknown coin… and the pump is over…. the price starts to slide and you’re out half of your initial investment. Now you’re left to either hold the bag on your poor investment and hope the price goes back up eventually…. or, simply call it a poor decision and sell at a loss. Don’t worry, this happens to the best of us. Even some of the most successful traders will get caught up in some hype sometimes. You can’t win them all.
What you can do, however, is limit these poor decisions. Check out the coin’s website, check out their forums, search reddit and twitter. See if they’re popular, if they have any new projects in development. Check out the community, see how knowledgeable their forum/irc members are. That’s all fine and dandy, however, forums and irc can be very misleading. Much like the trollbox on the various exchanges. Most people generally fall into two categories, fanboys or haters. There aren’t very many rational people in the middle. Another thing to worry about from trusting the community, is that everyone is in it for themselves. Chances are, if people are trying to get you to buy, they are looking to dump their coins on you. And if they want you to sell, it’s probably so they can buy back lower.
What you really need is a global view of the economy. You need to learn to read the charts. Check out the volume of coins being traded. Look at the sizes of the buy and sell orders across various exchanges. Analyze the charts to see if you can find trends. It’s very tedious work. We’re not here to teach you how to read tickers and charts though, there are plenty of places on the web to learn that kind of stuff. We’re here to tell you about another statistic we find very interesting to look at when making any trading decision. Daily Coin Maintenance Costs.
What is Daily Coin Maintenance Cost?
Recently, we came across an interesting thread by FreeTrade on BitcoinTalk (https://bitcointalk.org/index.php?topic=430639.0), which is where we got the idea for this article. To put it simply, it’s the amount of money needed per day to keep the coin at it’s current value. Meaning, that if a certain coin is worth X $, you would need at least Y amount of $ per day to be invested in the coin to keep it at that price. How is it calculated? You simply take the total amount of new coins that will be generated per day and multiply it by the current value of the coin. So if $10,000 worth of new coins are minted every day, theoretically if they were all sold people would need to purchase for $10,000 worth at the current price to keep the value the same.
CryptoSource has done an analysis on these numbers for over 85 different crypto currencies. You can see the full chart at the end of this post. We like looking at the top and bottom 10 coins. Coins at the bottom are ridiculously cheap to maintain. Just a few $100/day will keep them steady. These are really interesting. Especially if you find a coin in the bottom 10 with a great community and new upcoming services. You may have just found a diamond in the rough and probably the closest thing to a sure bet in the crypto world. It shouldn’t be very difficult to get these coins values to rise and the chances that they rise a significant amount are much greater.
On the other side of the spectrum, the top 10 will be the most expensive coins to maintain. You should be very weary of these coins. Especially if they are new or kitchy currencies. Chances are they will not be able to sustain this amount of investment for very long and their price will eventually plummet. Mind you, you will find all the big guns in this section (BTC, LTC). We consider Bitcoin and Litecoin to be “safe bets”. Their value and community have proven themselves, and their prices should remain fairly stable.
So, let’s get to the good stuff.
These coins all have various interesting projects in the works, have great communities and great developers. We consider these coins to be severely undervalued.
- Zetacoin (ZET) (Daily Maintenance Cost: $228.13)
- CryptogenicBullion (CGB) (Daily Maintenance Cost: $195.21)
- Devcoin (DVC) (Daily Maintenance Cost: $452.23)
- Frankos (FRK) (Daily Maintenance Cost: $1060.98)
- Digitalcoin (DGC) (Daily Maintenace Cost: $8376.52)
Coins To Avoid
We consider these coins to be very gimmicky. While many of them have outstanding communities, their current maintenance cost is way too high to be sustainable in the long run. Most of these coins are brand new and are surviving off hype. Trading of these coins should only be attempted by experienced traders).
- Dogecoin (DOGE) (Daily Maintance Cost: $1,060,957.44)
- Mooncoin (MOON) (Daily Maintenance Cost: $133,602.05)
- LotteryTickets (TIX) (Daily Mainteance Cost: $27,980.86)
- Lottocoin (LOT) (Daily Maintenance Cost: $26,369.84)
- Earthcoin (EAC) (Daily Maintenance Cost: $19,922.42)
This is not a knock on any of these coins. We actually applaud those of you who were smart enough to mine these babies from the start. It’s merely a reminder that their daily maintenance cost is extremely high for a new coin, so trade with extreme caution. Dogecoin costs more to maintain than Litecoin!)
Any suggestions we have made above are our personal opinions based on Daily Maintenance Costs. We advise any readers to thoroughly research each coins before investing any amount of money into alternate crypto currencies. Below is a chart of the current daily maintenance cost for over 80 crypto currencies based on their values and coin generation rates today.
|Rank||Coin||Coins/Day||Current Rate||Maintenance Cost/Day|
Let us know what you think, or if you think we made a mistake in any of our calculations. Also, feel free to discuss further in the original BitcoinTalk thread that started to get us thinking: https://bitcointalk.org/index.php?topic=430639.0 Happy trading!
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