Investing in Cryptocurrency – Getting started investing in Bitcoin, Ethereum, NFTs and other digital assets

Introduction to investing in digital assets like cryptocurrencies, NFTs and the crypto economy

Cryptocurrencies are a brand-new asset class that has taken the world by storm since Bitcoin first crossed the $1,000 mark in 2017. Recent price weakness is giving investors another chance to add cryptocurrencies to their investment portfolios.

Investing in Cryptocurrency / Bitcoin
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We have written this guide to demystify the world of crypto and to help you start investing in cryptocurrency while minimizing the risks.

What exactly is Bitcoin and blockchain?

Bitcoin / Cryptography
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Bitcoin is a good place for a primer on cryptocurrencies to start. Bitcoin was the first cryptocurrency, and most other crypto assets and blockchains are variations on the original principle. If you understand the basics of Bitcoin, you will find it easy to understand other crypto assets and networks.

Bitcoin is a decentralized cryptocurrency that exists on a decentralized ledger known as a blockchain. Every Bitcoin transaction and the number of Bitcoins held by each address is recorded on the blockchain. A Bitcoin address is like an account at a bank and tells us who owns what.

The blockchain is updated by “nodes” which are computer programs that store and process transactions. Bitcoin is decentralized, so anyone with enough computing power can download the software and run a node. Nodes that process new transactions are known as “miners”, and these nodes are rewarded with newly “mined”  Bitcoin when they add transactions to the ledger. Transactions are added to the blockchain in batches, or “blocks” of around 1,700 transactions.

Bitcoin Nodes / Bitcoin Transactions
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Mining nodes solve cryptographic problems to “win” the right to update the next block. The transactions they add to the blockchain also need to match the transactions proposed by more than 50% of the other nodes. This ensures there is always consensus and prevents double spending and fraud. When the first block was mined, the reward was fifty Bitcoins – but this figure is halved every few years and is now down to 6.25 coins per block. Approximately 144 blocks of transactions are processed each day.

Bitcoin and the Bitcoin network were launched in early 2009 by Satoshi Nakamoto, the actual identity of whom remains a mystery. Nakamoto mined the first block on January 3rd 2009 and created the first 50 Bitcoins. As of February 15th 2022, the ledger is on block 723,467 and 18.9 million Bitcoin have been mined.

What is the value of Bitcoin?

Bitcoin Value / Investing in Cryptocurrency
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Bitcoin does not have an intrinsic value like other assets do, as it does not generate cashflow or profits. However, supply is limited. There are only 18.9 million Bitcoins in existence so far, with just 900 new coins being added each day. The block reward will continue to halve until there are 21 million Bitcoins at which point no more Bitcoins will be created.

If supply is limited, and demand rises, the price must rise until supply and demand are in equilibrium. So, the price of Bitcoin really comes down to demand. The limited supply is one of the factors that differentiates Bitcoin from conventional currencies, also known as fiat currencies. These currencies are controlled by central banks, and the supply can be increased at any time, which causes inflation.

When Bitcoin was launched, few people knew about it and there was very little demand. This is the reason it took six months for the price to reach just 9 cents, and another four years to reach $100. However, demand grew as more people learnt about Bitcoin, and the rising price supported the case for investing. Most of the demand for Bitcoin comes from traders, speculators, and investors. These sources of demand are very sensitive to sentiment.

Bitcoin Investing / Institutional Investors
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But there is also an important use case: transferring value. Individuals, FinTech platforms and institutions can “use” Bitcoin as a method to cheaply and quickly transfer value from one entity to another. This is important as this type of demand is not influenced by sentiment.

In the past, it were retail investors that accounted for most of the demand for Bitcoin. However, this is beginning to shift to institutions and FinTech platforms. Ultimately, if demand for Bitcoin continues to rise, the price will likely rise over the long term – though there will of course be peaks and troughs along the way. 

Ethereum and decentralized applications

Ethereum Network
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By now you should have a basic idea of what Bitcoin is. Ethereum, or Ether, was the 18th digital coin to be launched, and it is now the second most valuable cryptocurrency, and possibly the most interesting of them all. The Ethereum network is an example of a network that added entirely new use cases to the concept behind Bitcoin and the blockchain.

Ethereum’s blockchain isn’t just a ledger for transactions involving Ether. Autonomous applications can also run on it, which makes it like a massive, decentralized supercomputer. These applications are governed by “smart contracts” that also reside on the network.

Decentralized Applications / DApp vs. App
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The Ethereum network creates an environment where DApps (decentralized applications) consisting of software and smart contracts can operate on the network without the control of any single entity. Examples of DApps that can run on the network include games, marketplaces, and exchanges. 

The key difference between a DApp and any other application, is that the DApp is not hosted on a centralized server, and it is not controlled by any single entity. The Ethereum network effectively rents processing power to the DApp by charging transaction fees. DApps can in turn charge users for access to the application, or a transaction fee. In fact, DApps can issue their own digital coins to fuel their own platform economy.

Networks like Ethereum allow for entirely different types of applications and organizations. This means businesses, platforms and software can exist and be directed by a community of users and developers, rather than by shareholders or a traditional management structure. 

Example: Decentralized Applications (DApps)

Decentralized Exchange / DEX
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Cryptocurrencies are traded on exchanges. These exchanges are either centralized or decentralized, with the latter being a good example of a DApp. Coinbase is an example of a centralized exchange. The platforms (there are several) are owned by a company. Like most companies, Coinbase has a management team, staff, offices, equipment and expenses to pay.

