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Introduction to Bitcoin and Cryptocurrencies Part 3: How to spot winners, get and store them








By Avinash Shenoy, UK


How to Spot Winners

With over 1,300 cryptocurrencies listed on the site https://coinmarketcap.com and increasing every day, it is tough to predict with any degree of accuracy which ones will succeed and which ones will fail. As discussed in the article ‘Bitcoin and other Cryptocurrencies - Are we in a 'Bubble' primed to pop? (Shenoy, 2017), the rate at which the number of coins listed over the past year has grown exponentially. The sheer number of Initial Coin Offering’s (ICO’s) is indicative of a bubble that is very similar to the one experienced in the dotcom boom. What we can say is that quite a few of these will fail. However, there will be some that remain who can be comparable to the Amazon, Apple and Google that dominate the market today.

There are a few essential tools that can help us spot the winners that are considered reliable, time-tested and trustworthy. These are:

1. Cryptocurrency Market Capitalizations (https://coinmarketcap.com). This site lists all the current cryptocurrencies in order based upon Market Capitalization, Price, Volume (24hr) and indicates Circulating Supply. It also provides what the change in value has been in the past 24 hrs and a graph on the front page.

There are drop-down menus at the top which allows you to play with the database. Some of the exciting features to explore for trading include the ‘Trade Volume’ and ‘Trending’ menus.

If you click on the coin or token you are interested in; you can take a further deep dive and see Charts, the list of markets it is on, social media talk and historical data.

2. ICO Alert (https://www.icoalert.com). For those who are interested in ICOs and want a reliable one-stop shop for research, this is the place to come. It is the ideal place to research the development teams, upcoming pre-sales and public sales and be prepared where to invest their hard-earned capital.

3. Coin Checkup (https://coincheckup.com). As mentioned earlier there are 1300+ cryptocurrencies currently listed and growing by the day. The question remains how do you analyse and compare them without trawling through pages of a web search engine? CoinCheckup is the go-to site for this purpose.

It lists all the coins and tokens that are out there in the marketplace in order on the front page in a similar manner to Cryptocurrency Market Capitalizations. Where it gets fascinating is when you click on the cryptocurrency you are interested in analysing it brings up some menus: Charts, Analysis, Investment, Predictions, Markets, Purpose, News, Resources and Related.

To describe a couple of them:

The ‘Predictions’ tab provides the potential price the currency will grow depending on the money entering the crypto-universe.

The ‘Related’ tab provides all the similar coins or tokens that are similar to the one you are analysing in the marketplace.

4. Blockfolio (http://blockfolio.com - download available on your mobile app stores). It is a portable cryptocurrency portfolio management tool. It provides live price data for investments 24 hrs a day for the currencies that the marketplace you have them on or wish to monitor. It is for virtually every cryptocurrency pairing with the bonus of the receiving fresh market information through news feeds from various online publications.

This tool is vital for anyone who is serious about staying proactive in this very volatile market. 
Additional things to bear in mind:

While there is no time-tested science for choosing a cryptocurrency, most investors can agree on one thing: Always select one by considering its future potential.

Here is a basic framework to guide you on how to do this:

1. Does the cryptocurrency have a real-life use? For example, Bitcoin, Litecoin, Ethereum and DASH have gained popularity worldwide as forms of payment with a variety of vendors for physical and digital goods (Chokun, 2017; Dinkins, 2017). The real question to ask yourself is: how widely is this coin accepted in real life?

2. Who is the development team behind the project? The developers resume arguably the most important thing to check in an increasingly crowded marketplace. Does the development team have a proven track record of success?

3. How good is their communication? The essential questions to consider when you start your research are: Do their website and offerings make sense? Is it free of grammatical errors? If you ask them any questions do they respond? Is their growth map clear and in place?

4. Ensure that the cryptocurrency is not significantly pre-mined. Pre-mining is a hotly debated area within the cryptocurrency world, and it means that a coin is created or mined before public release. Pre-mining is sometimes seen as controversial as often the development team retains a large part of the pre-mined currency. It can be considered a risk as if the developer was unscrupulous they could dump the coins into the market, profit by selling them and in the process induce a crash in the price of the currency.

You can verify if the coin you are interested in is pre-mined or not by checking the ‘announcement’ for that particular currency, as it will have to state if there is a pre-mine or not. You can also check for this and post questions on altcoin threads such as this one on Reddit: https://www.reddit.com/r/CryptoCurrency.

