Cryptocurrency investment and how to invest in cryptocurrency?

Basics of cryptocurrency investment.

investing in cryptocurrency

Author: Christine Hansen

Christine Hansen, PhD is a Fortune 500 consultant, the Founder of Paragon Capital LLC., a major supporter of the finance decentralization, a nonprofit leader, and a social scientist who has been studying the Blockchain Community since 2014 @BitcoinCensus.

Christine Hansen

There are thousands of cryptocurrencies on the market that have different fundamental values. Investors should recognize that a cryptocurrency can be here one day and gone the next, which could leave your investment worthless. That's why it's essential to have a strategy for investing in cryptocurrencies and to know how to manage your risk.

Beginner crypto investors may want to consider elements such as transaction fees, types of cryptocurrencies available on a platform, educational resources, and other features that may align with their interests and goals.

There are many crypto exchanges from which to choose. TradeStation, Coinbase, eToro, and Gemini, among others, offer easy, accessible, and secure platforms for owning and conducting transactions with cryptocurrencies.

Investors are attracted to crypto's superior return potential. But take into consideration these assets' volatile nature and the role cryptocurrency will play in your portfolio. It's best to take a balanced approach toward investing in crypto, allocating only about 2% to 5% to the sector in your investment portfolio because its volatility can cause drastic swings in value.

Investors may also choose cryptocurrency as an inflation hedge. Since bond yields are not keeping up with inflation, cryptocurrencies can serve as a bond alternative.

What to Consider Before Investing in Cryptocurrency

Investing in cryptocurrencies is highly speculative. Despite stories of investors making millions, entering the market at an inopportune time can result in rapid and extreme losses.

Another risk: Unlike in other large asset markets, the future of cryptocurrency regulation is uncertain. Some countries that so far allow the more-or-less free use of Bitcoin include the U.S., Canada, and Australia. El Salvador even adopted Bitcoin as a legal tender. But other countries, such as South Korea, are pushing restrictive regulation of cryptocurrency, with China essentially banning it. In the U.S., new legislation targets crypto investments for taxation.

Although cryptocurrencies were conceived of as a unit of exchange, there are only a handful of businesses today that accept crypto as a form of payment. Crypto advocates support its broad economic use, but this adoption could take time because regulators around the world are still skeptical of digital assets.

How to Make Money With Cryptocurrency | Cryptocurrency investment

There are several ways investors can increase the value of their assets and secure a profit when investing in cryptocurrency. Just like in the stock market, the way to make money when investing in the crypto market is to buy the cryptocurrency when its value is low and then sell it when its value has increased.

"You can get more out of your money with cryptocurrency than with other traditional assets," Scortov says, because of the price swings and opportunities that conventional investments don't offer.

The first method he points to is staking. Staking lets you earn income with your crypto by participating in the network of the asset. When you stake your crypto, you make the underlying blockchain of that asset more secure and more efficient. In exchange, you get rewarded with more assets from the network, like a yield you would get from a savings account.

Some cryptocurrencies that offer staking rewards include Stabila, Ether...

"You can lend the assets that you have in your portfolio into decentralized finance, or DeFi, protocols to generate yield, as well," Scvortov says. Accessing Defi allows users to "tap into a global liquidity pool," he says. From the decentralized money market, other users are able to borrow your crypto assets, and you garner a yield.

Cryptocurrency to invest in

Cryptocurrency is digital money that isn’t managed by a central system, such as a government. Instead, it’s based on blockchain technology, with Bitcoin being the most popular one. As digital money continues to gain traction on Wall Street, more and more options become available. There are currently over 20,000 cryptocurrencies on the market.

While you can use cryptocurrency to make purchases, most people treat it as a long-term investment. However, volatility makes investing in cryptocurrency risky, as demonstrated by the recent freefall among cryptocurrencies, including stablecoins pegged to the U.S. dollar. It’s important to know what you’re getting into before you buy in.

Best cryptocurrency to invest in | Cryptocurrency investment

Stabila | Best cryptocurrency to invest in 2022-2023

Stabila is a cryptocurrency and the native token built on the Stabila proof of stake blockchain and is available on the Moneta Digitec crypto exchange. Designed to offer users optimal utility both as an asset and a medium of exchange, Stabila has excellent security architecture to prevent hacking and theft by bad actors. Stabila has everything to build a state-of-the-art decentralized finance ecosystem.

