Cryptocurrency investment has fast become a global financial phenomenon.
When it became popular in 2009, many people predicted that cryptocurrency would not stand the test of time. Over a decade later, everyone is either putting their money into Crypto investment, considering it, or likely to consider it.
In this article, we’ve answered questions like, “How is cryptocurrency a good investment?” “What are the benefits of cryptocurrency investment?” and “What are some of the best cryptocurrencies to invest in?” Bon appetit!
Who is a Crypto Investor?
First, what is cryptocurrency? Cryptocurrencies are digital assets with which you can carry out transactions, without having to go through a centralized financial system. Transactions are tracked, ratified and recorded with a complex encryption algorithm, in a complex language called cryptography. Ironically, cryptocurrencies make transactions a lot easier than we have with fiat currencies (normal money).
Further in this article, we will explain more about how cryptocurrency works. For now, let us look at who a crypto investor is.
Basically, a crypto investor is someone who puts their money in crypto, with the goal of making more money from it. There are different ways to invest in cryptocurrency. However, the most common and affordable way is regular cryptocurrency trading. Crypto traders buy crypto when the prices are down, hold it for some time, and sell it to willing buyers when the prices are back up.
There. Profit made.
To get more insight on crypto trading, check out our post on 10 crypto trading strategy for beginners.
Types of Crypto Investors
Some other ways to invest in cryptocurrency are through Exchange Traded Funds (ETFs) and Crypto Trust Funds. Exchange Traded Funds are mutual funds that trade crypto on stock exchanges. In Coin Trusts, the trusts hold huge amounts of crypto, while investors buy the shares of the trust.
There could be up to 30 different types of crypto investors (depending on who is classifying them). However, we have provided a summarized list of five investor characters for you. Below, you will find suggestions on the skills you will likely need in your crypto investment experience, as well as relevant resources for your unique character.
- Newbie Nath
- Becca the Bitcoin-er
- Wary Warren
- Bet-on-it Betty
- Experienced Ed
1. Newbie Nath
Nath is interested in cryptocurrency investment but has very little to no experience on the subject. He is, however, ready to put in the work. He is likely looking for information on how to start investing in crypto, with the lowest possible risk.
Nath needs to learn how cryptocurrency works, how to study market trends, the best trading platforms and more. Here are some resources that Nath will find useful.
This course is offered by the University of Nicosia (UNIC). It is taught by Andreas Antonopolous and Antonis Polemitis. Andreas Antonopolous is a well-known Bitcoin investor and the author of the book Mastering Bitcoin. The course teaches people about the history and basics of cryptocurrency, as well as how to get around in the world of investing in cryptocurrency as it is now.
This free resource is only 2 hours long. The course helps newbies understand how cryptocurrencies work and how they are affecting financial activities around the world. Udemy also offers learners free access to a community of crypto enthusiasts, experts and fellow newbies.
This platform teaches crypto in the simplest, most interactive form. It uses beautiful flashcards to break down crypto and how to invest in crypto as a beginner.
2. Becca the Bitcoin-er
It does not matter that the world of Crypto is a vast and diverse one. Becca is only interested in Bitcoin. Well, as far as Becca is sure that she is getting what she wants from Bitcoin, she will do just fine. Whether you are a Becca or you explore the varieties of crypto, you will come across Bitcoin frequently. Look at some resources on Bitcoin that you may find helpful.
- www.ig.com How to Trade Bitcoin
This read shows what causes shifts in Bitcoin prices, Bitcoin trading styles, how to open and monitor trading styles, and much more.
The Bitboy Crypto Youtube channel is your one-stop point for anything Bitcoin, from its history, through market trends to policy and regulation.
On this platform, top Bitcoin CEOs and world-class traders share insights on their Bitcoin trading journeys and recent developments in the market.