Getting Cryptocurrencies

Like shares, Cryptocurrencies are bought and sold on exchanges. When choosing an exchange when purchasing a coin or token it is always good practice to look out for the following:

• Reputation, Regulation and Know Your Customer Requirements (KYC)
• One that offers low transaction fees (Usually between 0%-0.25% for Market Maker and Taker)
• An Exchange with high volumes. This factor is crucial because it will increase the chance of your trade going through
• Ideally, one that gives Cryptocurrency with Fiat (e.g. USD, GBP) pairing 
• One that has a reasonable number of Cryptocurrencies on offer to trade

The four best exchanges out there that satisfy these criteria on a global scale are:

1. Kraken (https://www.kraken.com)
2. Bitfinex (https://www.bitfinex.com)
3. GDAX (https://www.gdax.com) who are owned by Coinbase (https://www.coinbase.com)
4. Gemini (https://gemini.com)

Once you have chosen an exchange, whether it is one of the above or a local one near to you then you will need to go through a verification process which will involve submission of documents that prove identity.

The verification process is the ‘KYC’ requirements by law, and any reputable exchange should have this in place. It usually takes a few days, but at the time of writing most exchanges are experiencing a large number of applications and time to verification can be up to a fortnight. Once the verification process is complete, you can purchase the coin or token of your choice.

There ways in which you can purchase Cryptocurrencies via an exchange:

a. Deposit Fiat (eg USD, GBP) via bank transfer into your account and then convert it into the Cryptocurrency of your choice. The fee usually associated with this is 1-2% (apart from your bank charges). 

b. Some exchanges allow you to purchase via a Credit card. However, the fee is more substantial at around 4% per transaction.

c. You can purchase Bitcoins on a site such as LocalBitcoins (https://localbitcoins.com/country/IN) via cash (risky) or bank transfer and then move these to the exchange. Please note that you usually pay a 10% premium over the market price on such websites.

Storing Cryptocurrencies

Once you have bought your Cryptocurrency, you will need to save them securely.

You have the option of storing them on the exchange you have bought them on. However, you need to know that although you have purchased the coins or tokens, the exchange holds what is known as the private keys to them. This fact means should your exchange be hacked then the hacker will take your investment.

If you want 100% peace of mind that you are in control of your investment, then you will need to secure your private keys. This process involves transferring your cryptocurrency to a unique wallet that will store your private keys for you.

The best choice of wallets out there depending on type are:

1. Hardware: These are devices that store your private keys offline for example as a USB stick. One such favourite device on the market is the Ledger Nano S Wallet (https://www.ledgerwallet.com or available to buy on Amazon Worldwide).

2. Desktop: You download and install these wallets onto your computer. Popular choices include: Armory (https://www.bitcoinarmory.com), Parity (https://www.parity.io) and Jaxx (https://jaxx.io). 

Regardless of which type of wallet you choose it is vital that you remember to keep your private key and recovery phrase somewhere safe and secure. The reason for this is because if you lose your wallet, and do not have access to these, then your cryptocurrency will be lost forever.

An additional issue that you will want to consider is the matter of how to pass on your cryptocurrencies to your loved ones in inheritance. These are a couple of relevant articles that deal with this issue:


Final Thoughts

In ‘How to Spot Winners’, a description of some of the most influential tools and a framework which enables an individual to navigate this Crypto-Universe efficiently. These tools and framework are flexible in the sense that they are both mutually exclusive and collectively exhaustive if used appropriately.

The sections ‘Getting and Storing Cryptocurrencies’ provides details which are essential to explore this marketplace and stay safe during the process.

However, most people are aware that there are many complex factors to consider when investing in Cryptocurrencies. Hopefully, this article will have provided all the essential information needed before entering this confusing area of investment.


