Cryptocurrency to Invest
The year 2021 can be considered without hesitation as one of the most difficult for the classical financial system and the global economy as a whole. We have seen an increasing number of institutional investors turning to cryptocurrencies amid a major global pandemic with frequent lockdown measures and a high risk of a global recession.
The cumulative market capitalization of cryptocurrencies has increased by 500% and it is obvious that they will attract new investments in the future.
This article introduces some of the characteristics of cryptocurrencies that will allow a user to select the best cryptocurrency to invest in 2024.
Our list of the most interesting cryptocurrencies to invest
A large number of innovative cryptocurrencies have emerged over the years. We have listed some cryptocurrencies below that are most popular with investors of all skill levels.
1. Bitcoin
As far as traditional investors are concerned, Bitcoin (BTC) is de facto the most widely used cryptocurrency. It is widely perceived as a top-notch asset in the cryptocurrency world. This token has dominated the market since January 2009 and has seen all sorts of ups and downs over the past decade. Bitcoin prices peaked by breaking through the $20,000 level in December 2017. However, they crashed the following year, dropping below $3,500. The cryptocurrency rebounded from this drop and came back strong, recently surpassing $40,000 (January 2021). It is currently hovering around $30,000 and remains the most popular cryptocurrency.
2. Ethereum
Considered a more technologically advanced cryptocurrency than Bitcoin, the Ether (ETH) token is the cryptocurrency of the Ethereum platform that allows the implementation of decentralized applications (dApps) and smart contracts. What sets it apart from other digital currencies is the fact that transactions can be delayed or approved based on real-world events. It is currently the second-largest cryptocurrency by market capitalization (about $154 billion) after Bitcoin. The Ethereum platform itself meets many needs and is extremely popular in the industry. Ethereum will change its consensus algorithm in 2021 from proof-of-work to proof-of-stake (PoS), to increase the speed and efficiency of transactions on its network.
3. Polkadot
Created recently (in 2017), Polkadot (DOT) was founded by the CTO (Chief Technology Officer) of the Ethereum project, Gavin Wood, and represents a Proof of Stake cryptocurrency. The protocol it runs on is an upgraded version of older blockchain technology. Its main technological characteristic is the presence of several blockchains capable of operating in parallel (called “parachains”), which solves the problem of the single blockchain of Bitcoin. Additionally, the addition of smart contracts, extensibility, and security has increased its appeal.
4. Ripple
Ripple (XRP) is a centralized currency that is operated, managed, and administered by its founding organization – Ripple Labs. XRP is widely considered a strange entity in the cryptocurrency world. While, on the one hand, XRP offers the advantage of having multiple centralized payment processors, including fast trade execution, as well as better control of policies and negotiations with large banks, it is largely challenged the question as a cryptocurrency. The currency has great potential for the future and is actively used by many financial institutions as an alternative to the SWIFT network, proving its applicability in the real world.
5. Cardano
Another relatively new cryptocurrency (launched in 2017), Cardano (ADA) works on the Ouroboros proof-of-stake system, which gives it much higher efficiency and security than conventional cryptocurrencies that work on the proof-of-stake system and its counterparts. Running on the Cardano network, the token uses smart contracts that allow it to monitor transactions like Bitcoin, while giving it the payment processing efficiency of Ethereum. Its blockchain is often evaluated by a scientific community. Cardano reached a market capitalization of $10 billion just 3 years after its launch (compared to 9 for Bitcoin).
6. Chainlink
One of the main selling points of Ethereum is its function of smart contracts between two parties, with transaction details recorded in blocks of data. However, transactions can only be performed on a platform such as Ethereum, which needs a convenient way to integrate real-world data to successfully execute smart contracts (when the underlying conditions are met ). This real-world data is provided by what are called Oracles. Although many platforms have their own methods of retrieving data for Oracles, the Chainlink (LINK) has created a reputation system that guarantees the accuracy of this data and validates smart contracts. Oracles are paid in LINK after successful verification of the data they provided.
7. Litecoin
Litecoin (LTC) was launched in 2011 to simplify the underlying technology used in cryptocurrencies. It is also the largest of all existing “Bitcoin clones”. Designed by former Google engineer and MIT graduate Charlie Lee, the LTC token is based on the original Bitcoin code and has been modified to increase the speed of block creation by 4 times. While Bitcoin transactions take around 10 minutes to confirm, Litecoin transactions take less than 3 minutes. Moreover, its size reduces its vulnerability to attack by 51%, compared to other BTC clones.
8. Bitcoin Cash
One of the first Bitcoin hard forks, Bitcoin Cash (BCH) , was born in August 2017 with the idea of increasing the data storage capacity of each block – from 1 MB to 8 MB – to allow faster and cheaper transactions. Although it is much less popular than its predecessor, many users have pointed out that the scalability of Bitcoin Cash makes it a very promising cryptocurrency. 1 BCH today costs $410 and the currency has a market capitalization of $7.65 billion as of this writing.
9. Stellar
The Stellar is essentially an open blockchain created to link financial institutions together, to facilitate large transactions between them without problems, and to reduce the cost and time of these transactions. Its home currency is Lumens (XLM) . After lagging Bitcoin for most of 2020, Stellar surprised both investors and analysts by increasing its market capitalization by 200% in the first week of January 2021, showing signs that this could be the year of XRP’s biggest competitor. Its current market capitalization is $6.5 billion with 1 XLM worth $0.3 as of this writing.