3. Wary Warren
Apparently, Warren has been in the crypto investment space for a good length of time. His experience has taught him that not all investments that look good eventually turn out well. He has also learnt not to follow the rush of the moment with crypto investments. His biggest flex is his ability to hold his currency as long as he can until he is certain that he will not lose.
Although Warren could make a good investor, he borders on fearfulness and pessimism. Perhaps, he needs to learn risk management instead of holding currencies for too long. Unless he is willing to take the risk, he will be missing out on huge opportunities.
If you are a Warren, these articles will show you how to manage risks in crypto trading.
www.binance.com – Crypto Futures Risk and Money Management: 5 Things You Can Do to Better Manage Trading Risk
www. learn.bybit.com – Crypto Trading Risk Management Strategies You Must Know
4. Bet-on-it Betty
Betty is the kind of investor who takes all the risks and some more. She considers every crypto investment opportunity a good challenge and is willing to throw it all in. Usually, she is the first to buy and hold new coins, because “what if they surprise one eventually?”
Betty is an optimist, which is a good thing. However, she needs to learn a little bit about discipline in investment from Warren. Similarly, a good lesson on risk management will help. Also, she will find the following articles on financial discipline in cryptocurrency investment helpful.
- Cointelegraph.com – Day trading vs. long-term cryptocurrency hodling: Benefits and drawbacks
- Trality.com – Staying Disciplined in a Volatile Market
Obviously, this is the dream of every crypto investor. Ed has made tons of money from crypto investments because he knows exactly how the market works. Actually, he predicts trends before they happen. Other kinds of investors leverage his insights to improve their results.
5. Expert Ed
Naturally, his focus now would be catching up on investment news and market trends. He may also devote his time to sharing his knowledge with other investors. In fact, that could be yet another source of income for him.
How is cryptocurrency a good investment?
Chiefly, one factor that makes cryptocurrency attractive is its lucrativeness. Like every other kind of investment, it has its risks. Still, once you get a good grasp of the crypto market, you can make a world of profit from crypto investments.
Cryptocurrency also provides a different type of security that fiat currencies do not. Since transactions are decentralized in nature, the crypto market is less prone to censorship-induced volatility. In other words, market trends depend very largely on demand and supply, as opposed to government or policy action.
Of course, this is as risky as it is good. Since there are no bodies to rein them in, crypto markets can take very wild directions. Regardless, the best crypto traders know that with great risks come great rewards. As a result, they go all in, but armed with the right information and strategies.
How Cryptocurrency Works for Beginners
You will find this very useful if you are a Newbie Nath.
Cryptocurrencies run on blockchain networks. A blockchain is a digital record book (a.k.a ledger) made up of bits and bytes of data (called data sequences). These data sequences are referred to as data blocks.
Picture this. There is a network of more than one computer. Each computer is called a node. Each computer or node bears a small part of the total content of our digital ledger/record book. Together, all the nodes form a blockchain.
Usually, a physical record book is updated with each new transaction. In the same way, each blockchain is updated with the records of each new transaction.
Best Cryptocurrency to Invest in 2022
If you are looking for the best cryptocurrencies to invest in, we recommend these ten cryptocurrencies.
- Bitcoin (BTC)
- Battle Infinity (IBAT)
- Binance Coin (BNB)
- Lucky Block (LBLOCK)
- Ethereum (ETH)
- Tether (USDT)
- Solana (SOL)
- Avalanch (AVAX)
- Apecoin (APE)
- US Dollar Coin (USDC)
How Is Cryptocurrency Mined?
Crypto mining is the process of creating new cryptocurrencies or digital currencies. The nodes in a chain engage in the computation of complex puzzles and are rewarded with new coins. The computation process involves the calculation, verification and recording of each transaction. In that order.
This process requires a large computation capacity, so each node (computers, recall?) contributes its quota, creating new coins in the process.
Is Bitcoin a Good Long-term Investment?
Well, yes and no.
