Cryptocurrency adoption is growing rapidly, and many investors are adding cryptocurrency coins to their investment portfolios. Cryptocurrencies have high growth potential, and they generate higher returns than other financial instruments and investments.
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Cryptocurrencies are some of the best-performing digital currencies in the world, and during the past year, Bitcoin has increased over 480% in comparison with the Dow Jones experiencing growth of 45%, and the price of gold grew by 5% in the past year.
Cryptocurrencies can be bought, sold, and exchanged either through a forex broker or by registering with a cryptocurrency exchange trading platform. These platforms allow users to buy cryptocurrencies with fiat money, or they allow crypto-to-crypto exchanges between investors and traders.
There are over 12,000 cryptocurrencies in circulation today, and the following are the best coins to trade and invest in.
1. Bitcoin (BTC)
Bitcoin is the first cryptocurrency that was created and launched in 2009 by an individual/group known as Satoshi Nakamoto. Bitcoin runs on the original blockchain, which is a public leader that registers transactions that are distributed in a network that runs across thousands of computers worldwide.
Any entries to this distributed ledger are verified by users using cryptographic puzzles, also known as a Proof-of-Work (PoW), which is a consensus method that keeps the blockchain and Bitcoin network safe.
The aim behind Bitcoin is for it to serve as a currency that can be used to pay for services and products, much like fiat or paper money is used for payments.
Bitcoin is a good investment because it is liquid and scarce, retaining its value better than any other asset in the markets. Bitcoin has the best historical performance of all other assets in history, and it is the best hedge against inflation.
Bitcoin has a current price of $43,000 with a growth rate of +480% Year-to-date (YTD). From launch to date, Bitcoin shows an overall return on investment of 31,782.76%.
2. Ethereum (ETH)
Ethereum is a decentralized open-source blockchain system with a native cryptocurrency, ETH. Ethereum is a platform for several other cryptocurrencies, and it is well-known for the execution of decentralized smart contracts and decentralized applications (DApps).
Ethereum was described in a 2013 whitepaper by Vitalik Buterin. Buterin, along with several other cofounders, secured funding for the Ethereum project through a public crowd sale that raised $18.3 million in Bitcoin.
At its Initial Coin Offering, Ethereum sold for $0.33, and over 60 million ETH was sold. Ethereum currently has a return on investment (ROI) with an annualized rate of over 270%.
Ethereum is a good investment because it does not need to be mined, and it is, therefore, a more popular and environmentally friendly option. Ethereum is also a good investment because of the potential that its technology possesses to change many industries.
Ethereum has a current price of $2,976.45 with a growth rate of +720% YTD and an overall ROI of 104,357.88% from launch to date.
3. Binance Coin (BNB)
Binance is a cryptocurrency exchange that was launched in 2017, and it is one of the biggest exchange trading platforms in the world. Binance was founded by Changpeng Zhao and He Yi.
Binance Coin (BNB) is the native coin for Binance, and it is a good investment since Binance is a successful exchange that hosts a wide range of features, including the Binance Chain, Binance Smart Chain (BSC), Binance Academy, and more.
Binance Coin is a popular and safe investment because it is not as volatile as Bitcoin and some other cryptocurrencies.
Binance coin has a current price of $343.00 with an annual growth rate of 1,219% YTD and an overall ROI of 297,384.4% from launch to date.
4. Cardano (ADA)
Cardano was founded in 2017, and it is a Proof-of-Stake (PoS) blockchain platform that is open-sourced and aims to help create a secure and transparent society. Cardano's native token is ADA which allows owners to participate in network operations. As a governance token, ADA allows users to vote on proposed changes to the software.
Cardano is a good investment because it provides practical uses in the physical world, and ADA has been growing since its launch in 2017. Cardano has a high market capitalization, and as an academic cryptocurrency, it has a high potential market.
