Should you invest in cryptocurrencies?

 The rise of digital currencies like Bitcoin and Ethereum has made headlines and captivated investors while making many pioneers very, very rich. However, just as many have lost money, especially considering that the price of bitcoin jumped to just under $20,000 at the end of 2017 only to fall back below $4,000 a year later.


A single bitcoin is worth over $45,000 as I write this, but who knows where the price of bitcoin and other digital currencies will go from here.


You may be wondering if you've completely missed the cryptocurrency train or if there's still time to invest for profit. While some say that digital currencies will eventually die out, others say that they are still in their infancy and there are still plenty of opportunities to make money. According to some economists and investment experts, bitcoin in particular could be worth $200,000 to $300,000 by the end of 2022.


Before you invest in cryptocurrencies, you will need to compare all the platforms that allow you to buy, sell and trade cryptocurrencies. You'll also need to decide how much of your portfolio to invest, given the volatility that crypto-currencies have shown so far.


Why should you invest in crypto-currencies?

Just ten years ago, investing a portion of your portfolio in crypto-currencies would have seemed unnecessarily risky. But these days, ignoring digital currencies presents just as much - if not more - risk to your short- and long-term investment goals.


While many investment experts predict a bear market that could last for years, cryptocurrencies are often seen as a better alternative - or at least one you can use to secure your investments.


After all, investing in the stock market has seen huge gains over the past decade, even after accounting for the temporary downturn due to COVID-19. Some say that the gains we've seen in the Dow Jones Industrial Average and S&P 500 can't last and that investing in cryptocurrencies will help investors continue to build wealth during the uncertain economic times ahead.


Should you invest in cryptocurrencies? Below is a summary of the main advantages and disadvantages you should be aware of.


Advantages:

  • Very high earning potential
  • Liquid investment
  • Relatively low buying, and selling costs
  • Allows you to diversify your investments away from stocks and bonds

Disadvantages:

  • You have to learn a little before investing
  • High volatility and high loss potential
  • Payment is not accepted everywhere


How to invest in crypto-currencies?

Investing in cryptocurrencies is easy to do. You can do it from home with just a computer and an internet connection. All you have to do to get started is research the different types of cryptocurrencies that exist. From there, you can find a platform that allows you to execute your purchases with minimal hassle or expense. One platform that I recommend is Coinhouse

Here are some of the top digital currencies you need to know about, whether your goal is to diversify your portfolio, make a profit, or keep your crypto investment short-term.


Bitcoin (BTC)

Originally released as open-source software in 2009, bitcoin (BTC) is the largest and most well-known crypto-currency available today.


The basic characteristics of bitcoin are that it exists only on the Internet, is not issued by any government or central bank, and is limited to 21 million units. However, each of these units can be divided into 100 million Satoshi.


The total number of Satoshi that can potentially be created is 2.1 billion if you can imagine a number that large.


Although bitcoin is the most popular of all crypto-currencies, extreme volatility has been a problem so far. If you're interested in investing in bitcoin, you may want to consider using the following platforms: Coinhouse and Coinbase.


Ethereum (ETH)

Ethereum is the second largest crypto-currency available today. This crypto-currency originated in Switzerland in 2015 but has since split into two separate blockchains. As a result, we now have Ethereum (ETH) and Ethereum Classic (ETC), which continues as the original.


Ethereum is nowhere near the popularity or investor interest of Bitcoin, but that doesn't make it any less important. The crypto-currency phenomenon is still in its infancy and is happening in real-time.


Some experts believe that it is still possible for Ethereum, or even other crypto-currencies, to surpass Bitcoin and become the dominant crypto-currency.


Like Bitcoin, Ethereum has seen a lot of volatility so far. Prices jumped to over $1,400 in January 2018 only to drop below $100 by the end of the year. As I write this, Ethereum is currently worth $3,433.


If you want to get into Ethereum, you can invest using the same platforms as Bitcoin, including Coinhouse and eToro.


Litecoin (LTC)

Litecoin is another popular digital currency, based on blockchain technology and developed as a peer-to-peer currency for an instant, low-cost payments between users around the world. Like other cryptos, Litecoin is fully decentralized, meaning it is not overseen by governments, banks, or central authorities.


It appears that the Litecoin blockchain can handle a larger volume of transactions than Bitcoin. This could mean that in the future, merchants who accept Litecoin as their currency will be able to get faster confirmation times and become more efficient.


Ultimately, the Litecoin network is poised to produce 84 million Litecoins, which is 4x more currency units than Bitcoin.


If you decide to invest in Litecoin, you can start with Coinhouse.


Tether (USDT)

Tether is another cryptocurrency. It is considered a stablecoin, which means that it converts cash into digital currency with the goal of "tying" the value to the price of USD. Each Tether token is also fully backed by reserves.


Like other crypto-currencies, Tether uses blockchain technology that is protected by world-class security features. Proponents of Tether say that because it is a traditional parity currency, it is best used to exchange currencies and make payments on a myriad of platforms and digital wallets. Tether is also frequently used as a place to hold your cryptocurrency while waiting for the market to stabilize.


Invest in Tether using platforms like Coinhouse.


Cardano (ADA)

Founded by Charles Hoskins, one of the co-founders of Ethereum, Cardano is an open-source, proof-of-stake blockchain technology that was created in 2017. Using the symbol ADA, Cardano currently has the fourth largest market capitalization of any crypto-currency.


According to CoinMarketCap.com, approximately 31 billion ADAs are currently in circulation, with a maximum supply of 45 billion. Built through experimentation and peer-reviewed research, Cardano claims to be a blockchain platform for "change-makers, innovators, and visionaries."


Its technology aims to drive global change through the use of the Ouroboros proof-of-stake protocol - a protocol designed to be scalable and secure while boasting four million times the energy efficiency of bitcoin.


Cardano's digital currency is accessible to users located anywhere in the world. It can be used to securely exchange value between parties, while Cardano's blockchain continuously records every transaction.


Currently, there are several cryptocurrency platforms that allow the buying and selling of Cardano for other crypto-currencies. Among the most popular sites is Coinhouse.


Take your time before investing

If you're worried about getting into crypto-currencies, know that it's perfectly normal to be cautious. After all, crypto-currencies have only emerged in the last decade, so there's no long performance history to refer to. In addition, crypto-currencies have been subject to serious security issues, and many digital currencies have been hacked for millions of dollars over the years.


Before you invest in a cryptocurrency, read, learn, educate yourself, and talk to people who know about your project.


Finally

Should you invest in cryptocurrencies? Ultimately, only you can decide if you're ready to invest in cryptocurrencies and try something new - or if you just want to continue investing traditionally and invest in stocks, bonds, and other traditional investment options.


If you do decide to dive into crypto-currencies, I suggest you spend some time learning about the types of digital currencies out there, how they work, and the level of risk they present. There is no "right" or "wrong" way to invest in cryptocurrencies like Bitcoin and Ethereum, but you should make sure that every decision you make is an informed one.


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