The Ultimate Guide To Cryptocurrency Coin Price Investing

Investing in cryptocurrency is a risky business. Cryptocurrencies are various forms of digital money that are usually based on blockchain technology. They are decentralised and free from government manipulation and control. The most popular cryptocurrency is Bitcoin, which has been a trendsetter and continues to lead the pack in terms of market capitalization, user base, and popularity. However, there are thousands of other cryptocurrencies available today, including Ethereum, Cardano, Solana, Dogecoin, and Litecoin.

Cryptocurrency investing can take many forms, from buying cryptocurrency directly to investing in crypto funds and companies. You can buy cryptocurrency using a crypto exchange or through certain broker-dealers. Once you own it, you can store, manage, and even buy or sell your crypto in a wallet. It's important to do your research and carefully consider your investment goals, risk tolerance, and time horizon before investing in cryptocurrency.

Crypto wallets: software vs hardware

Crypto wallets are essential if you want to buy, sell, or do anything else with cryptocurrency. They store the private keys for your digital assets, which are used to authorise transactions. There are two main types of crypto wallets: hardware and software.

Software Wallets

Software wallets are entirely digital and come in the form of applications used on a desktop, laptop, smartphone, or other digital devices. Examples of software wallets include MetaMask, Trust Wallet, and Exodus. Software wallets are usually free and very convenient, as they can be accessed from anywhere with an internet connection. They also offer a wide range of features, such as staking, market statistics, and the ability to buy or sell crypto directly through the application.

However, software wallets are susceptible to hacking and malware attacks because they are stored on devices connected to the internet. Additionally, if your device is lost, stolen, or damaged, you may lose access to your private keys and cryptocurrency funds. Therefore, it is important to have antivirus software, firewalls, and other security measures in place if using a software wallet.

Hardware Wallets

Hardware wallets are physical devices used to store your private keys. They are small, hand-held, and easily stored, often resembling USB drives or keychains. Examples of hardware wallets include Ledger, Trezor, and KeepKey. Hardware wallets are considered to be one of the most secure options for storing cryptocurrencies because they store your private keys offline, making them less vulnerable to hacking and malware attacks. They typically have security features such as PIN codes, passphrases, and biometric scanning.

Hardware wallets are more expensive than software wallets, with prices ranging from around $50 to several hundred dollars. They also require you to have the physical device with you to authorise transactions, which may be less convenient than a software wallet. However, if your hardware wallet is lost, stolen, or damaged, you can recover your crypto assets as long as you have access to the recovery seed.

Both hardware and software wallets have their advantages and disadvantages. Software wallets are more convenient and accessible, while hardware wallets offer greater security and peace of mind. It is recommended to use software wallets for short-term storage of private keys and hardware wallets for long-term storage. Many crypto investors choose to use a combination of both types of wallets to balance security and accessibility.

Crypto exchanges

There are around 500 exchanges to choose from, including Coinbase, Kraken, Gemini, Crypto.com, Binance, and eToro. Some factors to consider when choosing a crypto exchange include:

• The number of cryptocurrencies available to trade
• The number of fiat currencies accepted
• The exchange's overall liquidity and trading fees
• The availability of complex trading features, like advanced order types and volume discounts for frequent trading
• Margin trading rates
• Platform availability
• Types of customer support
• Educational resources
• Security and storage options
• Staking and rewards

Some of the best crypto exchanges for beginners include:

• Coinbase: user-friendly interface, strong security features, and the ability to stake popular cryptos
• Gemini: simple, easy-to-use interface and a wealth of educational materials on cryptocurrency
• Kraken: solid range of coins, competitive trading fees, and good customer service options
• Crypto.com: very good selection of tradable cryptocurrencies and high cybersecurity ratings

Other popular crypto exchanges include:

• EToro: engaging communal experience and the ability to copy the trading strategies of advanced users
• BYDFi: low trading fees, decent selection of popular cryptocurrencies, and availability in all 50 US states
• CEX.IO: intuitive access to the crypto ecosystem, ability to buy Bitcoin with a credit or debit card, and high liquidity markets

Crypto funds

However, it is important to note that the big risk with funds goes against the spirit of cryptocurrencies—the investors do not hold the private keys. Funds can have their assets stolen, and traders can make mistakes, so diversifying into more than one fund can help reduce risk.

• Grayscale: The world's largest digital currency asset manager with over $20 billion in assets under management (AUM) as of 2023.
• 500 Global: A Silicon Valley-based VC capital firm with a portfolio valued at over $1 billion across 2,800 firms spanning 75+ countries.
• Pantera Bitcoin Fund: The first US-based institutional asset manager to focus exclusively on blockchain, Pantera Capital has been a pioneer in crypto funds since 2013.
• A16z Crypto: The dedicated crypto fund of Andreessen Horowitz, a well-known name in the crypto space.
• CoinShares: Europe's first and largest bitcoin investment fund, providing diversified exposure to digital assets through various investment products.
• Galaxy Digital Capital Management: A New York-based investment firm focused on digital assets and blockchain technology, using a hybrid hedge fund/VC fund model.
• Polychain Capital: A fund that invests directly in digital currencies rather than crypto companies, with a focus on providing "exceptional" returns through active management strategies.
• Multicoin Capital: An investment firm that primarily invests in cryptocurrencies, tokens, and blockchain startups, with notable investments including Algorand, Flow, Ethereum, Lido, and Tagomi.

Crypto IRAs

• ITrustCapital: One of the lowest-cost crypto IRA platforms, with a $1,000 account minimum, 1% fees on crypto transactions, and access to over 30 cryptocurrencies.
• Bitcoin IRA: One of the first companies to provide a Bitcoin IRA solution, with a $1,000 account minimum, 2% crypto transaction fees, and access to over 60 cryptocurrencies.
• BitIRA: Prioritises security with multi-encryption, end-to-end insurance coverage, and offline storage for digital assets. It has a $5,000 account minimum and supports 15+ cryptocurrencies.
• Alto CryptoIRA: Offers access to over 200 cryptocurrencies, with a $10 monthly or $100 annual account fee, and a 1% fee for crypto transactions.
• Coin IRA: Provides investor education and consultant support, with a $5,000 minimum starting investment, 1.25% buy trades, and 1% sell trades.

When choosing a Crypto IRA provider, it is important to consider security, fees, custodian reputation, tax implications, and regulations.

Crypto mining

Miners use hardware and software to generate a cryptographic number that is equal to or less than a number set by the Bitcoin network's difficulty algorithm. The first miner to find the solution to the problem receives bitcoins as a reward, and the process begins again. This reward incentivizes miners to assist in the primary purpose of mining: to earn the right to record transactions on the blockchain for the network to verify and confirm.

Miners receive bitcoin as a reward for creating new blocks that are added to the blockchain. However, mining rewards can be hard to come by due to the intense competition. The probability that a participant will discover the solution is related to the network's total mining capacity.

To start mining, you will need substantial hardware and software. This includes a graphics processing unit (GPU) or an application-specific integrated circuit (ASIC). Capable GPUs can range in price from about $1,000 to $2,000, while ASICs can cost much more, into the tens of thousands of dollars.

In addition to the right hardware, you will also need to join an online crypto mining pool. Mining pools allow miners to combine their computational resources to increase their chances of finding and mining blocks on a blockchain. Most crypto mining applications come with a mining pool, but you can also find and join pools through websites like CryptoCompare.

It's important to note that crypto mining can be financially risky. It requires a significant investment in equipment, and there is no guarantee of a return on that investment. Additionally, the legality of crypto mining varies by jurisdiction, so it's important to research the regulatory stance in your country before investing in mining equipment.

Frequently asked questions