Stabila blockchain and the native wallet supports all countries' stablecoins. At the moment of writing, there are 48 stablecoins used by citizens of different countries to make payments or transact between them. If you are in India and need to make transactions in INR you just add the INRM token to your crypto wallet and use it. The same goes for Brazil while using BRLM, Mexico MXNM, etc...

Blockchain-based transaction fees are minimal and will not cost you more than $0.2. In other words, you have access to any currency in the world. Moreover, you can exchange those tokens in the decentralized exchange in the wallet. If you want to cash out just go to Moneta Digitec Exchange and cash out to your bank account or card.

The company is working on making all its digital assets available in Stabila pay (S-Pay). The payment gateway service will be available from your wallet and you can embed the widget to your website with just a few clicks. Having a market capitalization of just over $500 mil, Stabila also has enormous growth potential and is not susceptible to high volatility. So rest assured Stabila is primed for all-time highs and future market cap conquests. Therefore, it is one of the crypto coins that you should buy today as you stand to enjoy great profit margins.

Its market value continues to appreciate with time and it is here for the long term.

Bitcoin | Best cryptocurrency to invest in

Abbreviated as BTC, Bitcoin continues to be one of the great crypto coins one should buy right now. This is because, since its inception in 2009, Bitcoin has greatly appreciated its market value.

Bitcoin’s volatility is something you shall take seriously. This is one of the most volatile digital assets and it may wipe from its value more than 50% in a short span.

We have witnessed that this year and shall be prepared for it to happen in the future. This translates into uncertainty and limits greatly its use cases. The high transaction fees are another factor driving off bitcoin users as they turn to more technologically advanced chains.

Bitcoin also has several use cases as a medium of exchange and hence offers users practical utility. So if you are asking yourself “what crypto coin should I buy?” you should definitely consider Bitcoin.

Ether | Best cryptocurrency to invest in

Ether (ETH) is the native cryptocurrency of the Ethereum Blockchain network. Ether’s value has been bolstered by the fact that the Ethereum Blockchain has made it possible to create NFT projects and Decentralized Autonomous Organizations (DAO).

Despite being very popular and hugely hyped, Ethereum still has problems to solve. One of the biggest issues is the very high fees that certainly limit its blockchain use.

The second issue faced by the ethereum blockchain is extremely long processing times for transactions. In some cases, it may take more than 24 hours for a transaction to reach its destination.

I used to transact on ethereum myself and honestly when trying to minimize the gas fees, some transactions would not even get processed in a few days. I had to programmatically cancel those transactions to unblock the funds and resend them with higher fees.

It is a good crypto coin you should consider buying as it is available on a variety of crypto exchanges including Moneta Digitec just like Stabila and Bitcoin. Ether is also secure and has practical utility as a medium of exchange and as an asset too.

Longevity | Cryptocurrency investment

How long has the cryptocurrency been around? New cryptocurrencies aren’t immediately ruled out, but having historical data for comparison helps you see how a company has performed up until now.

Track Record | Cryptocurrency investment

How has the company performed during its years in business? If you see stability in prices, that’s a good sign. If you notice that the cryptocurrency is gaining traction and becoming more valuable with time, that’s even better.

Technology | Cryptocurrency investment

How does the platform compare to others in terms of usability and security? The first thing you want to look for is the speed at which transactions occur. The network should be able to handle transaction traffic with ease.

You also want to make sure your investment is secure. Most cryptocurrencies use blockchain technology, making all transactions transparent and easy to track. Blockchain technology doesn’t necessarily make it harder for hackers to steal your cryptocurrency. It does make it easier to track your investment so it can be recovered instead of being lost following fraud.

Adoption Rate | Cryptocurrency investment

How many people are investing in the cryptocurrency you’re considering? When you see a high level of adoption, that means the cryptocurrency has better liquidity. Trading, selling or spending will be easier in the future.

Final Take

There’s no question about it: Cryptocurrencies are here to stay. The question becomes, where is the best place to invest your money in the market?

