Cryptocurrency has taken center stage over the past few years. And with wise investment strategies, it can be an extremely lucrative investment. However, it is important you know what crypto to buy in order to minimize losses and walk away with the highest profit margins possible. Before we delve into the best crypto to invest in, it is important to explore cryptocurrency and what it is, how it works and more.
What Is Cryptocurrency?
In a basic sense and understanding, cryptocurrency is an online form of payment that can be exchanged for goods and services, hence the name ‘currency.’ More specifically, it uses long lines of code within a blockchain, is stored in digital wallets for protection and utilizes strong cryptography to secure online payments. Unlike other forms of currency, such as government-backed U.S. dollars, cryptocurrency can be mined by those capable, essentially being produced by anyone and at any time. As such, cryptocurrency is not on the gold standard and cannot be set at a 1:1 trade value. This leads to some volatility and why you might see the price for one of the options on the cryptocurrencies list change often, even within minutes.
Cryptocurrency can be obtained via mining, as previously mentioned, but that takes immense technological and coding understanding, as well as having the right tools to do so. You can buy cryptocurrency via stock market platforms, such as Robin Hood, or explicit crypto platforms like Coin Base. Most recently, cryptocurrency has been available for purchase at kiosks located in grocery stores, malls and even currency exchange locations. It is always wise to research the different avenues of obtaining and purchasing cryptocurrency to ensure that you are not scammed or cheated. Now that you have a basic understanding of how it works, we can explore the different options on the cryptocurrencies list and determine which is the best crypto to invest in, in 2021.
As the first cryptocurrency, Bitcoin was created back in 2009 and is perhaps the most popular. Bitcoin is a great option because of its somewhat guaranteed return (due to the volatility involved in trading cryptocurrency, there is no 100 percent ROI guarantee, much like trading stocks). The only drawback with Bitcoin is its high buying price. Even if you are to buy a Bitcoin on a dip, it can still cost tens of thousands of dollars, depending on the current value. That said, you can buy portions of shares of Bitcoin, but in holding less shares, you will see less of a return when the prices spike back up.
However, you can purchase another cryptocurrency that is a member of the Bitcoin Family. Due to cryptocurrency’s popularity, other types of crypto have spun off of the two major options. For example, you can purchase Bitcoin Cash or Bitcoin SV. At a lower buying price, you could purchase more shares of these members of the Bitcoin Family in the hopes of selling at a higher return later on. However, keep in mind that cryptos in the Bitcoin family do not follow the exact same trend line as Bitcoin. So while the price for Bitcoin may rise, members in the family could remain the same, go down or rise as well. It is likely Bitcoin-based currencies will follow the same trajectory as Bitcoin but not guaranteed. In fact, people tend to see cryptocurrencies follow similar trajectories across the board as one another. Although there may be slight peaks, dips and rises than others, they are often correlated in culture trends, realizations and news breaks.
Ethereum is perhaps the second most popular and has the second-highest asking price on the cryptocurrencies list. Much like Bitcoin, there is more stability in Ethereum, but it has a lower buying price which makes it easier to invest in. Also like Bitcoin, there is the Ethereum Family. So if you do not want portions of shares and cannot afford an entire Ethereum, you can purchase Ethereum Classic, for example. Most recently, Ethereum has grown exponentially in popularity, for people see it has a brighter future than Bitcoin. Some people believe Bitcoin has reached its full potential, and they see Ethereum to be more expensive than Bitcoin in the future.
That said, Ethereum is #1 on our list for what crypto to buy. With the current reasonable buying price, it is wise to invest now before Ethereum truly takes off. That said, there is the high volatility, so the price may drop a few days, weeks or even months after you have invested. It is wise to trust your investment and not to sell, even if it dips well below what you purchased it for. In time, the price will bounce back, and you should actually purchase more during those dips if possible.
There are other cryptos you can buy outside of the Bitcoin Family and Ethereum Family. These are called Altcoins. They tend to be more volatile, but they have a lower buying price which makes them easier to obtain. When invested in wisely, Altcoins can be extremely lucrative, buying multiple, even hundreds, of altcoins during dips and selling once a strong selling price has been reached.
Litecoin currently holds the highest buying/selling price when it comes to Altcoins, making it quite popular and a smart choice. It was also created just two years after Bitcoin, so it has a longer history than Ethereum which was created in 2015. Litecoin tends to be less volatile, making it a safe investment but tends to take longer for increased profits.
Dogecoin is the most volatile cryptocurrency and should be seriously considered before invested in. It began as a meme, mocking cryptocurrency, but has since grown exponentially in popularity. It started at a buying/selling price of hundredths of a cent, but it has increased greatly. For those who were able to purchase Dogecoin so early on, getting thousands for a low price, they were able to sell when it became popular, making a hefty profit. Some believe Dogecoin will continue to grow, while others recognize Dogecoin as a meme coin that is a popular fad for now but will decline once everyone has lost interest.
Other Ways to Invest in Cryptocurrency
There are in fact other ways to invest in cryptocurrency without directly purchasing any cryptocurrency. You can invest in stocks that are related to cryptocurrency, such as companies involved in mining crypto, like BIT Mining. Another option is to invest in companies that are involved in trading cryptocurrency, such as Coinbase. This is a great way to take advantage of the cryptocurrency trend while minimizing the risk associated. Since you are investing in a company, this is backed by the stock market and FDIC, strictly trading with the gold standard currency.
For those who prefer to invest and forget, rather than regularly monitoring to see when to buy/sell, buying stock in these types of companies is a great option. Also, although they follow similar trend lines, you may not always see the same dip or spike in cryptocurrency as these are stock options. In fact, people see delayed correlations. For example, when the price for Bitcoin goes down, people often see the price for BIT Mining go down weeks or even months later. This can work in your favor, for if you see Bitcoin rise, it could be a smart, quick investment to purchase shares of BIT Mining before it follows the same rise. That said, these are trajectories that have been seen and are not guaranteed. See disclaimer below.
Do What Is Best for You
When it comes to investing in cryptocurrency in 2021, you have to do what is best for you and your financial situation. It is not wise to invest the money needed for rent, living or retirement. You should only invest money that you are willing to lose, and if you are looking to save for your retirement, utilize a ROTH IRA or 401(k) plan. Cryptocurrencies are a good way to enter into trading because the volatility can make it lucrative when done properly. Because you have to monitor the price closely to see when to buy or sell, it can garner your interest while increasing your knowledge of stocks, trading and cryptocurrency in general. If you would like to invest in cryptocurrency, do additional research online to learn more about how it works, the risks associated and which platform is best for purchasing cryptocurrency.
*THIS IS NOT FINANCIAL ADVICE. This content is purely for informational and entertainment purposes and should not be misconstrued as legal, tax, financial or other advice. If considering making an investment, conduct your own due diligence and speak with a professional financial advisor, specialist or consultant. You alone assume the sole responsibility of evaluating the merits and risks associated with utilizing this content.*