A decentralized exchange (DEX) is a DApp that exists as software and smart contracts on a blockchain like the Ethereum network. This means a DEX avoids many of the costs a centralized exchange would incur. 

A DEX, and most other DApps, will typically have its own token, which is required to access the platform, pay fees, or even to buy and sell other virtual currencies on the exchange. DApps like this are usually set up by a team of developers who are incentivized to add value to the platform, thereby increasing the value of its native token.

Types of digital assets

Digital Assets / Investing in Cryptocurrency
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There are no “official” categories for cryptocurrencies, but we can classify them according to their primary use. In many cases, virtual currencies can have multiple use cases that give them value.

  • Crypto coins – The first group of digital assets are those that primarily act as a medium of exchange (MOE) or a store of value (SOV). This group includes Bitcoin, Bitcoin Cash, and Litecoin. This category could be referred to as pure cryptocurrencies, coins, or digital currencies.
  • Utility tokens – Networks like Ethereum and DApps can issue their own tokens which are required to access the service. These types of tokens are sometimes described as utility tokens as they provide their owners with utility. However, these tokens can act as an MOE or SOV too – as is the case with Ethereum. The term altcoin is used in various ways. Sometimes it may refer to any cryptocurrency that isn’t Bitcoin.
  • Stable coins – There’s no denying the fact that most cryptocurrency prices are volatile. Stable coins are cryptocurrencies that are designed to have very low volatility. Most are backed by the US dollar and their prices are typically close to $1 at all times. Other stable coins use a system of collateral to reduce volatility. Stable coins offer crypto investors a place to keep their capital in the ecosystem while diversifying into less volatile assets. They also facilitate trading on decentralized exchanges which can’t accommodate trading in fiat currencies. Tether (USDT), USD Coin (USDC) and Binance USD (BUSD) are the leading stable coins.
  • Non-fungible tokens – NFTs are unique items that can be stored on a blockchain. By storing a digital asset on a blockchain, its ownership, ownership history, and authenticity can be verified. See below to learn more about NFTs.
  • Asset backed tokens – Asset backed tokens are digital tokens that are backed by real world assets like real estate, commodities and stocks. This is a grey area for cryptocurrency markets as the link between a blockchain and a real asset is dependent on the legal system. There has been limited progress in this area, but it holds potential for the future. In theory, all financial market assets and real estate could eventually reside on a blockchain.

What is DeFi?

DeFi / Decentralized Finance
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DeFi stands for Decentralized Finance, an emerging and alternative financial system. DeFi applications aim to use blockchain technology to replace the intermediaries that traditionally act as middlemen for financial transactions. Other DeFi applications are designed to solve challenges unique to the crypto industry. Some examples of DeFi applications include:

  • Decentralized exchanges
  • Peer-to-peer lending
  • Yield farming
  • Insurance
  • Synthetic assets and derivatives
  • Providing liquidity
  • Stable coins

DeFi applications typically operate on the Ethereum network and rely on smart contracts for governance.

Example: DeFi

BlockFi
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BlockFi is a well-known DeFi platform that providers users with several services. Besides a wallet and trading platform, BlockFi offers users several ways to earn a yield on their crypto assets.

In addition, you can apply for a Bitcoin credit card. This allows you to spend money against your Bitcoin holdings and earn 1.5% back on each purchase. BlockFi also provides loans using crypto assets as collateral. This means you can borrow money, while continuing to hold your digital currencies.

Prominent cryptocurrencies

Popular Cryptocurrencies
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Bitcoin (BTC) and Ethereum (ETH) are the dominant cryptocurrencies and together account for over 60% of the total market value of all cryptocurrencies. The following is a list of other prominent and interesting cryptocurrencies. This list is by no means complete or a list of recommendations. For a complete list of crypto assets have a look at the CoinMarketCap website.

  • Binance Coin (BNB) is the native token for Binancewhich is a major cryptocurrency exchange. Binance Coin resides on the Binance Chain blockchain and is used to pay for various services on the platform.
  • Ripple (XRP) is a payments network designed for interbank payments. XRP is the token used to transfer value between entities. XRP does not run on a blockchain but on a network of servers controlled by banks, so some believe it is not a true cryptocurrency.
  • Polkadot (DOT) is a protocol designed to act as a bridge between other blockchains. Developers can also use Polkadot’s chain to create their own blockchain that inherits features from the Polkadot chain.
  • Cardano (ADA) is similar to Ethereum in that it allows for DApps and smart contracts to run on the network. The Cardano network uses proof of stake (POS) rather than proof-of-work (POW) to validate transactions.
  • Litecoin (LTC) was one of the earliest cryptocurrencies and was designed to improve on certain aspects of the technology behind Bitcoin. Like Bitcoin, Litecoin is primarily a store of value and medium of exchange.
  • Solana (SOL) is another popular blockchain for developers to build DApps on. Solana is similar to Ethereum in many ways, but boasts faster processing speeds and lower transaction fees.
  • Uniswap (UNI) is a protocol that facilitates transactions between different cryptocurrency tokens. UNI is the native token used to transact on the network.
  • Monero (XMR) is a cryptocurrency with a focus on privacy. Monero is one of the oldest digital coins on this list and was designed so that transactions on the network cannot be traced.
  • IOTA (MIOTA) is a blockchain designed for the internet-of-things. Developers can use it to build applications that allow devices to communicate and make micropayments to one another.
  • Stellar (XLM) is a decentralized network that facilitates the transfer of value between fiat and digital currencies. Lumens are the tokens used to transact on the network.

