The Safest Cryptocurrency to Invest In
The cryptocurrency market is so volatile that new investors often panic and sell at the first sign of a dip. The result is an unfortunate vicious cycle, where prospective new investors are scared away from investing, which in turn makes the market even more volatile. For every investor who’s been burned by this volatility, there are those who have managed to double their money in just a couple of months.
The last year has seen the cryptocurrency market grow from a niche corner of finance into a fully-fledged asset class in its own right. As with any other asset class, there are good cryptocurrencies and bad ones. Some are great as short-term investments but not much beyond that; others offer long-term potential and so on. Beyond that common sense advice, there aren’t many universal rules for whether or not you should invest in any given cryptocurrency (or any other investment for that matter).
The trick is knowing how to recognize those good opportunities when they appear. Here we take a look at some of the safest cryptocurrency investments right now and explain why – so you can feel confident about what you put your money into.
Bitcoin: The Safest Place to Store Your Money
The very first cryptocurrency on the scene, Bitcoin is the most highly liquid asset in the market, with trading volumes exceeding those of stocks, bonds, commodities and almost any other asset class. This means that in the event of a market crash, Bitcoin will likely be the last asset to be affected.
If you’re buying Bitcoin purely as a safe investment, then you should make sure you store it in a wallet that’s not connected to the internet. This isn’t as complicated as it sounds; hardware wallets are simple devices that look like USB flash drives and keep your Bitcoin offline.
Because Bitcoin is the most liquid asset in the cryptocurrency market, it’s used as an indicator for the general health of the market. In general, if the price of Bitcoin is rising, the cryptocurrency market is healthy. If the price is falling, then there could be a major correction on the horizon.
Ethereum: A Solid Long-Term Investment
As the original platform for decentralized apps and smart contracts, Ethereum is in the unique position of being able to evolve and change over time. Because of this, Ethereum has been used by major companies like Microsoft and JP Morgan for large-scale blockchain projects. The result is that Ethereum is one of the most well-tested and proven technologies in the market. This makes it a very attractive long-term investment.
A general rule of thumb when it comes to cryptocurrency investing is that you should invest in the technology, not the price. If you believe that Ethereum will be the platform that powers the internet of the future, then it makes sense to buy now and hold for long-term gains.
Ethereum’s price has been largely stable for the last year or so, so it’s a great investment for long-term profits. Just make sure to diversify your portfolio – don’t put all your eggs in one basket.
Litecoin: Good for Short-term Investments
As a direct competitor to Bitcoin, Litecoin has a lot of similarities. It’s a decentralized, open-source cryptocurrency that has been around since 2011, so it has a proven track record. Investors like Litecoin because it’s closer to the pre-mining stage – which means developers haven’t hoarded Litecoin in the same way they have with Bitcoin.
Because of this, Litecoin has proven to be a good short-term investment. It’s generally less volatile than Bitcoin and other major cryptocurrencies and so is a good way to diversify your portfolio if you believe in the future of cryptocurrencies.
Just keep in mind that Litecoin’s price is generally less predictable than others and so you might want to invest a smaller proportion of your portfolio in it.
Ripple: A Long-term Investment
Although Ripple is often described as a cryptocurrency, it functions more like a payment network. It’s designed to allow people to send money across the world instantly and at a fraction of the current cost. This is why major banks like Santander, UBS and Westpac have already adopted Ripple’s technology.
Ripple is less speculative than other cryptocurrencies in that sense – it has a very real, tangible use case and has already been adopted by major banks. As such, it’s a great investment for long-term profits.
Because Ripple’s network is already up and running, it’s unlikely that the company will experience the same kind of sudden upward spike that other cryptocurrencies have seen in the last year or so.
Bitcoin Cash and Bitcoin Gold: Don’t Touch These
Bitcoin Cash and Bitcoin Gold are cryptocurrencies that were “forked” from the original Bitcoin blockchain – so are effectively new assets. You’ve probably noticed that cryptocurrencies have exploded in value over the last year or so; Bitcoin Cash and Bitcoin Gold are two examples of coins that were created after the explosion.
While some of the new coins have proven to be very profitable investments, others like Bitcoin Cash and Bitcoin Gold are generally rejected by the cryptocurrency community (and are generally considered very bad long-term investments).
Investing in cryptocurrencies is a risky business, but if you know which ones to buy, you can mitigate that risk significantly. The most important thing is to do your research; don’t just jump into the market because everyone’s talking about it.
If you’re looking to buy Bitcoin as a long-term investment, make sure you store it in an offline wallet. If you’re looking to short-term profit from a cryptocurrency like Litecoin, make sure you diversify your portfolio and don’t put all your eggs in one basket.
Don’t touch the new coins that were created as a result of “forks” in the blockchain of the original cryptocurrencies – they’re generally bad long-term investments. And always make sure to do your research before buying any cryptocurrency.
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