Is Cryptocurrency a Good Investment and Should I invest in it?

Is Cryptocurrency a Good Investment and Should I invest in it?

It’s possible to get filthy rich by investing in cryptocurrency in 2021. But you could also lose all of your money.

How can both be true? Investing in crypto assets is risky but also potentially extremely profitable.

Cryptocurrency. It’s the hot buzzword of the investing world these days. But what is cryptocurrency really? Ever heard of Bitcoin, Dogecoin, Litecoin, XRP, or Ethereum? Nope — they aren’t embarrassing rock band names from the ’90s.

A cryptocurrency (or “crypto”) is a digital currency that can be used to buy goods and services but uses an online ledger with strong cryptography to secure online transactions.

In 2010, a man from Jacksonville, Florida, made the first real-world purchase with Bitcoin. He bought 2 pizzas for 10,000 bitcoin. At the time, that was a fair price for 2 fast-food pizzas.

If this man skipped his dinner and kept his bitcoin, he’d be sitting on close to half a billion dollars worth of cryptocurrency today.

By historical standards, Bitcoin is a great investment. Bitcoin is the best performing asset of the past decade, appreciating over 31,000%. If you were to invest just $1,000 in Bitcoin ten years ago, you’d have hundreds of millions of dollars today.

But can Bitcoin maintain this exponential growth? Potentially. Trading volatile cryptocurrencies have much more risk than traditional investments, but the payout could be life-changing.

What is cryptocurrency?

Cryptocurrency is a digital payment system that doesn’t rely on banks to verify transactions. It’s a peer-to-peer system that can enable anyone anywhere to send and receive payments. Instead of being physical money that is carried around and exchanged in the real world, cryptocurrency payments exist purely as digital entries to an online database that describe specific transactions. When you transfer cryptocurrency funds, the transactions are recorded in a public ledger. You store your cryptocurrency in a digital wallet.

Cryptocurrencies work using a technology called a blockchain. Blockchain is a decentralized technology spread across many computers that manage and records transactions. Part of the appeal of this technology is its security.

So, where the heck do we get the word cryptocurrency from, anyway? Glad you asked. Cryptocurrency got its name because it uses encryption to verify transactions.

This means advanced coding is involved in storing and transmitting cryptocurrency data between wallets and to public ledgers. The aim of encryption is to provide security and safety.

How does Cryptocurrency work?

The concept of digital money that people spend online is not that complicated in itself. After all, most of us will be familiar with transferring money from one online bank account to another.

Cryptocurrency works a lot like PayPal or a credit card, except you exchange digital assets for goods and services instead of US dollars. To make a transaction with cryptocurrency, you must exchange currency with a peer using a digital wallet known as a cryptocurrency wallet.

Cryptocurrency runs on blockchain technology, but what exactly is a blockchain? The term has become so commonplace, its meaning and significance are often blurred. A blockchain is simply a digital ledger of transactions.

This ledger (or database) is distributed across a network of computer systems. No single system controls the ledger. Instead, a decentralized network of computers keeps a blockchain running and authenticates its transactions.

A cryptocurrency wallet is a software that allows you to transfer funds from one account to another. To complete a transaction, you need access to a password, known as a private key.

The private key is much like a bank account. You can own multiple keys and own all the funds sent to those keys. Transactions are recorded on a public ledger, which shows the transaction totals without revealing the identities of the parties involved.

Is Cryptocurrency Safe?

Several factors make cryptocurrency not entirely safe, at least currently, while other signs are emerging that cryptocurrency is here to stay.

Bitcoin and other cryptocurrencies run on the blockchain. A blockchain is a distributed ledger technology powered by cryptocurrency miners.

Bitcoin’s network has an estimated 10 to 20 times the processing power of Google’s servers, making it among the most secure networks in the world.

To hack a blockchain, you’d have to simultaneously hack 51% of the miners on the network, making security breaches virtually impossible.

Yet, crypto exchanges are still at risk of being hacked, and unless you store your crypto in a hardware wallet, you aren’t completely safe from bad actors.

Although blockchains are virtually impenetrable, Bitcoin and other cryptocurrencies are risky investments. It’s not uncommon for Bitcoin to dip 80% to 90% in a bear market — in 2015, Bitcoin lost 84% of its value, and in the 2018 bear market Bitcoin lost about 85% of its value.

