Invest in Crypto
Crypto Investing: Adding value to a rich investment portfolio while minimizing risks
Financial transactions have always transcended borders, even from the ancient times when merchants moved from one region to another to exchange money. However, in the modern world and precisely the 21st century, financial transactions have evolved faster, with cryptocurrencies at the center of the revolution.
Through blockchain technology, we have a faster, more secure, decentralized, and autonomous transaction model that has shaped our current global financial reality. Cryptocurrencies emerged amid skepticism on their longevity and the role it would play in the financial scene. However, since Bitcoin made its debut in 2009, cryptocurrencies have proved skeptics wrong by setting a new standard for transactions in the areas of speed, accuracy, security, and a diverse market with multiple coin options.
The opportunities available through a diverse market are numerous, but the most significant advantage for investors in cryptocurrencies is an avenue to diversify their investment portfolios. Investment diversification aids risk management for the investor by including various investment strategies in different markets.
Within the cryptocurrency market, investors can invest in several digital solutions as a way of protecting their portfolios from a sudden crash. For example, Bitcoin is currently the highest-selling crypto coin in the world as it experienced a surge in the last quarter of 2020. But if an investor's portfolio only consists of Bitcoins, when Bitcoin flips in the market and drops in price, that investor will run at a considerable loss.
Investors can diversify and have a rich portfolio by investing in different crypto industries, solutions, and coins. As the market retains its volatile nature, investors can manage potential losses and risks through their investments' diversity. The key to having a high-performing diverse portfolio, especially with coins, lies in investors' choice of currencies.
There are a few considerations for investors keen on reaping the benefits of a diversified crypto investment through coins, and some of them include market capitalization and liquidity. The market cap of a cryptocurrency is an indication of its value and the size of the coin represented by:
The current market price X Circulating supply = the crypto market cap.
The coin price alone doesn't give an accurate picture of its value; hence, investors are advised to first consider the coin's market cap before investing. Liquidity refers to a coin's ability to be converted to cash or other currencies, and this is not solely about cryptocurrencies as all-important tradable assets should have high liquidity. There is no point investing in a crypto coin when you cannot liquidate it at will, and trading volume is a crucial factor that affects liquidity in the cryptocurrency market. Look out for the trading volume of each coin on exchanges, and you can weigh its liquidity.
Determining a coin's market capitalization and liquidity are the preliminary steps an investor takes before investing in a coin. In addition to both features, investors need to know the coins are performing well in the market. The top five key-performing coins in the market include:
- Bitcoin is the most popular and widely sued cryptocurrency with the largest market cap in the crypto space.
- Due to its surging popularity, Bitcoin is always the first choice of coin for investors as businesses and individuals use it for transactional purposes even more than other coins.
- Liquidity is another reason why investors prefer bitcoin as its high trading volumes make it easy to sell, buy, and trade.
- Bitcoin is on most exchanges.
- It's currently at $27,376.20 per coin and has a $350 billion market cap.
- The Ethereum platform is an open software platform that allows developers to build decentralized platforms and raise funds, and instead of mining for Bitcoin, the miners get to earn Ether.
- The Ethereum coin is known as Ether, a transactional currency used as a medium of exchange, but unlike other coins, it cannot be substituted for other cryptocurrencies.
- Crypto investors mostly use Ether because of its role in enabling developers to start new blockchain projects.
- The Ether currently trades at 59.09 Euros per Ether and has a market cap of $40.6 billion.
- As the third-largest cryptocurrency by market capitalization, Ripple is an impressive open-source, peer-peer, and decentralized system that offers fast money transfer with other coins.
- Investors seeking a non-discriminating cryptocurrency find the Ripple XRP coin fascinating as sit makes currency exchange with other currencies seamless.
- Some banks have adopted the Ripple payment system despite people using more of Bitcoin because the XRP coin can be exchanged for Bitcoin on the Ripple system.
- XRP trades at $0.475152 with a market cap of $21.6 billion
- Litecoin is one of the five most important digital currencies globally due to its function as an online payment system with which users can transfer coins.
- However, Litecoin doesn't use the U.S dollars for its transactions; it transacts in units of Litecoins hence the similarity it has with fiat.
- Litecoin also transacts four times faster than Bitcoin by processing up to 56 transactions per second; it offers low transaction fees, is more scalable, and all with the absence of a middleman.
- Litecoin currently trades at 110.19 Euros with a $2.7 billion market cap.
- Despite China's heavily regulated crypto space, the NEO Coin has shown great promise and the potential to rise above set limitations; what makes this coin so unique that it made the top five list?
- With NEO, investors can manage digital assets through smart contracts as all assets can be digitalized on NEO blockchain.
- NEO aims to achieve a "smart economy" consisting of digital assets + digital identity –smart contract to produce the smart economy.
- Investors who are also programmers find NEO quite fascinating as it supports programming and makes it easier for developers to contribute to the platform.