How to invest in cryptocurrency

Cryptocurrency Investment
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Before you can invest in a cryptocurrency, you will need a wallet to store your digital assets. You will also need to choose an exchange or broker to trade with.

Cryptocurrency wallets, public and private keys

Crypto Wallet
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Each address on a blockchain consists of a public and a private key. The public key is the address someone would use to send bitcoin or another digital asset to you. The private key is like a password that you need if you want to send your Bitcoin to another address.

A wallet is used to access your cryptocurrencies and keep them safe. You don’t actually store your digital assets in the wallet as they only really exist on their respective blockchains. Instead, the wallet is used to store your public and private keys, and to interact with the blockchain. Most people use software wallets like the Coinbase Wallet or MetaMask. You can also use hardware wallets like Ledger which are not connected to a computer and add an extra level of security.

Some wallets can be used with multiple crypto assets, while others are only compatible with a specific cryptocurrency. When you set up your wallet, make sure you follow the instructions carefully to ensure that you do not lose your private keys.

Note: If you trade on some centralized exchanges like Coinbase, you do not need to have a wallet as the exchange operates more like a stock broker. You already have a wallet included with your account on the exchange. You can however send your coins to your own wallet.

Crypto exchanges, brokers and apps

Crypto Exchange
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You can buy and sell cryptocurrencies on various different types of platforms. These include:

If you are making your first Bitcoin transaction, the choice of platform probably won’t make a big difference. However, in time you may prefer an exchange that better suits your needs. Active traders and serious investors prefer to trade on exchanges as the fees are lower than they are for brokers and other platforms.

Decentralized exchanges are more complicated to work with, so they are probably best avoided until you are comfortable with the crypto market. Exchanges for digital assets vary widely in terms of the coins you can trade, the fiat currencies you can fund an account with, and account funding methods. 

Non-fungible tokens

NFTs / Crypto Art
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NFTs are the latest type of crypto asset to capture the world’s attention. Assets like Bitcoin and US dollars are fungible as each unit is exactly the same as every other unit. NFTs represent assets that are not identical to any other assets, and so non-fungible.

The NFTs that gained popularity in 2021 were mostly digital artworks and copies of tweets, which exist as jpeg files. These NFTs are individual blockchain tokens that includes information like the name of the creator, the creators signature and the date the NFT was minted. The media file itself cannot exist on a blockchain, but the NFT will usually include a hyperlink to the asset itself.

These types of NFTs allow artists to monetize their artworks, and allow ownership to be authenticated. This is important for digital art (images, audio and video) that can easily be copied. But there are also lots of reasons to be somewhat skeptical about these types of NFTs. Although the individual NFTs are unique, there is no limit to the number of NFTs like this that can be produced. Many of these artworks are computer generated, and one collection can include thousands of artworks.

Bored Ape Yacht Club / NFT
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In addition, an NFT may give official ownership of an artwork to one person, but that doesn’t stop anyone else copying it. The earliest NFT artworks may well retain some value due to the fact that they were the first to be minted. NFT’s like the signed copy of Jack Dorsey’s first tweet should also retain value due to their rarity.

However, it’s difficult to find a reason for millions of other NFT jpegs to retain any value if they have no utility. When an NFT has utility, it becomes a different story. The real potential for NFTs becomes apparent when they give their owner utility.

Example: NFTs with real world utility

Bored Breakfast Club
Image Source: BoredBreakfastClub.com

An example of an NFT with utility is Bored Breakfast Club. This is a collection of 5,000 NFTs that come with a free coffee subscription. NFT holders will have unique coffee blends delivered to them, wherever they are in the world, for free. 

The NFTs include a digital image of a breakfast scene made up of 200 individual traits. The artworks are inspired by the popular Bored Ape Yacht Club NFT collection. NFT ownership comes with the right to receive free, unique coffee blends roasted by Yes Plz Coffee. If an NFT is sold, the right to receive coffee transfers to the new owner. 

Initially, NFT holders will receive two bags of coffee, spread out over a two-month period. After that, shipments will be made when there are enough funds in a community fund, the Community Coffee Wallet. This community wallet is funded by royalties on NFT sales in the secondary market like OpenSea, coffee sales and merch sales.

More NFT use cases

NFT / Use Cases
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The Bored Breakfast Club is a good example of the potential for NFTs. In this case, the NFT and artwork are really a ticket that provide access to a subscription service. 

There are lots of other potential use cases for NFTs, with many of them tying in with the emergence of Web3 and the Metaverse. NFTs are already starting to make an impact in digital worlds like video games. For years, objects in these virtual worlds have been traded for real money. NFTs create a mechanism to do this securely, and to transfer digital assets between digital environments.

As the Metaverse evolves, unique digital assets will become more important, ubiquitous and valuable. These could include digital real estate, avatars and access passes. NFTs are a compelling way to authenticate ownership of these assets. There are also several compelling real word use cases for NFTs. One example is event tickets which are often the subject of fraud and scams. If event tickets are issued as NFTs, they cannot be illegally sold or copied.

