Investing in Cryptocurrencies
Top cryptocurrencies to invest in 2022
Interested in Cryptocurrencies but scared to invest?
To start off with, it is especially important to mention not to invest more money in crypto than you can afford to lose.
Risk Disclaimer: Investing involves a risk of loss.
So what are Cryptocurrencies?
Cryptocurrency is a digital currency, which uses cryptography to secure transactions on the blockchain. The blockchain is a decentralised network, to record transactions and issue new blocks.
It doesn't rely on banks to verify transactions, instead it's a peer-to-peer system without any intermediaries, making it more transparent. Additionally, also the fact that is encrypted to verify a transaction, makes it very secure and safe.
The first cryptocurrency was Bitcoin, coming out in 2009, making it the most popular Cryptocurrency with highest value today.
Bitcoin (BTC) current value: $20,054.89
Though Bitcoin is likely the best-known digital money, thousands of cryptocurrencies already exist.
Ethereum developed in 2015, which is a blockchain platform with its own cryptocurrency called Ether (ETH) or Ethereum. It is the most popular cryptocurrency after Bitcoin.
Litecoin is the cryptocurrency most similar to Bitcoin, but has moved more quickly to develop new innovations, including faster payments and processes to allow more transactions.
Ripple is a distributed ledger system that was founded in 2012. Ripple can be used to track different kinds of transactions, not just cryptocurrency. The company behind it has worked with various banks and financial institutions.
Non-Bitcoin cryptocurrencies are collectively known as “altcoins” to distinguish them from the original.
How to invest in cryptocurrencies:
Most common way is to buy the digital asset directly at an exchange offering cryptocurrencies, such as Coinbase, Kraken, and now other neo-brokers such as Revolut has added access to investing in top cryptocurrencies.
Here a list of top crypto investments (In what some call a “crypto winter,” these are for risk-tolerant investors to watch)
- Bitcoin (BTC): The largest by market capitalization, BTC currently constitutes of 40% of total market as of mid-September 2022. Its value is derived to its scarcity, as there are only 21 million BTC available. BTC price fell in 2022, as the broader's market sell off. More and more trusts and ETFs are adding BTC, despite the negative sentiment in the streets. It's very unlikely BTC will ever disappear, unless the entire asset class is deleted.
- Ether (ETH): On September 15th, the Ethereum blockchain made the big shift to proof-of-stake (known as 'the merge'), making the decentralized network more scalable and it should decrease the network's usage by 99%.
- Solana (SOL): Like Ethereum and BTC, it runs its own blockchain. With the potential to disrupt all sorts of transactions with centralized exchanges or expensive intermediaries, DeFi is a large system growing and attracting multiple investors. It's low fees and fast network has positioned this cryptocurrency in the top 10 currencies in terms of market cap. And it's now the second-largest market share in the the NFT space, surpassing 100 billion transactions!
- XRP (XRP): Market cap: Over $37 billion. Created by some of the same founders as Ripple, a digital technology and payment processing company, XRP can be used on that network to facilitate exchanges of different currency types, including fiat currencies and other major cryptocurrencies. It has risen more than 12,600% since its adoption in 2017 to 2022.
- Binance Coin (BNB): Binance is one of the largest crypto exchanges in the world, where Binance coin is a cryptocurrency that you can use to trade and pay fees on Binance. It was launched originally on the Ethereum blockchain but later migrated to the Binance Smart Chain, now called BNB Chain. It now can also be traded or exchanged for other cryptocurrencies such as Bitcoin and Ethereum. In 2017, its prices was just $0.10 and it rose to around $413 in March 2022.
- Cardano (ADA): Market cap: $14 billion. Cardano has proven to be one of the most active and busiest digital assets in the crypto world in the past year. With that in mind, it’s wise to say that ADA is one investment option worth considering. Preferred over Avalanche (AVAX) and Solana (SOL), due to not using the account model. It’s also worth noting that Cardano has recently piqued the curiosity in the NFT marketplace. Snoop Dogg is one of the most well-known, and he is currently using Cardano for his NFTs.
There are also different options of investing in cryptocurrencies, such as investing in cryptocurrency companies, such as mining companies, mining hardware makers, companies to exchanges to support cryptocurrency, and others with exposure to crypto.
- Cryptocurrency-focused funds: If you don’t want to choose among individual cryptocurrency companies, then you can decide to invest in a cryptocurrency-focused fund instead. You have a choice of exchange-traded funds (ETFs), such as index funds and futures funds, in addition to a range of cryptocurrency investment trusts.
In conclusion, 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 to buy the stocks of companies with exposure to cryptocurrencies and Crypto ETFs.
While the success of any cryptocurrency initiative is not guaranteed, if it meets its objectives, early investors may be well rewarded in the long run. However, make sure not to invest more than what you afford to lose.
