So you’ve decided to invest in a cryptocurrency.
But you’re confused about which one to invest in. There are so many out there!
You’ve heard success stories from other investors, and you’ve seen how successful cryptocurrencies like Bitcoin and Ethereum are by themselves.
But the step from learning knowledge to actually taking the plunge and investing can be tricky, if not downright terrifying.
Most investors don’t even understand how cryptocurrencies work or even which one is best for their uses.
But don’t worry.
In this article, you’ll learn everything you need to know about cryptocurrencies, how they work, and the best ones to invest in for serious returns.
We’ll also cover the risks involved, and how you can avoid those risks to protect your investment while making 5x or 10x what you put in.
Let’s get started!
The best description of a cryptocurrency is virtual money. While the technical differences vary, all cryptocurrencies all function in much the same way.
When looking into the technical details behind a cryptocurrency, you’ll find a pretty simple process.
At its heart, a cryptocurrency is a set of data points that are stored across multiple servers. This creates a decentralized system outside the control of one organized body.
The data is kept secure across the different computers by virtue of their diversity. A hacker would have to attract thousands of computers at once to change anything.
These data points record which accounts own which amounts and who has transferred money to whom. This list of transactions is known as the blockchain.
To send money from your account, you’ll need to have a password known as a private key. This gives you the ability to authorize transactions and have them recorded on the network.
This private key can kept anywhere, but the safest place is on a USB flash drive or other form of storage unconnected to the internet and impervious to hackers.
Each currency regulates the storage and security of its system differently, and we’ll discuss some of the differences in this article.
Cryptocurrencies have an advantage over traditional curries like the US dollar because they are anonymous and outside the regulatory control of the government or banks.
Because your account is identified by a series of numbers and letters and not your name, you can pay for services without using your identify.
By far, the largest cryptocurrency in use right now is Bitcoin. It was the first cryptocurrency and remains at the top of the stack–for now.
Other cryptocurrencies are referred to as altcoins, since they’re alternatives to bitcoin.
That leaves us with the question–what are the best coins to invest in?
Top five Cryptocurrencies by popularity and usage (for safe, long-term investment)
Top five cryptocurrencies to invest in
Note: The list of top five cryptocurrencies to invest in covers several styles of investments. If you’re looking for simple and safe (but also slower) profit, consider sticking to the most-used currencies as shown in the “by popularity and usage” list.
Bitcoin is the number one cryptocurrency. Investing in an altcoin is a bit of a gamble. Investing in a developing one even more so. Ethereum is quite a safe investment, but even that is less dependable than Bitcoin.
Bitcoin offers a solid, safe investment. You can expect steady gains and high security. This makes bitcoin the number one currency to invest in, especially for long-term affairs.
Despite being data, Bitcoin is a limited resource.
The coins that exist right now amount to 21,000,000, and slightly less than 17,000,000 have been mined (decrypted from original servers and put to use). This means two things for investors. First, Bitcoin is currently slowly gaining in value compared to earlier times. Second, Bitcoin will potentially become far more valuable once it is fully mined.
Bitcoin is in a constant, albeit slow, state of inflation. This already makes it a safe long-term investment. The real fun of the affair comes from an almost guaranteed jump in value once new bitcoin starts running out.
As the primary cryptocurrency, more and more services are starting to support Bitcoin. Couple this with the economy balancing itself once new bitcoin stops getting introduced, and its value is going to skyrocket for sure.
Let’s begin by differentiating Ethereum from most other cryptocurrencies. While Bitcoin and the like were built mainly for monetary usage, Ethereum is a platform that covers far more than that. Using decentralized networks, Ethereum allows users to make and run applications on the network. It is more an environment than a currency.
From a technical aspect, here’s what you need to know: Ethereum’s currency is Ether (though other currencies have been and will be made on the platform). Ether is used not only as money, but also to keep Ethereum programs and networks running.
The advantages of Ethereum lie in smart contracts and future development/popularity. Smart contracts are an Ethereum-unique system that allows completely secure and automatic transactions and deals to be made. Once a contract is created, it can automate and reduce costs, making any transaction-related business far smoother and more secure. Ether will also be used to provide “gas”, which can power an Ethereum network and applications. Gas is the basic unit used to value how much a program’s work is worth, and it is used to create and tax fees for any program and action on Ethereum.
Now the technical stuff is out of the way. Ethereum is Bitcoin’s biggest rival. Ethereum has seen far faster gains than Bitcoin since launch and it continues to compete with it. Ethereum often gains new useful applications, new features, upgrades and so on.
Ether also fluctuates more than Bitcoin. As the second most-used currency, it has popularity on its side, and popularity says Ether will keep rising in price as it is supported more and more. Despite numerous attacks and crashes, Ethereum has always recovered to a stable state.
Ethereum is currently incredibly secure and quite stable, but unlike Bitcoin, the chance for Ether to crash (due to hacking, bugs, market outages) or rise in price (due to upgrades, popularity and Bitcoin losing favor) are still a factor. Ethereum is far more likely to succeed and rise up than take any major damage, however.
The Ethereum team is generally regarded as trustworthy, which is a huge bonus, and Ethereum’s security is developing along with it.
Note that Ethereum also refers to Ethereum Classic, a second iteration of the platform that was split after Ethereum recovered from a major attack. Ethereum Classic maintains some of Ethereum’s original values and philosophies, but is less secure as a result.