Is Cryptocurrency Legal?

One of the most critical legal considerations for any cryptocurrency investor has to do with the way that central authorities view cryptocurrency holdings. In the U.S., the IRS has defined cryptocurrencies as property rather than currencies. This means that individual investors are beholden to capital gains tax laws when it comes to reporting their cryptocurrency expenses and profits on their annual tax returns, regardless of where they purchased digital coins.

There’s no question that they’re legal in the United States, though China has essentially banned their use, and ultimately whether they’re legal depends on each individual country. Also, be sure to consider how to protect yourself from fraudsters who see cryptocurrencies as an opportunity to bilk investors. As always, buyer beware.

Which is the Best Cryptocurrency to Invest in 2021?

There are the 10 largest trading cryptocurrencies by market capitalization as tracked by CoinMarketCap, a cryptocurrency data, and analytics provider.

Bitcoin is on top of the food chain that everyone knows about, but it’s not the only kind of cryptocurrency out there. There’s Litecoin, Polkadot, Chainlink, Mooncoin . . . and, oh, just about 10,000 other kinds of weirdly named coins coming up the ranks. Let’s emphasize the top contenders:

1. Bitcoin (BTC)

Theories on Bitcoin’s utility differ, but there’s no denying that it’s been the dominant player in its field since its creation. Bitcoin’s growing adoption is its saving grace; both retail and institutional investors are primed to dip their toes into cryptocurrencies with Bitcoin first. Plus, some of today’s smartest business minds are increasingly gravitating toward the “digital gold.” Twitter Inc. (ticker: TWTR) and Square Inc. (SQ) CEO Jack Dorsey has said he doesn’t think there’s anything more important in his life to working on, seeing it as a way for poor countries to guard against currency depreciation and for faster, cheaper funds transfers across borders. And although Bitcoin’s price lost more than half within two months of hitting all-time highs of about $65,000, Tesla Inc.’s (TSLA) decision to put Bitcoin on its balance sheet earlier this year could serve to usher in more corporate treasury inflows over time.

2. Ethereum (ETH)

The Scottie Pippen of cryptocurrency, Ethereum has been capably playing second fiddle to Bitcoin for years now. With a market capitalization of about $276 billion, Ethereum’s share of the overall crypto market is about 18% — a far cry from the 47% commanded by Bitcoin but more than four times the next-closest token. The native currency on the platform is technically called ether but is colloquially referred to as Ethereum. The leading platform for decentralized finance, or Defi, Ethereum allows users to create smart contracts that automatically execute when certain conditions are met. The potential to cut out third parties such as banks, brokerages, and clearinghouses makes Ethereum an exciting, money-saving platform. The rising tide of Defi should continue resulting in higher usage of this platform, which can be used to issue new cryptocurrencies or create and exchange nonfungible tokens, known as NFTs, among other things.

3. Cardona (ADA)

Like Ethereum, Cardano is a decentralized blockchain platform that uses a native cryptocurrency, in this case, Ada, to enable secure peer-to-peer transactions. It was founded in 2015 by Ethereum co-founder Charles Hoskinson, who left what is now the leading platform for decentralized finance to found Cardano, which is designed to use a fraction of the energy demanded by Bitcoin and Ethereum. One way Cardano does this is by using a “proof-of-stake” protocol that doesn’t incentivize high energy usage and is an increasingly popular way for blockchains to validate transactions for security reasons. Cardano, which at $43 billion is the fifth-most valuable cryptocurrency, is transitioning toward enabling smart contracts that should be fully operational by fall 2021.

4. Binance Coin (BNB)

One of Binance Coin’s chief advantages is that, like Bitcoin, it has a strict limit on the number of tokens in circulation. The limit is 200 million, and it’s a big reason BNB has soared to become to become the fourth-most valuable cryptocurrency in the world. The native currency of the popular Binance exchange, the coin is up more than 700% in 2021 alone. It has a different model than many of the other cryptocurrencies in the market, destroying, or “burning,” much of its currency on a quarterly basis, using one-fifth of its profits to do so. With a market capitalization of more than $50 billion, Binance Coin is no longer the instrument of pure speculation that it once was, and as long as the wildly popular Binance platform continues to grow, the BNB crypto has a bullish outlook.

