How to Invest In Cryptocurrencies: The Basics
Nowadays, Non-fungible tokens (NFTs) are big business now, at least for the moment. Mark Winkelman, the artist known as Beeple, made $69 million at Christie’s when he sold a piece of digital art as an NFT. This makes him among the top three most valuable living artists, according to the auction house.
If you’re new to crypto, the idea of trying to invest in currencies like NFTs, Bitcoin, and Ethereum seems to be a decent choice. However, it’s not an easy job for new beginners to Invest in cryptocurrency, But fear not, we’re here to help you understand how to invest.
Investing in cryptocurrency
At its very simplest, buying cryptocurrency is like buying other types of assets: you find a broker or exchange, agree on a price, and that asset is sent to storage. The hope being the value of that asset rises over time and you then sell that asset at a higher price.
With cryptocurrency, it’s no different. For example, if you have a savings account, with interest rates so low in most Western countries, the performance of those savings would be a few percentage points per year.
If you invested in Bitcoin meanwhile, depending on when you invested you could be way up, or down.
The different types of cryptocurrency
If you look at the biggest cryptocurrencies by market capitalization — the total value of the tokens currently in circulation multiplied by the current price — you’ll see a whole host of different projects that use tokens for different things.
So you’ll see Bitcoin, which is a cryptocurrency ranking the best value, the price of which raised from 0 cents to more than 60,000 US dollars in the previous 11 years！
Another popular type of cryptocurrency — especially for investors — is stable coins. These are currencies pegged to the value of something else, typically the US Dollar. Examples of these include Tether and USD Coin.
The reason why they’re popular with investors is they’re often seen as a stable on-ramp into cryptocurrency, and often developed and deployed by companies regulated by financial authorities. What you buy for a dollar, stays at that price (generally speaking).
Additionally, you have your utility tokens, these are essentially tiny slices of a product. One of the most famous is Filecoin, it’s FiL token provides users a way of accessing its decentralized storage. There are hundreds of utility tokens built on Ethereum, too. The price of utility tokens tends to fluctuate in relation to how much that token is being used for its intended purpose.
There are security tokens, too, but because the definition of these tokens is not a legal distinction, but rather a technical one, we won’t go into too much detail.
There are a whole host of other definitions: privacy coins, meme coins, governance tokens, the list goes on. But at this stage, what’s important to note is that the value of these tokens, and in turn what influences that value comes from different sources.
Some tokens will see increases in value when exchanges decide to offer them as a trading pair with a more well-known token, like Bitcoin. Other tokens rise — and fall — in value when the projects that run them announce or change features. Some will respond to headlines, and others might be being manipulated by organized groups using the network to inflate value so they can sell off the tokens at a profit.
The reason why they’re popular with investors is they’re often seen as a stable on-ramp into cryptocurrency, and often developed and deployed by companies regulated by financial authorities. What you buy for a dollar, stays at that price (generally speaking).
Additionally, you have your utility tokens, these are essentially tiny slices of a product. One of the most famous is Filecoin, it’s FiL token provides users a way of accessing its decentralized storage. There are hundreds of utility tokens built on Ethereum, too. The price of utility tokens tends to fluctuate in relation to how much that token is being used for its intended purpose.
There are security tokens, too, but because the definition of these tokens is not a legal distinction, but rather a technical one, we won’t go into too much detail.
There are a whole host of other definitions: privacy coins, meme coins, governance tokens, the list goes on. But at this stage, what’s important to note is that the value of these tokens, and in turn what influences that value comes from different sources.
Some tokens will see increases in value when exchanges decide to offer them as a trading pair with a more well-known token, like Bitcoin. Other tokens rise — and fall — in value when the projects that run them announce or change features. Some will respond to headlines, and others might be being manipulated by organized groups using the network to inflate value so they can sell off the tokens at a profit.
How to invest?
First and foremost, it’s important to understand your appetite for risk. While 2020 has seen Bitcoin’s volatility stabilize, it’s still well above what you’d see in other asset classes and stocks. Investing in cryptocurrency is like investing in small businesses or playing the lottery, the chances of success are low but the payout is high if a winner is picked.
Until now, the crypto market has been laser-focused on fungible digital assets like bitcoin and Ethereum. As bitcoin hitting the $60,000 mark, many of you may pick BTC as your prior choice. But the question on everyone’s mind is: What’s next? What does the future hold in terms of price, regulation, and adoption of this “digital gold?” , will you just own BTC at its peak price?
Actually, there is no need for such a big concern. Recently, there is a quietly online NFT collectible-3DBtc, which is hailed as the NFT BTC by investors. This digital collectible, which looks like a BTC, seems to be ambitious. First of all, the concept of 3DBtc is very novel. He customized an NFT artwork for every BTC. A total of 10,000 coins are issued. The patterns and layout of each currency are unique and correspond to the coin king Bitcoin one-to-one.
3DBtc contains the respective block height, mining time, hash value, and birth number. Its scarcity and The characteristics of permanent preservation determine his great consensus on the collection. And one more thrilling thing is that now you can own a piece as low as 0.05ETH each, that is to say, a former investor can easily afford a 3DBtc, the BTC in NFT field at there ten thousand BTC! With exquisite design and eternal collection value, it’s obvious that the return on investment will way surpass your imagination.
The current cryptocurrency boom might be a fork in the road if enough people want it to be. With a bold mind, smart investment choice for assets with great expectations at its early stage, investors can and take the path less traveled.