- NEO is currently trading at $60 per coin and has a market cap of $1,091,653,343.
Buying and Storing Your Coins
These coins have managed to say at the top of the trading market despite volatility. They are investors' favorite, but there's one more step to completing the investment process, and that is the role of exchanges and e-wallets. Staying secure in the digital finance space is crucial for success with cryptocurrencies, and the top e-wallets and exchanges include the following:
Best Wallets for 2020
Wallets are essential to keep your coins safe, and they are apps or hardware devices where you store all information about your crypto transactions, especially their location on the blockchain. Spending your cryptocurrency becomes more manageable with the wallets, and these are some of the top wallets in the crypto space right now. The wallets below are a mix of hardware and software wallets.
Ledger Nano X
Hardware wallets are the most secure of all wallets in the crypto market. The Ledger Nano X wallet is a leading wallet in the digital space as it supports 1,100 cryptocurrencies that can be managed from a mobile device.
Exodus Movement INC. is a multi-currency wallet and exchange founded in 2015 by JP Richardson and Daniel Castagnoli. Headquartered in Nebraska, it offers support to over 100 cryptocurrencies as well as many ERC20 tokens. In Exodus, assets are sent directly from the user’s wallet and delivered directly back to the user’s wallet, giving all users greater control. The company is carefully picking high rated assets by paying attention to coins with higher volume, volatility, market capitalization and popularity. Exodus is currently compatible with Mac, Windows, Linux, iOS, and Android. Users can link their desktop and mobile wallets together in order to have sleek control over their funds from both devices. The wallet is also compatible with TREZOR hardware wallet, which allows users take advantage of the robust security of a reputable hardware wallet. The accessibility and ease of use of its exchange makes it an amazing wallet worthy of recommendation to all beginners.
Trust wallet is a multi-coin wallet acquired by Binance in 2018. Trust Wallet has two different services that make this possible: swap and exchange. Swap is a simple interface that can quickly swap one crypto for another, whereas exchange is more advanced and allows more trading control. It allows users and investors to store, send, receive and exchange different cryptocurrencies with a single account. Individuals can also have the possibility of staking on proof-of-stake coins such as Tezos , Cosmos or Tron. The Trust Wallet, as the name implies, was carefully designed to build trust by keeping all funds safe while user identity is protected as no personal data is collected or stored. It further offers all users the opportunity to stake multiple cryptocurrencies and supports more than 160 thousand assets and 40 blockchains. Users stand a chance to store stable coins to avoid volatility and easily earn interest on their crypto wallet. Trust Wallet is currently only supported on android and apple mobile devices. There is no desktop version for PC use.
The KeepKey wallet is a hardware wallet that offers secure cold storage protection for cryptocurrencies. Users get a private key offline while using the wallet software to transact; the wallet also has a backup and recovery feature that guarantees your funds' safety. Its ShapeShift Integration enables quick exchanges directly from the wallet.
On cryptocurrencies exchanges, users, traders, and investors can exchange digital assets based on the asset's market value. Cryptocurrency wallets and exchanges are two different ideas as while one (wallets) are owned privately by the users, exchanges are shared platforms.
Every exchange has a set fee per transaction, influenced by factors, including the level of security offered by the exchange. While some exchanges limit users to trading with only digital assets, others allow fiat such as the U.S Dollars, and investors are advised to read such trading terms and conditions before leveraging on the services offered by the exchange.
Coinbase is the most popular cryptocurrency exchange because of its trusted security through the years, beginner-friendly interface, and support for various digital currencies. This exchange has 35 million verified users in more than 100 countries and has traded $320 billion worth of cryptocurrencies with coins stored on the servers having insurance coverage. The exchange offers services at the highest quality, a variety of altcoins to trade with, and high liquidity. Coinbase is an exchange, but also has a built-in wallet which allows users to keep their crypto on the Coinbase platform. It further offers a reliable and secured growing list of over 40 crypto assets while Coinbase Custody supports over 90 crypto assets. Coinbase Pro gives users an edge with enhanced features for advanced traders and businesses.
As a significant new feature, Coinbase Wallet users are able to back up their private keys on personal cloud storage platforms like Google Drive and Apple's iCloud, helping them avoid losing their funds if they lose their device or misplace their private keys.
Binance also offers insurance protection to users with multi-level security and remains one of the most straightforward exchanges to buy Bitcoins and other stable coins. Binance supports 150 cryptocurrencies and achieved an $11 billion in trading volume mark in 2020. Investors can trade anywhere and at any time with this exchange; mobile, web, and desktop enabled.
With over 200,000 customers and verified users using this exchange across 188 countries, this exchange offers an easy platform to buy and sell cryptocurrencies. Users can buy using credit or debit cards and bank transfers with the assurance of having them delivered instantly without any withdrawal fees.
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