The Ultimate Guide To Choosing Profitable Bitcoins

Bitcoin is the original cryptocurrency, created in 2009 by Satoshi Nakamoto. It is a decentralised peer-to-peer cryptocurrency that runs on a blockchain, a ledger logging transactions distributed across a network of thousands of computers.

Bitcoin's price has skyrocketed as it has become a household name. In May 2016, one bitcoin was worth about $500. As of 30 July 2024, a single bitcoin was worth around $66,636, a growth of 13,227%.

However, there are thousands of other cryptocurrencies, or 'altcoins', to choose from. These include Ethereum, Tether, Solana, Binance Coin, XRP, Dogecoin, Toncoin, Cardano, and Avalanche.

When choosing which cryptocurrency to invest in, it is important to consider your individual goals, investing timeline and risk profile.

Best for beginners

If you're a beginner looking to invest in Bitcoin, there are a few things you should know and do before making any decisions.

First, it's important to understand the risks and rewards of investing in Bitcoin. All cryptocurrencies, including Bitcoin, carry a substantial risk of loss. Due to its incredible volatility, Bitcoin may not be suitable for risk-averse investors. You need to consider what large price swings could mean for your current finances and long-term investment strategy.

Next, you need to choose a platform that offers crypto trading. Cryptocurrency exchanges like Coinbase, Crypto.com, Binance, Kraken, and Gemini, traditional stockbrokers like Robinhood, Webull, TradeStation, and Fidelity, and robo-advisors may all provide crypto access. When choosing a platform, consider the minimum investment requirements, security, and liquidity risks.

Once you've chosen a platform, you need to decide how to store your Bitcoin. You can use a hot wallet, which is provided by crypto exchanges or software providers, or a cold wallet, which is an actual piece of hardware that stores your coins offline. While hot wallets are more convenient and accessible, they are more susceptible to hacking. Cold wallets provide extra security but are easier to lose.

After setting up your wallet, you need to decide how much Bitcoin to buy. Bitcoin can be bought in fractional shares, so your initial investment could be as low as $25. However, it's important to only invest what you can afford to lose, as Bitcoin is a very high-risk and volatile asset.

Finally, you need to manage your Bitcoin investments. You can use your coins to make online transactions, hold them for the long term, or perform day trading. It's important to have a long-term strategy and financial goals in mind when investing in Bitcoin.

Best for long-term investors

When it comes to long-term investments in cryptocurrency, it's important to consider your risk tolerance, investment goals, and the specific coins or tokens you want to include in your portfolio. Here are some options for cryptocurrencies to consider for long-term investments:

Bitcoin (BTC)

Bitcoin is often regarded as a solid long-term investment option. As the first decentralized cryptocurrency, it introduced blockchain technology and has since gained widespread adoption. Its limited supply cap of 21 million coins adds to its value proposition, making it similar to precious metals like gold. Bitcoin also benefits from its decentralized nature, operating on a network where transactions are secure and resistant to censorship or tampering. Its global acceptance as a store of wealth and payment method, including by major companies, further contributes to its long-term investment potential.

Ethereum (ETH)

Ethereum is the second-largest cryptocurrency by market capitalization and offers strong potential for long-term investors. It has established itself as a leading platform for decentralized applications (dApps) and smart contracts. The recent upgrade to a proof-of-stake protocol, known as "The Merge," is expected to improve scalability, security, and sustainability. While ETH mining has ended, staked coins are now yielding around 5%, making it a yield-bearing instrument. Ethereum's established network, smart contract functionality, and upcoming upgrades make it an attractive choice for long-term investment.

Cardano (ADA)

Cardano, founded by Charles Hoskinson, aims to provide a more secure and scalable infrastructure for decentralized applications and smart contracts. It offers a strong technological foundation, emphasizing peer-reviewed academic research and formal verification methods. Cardano addresses scalability issues faced by other blockchain platforms, such as high transaction costs and slow speeds. Its layered architecture, "Ouroboros," separates the settlement layer from the computational layer, allowing for improved scalability and potential future upgrades. Cardano's growing ecosystem and partnerships also contribute to its long-term potential.

Polkadot (DOT)

Polkadot is a cryptocurrency and blockchain network that facilitates the connection and creation of various independent blockchains. It enables users to access proof-of-stake validation for security and transactions and simplifies the transfer of digital assets across blockchains. With a market cap of over $7.46 billion as of April 3, 2023, Polkadot has become one of the best long-term cryptocurrencies since its launch in 2020. Its early entry into smart contracts and ability to connect and create new chains give it a competitive edge.