5. Dogecoin (DOGE)

Named for the popular “Doge” internet meme of a Shiba Inu dog, Dogecoin was created as a lighthearted take on the blockchain craze. The cryptocurrency has surged about 4,000% this year, making it the eighth-largest cryptocurrency by market cap. Its price peaked in early May at more than 70 cents, though it has since pulled back. Dogecoin’s price remains well below a dollar because of its larger circulation and unlimited capacity to mine more. While Bitcoin is capped at 21 million coins, there are 130 billion Dogecoins in circulation already, with new blocks available to mine each year. Although wildly speculative, Dogecoin has a much faster mining rate, or hash rate, than Bitcoin, giving it some quantifiable advantage over the premier cryptocurrency.

6. Dogecoin (DOGE)

Unlike stocks, cryptocurrencies have debatable and subjective measures of “fundamentals.” Because of that, there are other credentials that are important to consider with crypto, with one of those being who began the project in the first place. Enter Gavin Wood, whose credibility as a co-founder of Ethereum helped drive DOT to one of the top 10 most valuable cryptocurrencies. One advantage of DOT is that it can be used as a bridge between networks, meaning applications can be built on Polkadot that work on both the Ethereum and Bitcoin networks, for instance. As one of the cryptocurrencies built after the pioneers in the industry, its features make it both more scalable and faster than its predecessors.

How to Safely Invest in Cryptocurrency

If you want to invest in cryptocurrency, you have a few options. New investors can choose between Bitcoininvestmentrexthe GBTC trust sold on the stock market, a cryptocurrency IRA (we don’t want to recommend one until we have reviewed them), a user-friendly solution like Cash App or Robinhood, or an exchange-broker-wallet hybrid like Coinbase/Coinbase Pro which allows customers to buy/sell/store a range of cryptocurrencies. Each option has its pros and cons, but notably, only a Cryptocurrency Investment Company like Bitcoininvestmentrex or an exchange broker like Coinbase/Coinbase Pro allows one to trade and invest directly in cryptocurrency. Learn how to invest in Cryptocurrency

Best Tips to Investing in Cryptocurrency for Beginners

Investments are always risky, but some experts say cryptocurrency is one of the riskier investment choices out there, according to Consumer Reports. However, digital currencies are also some of the hottest commodities. Earlier this year, CNBC forecasted that the cryptocurrency market is expected to reach a value of $1 trillion by the end of 2018. If you’re planning to invest in cryptocurrencies, these tips can help you make educated choices.

1. Research Exchanges

Before you invest one dollar, learn about cryptocurrency exchanges. These platforms provide the means to buy and sell digital currencies, but there are 500 exchanges to choose from, according to Bitcoin.com. Do your research, read reviews and talk with more experienced investors before moving forward.

2. Know-How to Store Your Digital Currency

If you buy cryptocurrency, you have to store it. You can store it on an exchange or in a digital “wallet,” for example one of the crypto wallets described in our Blog post Which cryptocurrency wallet to choose. While there are many different kinds of wallets, each has its own benefits, technical requirements, and security. As with exchanges, you should investigate your storage choices before investing.

3. Diversify Your Investments

Diversification is a key to any good investment strategy, and it holds true when you’re investing in cryptocurrency too. Don’t put all of your money in Bitcoin, for example, just because that’s the name you know. There are thousands of options, and it’s best to spread your investment around to several currencies.

4. Prepare for Volatility

The cryptocurrency market is a volatile one, so be prepared for ups and downs. You’ll see dramatic swings in prices. If your investment portfolio or mental wellbeing can’t handle that, cryptocurrency might not be a wise choice for you.

Cryptocurrency is all the rage right now, but remember, it’s still in its infancy. Investing in something that’s new comes with challenges, so be prepared. If you plan to participate, do your research and invest conservatively to start.

How to Invest in Bitcoin in 5 Easy Steps

Are you ready to dive into cryptocurrency? Are you ready to learn How to Invest in bitcoin and make money securely? You’re in luck, as investing in Bitcoin is simpler than you might think. Here’s how to invest in Bitcoin, in 4 easy steps:

  1. Join a Bitcoin Investment Platform or Cryptocurrency Exchange
  2. Get a Bitcoin Wallet
  3. Fund your Bitcoin Wallet
  4. Register your Bitcoin Order based on Minimum Bitcoin Investment
  5. Cash-out or Manage your Bitcoin Investment