NFT Network
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NFTs can also be used to protect intellectual property including images, music, videos and software. They can be used to track and pay royalties to creators. Creators can also sell their work as an NFT with additional utility. As an example, a musician could sell an album as an NFT that also gives the holder free entrance to future concerts.

Apart from these examples, NFTs can be used to track items with supply chains, to authenticate documents and credentials, and for vehicle licensing. As you can see there is a lot more to the potential for NFTs than digital art. In the future even more use cases are likely to emerge as the digital economy evolves. In fact, NFTs and asset backed tokens could become an essential link between digital and physical worlds. 

7 Ways to make money from cryptocurrencies

How to Make Money with Cryptocurrencies / Investing in Cryptocurrency
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There are lots of different ways to make money in the crypto and blockchain industry.

Direct cryptocurrency investments

Cryptocurrency Trading
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The first and obvious option is to build a portfolio of cryptocurrencies, or to trade them actively.

Cryptocurrency derivatives

Buy / Sell Crypto
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You can now trade futures and options on Bitcoin and Ether on several exchanges including the world’s largest financial derivatives exchange, the Chicago Mercantile Exchange (CME). A lot of brokers now offer CFDs (contracts for difference) on a range of cryptocurrencies.

Derivatives like futures, options and CFDs, allow you to trade with leverage and to open short positions on cryptocurrencies like Bitcoin. However, with all the crypto market volatility we would advise you to be very cautious about trading with leverage.

Non-fungible tokens (NFTs)

NFT Investing
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As mentioned, the NFT market is still evolving so there should be plenty of different opportunities to invest in the future.

Yield farming and P2P lending

Yield Farming / P2P Lending / Crypto
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Some cryptocurrencies can pay you interest. Generally this involves lending your coins to a miner or validator to help them increase their stake. The validator then shares the rewards they earn for validating transactions. This process is known as yield farming. Peer-to-peer lending is another way to earn interest on your crypto assets.

Cryptocurrency mining

Bitcoin Mining
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Crypto mining is not as easy as it used to be as the costs of doing so have risen dramatically. Nevertheless it can still be profitable if you go about it the right way. The barriers to entry are lower if you invest in a cloud mining pool. However, these mining pools need to be investigated thoroughly. In general, you should develop a good understanding of the industry before diving into mining.

Cryptocurrency funds

Bitcoin ETF
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It is possible to invest in the largest cryptocurrencies using a stock trading account. There are three types of crypto funds that can be traded on the stock market.

The first of these is ETFs (exchange traded funds). It has taken a long time for crypto ETFs to receive regulatory approval – and there’s still a long way to go. At this stage, the only Bitcoin ETF in the US holds Bitcoin futures rather than Bitcoin itself. This fund is the ProShares Bitcoin Strategy ETF (NYSE: BITO).

The second type of funds are ETNs (exchange traded notes). These differ from ETFs in that the assets are not held in a trust, but on the balance sheet of the issuer. ETNs offer more flexibility than ETFs, but come with some counterparty risk. Most of the cryptocurrency ETNs are listed in Europe. Examples include the VanEck Bitcoin ETN (listed in Germany) and the 21Shares Ethereum ETP (listed in Switzerland).

Grayscale Bitcoin Trust
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The third type of funds are closed end listed investment trusts. These are similar to ETFs, but have a fixed number of shares in issue. This means that the price is dependent on supply and demand and can vary substantially from the value of the underlying assets.

The Grayscale Bitcoin Trust (US OTC: GBTC) is the best-known closed end crypto fund. This fund traded at a large premium to the NAV for years, but is now trading at a discount. Grayscale also manages various other single coin funds and two multi coin funds.

Cryptocurrency stocks

Cryptocurrency Stocks
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There are also quite a few publicly listed companies that derive all or some of their earnings from cryptocurrencies or the blockchain industry. The companies listed below are involved directly in crypto mining, or hold substantial digital assets on the balance sheet.

  • MicroStrategy Incorporated Class A (NASDAQ: MSTR)
  • Riot Blockchain Inc (NASDAQ: RIOT)
  • Marathon Digital Holdings, Inc. (NASDAQ: MARA)
  • HIVE Blockchain Technologies Ltd (TSXV: HIVE)
  • Galaxy Digital Holdings Ltd (TSX: GLXY)
Crypto ETF
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There are also lots of companies, including Nvidia, CME Group, Block (Square) that offer partial exposure to the industry. You can also invest in several ETFs that invest in companies involved in blockchain technology and cryptocurrencies. Examples include:

  • Amplify Transformational Data Sharing ETF (NYSE Arca: BLOK)
  • First Trust Indxx Innovative Transaction & Process ETF (NASDAQ: LEGR)
  • VanEck Digital Transformation ETF (NASDAQ: DAPP)

How to evaluate a cryptocurrency or crypto project

Evaluate Cryptocurrency
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Investing in cryptocurrency should be approached with caution. While the most successful cryptocurrencies have generated massive returns for early investors, they have also exhibited extreme volatility. In addition, countless cryptocurrencies have seen their prices decline with little chance of recovery. There are now over 5,000 cryptocurrencies to trade, but there probably isn’t room for nearly that many digital currencies.