Yes, because it is in high demand. It is the most lucrative cryptocurrency with the largest market share (38.41% at $349 Billion). Notwithstanding its recent fall in price, it is expected to resume rising in at least the next five years, its recent instability notwithstanding. It may experience some dwindling, but it may not take any drastic hits.
Further, Bitcoin is also one of the easiest coins to liquidate. This means it can be given in exchange for tangible or traditional assets. Albeit this looks like a risk for long-term investment. Smarter investors however take advantage of this to protect themselves against drastic eventualities.
Be that as it may, there is a downside. The crypto market can be extremely volatile, even though Bitcoin is one of the most stable coins. For one thing, Bitcoin still relies heavily on demand. Since demand can be affected by a host of factors, Bitcoin, and indeed any cryptocurrency, can get hit by crazy demand trends. For example, the coin experienced a bad hit in July 2022.
Eventually, it depends on the angle from which you are looking as an investor and how much risk you are willing to take.
List of Crypto Investors to Look Out For
These individuals have made their mark in the world of crypto investing. Great crypto enthusiasts know to watch out for their insights and recommendations.
1. Elon Musk
Actually, it is Tesla, not him. In 2021, Tesla made its first 1.5 billion-dollar investment in Bitcoin. It continues to invest to date, under Elon’s leadership. Elon himself is loud about his love for crypto. His tweets have made some of the loudest impressions on the crypto market by an individual.
2. Morgan Beller
Head of strategy for Calibra, Facebook’s digital wallet. She co-created the much-talked-about Libra coin (that made some good noise in 2019). Morgan is a general partner at NFX. Her investments range from $500k to $5 million.
3. James Currier
A general partner at NFX, his investments in crypto over the years have ranged from $500k to $4M. Get some of his insights in the NFX podcast.
4. Garry Tan
Garry is a managing partner at Initialized Capital. In 2013, he invested $300k in Coinbase. As of 2021, the investment was worth over $2B. His investment ranges from $1 million to $4 million. He shares insights on news media and crypto podcasts.
5. Emilie Choi
She is the president and Chief Operating Officer at Coinbase Ventures. Under her leadership, Coinbase raised $300 Million in a series E round involving top investors. She described this as a “war chest” raise for a “rainy day.” As of August 2022, she is speculated to be worth at least $140M.
To read more on the starts of crypto, check out these Top 20 cryptocurrency billionaires
Crypto Investment Companies
These crypto investment companies are currently top on our recommendation list.
- Galaxy Digital
- 10T Holdings
- Multicoin Capital
- Wave Financial
- BlockTower Capital
- Bitcoin IRA
By now, you know that cryptocurrency is not the next big thing. It is already the buzz of the moment. It looks like it has come to stay too. Whatever stage you are at, crypto investment should not be difficult. With the right information, you can earn good money from cryptocurrency investments.
FAQs on How Is Cryptocurrency a Good Investment?
Is cryptocurrency legal?
Except in countries where it has been banned, cryptocurrency is legal. Algeria, Bolivia, China, Ghana, Vietnam, Nigeria, Russia, Nepal and a few other countries have banned crypto.
Is cryptocurrency a good investment?
Absolutely. It is quite safe, high-yielding and is a good store of value.
Is cryptocurrency safe?
Yes, cryptocurrency is safe. Like every other investment, it has its risks. Foremost among them is volatility. However, crypto is much more difficult to compromise than other kinds of investments.
- https://www.schwab.com – What is Cryptocurrency?
- https://www.cointree.com – Which Type of Crypto Investor Are You? The 11 Crypto Archetypes
- https://kapersky.com – What is Cryptocurrency?
- https://www.influencermarketinghub.com – Top 15 Crypto Asset Management Companies to Check Out in 2022
- https://www.signal.nfx.com – Top Crypto/Web3 Seed Investors
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- 10 Crypto Trading Strategies for Beginners
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- Top 20 Cryptocurrency Billionaires
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