How to Invest in Bitcoin in 5 Easy Steps

Are you ready to dive into cryptocurrency? Are you ready to learn How to Invest in bitcoin and make money securely? You’re in luck, as investing in Bitcoin is simpler than you might think. Here’s how to invest in Bitcoin, in 4 easy steps:

  1. Join a Bitcoin Investment Platform or Cryptocurrency Exchange
  2. Get a Bitcoin Wallet
  3. Fund your Bitcoin Wallet
  4. Register your Bitcoin Order based on Minimum Bitcoin Investment
  5. Cash-out or Manage your Bitcoin Investment

1. Join a Bitcoin Investment Platform or Cryptocurrency Exchange

Before you start investing in bitcoins or cryptocurrency, you’ll need to determine where you want to make a Bitcoin purchase. Most Bitcoin investors use cryptocurrency exchanges. There’s no official “Bitcoin” company because it’s an open-source technology, but there are several different bitcoin investment platforms and exchanges that facilitate Bitcoin transactions. These exchanges are the middlemen of cryptocurrency investing, like a stock brokerage.

If you decide to purchase from an exchange, you’ll have to decide which exchange you want to buy from and which bitcoin investment platform you want to invest your bitcoins. Here are a few of the most popular options:

Is cryptocurrency a good investment
  • Bitcoininvestmentrex: Bitcoininvestmentrex is by far one of the most popular legit and trusted bitcoin investment sites and one of the best cryptocurrency investment platforms because you can invest directly with USD. Bitcoininvestmentrex is the world’s most trusted bitcoin investment site that helps you to invest in bitcoin and make money securely and easily.
  • Coinbase: A very popular crypto exchange that insures losses in the event of a security breach or fraudulent transfers
  • Binance: Founded in 2017, Binance is a crypto exchange with a strong focus on altcoins
  • Kraken: This San Francisco-based exchange allows you to invest in Bitcoin using various currencies from around the world
  • Gemini: Launched in 2015 by Cameron and Tyler Winklevoss, Gemini offers services for casual and veteran Bitcoin investors with different user interfaces and fee structures for both.
  • Bitfinex: The longest-running cryptocurrency exchange that’s optimized for advanced traders and lenders (unfortunately, Bitfinex doesn’t currently accept USA customers)

2. Get a Bitcoin Wallet

When you purchase a coin, it’s stored in a “wallet,” which is where all your cryptocurrency is stored. There are two types of wallets you can get: a “hot wallet” or a “cold wallet.”

A hot wallet is a wallet that’s operated by either your cryptocurrency exchange or a provider. Some exchanges will automatically provide you with a hot wallet when you open your account. In any case, hot wallets are convenient because you’ll be able to access your coins through the internet or a software program.

Some notable hot wallets are:

Electrum: Software that enables you to store your coins on your computer

Mycelium: A mobile-only app for Android and iPhone users

However, hot wallets are not the most secure form of coin storage. If the hot wallet provider is hacked, then your coin information may be at risk.

A cold wallet is the safest storage method for your coins. A cold wallet is an actual piece of hardware that stores your coins, usually, a portable device that’s similar to a flash drive. Most cold wallets cost between $60 to $100. Some popular cold wallets are:

Trezor

Ledger Nano

If you’re only going to purchase small amounts of coin, then you might be fine using a hot wallet with an insured crypto exchange. But if you’re going to be trading large amounts of coin, then a cold wallet would be well worth your investment.

3. Fund your Bitcoin Wallet

Now you’re ready to purchase Bitcoin. Your cryptocurrency exchange will have everything you need to buy. The big question is, how much Bitcoin should you purchase in your wallet?

Some coins cost thousands of dollars, but exchanges often allow you to buy fractions of a single coin — your initial purchase could be as low as $25.

4. Invest your Bitcoin Order based on Minimum Bitcoin Investment

Investing in Bitcoin is very risky, and it’s important that you carefully determine your risk tolerance and review your investment strategy before you invest any Bitcoin.

With all that said, you must be ready to invest in bitcoin and make money fast, this is where you need the expertise of a trusted bitcoin investment platform like Bitcoininvestmentrex that offersminimum bitcoin investment suitable for all investors.

Most importantly, you can grow your bitcoin and crypto account into a powerhouse portfolio in under 40 days with our highly profitable crypto investing platform.

Each crypto is guaranteed to generate a monthly return between 25%-30% consistent profit, and there is an extra advantage of compounding profit on our platform.

