Many cryptocurrencies are rising higher and higher. Bitcoin is near its all-time high of $60,000 and many experts predict it will soar much higher in price. Although we can’t advise you on what you should invest in, we will share some cryptocurrency investment strategies that others have used. In addition, we will discuss what cryptocurrency is and some future predictions.
Fifty years ago, investing was simple: stocks, bonds and real estate. However, today the investment process has become much more complicated. Moreover, there are an infinite number of investment choices that can be difficult to understand. One new investment is Bitcoin and cryptocurrencies.
It seems clear that the future is bright for Bitcoin and Ethereum, as well as several other cryptocurrencies. We will discuss why these cryptocurrencies deserve serious consideration as a part of your cryptocurrency investment strategies. In addition, we will also briefly discuss some other cryptocurrencies worth noting.
Cryptocurrency Investment Strategies Summary
In some ways, investing in cryptocurrencies is like investing in stocks. Retail stock investors simply open a brokerage account like E-Trade or Robinhood, link their bank account and begin buying shares. Your cryptocurrency investment strategies will be similar. You can open a trading account at a cryptocurrency on-ramp brokerage firm like Coinbase or Gemini, link your bank account, and then begin purchasing cryptocurrency.
In general, cryptocurrency investment strategies include investing in the top 10 coins, such as bitcoin and Ethereum. In addition, investors may choose to make a play to capture gains through more risky altcoins that are not well known yet. Finally, traders may also invest in stable coins to offset some risk in the portfolio.
Another angle for cryptocurrency investment strategies is to consider passive income in crypto. Many exchanges and brokers, such as BlockFi, now offer investors the option to earn passive income on their investment by sampling holding cryptocurrency in an online account. For example, BlockFi offers up to 8% returns on some cryptos, which is quite significant. This is a simple portion of some traders’ cryptocurrency investment strategies that is low risk and earns significant returns.
What is Cryptocurrency?
Cryptocurrency is a digital asset. Payments occur between individuals on the internet. In addition, the best cryptocurrency uses cryptography to secure transactions on a network. Block chain technology is part of what makes the network secure. Miners use powerful computers to solve advanced equations in order to earn Bitcoin or other cryptocurrencies. Finally, mining makes the distributed ledger network secure. In addition, it ensures that transactions are complete. As a result, no one can cheat the system.
What is Block Chain?
The block chain stores data on a public database. The blocks of information include transaction data, participant data and distinguishing data. Moreover, each block of data stores thousands of transactions under cryptographic lock and key. A network of computers operates the blockchain. They make the network run and keep it secure by solving algorithmic hashes. The network computers earn cryptocurrency for their work. Finally, the bitcoin block chain technology uses a distributed ledger. Bitcoin’s network security hinges on the distributed ledger that the network participates in.
Bitcoin: A Peer-to-Peer Electronic Payment System Created by Satoshi Nakamoto
Bitcoin is an open-source, block chain-based technology that was designed as a peer-to-peer payment system. It is designed to be a decentralized electronic payment method that can be conducted semi-anonymously among individuals. Bitcoin is digital cash. Many consider Bitcoin to be one of the best cryptocurrencies to invest in.
It uses block chain technology to maintain its function. For users to send and receive bitcoin, the block chain depends on miners. Computers are used by miners to complete complex calculations which build blocks on the block chain. As a reward, the miners receive Bitcoin as payment when each block is completed.
Bitcoin was introduced to the world in 2009 by Satoshi Nakamoto in a 9-page white paper entitled, “Bitcoin: A Peer-to-Peer Electronic Cash System.” Bitcoin was the first cryptocurrency to experience widespread use and adoption. However, its use case has evolved over the years from a peer-to-peer payment method to a store of value model. Many Bitcoin users hold bitcoin much like you would hold silver or gold in an investment portfolio.
Reasons Why Bitcoin Is Included in Cryptocurrency Investment Strategies
- Exponential growth and adoption since 2009
- $240 Billion market capitalization
- Proven electronic payment method
- A store of value much like gold
- Deflationary money – only 21 million Bitcoins
- Replaces the US Dollar as World Reserve Currency
- Reasonable privacy
- Independence from banks and governments
- Border-less payment system
- Low fees
- Meets all the requirements of the definition of money
Ethereum: A Block Chain Project That Uses Smart Contracts to Power Other Projects
Ethereum is another powerful cryptocurrency that should be included in any trader’s cryptocurrency investment strategies. It is an open-source, decentralized block chain project. Second, Ethereum is a smart contracts platform. Additionally, it provides open access to money, via the Ether cryptocurrency coin (ETH), and technology, exemplified by the thousands of applications that are operating on the Ethereum network. The ETH coin of Ethereum is second only to bitcoin in market capitalization.