Chokun, J (2017, December 06). Who Accepts Bitcoins As Payment? List of Companies, Stores, Shops. Retrieved December 16, 2017, from https://99bitcoins.com: https://99bitcoins.com/who-accepts-bitcoins-payment-companies-stores-take-bitcoins/

Dinkins, D (2017, October 13). Bitcoin, Dash Can Now Be Spent at 40 Million Stores Worldwide. Retrieved October 16, 2017, from https://cointelegraph.com/: https://cointelegraph.com/news/bitcoin-dash-can-now-be-spent-at-40-million-stores-worldwide-thanks-to-wirex-debit-card

Shenoy, A (2017, September 25). Bitcoin and other Cryptocurrencies - Are we in a 'Bubble' primed to pop? Retrieved December 16, 2017, from http://www.daijiworld.com: http://www.daijiworld.com/news/newsDisplay.aspx?newsID=473626


Avinash Shenoy Archives:

Comment on this article

  • Jerzy Banas, Cracow

    Wed, Feb 21 2018

    Hi Avinash,
    I very like your article, but I think if you add https://stokz.com/cryptocurrencies to the list of tools it would be more complementary I think :)

    Best regards,

    DisAgree Agree [1] Reply Report Abuse

  • Avinash Shenoy, UK

    Sat, Apr 7 2018

    Hi Jerzy!

    I just picked this message up and really appreciate the feedback.

    Thank you for the link, and I agree it would be complementary to anyone's arsenal in analysing Cryptocurrencies.

    Warm Regards

    DisAgree Agree Reply Report Abuse

  • Akshay kumar, Udupi

    Sat, Jan 6 2018

    Sir, thank you for your articles. My query at this point is, you have listed various exchanges where fiat currency can be exchanged for coins directly. Which of these accept INR right now? If not, which are some exchanges that do help us.

    DisAgree Agree Reply Report Abuse

  • Avinash Shenoy, UK

    Mon, Jan 8 2018

    Dear Mr Kumar,

    Thank you for this very relevant question.

    The exchanges listed in my article do not accept INR directly.
    Of course, there are exchanges that accept INR directly within India. However, these do not fit all of the five points that I listed above them that one should look out for to minimise risk and ensure a positive trade.

    Moreover, recommending a specific one in India is difficult at the moment due to the uncertainty with regards to potential regulations and tax liabilities that these exchanges are now facing.

    I would not like any of our readers to incur major losses or difficulties.

    Hope you understand my reasons for not recommending anything at this stage.

    Best Regards,

    DisAgree Agree Reply Report Abuse

  • sri_elder, Karkala

    Tue, Dec 26 2017

    Bitcoin cannot be used for general purpose transaction because it is not plenty.
    Only way is to remove the 21 million limitation put by algorithm and issue more bitcoin for miners so it becomes cheap and can be global currency for usual transactions. Otherwise whole purpose of global transaction will not be that famous!

    DisAgree [4] Agree [3] Reply Report Abuse

  • Avinash Shenoy, UK

    Tue, Dec 26 2017

    Dear sri_elder,

    Thank you for this interesting comment.

    I am sure you and the readers will find it interesting to know that a Bitcoin is a highly divisible cryptocurrency. A bitcoin can be divided down into eight decimal places. Therefore, 0.00000001 BTC is the smallest amount that can be handled in a transaction. So at today's rate, the lowest amount of Bitcoin costs $0.00015!
    So although there is a 21 Million coin limit, this divisibility property ensures that there is plenty for transaction purposes.
    The issue of miners fees and transaction times (due to congestion in the network) is proving to be a problem and a potential Achilles heel for Bitcoin to act as an efficient means as a currency and could impact its dominance long term. However, I am sure the development team are working on getting the right solution for Bitcoin until Segwit and Lightning network are fully adopted across the industry.
    Until that time it is argued that increasing 'Block Size' seems to be the right answer, which is not in line with the core Bitcoin philosophy.
    'Bitcoin Cash' which is a hardfork of Bitcoin does allow its Block size to be adjusted and therefore is considered a contender by many in the cryptocurrency world at the moment!

    I hope this has been useful.

    Warm Regards,

    DisAgree Agree [3] Reply Report Abuse

  • geoffrey, hat hill

    Tue, Dec 26 2017

    Notwithstanding the fortunes made and lost, investing in crypto currency seems like pure gambling at this stage. May be human brain isn't evolved enough to develop a mathematical model to explain/ predict the wild swings as yet, somewhat akin to Chaos theory of Economics.

    DisAgree [1] Agree [3] Reply Report Abuse

  • Avinash Shenoy, UK

    Tue, Dec 26 2017

    Dear Geoffrey,

    Thank you for your comments.

    I agree with you that investing in cryptocurrencies at this stage is highly risky.
    With regards to developing a model of the 'system', I am sure that a computer given enough data could produce one. However, we are dealing with a very young and unregulated market which would at this stage affect any meaningful results and how reliable that model would be.

    Warm Regards,

    DisAgree Agree [4] Reply Report Abuse

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