For long-term investors, sticking to the largest coins has proved to be a winning strategy. This doesn’t mean that a new or small project can’t succeed, but the chances of failure are a lot higher for small projects. Unfortunately, the crypto market has also become a platform for scams, fraud and money laundering – see below. Whether you are investing in tokens, NFTs or any other crypto asset, you should carefully evaluate each project. This will become even more important as the market matures.

First of all, it’s important to make a distinction between trading and investing. Trading is short term in nature and based entirely on supply and demand. As long as demand for an asset remains strong, a short-term trade can be profitable regardless of the long-term viability of the asset.

Crypto Investor / Investing in Cryptocurrency
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If you are investing, which typically means for six months or longer, you will need to look beyond current market hype. As an investor, you should be considering the value of the asset and how that may change over time. Digital assets may not have an “intrinsic value” but there are factors that affect their perceived value. The technology and use case behind a crypto project are obviously important, but you should also consider the following:

  • Sustainable demand – For any asset to appreciate over time, their needs to be sustainable demand for that asset. Ideally demand should come from multiple sources – including users – and not just from speculators.
  • Community – Community strength has emerged as an important indicator of the success of crypto projects. Hype doesn’t guarantee success, but a project that can’t build up a following is likely to struggle regardless of its other attributes. Community strength is especially powerful when it is “organic”, and not paid for with giveaways, paid media coverage etc. Bitcoin and Ethereum do not have marketing departments – instead they rely on a community of users and developers to spread the word.
  • Competitive advantage – For any coin to succeed, there needs to be a clear competitive advantage. A lot of Bitcoin’s success can be attributed to the fact that it was the first and has always been the most valuable. For Dogecoin, the fact that Elon Musk likes it is a huge advantage. 
  • Incentives – Another important aspect of a project is the way incentives are aligned between various stakeholders. During the ICO (initial coin offering) craze of 2017, project founders were often incentivized to sell out and leave the project, rather than see the plan through. If incentives are aligned, there is more chance that the community will work together.

How to avoid cryptocurrency frauds

Bitcoin Scam Alert
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Various types of scams and frauds are becoming increasingly common in the crypto space. This is often the case with new industries that are not fully regulated and have new projects popping up every day. You can reduce the risk of becoming a victim of scams, cybercrime and fraud by following these guidelines:

  • Make sure the people behind a project are real. Try to find their social media profiles and make sure there is a history and more than a few connections. A reverse image search on Google will usually tell you very quickly if someone’s identity is fake.   
  • Don’t leave large amounts of digital assets in an exchange account. Use a hardware wallet for extra security if you have more than 10% of your assets in crypto.
  • Be very careful with any hyperlink you receive via email, via Discord or in a chat room. Phishing scams often use websites that look very real to trick people. 
  • Likewise, be careful with anything that appears to be free or too good to be true.
  • In general, stick to coins, projects and exchanges that are established and well documented. The smaller or less well known a project is, the more skeptical you should be.

Conclusion: Investing in cryptocurrency

This guide to cryptocurrency investing is just a starting point, but hopefully it has given you a good foundation for further research. We should probably still regard cryptocurrencies as speculative investments. However, the physical and digital economies are beginning to converge.

Cryptocurrencies and blockchain technology are an essential building block for the economy of the future – which means they shouldn’t be ignored either. What are your thoughts on investing in cryptocurrency? Do you think that at some point all assets will be tokenized? What is your favorite cryptocurrency or NFT any why? Let us know in the comments below.

Personal Finance, Business & Investing Blog | InvestOpen.com
About Richard Bowman
Richard is partner at InvestOpen, analyst and investor based in Cape Town, South Africa. He has over 18 years’ experience in asset management, financial media and systematic trading. Richard combines fundamental, quantitative and technical analysis with a dash of common sense.

65 Comments

  1. What causes cryptocurrencies to increase in value? What are the reasons and factors why cryptocurrencies are getting more expensive?

    • There are various reasons why cryptocurrency prices fluctuate, for example:

      • Rising demand
      • Scarcity (e.g. the supply of Bitcoin is limited to 21 Million)
      • Coin’s utility (e.g. Ether is necessary to use the Ethereum platform)
      • Mass adoption (e.g. in case of usage in real-world applications)
      • Inflation of fiat currencies
      • Production / mining costs
      • Political factors (e.g. regulation)

      It’s also worth noting that while cryptocurrencies are currently rising in value, it also can be the other way around. We saw this, for example, after the hype in 2017. Just like in other markets (e.g. stock market), there are market cycles. After huge rallies, it’s very likely that we’ll also see major corrections again.

  2. Which platform do you recommend to buy cryptocurrencies with less or no additional charges? Do I need to be aware of any scam platforms?

    • There are plenty of trustworthy cryptocurrency exchanges available. For example: Binance, Kraken, Coinbase, Bitfinex, etc. CoinMarketCap provides an overview of the top cryptocurrency spot exchanges, ranked by various metrics such as transaction volumes. If you choose any of the top exchanges, you usually don’t have to worry about scams or fraudulent business practices. Personally, I use Coinbase to buy / sell cryptocurrency.

      If you’re located in the U.S., you now also may be able to use PayPal to buy and sell cryptocurrencies. In case you are new to cryptocurrency, note that while Bitcoin is currently making new all-time highs, the market is very volatile. If you’re looking to invest larger amounts, it would also be recommended to transfer your coins away from the particular exchange and instead store them in a dedicated software or hardware wallet (e.g. Ledger Nano X).