5. Cash out or Manage your Bitcoin Investment

After you’ve invested your bitcoins with Bitcoininvestmentrex a Trusted Bitcoin Investment Platform, you wait to receive your guaranteed profit at the end of your investment period depending on the maturity of the bitcoin investment plan you choose.

In addition, you cash out your bitcoin profits once you receive them in your bitcoin wallet at the end of your investment period or you can :

  • Use your coins to make online transactions
  • Hold your coins for a long period in the hopes they’ll appreciate in value
  • Perform day trading with your coins — that is, buying and selling coins with other Bitcoin owners, which can be facilitated on the cryptocurrency exchange

Is Cryptocurrency a Good Investment in 2021

With cryptocurrency being young, and the market being historically volatile, there is no ‘yes or no’ answer about the wisdom of investing in cryptocurrency.

Many cryptocurrencies like Bitcoin and Ethereum are launched with lofty objectives, which may be achieved over long time horizons.

While the success of any cryptocurrency project is not assured, if a cryptocurrency project achieves its goals, then early investors could be richly rewarded over the long term.

Fiona Cincotta, the senior markets analyst at City Index, thinks the bitcoin price could rise to about $80,000 this year, but notes that forecasts are notoriously tricky because bitcoin is so hard to value.

Several crypto-market experts have tipped bitcoin to hit $100,000 or more by the end of 2021. Though its recent falls have dampened its prospects.

If you’re willing to take on the risk, crypto is a great investment. Bitcoin aims to replace gold as a store of value, and Ethereum has the potential to disrupt the entire financial services industry. Although ambitious, the growth potential for cryptocurrencies is unlike any other investment.

Even if cryptocurrency is in a bubble, the trend could very well be toward cryptocurrency being an important medium of exchange and store of value in the future. If the current price is lower than the highest price we will ever see. That makes it a good long-term bet. Meanwhile, for day traders, cryptocurrency is a very risky (but potentially rewarding bet).

There are a thousand reasons to be excited about cryptocurrency, but also reasons to be conservative in your investment strategy. Don’t dump your whole 401k into cryptocurrency, but don’t be scared to get a toe wet with a small investment you are comfortable losing (to join in the fun and to learn more now, so you have the know-how later).

Should I invest in Cryptocurrency?

The biggest advantage of investing in cryptocurrency is its upside potential. If Bitcoin replaces gold as a store of value, each coin would be worth over $320,000 (market cap of gold / total Bitcoins issued). Some investors are calling for Bitcoin to reach $1 million, as it will be a better and more accessible store of value than gold.

Ethereum has similar upside potential. Anyone who wants to perform a financial transaction with Defi is required to pay Ether tokens to do so. For example, if you want to exchange tokens on Uniswap, buy an NFT, or get a loan on the blockchain you must pay an Ethereum transaction fee. Also, investors are locking up their Ether to earn interest through Defi (and soon Eth2), so Ethereum tokens will become more scarce as more use cases are developed.

Owning some cryptocurrency can increase your portfolio’s diversification since cryptocurrencies such as Bitcoin have historically shown almost no price correlation with the U.S. stock market. If you believe that cryptocurrency usage will become increasingly widespread over time, then it probably makes sense for you to buy some crypto directly as part of a diversified portfolio. For every cryptocurrency that you invest in, be sure to have an investment thesis as to why that currency will stand the test of time.

  • If you had invested in bitcoin at the start of 2020 and sold on 31 December 2020, you would have made a 300% profit
  • If you had invested in bitcoin at the start of 2018 and sold on 31 December 2018, you would have made a 73% loss

Bitcoin is extremely volatile so the trick is not to panic and crystallize your losses by selling when its value inevitably falls. This is the same with all investments.

A Better Way to Invest

Bottom line? The road to building wealth is slow and steady, and there are still way too many unknowns when it comes to cryptocurrency. Could crypto become a more legit way to invest later on down the road? Sure.

Get-rich-quick schemes are just that — schemes. Don’t risk it and pour all your hopes, dreams, and money into them. Instead, sit down with Bitcoininvestmentrex who has the heart of a teacher. Let them walk you through a solid cryptocurrency investment strategy for investing.

This content should not be interpreted as investment advice. Cryptocurrency is a volatile market, do your independent research and only invest what you can afford to lose.

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