3 Best Cryptos for First-Time Investors

Please fol­low and like us:
Pin Share

If you’re one of the 20% of cryp­to-curi­ous Amer­i­cans who want to buy their first cryp­tocur­ren­cies, you might feel a lit­tle over­whelmed at first. Not only is there a vast num­ber of coins (over 13,000 of them accord­ing to Coin­Mar­ket­Cap), but the logis­tics of open­ing a cryp­tocur­ren­cy account and deposit­ing mon­ey can also be daunt­ing. With that in mind, let’s take a look at some advice to get you start­ed, as well as three cryp­tos that could be your step­pings stones into the market.

Minimize the risks

I don’t want to scare you by start­ing with the risks that are part and par­cel of cryp­tocur­ren­cy invest­ing, but it’s bet­ter to be pre­pared. So before we get to the best cryp­tos for your starter port­fo­lio, let’s touch on some of the ways to pro­tect yourself.

  • Only invest mon­ey you can afford to lose. Cryp­tocur­ren­cies are extreme­ly volatile, so your assets could eas­i­ly gain or lose 20% or more in a sin­gle week. Not only that, but many coins will fail. If you only invest mon­ey you can cope with­out, you won’t be so affect­ed if the mar­ket crashes.
  • Top up your emer­gency fund and retire­ment sav­ings first. It’s easy to get caught up in the hype around cryp­tocur­ren­cy invest­ments and feel like you’ll miss the boat if you don’t invest now. But your emer­gency sav­ings and retire­ment account have to take pri­or­i­ty. They are what will sus­tain you, either in your old age or in any finan­cial cri­sis you face before that.
  • Lim­it your cryp­to invest­ments to 5% of your over­all port­fo­lio. Anoth­er com­mon mis­take is to go all in on cryp­to. Instead, ensure your dig­i­tal assets are a small part of a more bal­anced port­fo­lio, so you won’t be over­ex­posed to fluc­tu­a­tions in the cryp­to market.
  • Use a good cryp­tocur­ren­cy app or exchange. Look for a cryp­tocur­ren­cy plat­form that will keep your invest­ment safe by stor­ing assets offline in what’s called cold stor­age. It’s a bonus if it also has third par­ty insur­ance to give addi­tion­al pro­tec­tion against hacking.
  • Nev­er stop research­ing. You don’t have to become a blockchain expert, but you do need to know the basics. Oth­er­wise, how can you pick out the worth­while invest­ments from the sea of pre­tenders? It’s cru­cial you do due dili­gence on any cryp­to before you invest.
  • Invest for the long term. Rather than look­ing for quick gains, a long-term invest­ment approach will help you avoid pan­ic buy­ing or sell­ing. It makes it eas­i­er to ride out the volatil­i­ty and focus on cryp­tos with real-world util­i­ty that are like­ly to per­form well over time.
  • Under­stand the tax impli­ca­tions. You need to keep track of all cryp­to trans­ac­tions, as you’ll need to pay cap­i­tal gains tax on any prof­its. Cryp­to tax­es can be com­pli­cat­ed, so make sure you know what you need to report.

With­out fur­ther ado, let’s look at the three best cryp­tos for first-time investors.

1. Bitcoin (BTC)

Bit­coin is the grandad­dy of cryp­tocur­ren­cies — the world’s first dig­i­tal cur­ren­cy and still the leader by mar­ket cap. It may not feel excit­ing, but Bit­coin has already sur­vived sev­er­al mar­ket crash­es. The more estab­lished cryp­tocur­ren­cies have the best chance of sur­viv­ing any future crash­es. Plus, the price of Bit­coin already influ­ences the prices of small­er cryp­tocur­ren­cies, so it’s a sol­id first buy.

SEC Chair Gary Gensler was not far off when he described cryp­to as the Wild West. This is a rel­a­tive­ly new indus­try with very lit­tle reg­u­la­tion, so there’s not a lot to stop peo­ple from manip­u­lat­ing the mar­kets or to pre­vent out­right lies. If you invest in small­er cryp­tocur­ren­cies, there’s a high­er risk of falling prey to shady actors, which is anoth­er rea­son to stick to the big boys.

In case you’re con­cerned, you don’t have to buy a whole Bit­coin. All cryp­tocur­ren­cy exchanges let you buy frac­tions of cryp­tocur­ren­cies. So if you only want $10 worth of BTC or any oth­er major coin, that’s all you need to buy. Though if you’re only invest­ing $10, make sure your invest­ment won’t get swal­lowed up by trad­ing fees.

2. Ethereum (ETH)

Ethereum is the sec­ond biggest cryp­tocur­ren­cy, and its tech­nol­o­gy pow­ers a large amount of the decen­tral­ized finance (DeFi) indus­try. It was the first to intro­duce smart con­tracts, which are tiny pieces of self exe­cut­ing code that live on the blockchain. These are what devel­op­ers use to pro­gram appli­ca­tions on the Ethereum network.

No cryp­tocur­ren­cy is per­fect, and Ethereum does have issues with scal­a­bil­i­ty — it suf­fers from net­work con­ges­tion and high fees. As a result, it is work­ing on a major upgrade to Eth2, which is expect­ed to be fin­ished in 2022.

A num­ber of so-called Ethereum killers have grown in pop­u­lar­i­ty, many of which are faster and cheap­er. But Ethereum still hosts the lion’s share of appli­ca­tions, and that first-mover sta­tus remains a sig­nif­i­cant advantage.

3. Cardano (ADA)

Car­dano is the newest cryp­tocur­ren­cy on this list, mak­ing it poten­tial­ly the riski­est of the three. How­ev­er, it’s a great way for new investors to learn more about what blockchain tech­nol­o­gy can do. It already has part­ner­ships in sev­er­al coun­tries in Africa, such as a deal with the Min­istry of Edu­ca­tion in Ethiopia to record stu­dents’ aca­d­e­m­ic records on the blockchain.

Car­dano has tak­en a slow-and-steady approach to devel­op­ment. Its founders went back to the draw­ing board and built a new blockchain. The idea is that the solu­tions to the issues Ethereum faces are baked in from the out­set, so once the new sys­tem is fin­ished, it won’t need major upgrades.

The chal­lenge for Car­dano is that a num­ber of oth­er cryp­tocur­ren­cies that also solve Ethereum’s prob­lems are already oper­a­tional and attract­ing devel­op­ers and investors.

Bottom line

Don’t get seduced by arti­cles about the lat­est must-buy cryp­tocur­ren­cies when you first invest. Take time to under­stand the indus­try and get used to the volatil­i­ty and oth­er aspects of cryp­to invest­ment. Cryp­tocur­ren­cy invest­ments are already risky enough with­out get­ting burned right out of the gate, so stick to the big ones — at least until you feel con­fi­dent branch­ing out.

Source link

Please fol­low and like us:
Pin Share

Leave a Reply

Your email address will not be published. Required fields are marked *