  3. I want to buy cryptocurrency and transferred money to the platform Plus500. Why did I have from the beginning some Euros less than the money I transferred as capital? I tried to buy Ethereum, but could only place an order and did not receive any cryptocurrency. Why I lost money on placing orders even without receiving any Ethereum?

    • I’ve not done business with Plus500 before, so I’m not familiar with their offerings and fee structure. However, as far as I know, Plus500 is a CFD broker. That means whatever you trade there is not crypto, but a “Contract for Difference” (CFD). CFDs are financial instruments and contracts for the difference between your entry and exit from a trade. That means for example, if you buy a CFD for $100 and sell it for $200, you have the contractual right to the difference of $100. The price of the CFD for an asset is usually close to the price of the asset itself and most CFD brokers allow leverage.

      I quickly checked the Plus500 website and found no indication that they actually offer cryptocurrency trading. It really seems they are a CFD broker only, so the order you placed likely was for CFDs on Ethereum, not Ethereum itself. The money you lost could either be related to fees you paid to Plus500, or your order may have already been executed and the Ethereum price may have dropped since then.

      However, as mentioned above, what you’re buying through Plus500 are CFDs, not cryptocurrency. If you want to buy cryptocurrency, you can open an account at a cryptocurrency exchange and place your order there. Personally, I use Coinbase to buy cryptocurrency. They are one of the world’s largest cryptocurrency exchanges and offer most coins as well as secure offline storage incl. dedicated cryptocurrency wallet app.

    • I certainly don’t have a crystal ball and estimating how much Ether might rise or fall in value would be a complete moonshot. However, Ethereum is seeing good demand, mainly because of the growing DeFi (Decentralized Finance) market.

      In addition, there also is the upcoming Ethereum 2.0 upgrade, which will make Ethereum more scalable, more secure, and more sustainable. In one of my posts, I linked to the recent earnings webcast of HIVE Blockchain Technologies (Ethereum mining company). They also talk about the potential of Ethereum, in case you want to dive into it.

  4. I have been reading about XRP like months ago and now it has rallied 91%! WOW, that’s good for those who bought earlier. XRP is performing really well, and it rallied 91% in a month. Its performance is obviously due to a driving force behind it.

    It is currently competing with big sharks such as BTC (Bitcoin) and ETH (Ether). The XRP price rally was attributed to the increase in new unique addresses, the buybacks that are happening in Ripple, and Ripple’s possibilities of developing a new product.

  5. Bitcoin (BTC) supply is fixed and more and more institutional investors and users are adopting BTC. We’re still far away from mass adoption but cryptocurrency is growing in popularity as a store of value, especially now that companies like PayPal are joining the party.

    Crypto Adoption Survey

    • It is interesting how many people don’t know anything about cryptocurrencies. I can relate, where I live (Central/Eastern Europe) it is not yet endorsed by central authorities and people around me don’t even care about what cryptos are.

      They are not exactly in the “legal” category yet – like in many countries, more of a grey zone, and it’s really far from having any everyday significance. So there is definitely much distrust on people’s part. I wonder where different parts of the world will stand years down the line.

  6. I invest in cryptocurrency, mainly BTC, LTC and ETH. I think cryptocurrency is the future. It can provide good passive income while paying only minimum commission.

    • Cryptos are stored in a digital wallet. This wallet has a private and a public key. The private key allows you to transfer funds out of it. The public key allows you to transfer funds into it. If you lose your public key, you can still access it with your private key. If you lose your private key, you lose access to your wallet’s funds. If someone discovers your private key, they gain access to your funds.

    • You can use a Bitcoin wallet on your computer. All transactions take place on the blockchain. There are also some providers that can help you manage your Bitcoin wallet. But I prefer a hardware wallet, because it gives you total control over your coins.

    • You can export the private key of your crypto wallet as a set of words. Who controls it, controls the money.

    • It will not be easy to do that since Bitcoin was built with privacy in mind. Regulating it will take away that major advantage. The government can only regulate exchange companies.

      • Yes, but soon all crypto exchanges will ask for your ID and documents before opening accounts. This is like regulating BTC.

  7. Cryptocurrency exchanges are going to face regulatory hurdles in the distant future. The exchanges will have to report all crypto transactions above $1,000 in which the FATF will decide on June 21 2019. This will help combat money fraud and finance for terrorist activities.

    This rule applies to businesses working with digital assets such as exchanges, custodians and crypto hedge funds. With that being said, do you think privacy coins such as Monero (XMR), Apollo (APL), Zcash (ZEC) will be the future?

    • I think this is not a bad thing, because regulation will eventually help the industry. The future is without a doubt very bright for the crypto industry.

  8. Do you have any thoughts on Coinomi Wallet? I’ve been using it for a while now. Seems pretty decent, anyone else using it with success?

  9. I’m looking for a way to buy Bitcoin with my PayPal account. I tried VirWoX but they closed down my account and said it is high risk. No other reason was given. Any way to buy Bitcoin via PayPal?

    • That is almost impossible due to the high risk associated with PayPal funds. You could try LocalBitcoins, but be careful, there are some scammers on that site.

    • PayPal has announced the launch of a new service that will enable customers to buy, hold and sell cryptocurrency directly from their PayPal account. This is HUGE news for the adoption of cryptocurrency.