The Monero affair is far simpler than Bitcoin and Ethereum. Monero slowly and steadily rises in popularity and worth, and it offers things no other currency can fathom yet.
Namely, it offers complete anonymity at all times. While all valid cryptocurrencies are secure, Monero is the most secure out there, at least when it comes to your identity. Every transaction, address and person is kept hidden to outsiders in Monero’s transaction system. Monero also has a safe plan that decreases taxes as networks grow, and gains security updates every few months due to a forking policy.
The reason you want to invest into Monero, the anonymity aside, is that its popularity is still growing, and it has a very real advantage to offer. While Monero overtaking Bitcoin and Ethereum is not realistic, one could easily use it for a long-term investment banking on its future popularity.
Monero is also naturally great for banking and the anonymity makes it a solid platform for short-term investments (if you want to capitalize on smaller price fluctuations).
Monero has a dependable and communicative team, which is a big plus.
Factom is an extension of the bitcoin system/network. It is an additional protocol that adds more features and reshapes the system entirely.
Factom is in a way an opposite of Monero, as its primary feature is securely storing data. Factoids are Factom’s currency, and every transaction can be safely logged for future reference.
Despite keeping track of any transactions going on, Factom maintains high security and safety for users. Just because the data is logged doesn’t mean you are at any greater risk using Factom than other currencies (except maybe Monero, which trumps most).
With all this in mind, you should invest into Factom because of its great potential for businesses. Yes, Factom’s extensive data logging isn’t that useful to a single trader, but any company or business that uses cryptocurrencies and has an excess of data to store can greatly benefit from such features. This has lead several companies to support Factom’s development, giving it a major head start. For comparison, Ripple, another popular altcoin, took ages to get the global support that Factom already has.
Because Factom is mostly going to be used by corporate entities, the numbers are probably going to be big as well. Interestingly, Factom has great potential for everyday use as well, as it can safely store information while functioning as a currency (which is linked to that information).
If you’re investing into Factom, consider making it a long-term investment. Factom has amazing commercial uses and its price will surely adjust as word of it spreads.
Now for something completely different. Golem is a project that is currently in alpha. It uses Ethereum’s base protocols and smart contracts to minimize fees and maximize automatization.
Golem is doing something truly unique – using your computing power to make money and sustain its network. The goal of golem is to make a decentralized, online, global supercomputer. You can get on the golem network and order specific computing-heavy tasks, or put your own machine to use to earn money.
Golem is in early development and only supports a few ways to make use of its computing power, but what it offers so far is looking incredibly competent. Golem has seen an amazing increase in value since its launch, and it already has great plans for the future.
Golem will most likely find massive usage on the cloud computing market due to its base nature. Cloud computing is extremely lucrative which means that Golem will be far, far more valuable than it is today, should it rise to success. Some consider Golem a second chance for those who haven’t invested in early-day Ethereum or Bitcoin.
Golem’s security is top-notch already and it constantly receives updates. With this in mind, you can use a short term strategy to profit once a major update hits, or go for a long-term investment instead due to Golem’s prestigious record so far.
Keep in mind that investing into any newer and developing cryptocurrency is risky, and many factors could cause drops or a downfall. Golem is merely the best currency we’ve found among those worth truly betting on.
Perhaps you’ve noticed, but even in the top five currencies that we’ve selected, there’s already a variety of reasons for support, and with that come different styles of investment.
Put simply, we can divide cryptocurrencies into three distinct types in regard to investing.
In summary, invest long-term into mainstream cryptocurrencies, keep your eyes on development of any cryptocurrencies that are growing in popularity to find a good time to invest for nice gains, and don’t overextend when investing in a new currency.
Because Bitcoin and to a lesser extent Ethereum are popular, secure and have almost guaranteed profit, we suggest basing most of your investments on them, and putting about 20% of your money into less mainstream currencies. This way you have a solid strategy even if your smaller investments fail.
Consider that there’s several non-risky options available, such as Bitcoin, Ethereum, Ripple, Litecoin, Neo and so on. Spreading out your investments into several top-tier cryptocurrencies will keep you secure if one happens to suffer a loss.
Remember that awareness of Bitcoin is very different depending on where you are located. Even developed countries suffer from small awareness. The lesser-known currencies have it even worse.
Source: screenshot of investinghaven.com
There are three key aspects of a new cryptocurrency that you should look at before investing. This can apply to most altcoins, but the more popular ones call for less inspection.
If an altcoin pleases you in all three criteria above, you should be set to invest!
Some helpful tips, especially for altcoins as they usually involve less long-term investment.
Mainstream cryptocurrencies can be a perfectly valid and safe way to gain money by trading or investing.
The newer a cryptocurrency is, the more potential profit you can receive if you invest in it, should it prove successful.
It is up to you to use any and all information available, as well as your judgement, to choose what to invest to.
Remember that you are never limited to investing into one currency. Minimize any potential losses by keeping most of your money in safe hands (Bitcoin, Ethereum, etc) while using only a percentage to invest into developing altcoins.
Cryptocurrencies are still a relatively new invention. Keep in mind that globally there’s only room for improvement as the technology advances and is accepted further,
It is a tricky business, but trading and investing in cryptocurrency is far more popular than doing so with other money – there’s big potential for profit.