5 Ways To Invest In Cryptocurrency In 2021
It’s over ten years since Satoshi Nakamoto created the first cryptocurrency, Bitcoin. With a market cap of over $1.1 trillion, this coin is by far the most popular. The global cryptocurrency market capitalisation currently stands at $2.04 trillion. Besides, there are over 9,000 cryptocurrencies to invest in as of May 2021. With such a wide assortment of cryptos to choose from, successful investors start by identifying the most viable and adopt the best approach to invest in them.
In this tutorial guide, we give a comprehensive review of how to invest in cryptocurrency.
1. Trade Cryptocurrency
You can trade most cryptocurrencies through crypto brokers. Before opting to invest in any particular coin or token, look for a suitable brokerage platform where you can bet on the asset’s price with an assortment of financial instruments. Some of the popular instruments that can serve your investment needs are Options, Contract for Differences (CFDs) and Futures.
Cryptocurrencies are volatile. In other words, their value keeps fluctuating. So, an investor can take advantage of short term price fluctuations. After joining a crypto brokerage platform, you can trade your chosen coin without investing a lot through leverage.
This crypto investment method is suitable for short-term traders who want to make a quick profit within a few hours or a day. Since the duration is short, you should not expect huge earnings. So, individuals who are looking for secondary sources of income could consider this method of investing.
Due to the volatility, beginners must acquire in-depth knowledge about crypto trading to mitigate the risk of losing their money.
Where to trade cryptocurrency
If you are looking for the ideal place to trade cryptocurrency, remember we’ve said you need a brokerage platform. You have a broad range of brokers to choose from, so the best way to succeed is to choose a credible one. One of the things you need to consider is the platform’s customer service.
Credible brokers are knowledgeable and easy to reach. They are also customer-centric. You can also look at their websites to find out whether it’s designed with the users’ needs in mind. Moreover, the service cost should be affordable.
The best platforms also comply with regulatory requirements and implement advanced security solutions.
We know that doing the above is often easy in theory. You need an insider knowledge of the cryptocurrency market to be able to identify suitable brokers. Alternatively, you can rely on the findings of knowledgeable industry players. If you opt for the latter, you are welcome to use our recommended brokerage service provided below.
2. Buy and HOLD
Not interested in trading? Well, why not buy and hold crypto as you target more gains down the road. The strategy you would be using is called “HODL” in cryptocurrency circles.
The term is now a popular investment plan that unsurprisingly sprung out of a trader’s response to the decline of his holdings meant for short term gains. As the trader misspelt “hold,” his intention to stay put caught on in the market.
Think of the price of Bitcoin surging after declining to $3,800 in March 2020. Hodlers didn’t sell during the downturn and many haven’t even after BTC hit $60k.
The reason is that investors believe Bitcoin’s fundamental development, adoption and scarcity suggest it’s still undervalued. You can apply this strategy to any cryptocurrency whose value you believe will be higher in the long term.
As already mentioned, almost all cryptocurrencies are volatile. This means you can use the buy-and-hold philosophy if you understand your investment requirements. It doesn’t require extensive expertise or experience. Unlike the first method, this is often a long-term strategy. If investors implement it well for a long duration, they have high chances of reaping huge gains.
We understand that our readers are interested in knowing the best ways to obtain their cryptos of choice. For that matter, we’ve created dedicated pages that provide more detailed information on this. You’ll learn more about the best payment methods that you can use.
Remember, some of them are available depending on your country of residence and your chosen trading platform. For comprehensive information on the best ways to purchase your preferred cryptocurrency, click the following links:
3. Invest in Cryptocurrency and Blockchain Companies
If you have been investing in traditional stocks and shares, you understand the underlying principle involved here. The only difference is that you are investing in crypto shares. This approach is suitable for individuals with limited spare time or who lack extensive investment expertise. Besides, it could be more beneficial than the above two alternatives.
When you invest in the shares of companies that have heavily invested in cryptocurrency or use blockchain, you can capitalise on their success. Moreover, like in the above two instances, you capitalise on your chosen coin’s success.