      It will be interesting to see how this will affect transaction volumes and prices. Has anyone already tried this? How was the experience? Especially in comparison to regular cryptocurrency exchanges and crypto wallets.

      • A current survey conducted by Mizuho Securities, a Japanese investment banking and securities firm revealed that 17% of Paypal users have already used the Paypal app to trade BTC (Bitcoin). Also, 65% of those who traded expressed that they are willing to use the cryptocurrency to purchase goods and services. As further stated in the survey, there has been a remarkable increase of 50% in the use of the Paypal app by PayPal Bitcoin traders after beginning to trade Bitcoin. This comes pale with the 9% who reported reduced engagement.

        On Nov. 12, Paypal launched its live crypto trading for all its eligible customers in the U.S. This is three weeks prior to its schedule. In a recent report by Pantera, the entry of Paypal has caused a shortage in Bitcoin. The majority of newly minted BTC is being siphoned by PayPal. In reference to itBit data, Pantera explains: “When PayPal went live, volume started exploding. The increase in itBit volume implies that within four weeks of going live, PayPal is already buying almost 70% of the new supply of Bitcoins”.

  10. What do you guys believe will happen with cryptocurrency beyond 2019? Will it still exist as it is? Who will be the big players? Where should we invest?

    • Blockchain is the largest advancement since the launch of the internet. The blockchain enables the “internet of transactions” which leads to the “internet of value”. As opposed to the internet which enabled communications, content and social connections, the blockchain is focused on every type of transactions first and foremost payments. We strongly believe that only the cryptocurrencies that deliver real added value and can prove their technology and concepts will do very well starting in 2019, and do extremely well in the 2020-2023 period.

      Why is blockchain a budget item that isn’t going away anytime soon? That’s because this technology “reduces errors and streamlines operations because everyone is looking at the same numbers”, said Richard Johnson of Greenwich Associates. With that kind of speed and accuracy, more companies are going to be allocating even bigger bucks to blockchain in the next few years. International Data Corporation expects annual blockchain spending to reach almost $12 billion by 2022.

      We feel that up to 80% of cryptocurrencies will be gone. It seems that we are already at 50% right now: according to CoinMarketCap out of the 2000 or so cryptocurrencies almost 1000 are found to be dead and/or scam. Here are a few of the projects that we think have potential: EOS, ETH, Ripple, Stellar, NEO, Tezos, Cardano, Dash, 0x, DragonChain, REP, RLC, Poly. There are several other solid crypto projects that we like but that’s a good start for you to begin researching.

    • Crypto enthusiasts are passionate about creating a parallel financial system that is more inclusive, transparent and equitable than the legacy system existing today. However, centralized exchanges that allow buyers and sellers to trade cryptocurrencies are hampering the growth of the decentralized financial industry.

      By providing a single point of failure, these exchanges are attractive targets for hackers and regulators alike. From the infamous Mt. Gox breach which caused the 2014 bear market to the recent slew of hacks including Bithumb, Bitgrail and Coincheck, centralized exchanges have proven to be the weakest link in the crypto chain.

    • I think it was a bubble in the beginning, and the cryptocurrency market is now experiencing the reality of the world economy. Bitcoin will never experience such high again. That was as far as it could go. Maybe another cryptocurrency will go for it, but surely not Bitcoin. I almost agree with those who said Bitcoin was the biggest scam of all.

    • I think there is this general idea that e-commerce will be turned to c-commerce, with the “c” standing for crypto. The whole thing revolves around safex, with that new push, the online retail industry could grow more than is predicted. Going by this, the future might be bright for crypto.

    • Once authorities find a way to regulate cryptocurrencies and put a face to each transaction to combat money laundering, blockchain will emerge stronger.

    • I think cryptocurrency will be the norm for all digital assets in the future. Look at IMFCOIN, LibraCoin and also CBDCs that are in development in some countries. I think cryptocurrency will live forever.

  11. My favorite altcoins right now are Ripple, Tron and Zilliqa, all look promising. Ripple allows for easy cross-border remittance between banks. Utilizing the XRP cryptocurrency allows fast transaction times.

    Tron and Zilliqa are Ethereum competitors, based on their whitepapers they allow for fast transactions and fast smart contracts execution. With smart contracts you’re able to create cryptocurrencies for utility or funding of a project.

    • I have sold off my Ripple coins. I will accumulate Bitcoin very soon and I’m waiting to see what happens in January. I’m still trading cryptocurrency CFDs at Forexchief broker along with Forex. Accumulating Bitcoin is my target for next year. I have a feeling it will crumble further, but regain afterward.

  12. I thought it might be fun to do a bit of speculation about where the Bitcoin price might be heading into the long-term. Some believe last year was the only time that we’ll ever see 20k Bitcoin whilst others have made some rather crazy predictions of 100k. What do you guys think? Personally I think it’s pretty obvious that we are in a bear market right now and I believe we could continue to be for some time. Do I think that Bitcoin is going to go to 0 though? I really doubt it.

    I’ve been through multiple of these “bull” and “bear” cycles over the years and each time the sentiment is very similar. When it’s going to the moon and getting hyped like crazy in the media – everyone thinks it’s about to take over the world – until it crashes. Then when it’s at its lowest there’s total despair. People panic, sell and proclaim that Bitcoin is “dead”. This pattern has literally been repeating itself for years if you zoom out on the price chart.