Like Bitcoin, Ethereum is a Proof of Work consensus system. This means that powerful computers all over the world are continuously solving complexed equations in order to build blocks on the Ethereum block chain. Whichever machine or miner solves the problem quickest, completes the block and receives a reward as payment: ETH coin.
Although Ethereum shares some features with Bitcoin, such as being able to make peer-to-peer transactions, they serve different purposes and audiences. Bitcoin was the original decentralized payment system. As a result, banks do not manage payments. Ethereum’s primary purpose is to serve as the core block chain on which newer projects operate.
Ethereum uses a payment system for ETH. In addition, it implements smart contracts which allows entirely new projects to run on top of the Ethereum block chain. For example, in November 2017, the decentralized application “CryptoKitties” was launched. It is a digital collecting and trading app of virtual felines that works on Ethereum. As a result, Ethereum may be one of the best cryptocurrencies to invest in.
Reasons Why Ethereum May Be One of the Best Cryptocurrencies to Invest in
- Industry leader in smart contracts
- Widespread use and adoption
- $200 Billion market capitalization
- Home of block chain decentralized applications (dapps)
- Well established decentralized payment network
- Serves as the block chain base for hundreds of projects
- Independence from Banks
- Borderless Payments
- Low Fees
Other Cryptocurrencies to Consider
Here are some other cryptocurrencies that are worth looking at more deeply. Although Bitcoin is the most dominant and most secure cryptocurrency, there are many other cryptocurrencies that have strong security and strong use case value. A cryptocurrency investment portfolio may include other cryptocurrencies.
Named after Gerolamo Cardano, a 16th century Italian polymath, the Cardano project began in 2015. It is an open-source software project. Moreover, it innovates the design of cryptocurrency. Cardano has a long-term plan called the Road Map. Cardano’s most notorious feature is its implementation of peer-reviewed research. Research and peer review are a part of project development. It has a $35 Billion market capitalization.
A team of academics, researchers and developers managed Cardano. They focus on solving cryptocurrency problems. Moreover, Cardano doesn’t focus on one use case scenario for cryptocurrency; instead, it appears to be tacking many problems at once, such as currency, proof of stake, smart contracts, scalability, security and even scripting. In addition, Cardano uses the delegated proof-of-stake method to maintain the network functionality. This is different because it is more efficient for electricity consumption. Cardano is definitely one to watch if you are looking for one of the best cryptocurrencies to invest in.
Created in 2014 from a fork in the Bitcoin block chain, Monero is a privacy coin. Monero uses what it calls an “obfuscated public ledger” which makes transactions of Monero private. Moreover, Monero is a tested privacy payment method. The project has longevity and a working record of privacy.
Monero gets a bad reputation at times. For example, it has been used on the dark web as an illegal payment method. However, it should be noted that paper currency such as the US Dollar can also be used for illegal purposes. Privacy for legal transactions is an important aspect for money and Monero is the foremost privacy cryptocurrency on the web. Monero is definitely one of the best cryptocurrencies to invest in for those who love privacy.
XRP is a currency that operates on a digital payment platform known as RippleNet. The company known as Ripple operates XRP. The currency is not technically a cryptocurrency and doesn’t operate on a block chain. Instead, XRP is a centralized, distributed ledger technology. XRP is an engineered payment system. It is a new competitor to the SWIFT payment system. The SWIFT system is used in international banking.
Developed in 2017, Chainlink is a decentralized network that connects smart contracts with real world data. Furthermore, the Chainlink decentralized oracle network is operated by node operators. In addition, operators that maintain nodes are paid LINK cryptocurrency. The nodes connect the system like links in a chain. Chainlink runs on the Ethereum network and plays a critical role in execution of smart contracts. It is one of the new rising stars of the cryptocurrency revolution and one of the best cryptocurrencies to invest in.
Another new rising star in the cryptocurrency space is Polkadot. The Web3 Foundation created Polkadot. Its primary function is to facilitate the operation of block chains together. The DOT coin functions in three ways: staking, bonding and networking. Finally, Polkadot contains special tools like specialization, scale and inoperability which act as catalysts between block chains.
Binance Coin (BNB)
Binance coin is a utility token that is one of the highest market cap coins in the industry. It is used to pay for Binance exchange fees. In addition, it also helps power the Binance decentralized exchange (DEX). The Binance coin is a deflationary coin. It is burned frequently by Binance. Part of the reason that BNB is so popular and successful is due the success of the Binance exchange. Binance is definitely a strong consideration when looking for one of the best cryptocurrencies to invest in.