Since the process of investing in crypto/blockchain shares is a little risky, you need a helping hand. The best solution is to identify and work closely with a qualified broker.
Where to invest in cryptocurrency shares
A competent crypto broker will help you open a position to purchase the right cryptocurrency or blockchain stock.
Since there is a wide range of crypto brokerage services, your success depends on the ability to select the best service provider. Some of the critical factors that you should consider to make the best decision are the user-friendliness of the brokerage website, regulatory compliance, security measures, cost of service, and trading data and charts.
It should be noted that being a nascent sector, the cryptocurrency exchange and brokerage space continues to face some challenges when it comes to scams. A beginner investor might not be able to distinguish between legit and disreputable platforms, which is why we have done comprehensive reviews of exchanges and brokers in the industry. This should help you easily find one that suits your investment strategy.
Find our recommended service below.
4. Become a Miner/Staker
You can choose to be either a staker or miner, depending on how your chosen cryptocurrency is created. Let’s see the difference between these strategies below.
- Mining- It involves dedicating lots of computing power to a crypto project to solve complex mathematical puzzles. Once a miner finds the solution, they alert the other participants, who then verify the transaction before it’s added to the blockchain. The miner then receives new coins as a reward for their participation in the Proof of Work (PoW) mechanism.
- Staking- As the name suggests, you are looking to earn from putting down a “stake” in the consensus mechanism of a crypto project. Participants purchase the coin or token to earn the right to participate in the creation of new coins.
Different coins have different requirements for staking, but you will earn rewards and increase your investment, which is even more attractive as decentralised finance (DeFi) gains traction.
If you are interested in the best cryptocurrency to mine, here are some profitable coins and their corresponding mining devices:
- Bitcoin (BTC): ASICs and GPUs
- Vertcoin (VTC): ASIC-resistant, GPUs
- Monero (XMR): GPUs
- Ravencoin (RVN): GPUs
- Ethereum(ETH): ASICs and GPUs
If you are interested in stakable cryptos, here are examples of profitable ones:
- Tezos (XTZ)
- Neblio (NEBL)
- Stellar (XLM)
- Ontology (ONT)
- Cosmos (ATOM)
Where to store cryptocurrency
After staking or mining cryptocurrencies, you’ll require a secure crypto wallet to hold your rewards. You can choose one of the following, depending on your need.
- Hardware wallet: These are cold wallets that store your coins or tokens in an offline environment. They are physical devices and are the safest since they ensure that cybercriminals can’t access your assets.
- Software wallet- They are referred to as hot wallets since they store your cryptocurrency in an online environment. Most of them use advanced security protocols to protect your money. They come in the form of desktop apps, mobile apps and web services.
Remember, you need a wallet that is compatible with your cryptocurrency. Our recommended wallet is given below.
5. Become a Cryptocurrency Developer to Make Money
Another viable investment option is to become a cryptocurrency developer. Since we have over 9,000 cryptocurrencies, you can choose a few of the most promising ones and develop blockchains projects that would use the coins or tokens to power their networks.
To become a cryptocurrency developer, you need advanced coding skills. You should learn the computer programming skills like Java and C++ and others that blockchain projects use.
Besides, you should research the needs of the crypto market and create a project that addresses them. The success of the project might depend on your expertise, experience and external factors in the market beyond your control. So, only investors who are willing to take the risk qualify to venture into the development of blockchain projects.
Expert Tip on When and How to Invest in Cryptocurrency“ Investing in cryptocurrency is considered a high-risk venture. The prices of the currencies are volatile. However, you can take advantage of the fluctuations. You can use various tactics, including the buy-and-HODL and make money when the value of your chosen cryptocurrency increases. You can also create your blockchains projects. Whichever option you choose, be sure to put in mind factors such as the digital currencies’ price, history and potential future developments. You can invest any time, provided you base your decision on your extensive understanding of the crypto market and your crypto of choice. ”- Benson Toti