    Right now we are probably somewhere near that capitulation/anger/depression phase. Though that doesn’t necessarily mean we’re at the bottom – it could still have a way to go down. But personally I’m betting we will see another bull run eventually. It just might take a while. Could even be years.

    There is of course the chance that something could come along and knock Bitcoin’s crown off so it’s probably good to diversify a bit. But regardless of what happens, if another bull market does occur then there will be big opportunities to kill it. For now I’m just being patient and waiting to see what happens in the long term.

  13. Bitcoin and other Top 50 altcoins were little changed in value. Bitcoin, in particular, continued its consolidation below the Ichimoku Kinko Hyo’s cloud on the daily chart, inside a triangle chart pattern. A break above or below the triangle or the thinning future Ichimoku cloud could confirm the direction of Bitcoin’s value in October.

  14. Hope you are all doing great. I invested $44k in crypto 8 months ago. Right now I have only $3475 left in my crypto account on the Bitfinex exchange. Why I lost: Because the market is only going down since February and due to panic I made the mistake of jumping from one coin to another.

    • I know how you feel, there are quite many people around who had the same experience. You got in at the top of the bull market and the all year bear market wore everyone down, it’s not uncommon to have 90%+ losses this year.

      All I can say is: hold your coins and do not panic sell now. If you invested in the Top 10 or 20 market cap coins, those are established enough to ride the bear market out and hopefully rise in the next 2 quarters.

  15. Is there already a cryptocurrency ETF available? Or when are cryptocurrency ETFs coming guys? How can I invest in a crypto ETF? I know that Coinbase has an index but you have to make a very high minimum investment I think?

    • I’m also not aware of any “real” publicly traded cryptocurrency ETFs that actually hold coins. As far as I know, VanEck has tried a couple of times to launch a Bitcoin ETF, but their application was rejected by the SEC. Now, VanEck has recently filed an application with the U.S. Securities and Exchange Commission (SEC) for a “VanEck Bitcoin Trust”. We will see if their application will be approved this time, now that BTC is in the focus of institutional investors.

      However, there are alternatives to cryptocurrency ETFs if you’re looking for something that you can trade on a regular stock exchange. For example, you could look into Grayscale Bitcoin Trust (OTC: GBTC) and CoinShares offers Exchange Traded Products (ETPs) on Bitcoin, Ether, Litecoin & Ripple (XRP). Here is a 1-year chart showing that GBTC, for example, is currently following the Bitcoin price pretty closely:

      GBTC Chart

  16. I recently was at a marketing event and they said that Bitcoin mining is very attractive. Anyone knows anything at all about crypto mining?

    • What I’ve read on Reddit and other websites, mining isn’t that profitable, but I guess it depends on what you mine. I’m looking to purchase a few rigs and get started mining, have to finish my plan for electricity and see how it goes.

      • Mining at this time is not profitable if you pay for electricity. Check very carefully before you buy miners. Sometimes it’s better to just buy the crypto at the current prices on exchanges, than to buy miners for crypto mining.

  17. Bitcoin value is currently around $10k but it will be worth more than double by year end says Fundstrat.

  18. I’m waiting for Bitcoin to break its old records. It will certainly exceed its past values. Just the fears need to go away and people need to become confident about cryptocurrency before Wall Street and the world will believe in it.

  19. Bitcoin’s price set a new record on Saturday as the virtual currency rose above $19,000 for the first time on the Bitstamp exchange. The gains came just hours after the currency crossed the $18,000 mark. Bitcoin’s value has doubled over the last three weeks, and it’s up more than 20-fold over the last year.

    When you understand foreign currency trading basics it is hard not to see a gigantic bubble. But Bitcoin’s value keeps rising despite a growing chorus of experts who say the currency value is an unsustainable bubble. “A lot of bubbles historically involve some kind of new financial technology the effects of which people can’t really predict”. – William Deringer, historian at MIT

  20. This morning, the price of Bitcoin rose to $17,171 USD on the Hong Kong exchange Bitfinex. This marks a new all-time high for Bitcoin and an increase in its price by a factor of more than 10 since the beginning of 2017.

    Many experts claim that this growth is the result of reduced hype surrounding the US dollar. They believe that this is more a case of the dollar depreciating in FX trading basics than the price of Bitcoin rising. Crypto-analysts claim that the US Federal Reserve has printed so much money in the last 10 – 20 years that not even the regulator actually knows how much USD is in circulation around the globe.

  21. How did you get into Bitcoin? For me, I was dealing with e-currencies for over 12 years, so getting into Bitcoin came quite natural.

    • Getting into Bitcoin and start trading it on exchanges for me was the best decision, rather than getting into PTC, HYIP, ponzi, MLM or other investment schemes which are mostly meant to take away investor’s money and eventually turning into scams.

    • I got in very late, so it wasn’t really a memorable entry. However, I’ve gained quite a bit from Ethereum, which I managed to get in earlier. I’ve also benefited from Dash and other things.

      Now, I’m fully focused on the upcoming ICOs, and my current pick is DFS, which is based on an online fantasy sports platform built on the Ethereum blockchain. Huge potential there with the possibility to get 5,000 tokens on their DFS for just 1 Ethereum!

  22. I was wondering, does anyone here use Bitcoin (BTC)? I’m currently looking for some sort of work that will pay me in Bitcoin. If you know of anything please let me know thanks.

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