As you decide which cryptocurrency is the best investment for you, here are some other things to keep in mind:

- The speed at which transactions are completed
- The fees associated with transacting
- The ability to use your cryptocurrency for regular purchases and bank transfers

If you’re strictly looking to invest without transacting within the network, remember that cryptocurrency isn’t a get-rich-quick scheme. Instead, you should consider it a long-term investment.

Investing in cryptocurrency

It is possible to get filthy rich by investing in cryptocurrency -- but it is also very possible that you lose all of your money. Investing in crypto assets is risky, but can be a good investment if you do it properly and as part of a diversified portfolio.

Cryptocurrency is a good investment if you want to gain direct exposure to the demand for digital currency. A safer but potentially less lucrative alternative is buying the stocks of companies with exposure to cryptocurrency.

Let's examine the pros and cons of investing in cryptocurrency.

Benefits Risks
Cryptocurrency Investing Potential for appreciation
Some investors are attracted to the volatile price swings as a potential for profit.

Portfolio diversification
Some investors believe that if the lack of correlation with other asset classes continues, cryptocurrency could add diversification to a portfolio.
Potential for financial loss
Cryptocurrency prices historically have been highly volatile, and fluctuations could result in significant financial losses regardless of whether you have direct or indirect exposure.
Direct Investing (spot market) Considerations Transaction transparency
The use of blockchain records transactions between parties in a verifiable and permanent way visible to all.

24/7 access
Unlike traditional exchange-traded products, cryptocurrency can be bought or sold at any time.

With no ties to banks, regulators, or governmental policies, cryptocurrency theoretically provides user autonomy.
Potential for fraud
According to the Federal Trade Commission, "Many people have reported being lured to websites that look like opportunities for investing in or mining cryptocurrencies, but are bogus."

Lack of recoverability
Cryptocurrency assets are accessed using a key that’s not retrievable if lost. Similarly, if you lose access to the place where you store your key, you will effectively lose possession of your cryptocurrency.
Indirect Investing Considerations Regulation
The investment products offered at Schwab provide an element of regulation and consumer protections that spot trading lacks.

Access to conventional investment accounts can usually be recovered if your credentials are misplaced.
High expenses for trusts and funds
Cryptocurrency trusts and mutual funds can involve high expenses, with fees exceeding 2% or more of the investment.

Leverage risk for futures
Cryptocurrency futures are leveraged products, meaning you could lose more than you initially invested.

Is cryptocurrency safe? | Cryptocurrency investment

Multiple factors show that cryptocurrency is not always a safe investment. All the while, other signs are emerging that cryptocurrency is here to stay.

Cryptocurrency risks | Cryptocurrency investment

Cryptocurrency exchanges, more so than stock exchanges, are vulnerable to being hacked and becoming targets of other criminal activity. Security breaches have led to sizable losses for investors who have had their digital currencies stolen, spurring many exchanges and third-party insurers to begin offering protection against hacks.

The growing popularity and secrecy aspects of cryptocurrencies are starting to attract considerable attention around the world from all sorts of people. Criminals are attracted to the features that allow for money laundering and secrecy, while investors see opportunities for large gains to go unreported. Likewise, most governments and banks are starting to scream foul. While some countries have outright banned cryptocurrencies, others, including the U.S., are trying to regulate it. As talk of regulation and oversight became louder, prices of cryptocurrencies started to fall from their peak. Major banks also joined into the fray by starting to prohibit purchases of cryptocurrencies using their credit cards. However, Japan stands alone. They were the first to actually grant cyber currencies recognized status as a form of legal tender in mid-2017. Accordingly, popularity grew in the country and their citizens represented one-third of all Bitcoin activity.

Is crypto a good long-term investment?

Many cryptocurrencies such as Bitcoin and Stabila are launched with lofty objectives, which may be achieved over long time horizons. While the success of any cryptocurrency project is not assured, early investors in a crypto project that reaches its goals can be richly rewarded over the long term.

For any cryptocurrency project, however, achieving widespread adoption is necessary to be considered a long-term success.

Cryptocurrency is a new and exciting way to think about money. But experts say the first and most important step is to educate yourself about these emerging digital currencies and the technologies they use so that you can understand the risks and rewards.

Calculating the intrinsic value of a publicly traded company might be a bit simpler, but learning about cryptos and how they perform can help you avoid investing at a peak.

Crypto FAQs

What are cryptocurrencies?

