The most exciting cryptocurrency to invest in may not be the one you think. The best cryptocurrency to invest in is not the cryptocurrency that will make you rich, or the one that has just been released. It’s the one you haven’t heard of yet. The one nobody is talking about yet, except for a few crypto-geeks and very early adopters.
The truth is that every year brings a wave of new cryptocurrencies that sometimes prove to be brilliant investments and sometimes turn out to be scams. These days there are so many cryptocurrencies flooding into the market that it can be hard for investors to find a good one.
And until you choose your investment, there isn’t any way of telling which ones will become big successes and which ones will turn out to be frauds. So instead of buying any old cryptocurrency and hoping it works out, I suggest you buy a few different ones, because they might all fail or they might all succeed. If they all succeed, you’ve got yourself a nice little hedge fund portfolio.
Investing in cryptocurrencies is an art rather than a science (although it is possible to educate yourself on what makes a good investment).
In which we investigate 5 cryptocurrencies that could be the next Bitcoin, Ethereum, and Litecoin.
In recent years, cryptocurrencies have made a lot of news, but even by the standards of the internet they’ve been something of a sideshow. The real action has been in other areas.
If you are thinking about buying some cryptocurrency, let’s look at five ideas for where to start.
Cryptocurrencies are a way of making money without having to own anything. The idea is that if you have something people want to buy, you can use blockchain technology to make its value jump.
A cryptocurrency is a completely digital version of something that has some real-world value. In theory, though, it doesn’t matter whether it is something people want or not. You could invent a cryptocurrency that doesn’t exist at all, and it would be worth more than any real thing that does.
The point is, anyone can make something like this. Anyone who wants to has the tools to do so. And once a cryptocurrency get started—once there are enough people using it, say—it just keeps going up in value even if no one wants it anymore.
Cryptocurrency investors can be picked off pretty easily by scam artists and by movements known as ransomware and hackers. But for most people these risks are low compared with the risk of owning an asset whose value goes down instead of up.
Cryptocurrency, that new thing that everyone is talking about, is a lot like the internet.
Like the internet, it is not one thing. It is lots of things, and we don’t know yet what they will turn out to be. Like the internet, it looks as if a lot of people are working on it at once. And like the internet, it has a lot of people who make money from it. But like the internet, no one really knows what it will look like when it is finished.
Cryptocurrency is basically just a way for computers to exchange information without involving banks or governments or other institutions. It does this by using math instead of government-approved middlemen. Cryptography is the technology that underlies cryptocurrency; cryptography was used before in such things as secure forms for e-mail and secure transactions for stock markets and credit cards, but cryptocurrency takes it to its limit: digital cash with no counterparty risk (the risk that you won’t get your money back if you send or receive money) or charge-backs (the risk that someone might get mad at you if you send them money).
Cryptocurrency has become popular because it works well enough for ordinary transactions and because it gives people something they have wanted for a
The best cryptocurrency to buy on January 1, 2018, might not be the same as the best cryptocurrency to buy on March 1, 2018. A good cryptocurrency doesn’t exist in a vacuum; it has to compete with other cryptocurrencies. The price of a cryptocurrency is volatile because a lot of people are trying to make money from it. If you look at a chart of the largest cryptocurrencies, you’ll see all sorts of crazy stories about why one will replace another.
When we wrote this blog post, Bitcoin was worth around $16,500. Ethereum was worth around $1,400. There were a lot of people saying that Bitcoin’s price would rise to $250,000 by year’s end and Ethereum’s would go to $2,000. But those predictions have been wrong before.
My personal advice is: don’t trust anyone who makes claims like that. The reason they are wrong before is that they are making predictions based on their own ideas about what will happen next week or next month or next year.* Don’t try to predict market prices based on your idea of how much money you want to make or how you think the world should work; it’s no fun if the results are different than what you expected.*
The simplest and most common way to trade cryptocurrencies is through a cryptocurrency exchange. There are many exchanges available, such as Coinbase, Kraken, and Poloniex. They are used by individual investors and small businesses rather than large companies or banks.
Because they are less regulated than banks, they offer fewer consumer protections, so if you lose your funds you cannot get them back.