Have you ever heard of Bitcoin, Ether, Dogecoin, or Litecoin? They are types of cryptocurrencies or digital money. Today, everyone mainly refers to them as digital currencies that can be bought, sold, held for profit, and used for payments. The term crypto investment also refers to investment in above mentioned digital currencies.
The most common question is whether you should invest in cryptocurrency. Warren Buffett, the world’s most significant investor, has publicly stated that he does not own cryptocurrency. Nonetheless, according to fortune.com, his company, Berkshire Hathaway, purchased $1 billion in shares of Nubank, a digital bank based in Brazil and the largest of its kind in Latin America, earlier this year. This demonstrates that, as the popularity of cryptocurrency has grown enormously in recent years, large firms and institutes are also investing in the digital virtual business, purchasing stocks and shares.
This article will go over how to invest in cryptocurrency, how it works, and which countries have made the most investments in cryptocurrency. Along with the long-term cryptocurrency investing strategy on top coins and crypto investment risks.
What is Cryptocurrency?
Investing in cryptocurrency can take many forms, from purchasing cryptocurrency directly to investing in cryptocurrency funds and companies. People often consider investing in Bitcoin because it is the most well-known digital currency, but thousands of cryptocurrencies exist. However, before you decide to go on with the cryptocurrency investment part, let’s look at the cryptocurrency definition.
The definition of cryptocurrency is a digital currency that is encrypted to prevent intellectual property theft or double-spending. Many cryptocurrencies are built on blockchain technology, a distributed ledger enforced by a network of computers. Because cryptocurrencies do not pass through a central authority and are theoretically immune to government interference or manipulation, crypto investment can be made independently and directly by any investor, regardless of residence or nationality. Check out top crypto trading strategies with this interesting article.
Investing in Cryptocurrencies
Cryptocurrencies have a reputation for being highly volatile assets. However, Bitcoin is also regarded by some as a good store of value and is frequently referred to as “digital gold.” It has a maximum supply of 21 million, and many investors view this limited supply or scarcity as a major contributor to Bitcoin’s value.
In November 2021, the crypto market capitalization reached $3 trillion, making a fortune for many investors and early crypto adopters. The market is currently cooling, but it is still worth over a trillion dollars, and new coins, tokens, and many more blockchain projects have entered the market.
Cryptocurrencies have their power that is backed by the community, and banks or monetary institutions do not control them. It made transferring the funds between parties much easier without needing a trusted third-party bank or a credit card company. Furthermore, they do not rely on third-party intermediaries or ban cryptocurrency transfers between two transacting parties faster than traditional money transfers. Most cryptocurrencies, such as Bitcoin, are used as money to purchase goods. Moreover, Bitcoin can be transferred across borders cheaper and faster than traditional fiat currency.
Bitcoin as Long Term Investment
If you think of buying low and selling high concepts, Cryptocurrency investments can yield profits. The market has seen many Bitcoin investors have made significant gains over the last decade. Due to the market’s peak, Bitcoin’s price per bitcoin was $64,000, valued at more than $1 trillion in crypto markets.
Bitcoin benefits from the network effect, which means that more and more people want to own it. It has been called “digital gold,” which is also used as a digital currency to pay for services and goods. Bitcoin investors believe the cryptocurrency will increase in value over time because the supply is limited to only 21 million coins, and it could be the first truly global currency. In contrast, most currencies can be printed by their central bank and repeatedly devalued due to high inflation. Here is the video of a quick tutorial from CoinField Exchange.
Ether as Long Term Investment
Ether (ETH) is the Ethereum platform’s native coin, and it can be purchased by investors who want to trade and profit from it. Ethereum is constructing a global computing platform that will support numerous other cryptocurrencies and a vast ecosystem of decentralized applications (“dApps”).
Because there are many cryptocurrencies built on the Ethereum platform and the open-source nature of dApps, Ethereum has opportunities to benefit from the network effect and create long-term value.
The Ethereum platform supports “smart contracts,” which execute automatically based on terms written directly into the contract code. In exchange for executing smart contracts, the Ethereum network collects Ether (ETH) from users. Smart contract technology has the potential to significantly disrupt massive industries such as real estate and banking and create entirely new markets.
As the Ethereum platform gains popularity worldwide, the Ether token gains utility and value. Investors who believe in the Ethereum platform’s long-term potential can profit directly by owning Ether.
World’s Top 10 Crypto Countries
According to finance.yahoo.com, Nigerians are the most open to cryptocurrency trading and spending. Southeast Asian countries also perform well. Switzerland and Germany are the only two European countries on the list, and the United States is at the bottom. Let’s go over the entire list below:
- Nigeria: 32%
- Vietnam: 21%
- Philippines: 20%
- Turkey: 16%
- Peru: 16%
- Switzerland: 11%
- India: 9%
- China: 7%
- U.S.: 6%
- Germany: 5%
- Japan: 4%
Crypto Investment Risks
Every investment involves some degree of risk, and cryptocurrency investors need to consider the following risks:
User risks: Reverse or canceling a cryptocurrency transaction is not possible. According to some estimates, roughly one-fifth of all bitcoins are now inaccessible because people have forgotten passwords or incorrect sending addresses.
Regulatory risks: The legal status of some cryptocurrencies is still unknown, with many governments attempting to classify them as securities, currencies, or both. A sudden regulatory crackdown could make selling cryptocurrencies difficult or result in a market-wide price drop.
Management risks: There are few safeguards against deceptive or unethical management practices due to a lack of consistent regulations. Many investors have lost significant sums because the management teams failed to deliver a product.
Market Manipulation: Market manipulation remains a significant issue in cryptocurrency, with larger market players creating artificial demands.
Despite the risks, there is also the possibility of profit. Long-term cryptocurrency investment is the most important strategy for those who do not trade frequently but want to hold assets that they believe will grow in value and have significant upside potential. It is critical to store digital assets safely in a cold wallet and to use a strong password. Investors must constantly monitor market movement and assess risks.
Having some cryptocurrency in your portfolio can help to diversify your investment portfolio. Let’s assume you believe that cryptocurrency will become more popular and valuable over time. In that case, investing in cryptocurrency directly as part of a diversified portfolio makes good sense.
Each cryptocurrency you invest in requires extensive research into each coin or token, as well as an assessment of the overall risk of your portfolio.
If you want to invest in cryptocurrency, open an account at CoinField.com and invest as little as you want to buy your first cryptocurrency, or if you prefer to continue with traditional stock markets, consider investing in crypto companies like Berkshire Hathaway does in Nubank, or look for crypto exchanges that are listed on stock exchanges like NASDAQ or NYSE.
Please note that this is not trading advice. We recommend you to carry out your own research before making any trading decisions. This article is for informational purposes only.