Cryptocurrency can be a lucrative investment option, but it is important to understand that it is a high-risk bet that could pay off, but also carries the potential of losing all your money. Investing in cryptocurrencies can give you direct exposure to the demand for digital currency. An alternative that is safer but potentially less profitable is to buy shares in companies with exposure to cryptocurrencies. Historically, cryptocurrency has been a big investment. However, investing in cryptocurrencies is inherently riskier than other asset classes such as stocks, traditional commodities, and real estate.
Bitcoin aims to replace gold as a store of value, and Ethereum has the potential to disrupt the entire financial services industry. The growth potential of cryptocurrencies is unlike any other investment. From Bitcoin and Ethereum to Dogecoin and Tether, there are thousands of different cryptocurrencies, which can make it overwhelming when you first start out in the cryptocurrency world. To help you get your bearings, here are the top 10 cryptocurrencies by market capitalization, or the total value of all coins currently in circulation. For most people, the easiest way to get cryptocurrencies is to buy them, either from an exchange or from another user.
Given the thousands of cryptocurrencies that exist (and the high volatility associated with most of them), it's understandable that you want to take a diversified approach to investing in cryptocurrencies to minimize the risk of losing money. The biggest advantage of investing in cryptocurrencies than investing in other asset classes is its bullish potential. For example, many short-term crypto investors invest in Dogecoin, which has no competitive advantage over other larger cryptocurrencies such as Bitcoin. Once you've decided to buy cryptocurrencies and you've determined which cryptocurrencies you want to invest in, your next decision will be how you want to store them securely. For every cryptocurrency you invest in, make sure you have an investment thesis on why that currency will stand the test of time.
In general, the more accessible cryptocurrency assets are within traditional investment products, the more Americans could buy and influence the cryptocurrency market. Before investing in a cryptocurrency for the long term, make sure you understand what you are investing in. Instead of learning how to navigate a cryptocurrency exchange to trade your digital assets, you can add cryptocurrencies to your portfolio directly from the same brokerage that you already have a retirement account or other traditional investment account with. If you do your research and learn as much as possible about investing in cryptocurrencies, you should be able to manage investment risk as part of your overall portfolio. Although investments in these companies can be profitable, they don't have the same upside potential as investing directly in cryptocurrencies.