The development team of Cardano is committed to ensuring that the platform experiences a lot of development and growth, placing value in investments. Another factor that will make ADA a good investment is the fact that there is a limited supply, and as supply becomes less, the value of ADA is set to increase drastically.
Cardano’s current price is $2.26, and the annual growth rate is +2,100% YTD, with an overall ROI of 10,368.22% from launch to date.
5. XRP (XRP)
While many refer to it as Ripple, it is important to note that there is a difference between XRP, Ripple, and RippleNet. XRP is a currency that runs on the digital payment gateway and platform, RippleNet, which is built on a distributed ledger database known as the XRP Ledger.
RippleNet is run by the company called Ripple, with the XRP Ledger known as an open-source project that is not on a conventional blockchain but that is based on a distributed ledger database.
XRP was created by Ripple to be a fast, cost-effective, and more scalable alternative than other digital assets. The ledger is maintained by the global XRP community, and Ripple is an active member of this.
XRP is a good investment for thematic investors who buy digital currencies according to top-down investment approaches that diversify their investment portfolio. Following a lawsuit with the SEC, XRP was delisted from several major exchanges.
Before and after the lawsuit, the price of XRP was extremely unstable, but it has since stabilized, with XRP building back its reputation and the trust that it lost in investors.
XRP has a current price of $0.94 with an annual growth rate of +291% YTD and an overall ROI of 15,940.1% from launch to date.
6. Dogecoin (DOGE)
Dogecoin was initially started as a joke in 2013, and it is based on the popular “Doge” Internet meme that features a Shiba Inu as its logo. DOGE is an open-source digital currency that is based on a Proof-of-Work consensus method but uses Scrypt technology.
DOGE is a popular coin used primarily as a tipping system on social media platforms such as Reddit and Twitter to reward content creators for quality content.
DOGE can also be used to tip community participants who use the coin, or DOGE can be obtained from a Dogecoin faucet, which is a website that gives free coins as an introduction to the currency and encourages participation in the Dogecoin communities.
DOGE is a good investment because it has the support of Elon Musk and other prominent figures. Dogecoin also has a massive social medial following and a large online community. There is no maximum supply of Dogecoin, and it can be purchased on any major exchange.
Dogecoin has a current price of $0.204 with an annual growth rate of 10,100% YTD and an overall ROI of 36,562.42% from launch to date.
7. USD Coin (USDC)
USD Coin (USDC) is a stablecoin that is pegged to the US Dollar at a ratio of 1:1. For each unit of USDC in circulation, there is $1 that is held in reserve in a mix of short-term United States Treasury bonds as well as cash. The asset is backed by the Centre consortium, and it is issued by regulated financial institutions.
The purpose behind USDC is to be a digital currency in a world where cashless transactions are becoming more widespread.
USDC is a good investment because it is pegged by the US Dollar, it provides a way for cryptocurrency traders and investors to protect themselves against market volatility, and USDC can be used as a hedge against inflation.
USDC’s current price is $1.00 and an overall ROI of -0.38% from launch to date.
8. Polkadot (DOT)
Polkadot is an open-source sharding multi-chain protocol that facilitates cross-chain transfers of any asset type or data, not only crypto assets. This makes several blockchains interoperable with one another. This interoperability tries to establish a fully decentralized and private web that is completely controlled by users.
It also aims to make the process of creating new applications, institutions, and services much easier. Polkadot connects both public and private chains along with permissionless networks, oracles, and future technologies together.
Through this, these independent blockchains can seamlessly share information and transactions through the Polkadot relay chain. Polkadot's native token, DOT, services three primary purposes, namely providing governance of the network, the running of all operations, and creating parachains (parallel chains) through bonding.
Polkadot is a good investment because it has innovative technology and a good reputation. DOT is popular because its value is rising at an unprecedented rate and the coin also records significant daily price action. Its strong growth rate and potential make it perfect for long-term investors and day traders.
The current price for Polkadot is $29.00, and the YTD price change and growth rate is +570%, with an overall ROI of 952.39% from launch to date.