Cryptocurrency Investment Strategies in 2021
Recently, Bitcoin has traded as high as 60,000 per Bitcoin. It peaked in price around approximately $20,000/Bitcoin in late 2017. Bitcoin has been on an upward trajectory lately and has neared its all-time high on several occasions. There are many analysts who believe it could go much higher. But even more importantly, Bitcoin and other cryptocurrency may break the banking chains that imprison us today. And it’s no longer a conspiracy theory to discuss cryptocurrency. Respected investors are taking it seriously like never before and many believe that Bitcoin should be a serious part of anyone’s cryptocurrency investment strategies.
Future Predictions of Bitcoin and Ethereum Prices
Reputable Investors Foresee Exponential Growth in Bitcoin and Ethereum Markets
It seems clear that in 2021, Bitcoin and Ethereum will begin the next phase of expansion and adoption. Many investors have included cryptocurrency investment strategies in their portfolio.
As a result, the price of both cryptocurrencies will likely go much, much higher. These are certainly important when determining the best cryptocurrencies to invest in.
Anthony Pompliano and Max Keiser, two well-known investors in the Bitcoin space believe that Bitcoin price will exceed $100,000 in the next few years. Other investors like Mike Novogratz and Chamath Palihapitiya believe Bitcoin price is destined to go even higher to levels like $400,000 and $1,000,000, respectively.
As for Ethereum, investors are optimistic about its future price as well. Because Ethereum’s market capitalization is only $40 Billion, there is much room for growth. Continual adoption of Ethereum by institutional investors could easily lead to a $200 Billion market capitalization, equating to a $1,500 ETH price. Investors such as Nigel Green and Blockfyre co-founder Simon Dedic predicted much higher prices ($2,500 – $9,000) for Ethereum in the future.
It should be noted that several of the investors mentioned are worth Billions cumulatively and have a clear track record of investing in markets. As a result, their predictions should be seriously considered.
Bitcoin Continues to Grow
There are a couple of things to understand about Bitcoin growth. First, Bitcoin is growing in popularity and use worldwide. Users are adopting Bitcoin as a store of value like gold and using it as a payment method in places where banks don’t exist. Second, Bitcoin is growing in price.
When users began mining Bitcoin on laptops in 2009, it had little value. Yet today 1 Bitcoin can be exchanged for $12,000! Around 2020, billions of Dollars of institutional money began to flow into cryptocurrency investment.
Examples of Institutional Money Investments in Bitcoin:
- ARK Investment Management and Kinetic Portfolios Trust, two large investment funds representing wealthy clients, have begun investing in the Grayscale Bitcoin Trust.
- Wall Street billionaire investor Paul Tudor Jones has invested approximately 2% of his investment portfolio in Bitcoin
- Michael Saylor, Founder and CEO of MicroStrategy invested over $400 Million in Bitcoin in 2020.
- Twitter/Square CEO Jack Dorsey invested $50 Million in October 2020 in Bitcoin.
- PayPal announced on October 21, 2020 that it would be launching a cryptocurrency service that allows users to buy and sell cryptocurrencies.
The list of investors and cryptocurrency investment continues to grow each day. When considering some of the best cryptocurrencies to invest in, look at what professionals invest in as well.
Bitcoin Exchanges and More Information
Hopefully this article has given you some ideas about the best cryptocurrencies to invest in. When making investing decisions it is important to do your own research and determine for yourself what is a good investment.
In addition, there are many exchanges that can be used to purchase cryptocurrency. Binance, Gemini, Kraken, Coinbase and so many more. Please do your research if you decide to invest. There are many scams in the crypto industry that are searching for an easy mark. If you want to learn more about Bitcoin and cryptocurrency, there are more articles by Piggy Bank Coins below.
Cryptocurrency Investment Strategies Wrap Up
Clearly,cryptocurrency investment strategies are a part of many wise trader’s portfolios. Cryptocurrencies are no longer a taboo subject among investors. As a result, many traders that have not formulated cryptocurrency investment strategies may find themselves missing out on big gains.
It is important to note that Piggy Bank Coins does not provide financial advice. We don’t endorse or recommend any financial investments. Instead, we provide information for educational purposes to those seeking knowledge regarding personal finance. However, in the spirit of transparency, note that the author is an investor in cryptocurrencies, precious metals and some equities.
In addition, The Federal Trade Commission (FTC) requires that Piggy Bank Coins disclose to readers that we may receive commissions when you click our links and make purchases. However, this does not impact our reviews and comparisons. Moreover, we try our best to keep things fair and balanced, in order to help you make the best choice for you.