Cryptocurrency is decentralized, which means it is created and overseen by a peer-to-peer network rather than a central banking authority. It is traded digitally. More than 8,000 active currencies exist, and new ones are constantly entering the market. Choosing which cryptocurrencies to invest in requires some research and skill. Anbruggen Capital has been investing in cryptocurrencies since 2013.
Many digital currencies operate on a blockchain platform. A blockchain is a digital ledger that verifies each transaction. Once the blockchain has verified a transaction, the transaction cannot be changed. In this way, a blockchain enables cryptocurrency to operate like traditional (fiat) currencies.
Blockchain technology also has other functions, including allowing for smart contracts. Smart contracts operate automatically when the parties meet certain conditions on the digital platform.
Why Crypto Is Popular
Cryptocurrency has become popular for several reasons. It can help diversify an investment portfolio comprised mainly of stocks, bonds, real estate, and fiat currency. As an asset class, crypto’s value has skyrocketed over the past five years, especially as it has received coverage in the mainstream media. Almost 20,000 businesses accept crypto, and about 8 percent of the U.S. trades crypto. The numbers rise daily, increasing crypto’s utility. Many also believe that crypto is the future of money.
The largest cryptocurrencies are Bitcoin, Ether (Ethereum), and Binance Coin.
Tips for Beginning Investors
- Cryptocurrency is one of the most volatile investments. Sophisticated investors (or investors whose money is managed by crypto experts) can make a lot of money investing in crypto. However, novices may only do as well with experienced help.
- Develop a strategy for managing risk just as you would with traditional investments. One strategy is to set aside a fixed percentage of your investment dollars towards crypto and then use only a portion to gauge the market before investing the rest. Another strategy may be to develop strict rules about when to buy or sell.
Ways to Invest in Crypto
Investors can invest directly in an individual cryptocurrency. However, other tactics may help them better manage risk. An investor can carefully choose a mix of cryptocurrencies based on market capitalization, for example. Investors can also buy stocks in companies that benefit from crypto trading, such as crypto brokers. Or, they can choose a futures-based crypto fund. Investors can trust a fund management company, such as Anbruggen.Capital, to use investment strategies that have worked well for many years.