9. Solana (SOL)
Solana is a highly functional and open-source project that works on the same permissionless nature as blockchain to offer decentralized finance (DeFi) solutions.
Solana is a protocol that was designed to facilitate the creation of various decentralized applications (DApps). The protocol works to improve scalability by using a Proof-of-History (PoH) consensus method that is combined with a Proof-of-Stake (PoS) consensus.
SOL is a good investment because the hybrid consensus model that Solana uses means that there is a lot of potential for further development in its technology and its application in the physical world.
Solana is considered as a cheaper, faster, and equally reliable alternative to Ethereum, where the development of smart contracts and DApps is concerned, leading to developers flocking to the network to use its unique scalability at lower costs than the gas fees that Ethereum charges.
Solana has a current price of $138.00 with an annual growth rate of +4,294% and an overall ROI of 61,794.18% from launch to date.
What should you know before investing in cryptocurrencies?
Cryptocurrency trading and investment is a lucrative way to earn additional income, both short-term and long-term. However, there are several things that investors must consider before they put capital into cryptocurrencies.
Cryptocurrencies are digital assets, much like a computer file, which is kept in a digital wallet with private and public keys. To access the digital wallet, the user needs to use their private key, which is like a PIN or a password. This private key must be kept safe because if it is lost, the user loses access to their funds, and it can never be recovered.
A public key is an address that the receiver of crypto gives the sender. Once the funds are paid over into the receiver's digital wallet, they use their unique private key to access the funds.
To buy, sell, and exchange cryptocurrencies, users, need a digital wallet. There is no single digital wallet that can be used, and there are hundreds of different digital software applications. Different digital wallets are compatible with different cryptocurrencies.
Users must also know that there is a difference between hot and cold wallets. Hot wallets are digital storage that is always online and is susceptible to hacking attempts and cyber-attacks.
Cold wallets are offline and considered the safest storage for large sums of cryptocurrencies. Investors are urged to keep most of their funds in a cold wallet and to only transfer enough crypto to their hot wallet for trading and transactional purposes.
How to buy, sell, or exchange cryptocurrency
Cryptocurrencies can be bought, sold, and exchanged in two different ways:
- Through a forex and CFD broker either as a physical asset or a contract for difference (where traders can profit from speculation on the price of an asset without owning the asset).
- Through cryptocurrency exchange trading platforms that allow traders to buy cryptocurrency with fiat money or by exchanging existing crypto coins for others.
To register with a broker, cryptocurrency investors must complete an application form and complete a “Know Your Client” (KYC) process to verify the account. During this process, the investor must submit proof of identification and proof of residence to verify their account before they can start trading.
To start trading with a centralized cryptocurrency exchange, investors must complete the KYC process as part of the exchange's anti-money laundering policies. However, with a decentralized exchange, this process is not a requirement, and investors can remain anonymous.
Cryptocurrency Terms that every investor must know:
- Fork – a soft or hard fork relates to the splitting of a blockchain because of competing philosophies or a protocol update.
- HODL – the act of holding onto coins and resisting the urge to sell even if there are dire market conditions.
- Pump and Dump – refers to manipulation by whales (investors who own significant amounts of coins with the potential of influencing prices) or collectives.
- Long/Short – refers to buying/selling of crypto.
- Node – a node is a computer that runs software to support a specific cryptocurrency.
- Mining – the process involved with computers verifying cryptocurrency transactions to maintain consensus of the network and distributed ledger.
- Hashrate – refers to a measure of mining hardware power.
- Block – refers to a group of transactions on the blockchain and a unit of work that miners process.
- Block reward – refers to the reward that miners receive for confirming a block of cryptocurrency transactions.
- Proof-of-Work (PoW) refers to the consensus method that keeps Bitcoin's digital ledger free of commissions or errors. With a PoW, miners must guess a random number that will give them the correct hash for a block. PoW uses a significant amount of computational power.
- Proof-of-Stake (PoS) refers to an alternative consensus method that rewards those who hold the most coins. The chances of verifying a block are greater the more coins a user holds.
- GPU mining refers to using a graphics card to mine crypto.
- ASIC mining refers to using application-specific integrated circuits (ASIC), which are specialized computer chips to mine cryptocurrency.
- Altcoins – are all cryptocurrencies other than bitcoin.
- Cryptography – refers to the process that makes cryptocurrency safe.
- Blockchain – refers to a universal public leader of Bitcoin transactions.
Safety of Cryptocurrency
While cryptography is involved in cryptocurrencies, direct ownership and transactions that involve crypto assets are unregulated, and there is truly little consumer protection.
There are many cases of fraud, scams, and abuse in many applications, resulting in investors losing a significant amount of capital and funds.
Investors are required to keep their funds safe by using cold storage wallets, keep their private keys for these wallets safe, and thoroughly research exchanges and brokers to verify their reputation, regulation, and level of security before dealing with them and trusting them with capital.
What are the best platforms to invest in Cryptocurrencies?
The best cryptocurrency platforms to invest in are listed below.
- The Best overall exchange with powerful security features, more than 150 cryptocurrencies, and advanced trading solutions – Binance
- The safest cryptocurrency platform that is easy to use for beginners – Coinbase
- The top-rated Bitcoin exchange with high security and low trading fees – Kraken
- The perfect hybrid social trading platform where forex and crypto can be traded – eToro
- The best low-cost cryptocurrency exchange trading platform with commission-free trading – Robinhood
Should you use Apps for Cryptocurrency Investment?
Yes, trading apps are the perfect platform for cryptocurrency investment.
Crypto trading apps are advanced technological developments that give users access to their investments 24/7, no matter where they are in the world. The cryptocurrency market is a financial market where price movements occur rapidly.
This requires crypto investors to act quickly when there is a market opportunity to earn profits. Crypto trading apps enhance the trading experience and allow investors to manage their crypto investment as part of their investment portfolio.
The best crypto apps on the market are:
- Best Exchange for Global Users: eToro
- Best Platform for earning Cryptocurrency: Crypto.com
- Best exchange for trading: Gemini
- Best trading app for beginners: Coinbase
- Best trading app for commission-free crypto trading: Robinhood
How to understand which Cryptocurrency is better to invest in
There are over 12,000 cryptocurrencies in the world. This makes it difficult for investors to know which cryptocurrencies they should invest in. Beginners in the field may find it especially hard to navigate the crypto market and struggle to understand the foundations of investing.
Beginners need to understand what their investment objectives are, how much they can invest, and what they should invest in that will give them a positive return on investment.
The crypto market is a volatile market where prices can change in less than a second. It is, therefore, important that investors follow these instructions to determine which cryptocurrency is the best for them to invest in.
- Explore the Community
- Carry out a Fundamental Analysis
- Consider and research the Development Team
- Evaluate and understand the Technology
- Read the White Paper
- Consider their Vision
- Evaluate their Leadership
- View the Pricing History
- Research and evaluate the Credibility and reputation
- Evaluate the Road Map
1. Explore the Community
The community behind any coin is one of the biggest determining factors of success. Cryptocurrencies that have strong and active communities with loyal followers are the best option.
This shows that there are users who have a genuine interest and who have faith in the future of the specific cryptocurrency. Users can read through Subreddits, explore YouTube channels and articles to get feedback from the communities of coins.
Reddit is one of the best platforms to explore the community and following of any altcoin and to read what others say about its investment potential. Reddit is also the perfect place where complex and difficult technical concepts are broken down and explained in simpler terms.
Some of the largest cryptocurrency communities are active on various social media platforms, which further shows their faith in the cryptocurrency. These forums are perfect for beginner users who want to understand how the process works, the technology behind a coin, and so on.