Chainlink (LINK)

Chainlink is a decentralized oracle network built on the Ethereum blockchain. It aims to bridge the gap between smart contracts and real-world data by providing reliable and tamper-proof data feeds. Chainlink's decentralized nature allows smart contracts to securely interact with external data sources, APIs, and traditional banking systems. Its native cryptocurrency, LINK, is used for various purposes within the Chainlink ecosystem, including compensating node operators and participating in governance decisions. Chainlink's upcoming upgrades, focusing on staking and security, are expected to further enhance its long-term potential.

Best for trading

Kraken is one of the original crypto trading platforms and has a good selection of coins and tokens to trade and invest in. It also allows margin trading. However, it is a real exchange and not as easy to use as some of the top platforms on this list.

Kraken is one of the few platforms on this list that allow you to trade in Dogecoin and other, more risky, tokens. Note that Kraken offers a limited selection of coins and tokens to US customers compared to international customers.

Kraken is one of the longest-running crypto exchanges, with a high level of security and trust. It has a large variety of crypto and tokens to trade.

Other Options:

Coinbase is the most popular and one of the best cryptocurrency exchanges because you can invest directly with USD. You can purchase Bitcoin, Ethereum, and Litecoin, as well as 30+ other coins and tokens on the platform. You can also earn interest on your USDT and earn token rewards by completing various activities.

Uphold offers a simple solution for trading multiple assets—open one account and trade multiple assets without having to convert back to cash. If you've ever traded crypto, you'll know that a lot of coins and tokens only trade in certain pairs, so you're always going back to BTC or ETH. But on Uphold, you can trade multiple assets directly.

Plus, Uphold is one of the few exchanges that allow you to trade XRP, DOGE, and more.

Binance has a huge amount of supported coins and tokens, fast transaction times, and is a US-based and regulated platform. However, it has limited customer support and is not available in all 50 states.

Best for earning interest

There are several ways to earn interest on your Bitcoin, each with its own pros and cons. Here are some of the most popular methods:

• Bitcoin lending platforms: These platforms allow you to lend out your Bitcoin to borrowers in exchange for interest payments, providing a passive income stream.
• Bitcoin savings accounts: Many cryptocurrency platforms offer Bitcoin savings accounts with fixed interest rates, allowing you to earn passive income without actively trading or investing.
• Staking: By staking your Bitcoin, you can help validate transactions on the blockchain network and earn rewards in the form of additional Bitcoin. This option is popular for long-term investors.
• Interest-bearing crypto wallets: Some crypto wallets, such as Ledger, Exodus, Trust Wallet, and Atomic Wallet, offer the option to earn interest on your Bitcoin holdings directly within the wallet.
• Decentralized Finance (DeFi) platforms: These platforms offer a wide range of financial services, including lending and borrowing, with no intermediaries. By participating in DeFi lending protocols, you can earn interest on your Bitcoin by providing liquidity to the platform's lending pool.

When choosing a method to earn interest on your Bitcoin, it is important to carefully consider the risks involved and do thorough research. The volatile nature of the cryptocurrency market and the lack of regulation in the industry mean that there is always the potential for losses and scams. It is also crucial to understand the lock-up periods, service fees, frequency of interest payouts, and annual interest rates offered by each platform.

• Uphold: A centralized exchange that makes it easy for beginners to start earning interest on their Bitcoin.
• Nexo: Offers a high-interest account with up to 17% annual interest on Bitcoin and other cryptocurrencies, as well as a Nexo card that gives you access to fiat without selling your crypto.
• Binance: Provides flexible and locked savings accounts with competitive interest rates on various cryptocurrencies, including Bitcoin.
• YouHodler: Offers an extensive set of crypto-fiat financial services, including a crypto-exclusive savings account and interest-bearing loans.
• Coinbase: A user-friendly crypto exchange that enables users to earn interest on over 120 cryptos, including Bitcoin.

Best for altcoins

Uphold is one of the few exchanges that allow you to trade XRP, DOGE, and more. It offers a simple solution for trading multiple assets—you can open one account and trade multiple assets without having to make a trip back to cash. Uphold's pricing structure is simple and transparent, and it offers both desktop and mobile apps. However, some users have reported poor customer service, and the platform is not as easy to use as some of its competitors.

Other Altcoin Options:

• Kraken: One of the original crypto trading platforms, Kraken has a good selection of coins and tokens to trade and invest in, and it also allows margin trading. However, it is a real exchange and is not as user-friendly as some of its competitors.
• Binance: One of the largest crypto exchanges in the world, Binance offers its own cryptocurrency, Binance Coin (BNB), which can be used for trading, payment processing, and even booking travel arrangements. While Binance.us has limited coins and tokens compared to the international version of Binance, the platform supports a huge amount of cryptocurrencies overall.

Frequently asked questions