What is crypto investing?
Investing in cryptocurrency is similar to investing in any other business or stock. You select a currency or project you believe will appreciate in value, purchase some of the currency, tokens, or assets, and hold them with the view to making a profit long term.
Some people approach crypt in a similar fashion to day traders. They buy large volumes of currencies or make big investments in projects they believe will appreciate drastically and quickly.
Others take a longer view investment approach with their crypto. They assess the long term goals and roadmap of a project, look into public reception, founders, and utility before making a decision. These people tend to buy and hold their investment planning on it increasing in value over a longer term period of several years.
Is crypto a good investment?
First, be aware that this is not financial advice.
Some cryptocurrency investments have outperformed the S&P 500 over the last few years. Others have faded into obscurity.
And others still have dramatically collapsed in on themselves leaving investors with nothing but sizable losses.
Cryptocurrency investing is something of a minefield as the industry is so volatile.
For every crypto investing millionaire out there, there are dozens if not hundreds of people who have lost it all.
This is all a long winded way of saying investing in crypto can be great. It can also be an incredible failure. You have to do your own research and make sure that you know what you're getting into.
Here are a few key points to consider if you're interested in investing in cryptocurrencies.
1. Cryptocurrencies are very unstable
Between the years of 2013 to 2022, cryptocurrency was 4X more volatile than the S&P 500.
In that same time period, crypto was 26X more volatile than bonds.
Cryptocurrency values go through extreme ups and downs on a daily basis. You could make some very smart and educated crypto investments and still find yourself completely surprised day-to-day.
There are very few currencies that are stable. Even the likes of the heavy hitters like Bitcoin and ETH experience incredible swings. Investing in cryptocurrencies is risky.
But if we're being honest, the same can be said of any investing. There's an inherent risk with whatever you're investing in.
What we will say is that, at the time of writing, the gains long term holders of currencies with real world utility like ETH have experienced are generally positive.
2. Cryptocurrency investing explores as yet uncharted lands
As an asset class, cryptocurrency is still very much in the development stage.
As such, there's a lot of new issues and errors popping up frequently. Issues that cost investors cash as they throw up previously unknown hurdles.
You could look at this from two sides.
First, outside of the crowd already knowledgeable in cryptocurrency investing, few people know of let alone understand how this all works.
This means getting early and securing large stakes in the most promising currencies and projects culd pay off big when this all finally goes mainstream.
However, on the other side we have the people who believe that there are still too many issues and unknowns for this to be a smart bet now.
People who believe that issues like gas fees, complexity of use, and the very unstable nature of the industry make investing in crypto right now unwise.
After all, fixing things like gas fees might require moving to a new chain or new system which could affect the long term promise of currenct projects.
3. Cryptocurrency investing is unforgiving
In addition to the common scams, hacks, and problems that are losing people their investments, we have the completely unforgiving nature of cryptocurrencies.
By that I mean the anonymous nature of wallets where funds are held and services that can break the chain for tracing where your funds have gone.
If you have your money stolen from a bank, there's a good chance that they can trace the funds to retrieve them or that you're covered by insurance.
While many crypto exchanges have insurance (in case the exchange itself is attacked), if your cash is stolen there's often little anyone can do to trace who stole from you and/or where the money now is for retrieval.
Once its gone, it's gone.
You can minimize the risk in two ways.
The first is to take out private cryptocurrency insurance to insure your investments against theft and hacks.
The second is to vet the investment company to ensure they're one of the best cryptocurrency investment firms out there. The last thing you want is for the firm you're trusting wiht your investments to run off with your cash.
Should I Invest in Cryptocurrencies?
Only you can answer this question. And it depends heavily on your risk threshold, knowledge of the industry, and ability to do your own due diligence.
There are some very smart people out there who have invested in crypto and earned themselves generational wealth. There are others who have sunk life savings into projects and currencies only to see it all disappear overnight.
The difference between the two is - like with any investment - the research someone does on the investments they're about to make.
With more established firms starting to dip their toe with cryptocurrency investments now might be a good time for you to get involved. But make sure you know who you're jumping into bed with.
There's a lot of instability and a lot of scams out there.
Make sure you research each and every project to understand if it's a scam and reduce your chance of losing your money.
What's the best crypto to invest in?
There is no one solid answer to this as there are so many different elements at play.
A lot of the advice on the best crypto to invest in will simply say Bitcoin, ETH, or another of the big players.
However, now might not be a good time to invest. As you're reading this, do you know if the value of Bitcoin is up or down on it's value yesterday? Does that trend look likely to persist or will it soon end and change direction?
All fo this determines whether or not an asset is worth investing in right now.
Generally speaking, we'd recommend ignoring any currencies or projects that...
- Have shady founders
- Offer no functionality
- Have tokenomics that favor only the founders
- Seems to be being pumped by multiple shill accounts
If a project shares thew above traits, the smart money is on it not being a good investment.
In addition to how the currency is currently trending, finding the best crypto to invest in also depends on what you can afford and what risk you can tolerate.
This is not financial advice and we're not saying whether or not your favorite coin is a good cryptocurrency to invest in.
What we are saying is do your due dilligence and operate within the margins your financial position comfortably allows.
How to invest in crypto
There are two ways you can invest in cryptocurrency.
The first is the manual route.
This requires you to use the right crypto research tools to look into the creation, organization, and goals of projecst to decide if this is something you believe will be a sound investment.
if you've done your research and believe the project is set to grow, then you'll want to purchase some of the currency.
The manual route requires the use of one of the best cryptocurrency exchanges to buy the currency you believe in at the best price.
If you're planning on investing substantial amounts and holding it for a while, our recomendation is to not store your assets on the crypto exchange.
You want to store these crypto investments and assets in a good crypto wallet. Specifically we'd recommend using a cold wallet as it makes hacking your account and stealing your assets that much harder.
If you don't have the time or expertise to identify potentially profitable crypto investments, choose and learn a good crypto exchange, and purchase and set up a solid cold wallet, you might be better off trusting an established cryptocurrency investment firm handle your investments.
these firms have a number of specialist analysts on their teams whose sole job it is to identify good investments.
You're able to spend your time focusing on what you're best at while you leave the experts to make smart investment decisions for you.
This page has a number of the best cryptocurrency investment brands out there, and should be a great starting point for you to find and get quotes for their help.