10. Binance Coin
Binance Coin (BNB) was first hosted on the Ethereum network until Binance DEX (a similar platform to Ethereum) went live in 2017. The exchange allows its users to not only trade BNB on the platform but also use the native token to trade on the platform. Attractive discounts are offered to users who choose to pay transaction fees (for exchange services) in BNB. The Binance network uses a proof-of-stake (staking) system and BNB has a market capitalization of $6.5 billion at the time of writing this report.
Cryptocurrency to Investment strategies
When it comes to investing in cryptocurrencies, you can take a long-term or short-term approach. Both have their pros and cons and are suitable for certain types of investors respectively.
Long-term investors normally use Buy and Hold and DCA (Dollar Cost Averaging or recurring investing) type strategies. These types of investors believe strongly in a token and prefer to buy tokens for the long term (6 months and more) to make bigger gains, without worrying about market fluctuations in between.
Short-term traders prefer to bet on daily market movements to make quick profits. They often do this by leveraging the trading of cryptocurrency derivatives like futures, options, and CFDs. These products allow them to speculate on market movements and take long or short positions accordingly. Spot trading and arbitrage trading are other short-term strategies.
There are also other cryptocurrency investment strategies, such as copy trading, which allow inexperienced traders to automatically copy the actions of seasoned traders. They can learn, practice, and master various investment approaches, while often making a profit.
In addition to using a proven investment strategy, you should also learn how to perform fundamental and technical analysis on the cryptocurrency you are interested in. There are different types of risk management tools in the market to help you secure your profits and cut your losses at the right time. Besides, there are investment tools that can help you keep up to date with market indicators, price charts, trends, and chart patterns, in order to make informed decisions.
Trade or buy crypto-currencies?
Buying a cryptocurrency is more of a long-term thing, while trading is a short-term activity. The latter is ideal for people who have an in-depth knowledge of crypto-trading and are able to absorb large losses.
While buying crypto normally involves using a regular crypto exchange to buy and own cryptocurrency, trading is a speculative activity done through a broker, without the need to buy and sell. own any token. You can use several trading instruments like futures, options, and CFDs (Contracts for Difference) for this purpose. A brokerage platform allows you to take quite large positions (long or short).
Use a broker or an exchange platform?
The platforms simply act as intermediaries between buyers and sellers and receive a commission for their services. Brokers, on the other hand, serve as intermediaries between buyers/sellers and the cryptocurrency market. The main difference between the two is in the types of trades they offer.
With a broker, you can engage in leveraged trading using derivative instruments like futures, options, and CFDs, while cryptocurrency exchanges mostly offer non-leveraged trading. An exchange will provide you with a wallet where you can store your tokens to make your investments, while a broker does not need a wallet since you are trading on the price difference and not the underlying token.
Top platforms offer their clients investment tools including price charts, strategy tools, volatility alerts, performance analysis, training, video tutorials, technical analysis, new cryptocurrencies, dedicated wallets, and many more.
PROs and CONs of Cryptocurrency to Invest
PROs
- The cryptocurrency market never sleeps. It operates 24 hours a day, 7 days a week.
- Investments are transparent, with each record being added to a decentralized blockchain.
- Cryptocurrencies, unlike fiat currencies, are very portable since they are 100% digital.
- You don’t need to invest in a full token and you can just buy a fraction of it.
- Cryptocurrencies are highly liquid, which means you can quickly convert them into any currency of your choice.
CONs
- Cryptocurrency to Invest through an exchange that does not apply KYC measures may expose you to the risk of fraud.
- Cryptocurrencies are very volatile.
cryptocurrency to invest FAQs
Investing in crypto assets is risky but also potentially extremely profitable.
Cryptocurrency is a good investment if you want to gain direct exposure to the demand for digital currency. A safer but potentially less lucrative alternative is buying the stocks of companies with exposure to cryptocurrency to invest.
Best Cheap Cryptocurrency to Invest in 2024
- Lucky Block (LBLOCK) – Overall Best New Crypto to Buy.
- Avalanche (AVAX) – Most Promising Cryptocurrency to Buy in 2022.
- Maker (MKR) – Exciting New Crypto with DeFi Exposure.
- Ethereum (ETH) – One of the Best Altcoins with Long-Term Value.
Buying cryptocurrencies involves four basic steps:
- Decide where to buy it. There are many ways to buy cryptocurrency, though the most accessible method for beginners is likely to be a centralized exchange. …
- Choose how you’ll pay. …
- Add value to your account. …
- Select a cryptocurrency.
To cash out your funds, you first need to sell your cryptocurrency for cash, then you can either transfer the funds to your bank or buy more crypto. There’s no limit on the amount of crypto you can sell for cash. Link a payment method to your account before cashing out.
The next cryptocurrency to invest in 2024 is PancakeSwap. In its most basic form, PancakeSwap is a decentralized exchange that was launched in late 2020. The exchange allows users to buy and sell digital tokens without going through a third party.
Invest – Enter the amount you’d like to invest in Bitcoin (minimum of $10), double-check everything is correct, and click ‘Open Trade’
You should invest in Bitcoin somewhere around 5% to 30% of your investment capital. I consider 5% to be very safe and 30% to be pretty risky. Personally, I sit most of the time between 15% and 50%.
Final Thoughts
The main reason people invest in cryptocurrencies today is to make money, often as quickly as possible. However, the risks associated with cryptocurrencies also increase over time. It is therefore always recommended to take a considered and well-calculated approach. With that in mind, we’ve brought you the best cryptocurrency to invest in 2024, along with some strategies and approaches you can use to profit from them.
Resources: