While many cryptocurrency detractors expected the market would never recover from the 2018 crash, this year has proven that was not the case.
This recovery period means that newcomers are once again arriving at the cryptocurrency market – investors looking to multiply their holdings and considering whether cryptocurrencies are a good way to do so.
After all, there are dozens of stories, about people becoming millionaires by investing in crypto.
The chance to quadruple the size of your investment portfolio overnight and bag the biggest capital gains possible comes to life with cryptocurrencies.
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Why should I invest in cryptocurrencies?
This could be the possibility for the greatest world transfer that the world has ever seen.
The cryptocurrency market is one of the biggest growing investment sectors in the last few years.
Early proponents saw their Bitcoin holdings go from being worth $1 a piece to $19,000 – receiving the kind of ROI most wall street investors would kill for.
While it’s unlikely anyone will ever make such a huge ROI from cryptocurrencies again, crypto tokens tend to appreciate much faster than company shares and are therefore seen as desirable by many.
Moreover, since crypto mass adoption is pretty much a certainty by now, cryptocurrencies are expected to see a price surge in the near future.
The basis for optimism is simple-like the stock market, cryptos will see great rises and crashes, and as such, there will always be a window to make some money.
After all, many countries are coming up with diverse regulations to make sure the industry players are accountable and adhere to generally accepted operational standards.
Best practices when buying and storing crypto
While cryptocurrencies are secure by design, in truth, platforms are only as secure as their user and their practices.
The most secure cryptocurrency in the world can still be stolen if they aren’t properly stored and traded.
When buying cryptocurrencies, always do it from a reputable exchange. This means an exchange trusted by the community, like Binance or Coinbase, but depending on where you’re located, you might want to go a bit further and use a regulated one.
Regulated exchanges run according to a country’s financial laws, putting them in the clear and making all transactions made through them legal.
While storing crypto in your exchange is often fine, and large exchanges are both secure and insured, nothing beats keeping your crypto in cold storage yourself.
If you’re keeping cryptocurrencies for the long run, look into the process – it’s simple and guarantees that you’ll have your crypto when you need it regardless of what happens with the exchange.
Last, always use secure passwords for everything related to your finances.
This means not only your exchange account, but your crypto wallet and the email tied to those accounts should use passwords that aren’t easy to guess or brute force.
2FA is also a worthy practice to mention. Always tie your online wallets to your mobile phone and email.
When any access to your online accounts occur, you will get a notification. This can save you lots of sorrow and tears.
With regards to safety still, endeavor never to flaunt your trading success on social media or online communities.
You will become an easy target for predators that prowl these platforms, and they will not stop until they use phishing schemes to invade your email and hack your wallets.
5 Best Cryptocurrencies Everyone Should Own
By now, there are over a thousand different cryptocurrencies on the scene, and while “investing in cryptocurrencies” is good advice, “investing in the first token you come across” is not.
Most cryptocurrencies are worthless these days, with only a small group of them earning the plaudits. Even fewer of those could be considered good investments, at least when taking to account the risks you’d be taking.
Among investors, however, there are a few tokens everyone seems to agree are good to invest in.
This doesn’t mean everyone who invests in them will make lots of money – in fact, some people will lose money – but that they’re the most likely tokens to increase in value over time.
The basis for the optimism above is grounded in facts. These tokens have a history, and others have justified their use cases. Let us look at these at close range:
The original cryptocurrency, Bitcoin is the most commonly mentioned cryptocurrency, to the point where some news outlets will use the term “bitcoin” to refer to cryptocurrencies in general.
There’s little that hasn’t been said about the token by now, yet public understanding of how it works is still low – partly because the concept of the cryptocurrency and how it works can be difficult to understand.
Nonetheless, understood or not, Bitcoin is still the indisputable king of cryptocurrencies.
Bitcoin’s popularity alone acts as a safeguard against market shifts.
There’s a permanent interest in the token, and its track record (including reaching $19,000/token in late 2017) is enough to entice many an investor to join the market, led by dreams of a new bull market.
The token has seen a bit of a renaissance during this year thanks to rising prices in the wake of a renewed interest in the market.
While it’s yet to be seen whether the token will reach or surpass the heights of 2017, the year has seen many investors who bought in right after the market crash get handsomely rewarded for their patience.
While the market is impossible to predict, it is expected that Bitcoin’s price will continue rising into the new year as cryptocurrencies enter the mainstream consciousness again.
Another older token, Ethereum is easily the second best-known cryptocurrency in the world, right after Bitcoin.
Unlike Bitcoin, Ethereum is more than just a cryptocurrency, however – the Ethereum blockchain is a smart contract and development platform that currently serves as a base for several successful distributed apps in the market.
This puts the cryptocurrency in an interesting position, since it’s one of the older tokens to have a reason to exist beyond just being used as currency – and therefore, it’s unlikely the Ethereum blockchain, or its tokens, will disappear overnight.
As with Bitcoin, the Ethereum prices surged earlier this year, motivated both by Bitcoin’s own rise, as cryptocurrencies tend to prop each other up, and renewed interest in crypto in general.
Sadly the price surge didn’t last, but it did serve to prove that the token is far from dead and still seen as a good investment in most circles.
One of Ethereum’s main advantages over Bitcoin is that it is still in active development.
While the Bitcoin blockchain was finalized in 2009 and only tiny changes have been made to it since, Ethereum is regularly updated in attempts to keep the blockchain competitive in a market where every other day, a new project is unveiled.
Among Ethereum’s most recent updates is the groundbreaking Constantinople protocol, expected to reposition the usability, speed, and safety of the platform.
Ethereum’s price is at a relatively low threshold at the moment, but the blockchain shouldn’t be discounted.
It is, after all, the premier platform for Dapps and smart contracts, and it’s quite likely that as mass crypto adoption draws near, more and more people will turn their heads towards Ethereum for all the services it provides.
Rather than trying to reinvent the wheel or conquer a new market, Ripple takes a different approach to the same problem Bitcoin tried to solve -that of sending and receiving money over the world instantly and for small or nonexistent fees.
While Bitcoin has only managed to position itself as an investment option, Ripple’s particular strategy – which included beating banks and financial institutions to the money transfer game, positioning itself as a 21st century replacement to the old, slow, expensive order– has seen it adopted by many financial institutions all over the world, with the list growing longer every passing day.
In fact, as of 2019, banking is one of the main uses of Ripple, with the blockchain often used as an interbank network allowing institutions to send and receive money from each other directly.
This level of adoption by banks has led to the crypto token becoming the second largest coin by market capitalization, a trend that’s only likely to continue.
Ripple’s prices have historically remained low, and during 2019, the trend has been downward, but you shouldn’t let this fool you: The token is still very much alive.
The low prices are a result both of a huge number of tokens in the market (necessary to allow banks to send each other money no matter how small the amount) and our current economy where many markets, particularly financial ones, seem to be bracing themselves for a recession.
Curiously, investing in cryptocurrencies is one of the commonly thought avenues to try and ride the incoming recession, which means that if the fears many economists have crystallizes, Ripple’s price will rise as the economy takes on the much-fabled incoming downturn.
As such, Ripple’s price, although low and getting lower, should appreciate over time regardless – a stronger economy will mean more people and institutions will turn to it.
While a weakening economy might turn many people towards cryptocurrencies in attempts to minimize the damage to their financial assets, tokens like XRP will be among the bid winners.
Litecoin is one of a handful of bitcoin-based altcoins, and quite likely the most successful of the lot.
Bitcoin-based altcoins are cryptocurrencies that use the same base code as Bitcoin, with its strengths and flaws, while making changes, usually small, to how the cryptocurrency works.
The most common reason for these coins to appear is the Bitcoin community’s reluctance to make any larger changes to its code, which has made any members of the community pushing for them to create hard forks in the code so they can be implemented.
In general, these resulting cryptocurrencies retain most of Bitcoin’s properties, usually addressing one or two large concerns, like the scalability problem or security issues.
Litecoin has always had a lower price than Bitcoin. However, most Bitcoin-based altcoins, while being cheaper, mimic Bitcoin’s price swings – meaning they go up and down as Bitcoin does.
This makes these altcoins great investments for people on the fence about Bitcoin due to how expensive the token is, since it gives them a cheaper alternative that’s likely to see a similar return of investment.
As with Bitcoin, Litecoin’s price is expected to go up during the rest of the year, and even if it depreciates it’s unlikely it will lose most of its value or fail to recover barring an earth-shattering event in the crypto scene.
This marks it as one of the safer investments in the market currently.
Binance Coin is the outlier in our list. Firstly, because it’s the newest token of the lot, having barely been on the scene for just two years in the market.
Secondly, because unlike the other tokens, which were made by groups of developers trying to tackle specific problems, Binance Coin was introduced by a crypto exchange, namely Binance.
The manner in which Binance Coin was launched might seem suspicious, but any doubts have since been cleared by Binance’s commitment to helping cryptocurrencies and blockchain technology mature.
Binance has since been focused on aiding other blockchain projects, and its own Binance Blockchain is a home both to external developers and the exchange’s own attempts to push mass adoption.
Binance Coin is, in fact, one of only a handful of tokens to have reached its peak price after the 2017 bull market.
It's price has been slowly rising since, and this last year in particular has seen the token break its own price record a few times.
The basis been the onslaught of projects piggy-packed to the global market on the terms of BNB and IEOs.
With IEOs attracting record participation on Binance chain, it was hey days for BNB as demand for it has continued unabated.
After all, to take advantage of the price discount on transactions, Binance users had to take BNB as first preference when settling platform fees.
Since Binance is as relevant in the crypto market as ever, it’s highly unlikely Binance Coin will lose its value anytime soon.
The token is currently the preferred payment method for Binance’s exchange fees, with the exchange offering hefty discounts to those using it, and it’s often listed as one of the few, or the sole, way to participate in Binance’s IEOs.
The introduction of BTCB, a bitcoin derivative and news of Binance stablecoin can only assure the market that Binance is consolidating or becoming an outright behemoth.
The only worry Binance Coin brings with it is, curiously, also tied to its origins:
While Binance’s strength has helped prop up the crypto token, were the exchange to lose market share or disappear the token would more likely than not also suffer the same fate.
Binance is currently the largest crypto exchange in the world, so such a thing isn’t likely to happen anytime soon, but it’s good to always remain on top of any developments on the scene – and around Binance – if you own this token, just like any sane investor should be expected to do.
Why is crypto becoming a real investment alternative these days?
Long gone are the days that people buying Bitcoin were thought of lacking knowledge and driven by fantasy.
While the early crypto proponents a decade ago envisioned a scenario where everyone used Bitcoin and cryptocurrencies, the fiat currencies replacement part is yet to come.
However, it’s increasingly common for people to invest in crypto without feeling the need to justify their choices.
The reason for this is twofold. First, crypto has already yielded huge earnings for a subset of the population, specifically those who adopted it early.
As such, there are already people who can vouch that there’s money to be made in cryptocurrencies.
The second reason is more important: Plenty of financial institutions, among them several who just a couple years ago called crypto a fad, have jumped into the market.
The simple presence of companies like JPM give the market legitimacy, since most people both in the financial world and among the general population wouldn’t dare go against the investment giant.
Thus, the general train of thought goes as this: If companies like JPM see value in crypto, there must be a basis, since they’re rarely wrong.
Even if JPM does happen to be wrong, its presence in the market makes people think otherwise.
There’s a third, smaller reason why it’s an alternative these days, too: More and more financial institutions are offering crypto to their customers as investment alternatives.
It’s even become popular as an IRA investment. The fact that investing in crypto is easier now than ever has also helped the general population to get closer to it.
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Expectations and Market Possibilities
When investing, it’s always good to be clear on what you can expect from your investment – that is, how much ROI you should expect and how soon, and what the risk of losing some or all of your investment is.
While these cryptocurrencies we’ve listed are seen as safer, there’s always an inherent risk to investing in cryptocurrencies.
Crypto markets have crashed before and it’s quite likely that, given enough time, they will again.
Also, these cryptocurrencies are safer than others right now because they’re the dominant ones – but markets are prone to shift.
When investing, always keep in mind that you aren’t likely to see a huge ROI soon.
While the crypto market moves faster than the stock market, its tendency is towards settling – so you should approach it as you would approach purchasing shares in a company.
There’s always a chance your token of choice will appreciate greatly overnight, in which case you should consider yourself lucky.
Else, assume you won’t see any returns based on the spur of the moment and set your sights on long-term capital gains.
What to expect in the future
The current state of the market is transient. Big tokens have appreciated in value and there’s a bit of a bull market going on, but that won’t last too long.
The expectation that mass adoption might be imminent has partly driven these prices, and once a big player breaks in, the market will likely be thrown into disarray.
Large tokens are expected to retain most of their value, or perhaps even appreciate, but smaller tokens might be wiped out in the mid-to-long term.
The main fear of the current market is a large company, such as JPM, taking over, bringing entirely capitalistic and old economic beliefs to what is so far a free economy.
In truth, nobody knows exactly what to expect – the only thing we know is the market is currently much more stable than it has ever been, but recent and upcoming developments make it look like the calm before the storm.
Cryptocurrencies are here to stay, there’s no doubt this, but the markets are likely to be shaken sooner or later – with sooner seeming the most likely option.
Should You Invest in Cryptocurrency?
Perhaps it might sound weird, after that last gloomy outlook, to say that in general cryptocurrencies are a good investment right now. But they are.
The market is bracing itself for an earth-shattering development, but that might still take a while to happen – it might be years, in fact.
The technology has matured to the point of finally being useable, the main issues blockchain has faced, such as the scalability problem, have been dealt with in newer projects, and there’s no technological reason why crypto couldn’t go worldwide.
But we don’t know when that will be.
For now, there’s only one thing you need if you wish to invest in cryptocurrency: Knowledge.
That means both knowledge of how the market is right now and what goes on with it while you have cryptocurrencies.
Don’t limit yourself to only learning about the tokens you have either – other tokens might appear out of nowhere and dethrone them.
In the end, cryptocurrencies are still a good investment and stand a chance at delivering a major ROI.
However, they require their holders to keep close watch on the scene and prices since the market is known for its volatility.
A close parallel here might help- forex and the market for derivatives have been growing in the last decade.
While to many people this is a no-go area, these investment vehicles have continued to grow in leaps and bounds.
This might be the likely fate of cryptos, serving a niche market and enduring, even if the likes of Facebook Libra never see the light of day.
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Asif is a cryptocurrency enthusiast and journalist who’s been writing on the subject since 2014. He also has a keen interest in social engineering and cybersecurity. When not busy writing about cryptocurrency, he can be found reading books and listening to music. He holds an M.Sc in Life Science and an MBA in Finance & Banking.