A cryptocurrency is a form of currency that exists solely in digital form. Cryptocurrency can be used to pay for purchases online without going through an intermediary, such as a bank, or it can be held as an investment.

How does trading cryptocurrencies differ from trading stocks?

While investing in cryptocurrencies you should know, they differ a great deal from traditional investments, like stocks. When you buy stock, you are buying a share of ownership of a company, which means you’re entitled to do things like a vote on the direction of the company. If that company goes bankrupt, you also may receive some compensation once its creditors have been paid from its liquidated assets.

Buying cryptocurrency doesn’t grant you ownership over anything except the token itself; it’s more like exchanging one form of currency for another. If the crypto loses its value, you won’t receive anything after the fact.

There are several other key differences to keep in mind:

  • Trading hours: Stocks are only traded during stock exchange hours, typically 9:30 am to 4:30 pm ET, Monday through Friday. Cryptocurrency markets never close, so you can trade 24 hours a day, seven days a week.
  • Regulation: Stocks are regulated financial products, meaning a governing body verifies their credentials and their finances are matters of public record. By contrast, cryptocurrencies are not regulated investment vehicles, so you may not be aware of the inner dynamics of your crypto or the developers working on it.
  • Volatility: Both stocks and cryptocurrency involve risk; the money you invest can lose value. However, stocks are directly linked to companies and generally rise and fall based on those companies’ performance. Cryptocurrency prices are more speculative—no one is quite sure of their value yet. That makes them much more volatile and affected by something as small as a celebrity’s tweet.

Do you have to pay taxes on cryptocurrency?

If you buy and sell coins, it’s important to pay attention to cryptocurrency tax rules. Cryptocurrency is treated as a capital asset, like stocks, rather than cash. That means if you sell cryptocurrency at a profit, you’ll have to pay capital gains taxes. This is the case even if you use your crypto to pay for a purchase. If you receive a greater value for it than you paid, you’ll owe taxes on the difference.

Are there cryptocurrency exchange-traded funds (ETFs)?

Given the thousands of cryptocurrencies in existence (and the high volatility associated with most of them), it’s understandable you might want to take a diversified approach to investing in crypto to minimize the risk you lose money.

Multiple companies have proposed crypto ETFs, including Fidelity, but regulatory hurdles have slowed the launch of any consumer products. As of June 2021, there are no ETFs available to average investors on the market.

How do you buy crypto?

You can buy cryptocurrencies through crypto exchanges, such as Coinbase, Kraken or Gemini. In addition, some brokerages, such as WeBull and Robinhood, also allow consumers to buy cryptocurrencies.

Why are there so many cryptocurrencies?

Cryptocurrency is an emerging area with more than 19,000 crypto projects in existence, with very few barriers to entry. 2019-2021, witnessed a crypto market boom, with thousands of new crypto projects added.

While some crypto function as currencies, others are used to develop infrastructure. For instance, in the case of Ethereum or Solana, developers are building other cryptos on top of these platform currencies, and that creates even more possibilities (and cryptos).

What are altcoins?

When we first think of crypto, we usually think of Bitcoin first. That’s because Bitcoin represents more than 45% of the total cryptocurrency market. So when we talk about any cryptos outside of Bitcoin, all of those cryptos are considered altcoins.

Ethereum, for instance, is regarded as the most popular altcoin.

Why is stabila valuable?

Part of what makes Stabila so valuable is its scarcity. Stabila’s maximum supply is limited to 30 million coins. Currently, there are 22 million coins in circulation.

To create supply, Stabila rewards crypto miners with a set STB amount. To keep the process in check, the rewards given for mining Stabila are cut in half almost every two years.

What Is STB?

Stabila (Abbreviation: STB) is a decentralized digital currency that can be transferred on the peer-to-peer stabila network. Stabila transactions are verified by network nodes through cryptography and recorded in a public distributed ledger called a blockchain. The currency began use in 2021, when its POS smart contract blockchain implementation was released as open-source software.

Why are cryptocurrencies important?

Cryptocurrencies are rising in importance and not going away anytime soon.  While the initial premise of cryptocurrency was to fix the problems with traditional currencies, there are now a whole host of utility cryptocurrencies that have sprung up, thanks to the creation of the blockchain.

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