However, smaller communities are not a bad sign, especially if they are still active, helpful and they are willing to answer any questions that prospective investors may have.
2. Carry out a Fundamental Analysis
A fundamental analysis simply means that the user explores the foundations of investment by evaluating the team, ambitions, strengths, weaknesses, and other factors that surround the coin.
By carrying out fundamental analysis on a potential investment, the user can base their investment decision on facts.
3. Consider and research the Development Team
This is one of the most important things that users must research. Users must research and vet the team behind the cryptocurrency by analyzing the following:
- Who is behind the team?
- Can the team's expertise be trusted?
- Is the team ambitious about the project?
- Do the team and cryptocurrency have a proven track record of accomplishment?
4. Evaluate and understand the Technology
The underlying technology is another big part of any cryptocurrency's success. Users must understand and compare how the cryptocurrency is set to perform against competitors and how the technology is set apart from the rest.
Users should consider the unique technology, how it can be used in the physical world, how it can improve current processes, how many industries can use it, etc.
5. Read the White Paper
When a cryptocurrency is launched, there is typically a white paper that companies it. The white paper outlines the purpose of the coin, its underlying technology, how it works, and what the overall objective is.
The white paper is one of the best ways to evaluate and verify the fundamentals of a coin. The more users read white papers, the more they will improve in identifying long-term winners.
In addition, the white paper can also tell the user about the coin's professionalism and credibility. Some of the most common red flags that users must look out for are:
- The cryptocurrency promises unrealistic goals.
- The white paper is overly in the overall objectives.
- There are spelling mistakes and grammatical errors.
6. Consider their Vision
The vision of a specific cryptocurrency is important, especially in the long-term sense. A large vision is often a tell-tale sign of ambition. If the cryptocurrency does not have a clear vision and mission, the coin will struggle to become a top competitor or disruptor in a highly competitive field.
Users can consult the white paper, social media, and the coin's website to try and identify what the developers' intent is for the coin. The user can also inspect the community to get an idea of the culture that is being cultivated.
Users should only invest in cryptocurrencies with a strong, realistic, and clear vision. While short-term gains are exciting and users consider day trading or swing trading, it is important to consider the long-term growth and value of the cryptocurrency in the next 5 to 20 years.
7. Evaluate their Leadership
The success of any cryptocurrency is navigated by a strong leadership team. The leaders are the ones that carry out the vision of a coin, and users must be assured that the leadership is committed and invested in the project.
IT is important to consider previous projects that the leadership was involved in or whether they have relevant experience in the field. Another important consideration is what the leadership aims to achieve with the coin.
8. View the Pricing History
Price fluctuations are inevitable in the cryptocurrency market, and they can occur rapidly and drastically in a short time. Pricing fluctuations present in the price chart of a coin can give the user strong historical indicators of the coin, especially when paired with fundamental analysis to determine why the price fluctuated at a certain point.
By using technical analysis and fundamental analysis, users can determine whether a coin is a solid investment long-term. Other considerations include whether the coin is volatile in value, the resilience of the coin during major market dips, and the price of the coin is at an all-time high.
9. Research and evaluate the Credibility and reputation
Users must consider the coin's online reputation and its credibility by looking through crypto communities to discover what people think about the coin.
If there is a lot of negativity, it is better to invest in another coin. If there are mixed reviews, it means that further research is necessary to determine whether it is a good investment, based on facts such as the price history and performance.
If a cryptocurrency looks like a Ponzi or pyramid scheme, users should avoid investment.
10. Evaluate the Roadmap
While deciding on which cryptocurrency to invest in, users must consider coins that have a clear, realistic, and solid roadmap and strong plans for future developments and growth.
A few things to look out for are:
- Clear timelines for development.
- Indication of the timeline on major update releases.
- If there is a limited supply of coins that will be released, the time when the limit is expected to be reached should be indicated.
The important factor with viewing these components is to evaluate the cryptocurrency's potential for long-term success, especially if there is a limited supply for a coin.