Investing in Cryptocurrency


Cryptocurrencies are known for being rather unstable. While it can turn out to be a successful investment, it also comes with high risks. For example, Bitcoin can have a price swing of $1,000 in a single day, whereas other unstable stocks only have a price swing of about $75. However, if you consider yourself a risk-taker and this is a risk you’re willing to take, then cryptocurrency can add a nice look to your portfolio.

If you are not too familiar with cryptocurrencies yet, then first you need to familiarize yourself with base coins and alt coins. Base coins are coins that can be bought using fiat currency. Examples of base coins are Bitcoin and Ethereum. Alt coins are those that cannot be purchased directly using fiat currency. To earn alt coins, you must first purchase base coins using fiat currency and then exchange your base coins for alt coins. Examples of alt coins are Litecoin and Zcash.

There are a couple of ways you can invest in cryptocurrency. You may opt to go for a direct investment or a more indirect way by using funds and stocks. Investing in cryptocurrency by holding a fund with exposure can make it more stable. You wouldn’t also have to worry about keeping a digital wallet, or you can opt to trade your cryptocurrency funds that way you would with mutual funds. One example of this is the Grayscale Bitcoin Trust (GBTC) which is a fund that holds Bitcoin. The good news is that GBTC is a bit more stable than Bitcoin. The downside is that its management fee is a bit higher than what the management fee for a typical index fund costs.

Another way is by investing in cryptocurrency companies. Companies that deal with cryptocurrencies do it through microprocessor technologies by creating their own cryptocurrency or making a platform that powers it. There are a couple of companies that have publicly-traded stocks like Visa, Mastercard, and Salesforce (CRM). Visa and Mastercard rely on companies to issue cards to customers. They are only responsible for controlling the cash flow of digital credit. Both companies have decided to deal with cryptocurrencies by partnering with other companies like Coinbase for Visa and Bitpay for Mastercard.

Other people prefer not to invest in cryptocurrency at all because of its volatility, while some prefer having an account at a cryptocurrency exchange and don’t mind the risk. At the end of the day, whatever way you pick depends on what you think suits you best and on your risk tolerance.