Why Do People Invest in Cryptocurrency?
People are attracted to cryptocurrency investments because, over time, they have proven to provide much quicker and higher ROI compared to other traditional forms of investment like hedge funds. They have also attracted many first time investors since the realization of these potentially high-profit margins and have caught the attention of a much younger group of users.
The virtual currency markets are extremely volatile and lead to as much loss as profit.
As more assets enter the markets, it is important to know which ones are the best cryptocurrencies to invest in 2018.
Best Cryptocurrencies to Invest in
Cryptocurrency investment is not easy due to the amount of risk it presents. However, out of more than 1,000 cryptocurrencies, there is a handful that provides the best odds in terms of long-term safety, popularity, and profitability. They include:
1. Bitcoin (BTC)
Although the performance of Bitcoin in 2018 so far has been less than great, it has shown a progressive track record over the years since its creation. Apart from being the largest and most popular cryptocurrency, Bitcoin has become a fan favorite among important industry figures.
This is mostly because a lot of these figures held BTC before any other digital asset. It is also due to the fact that BTC remains the most stable virtual currency, so traders prefer to use it as a base currency for their operations. Several reputable exchanges were also created for the sole purpose of BTC exchange. Exchanges like Binance for example, do not accept fiat deposits so users deposit BTC.
One more thing that makes this currency appealing is its origin which has managed to remain shrouded in mystery for several years. Prior to the creation of bitcoin, cryptographers had been trying to create currencies that would fall beyond the control of a central authority (like a central bank), yet still, retain the core properties of money.
In 2008, an anonymous programmer bearing a pseudonym– Satoshi Nakamoto– released a related paper in a cryptography mailing list. This paper described a new digital currency, built on blockchain technology, an immutable digital ledger. Although decentralized, it was designed to embody the qualities of traditional money while also providing decentralization, anonymity, transparency and the ability to store and transfer value. At press time, the price of Bitcoin is $6439.90.
Why Invest in Bitcoin?
There are several convincing reasons to invest in Bitcoin this year, including:
- Prominent personalities within the crypto space have continuously made predictions all year round concerning a rise in the price of bitcoin. One example is Tom Lee who predicted that BTC will hit $25,000 in the near future. Most of these predictions are usually slated to manifest by the end of the year. While predictions do not always end up coming true, industry figures like Tom Lee are hardly ever wrong.
- It is a safer bet than other digital assets, in terms of volatility and guaranteed ability to generate profit.
- Bitcoin has the largest market capitalization in the cryptocurrency market, retaining its place as the dominant player, with 40% of the market share.
- Transactions fees and time are lower due to the implementation of segregated witnesses reforms and the Bitcoin lightning network. This may also lead to an increase in adoption.
How to Buy and Store Bitcoin
Bitcoin can be acquired through the use of:
- Exchanges like Coinbase, Binance
- Peer-to-Peer Exchanges
- Bitcoin ATM
It can be stored in wallets like blockchain.info, Ledger and Greenaddress.
2. Bitcoin Cash (BCH)
Of the several hard forks of Bitcoin, Bitcoin Cash is easily the most successful with a market capitalization of approximately $9 billion. At press time, each Bitcoin cash unit is worth $532. Although it has only been in existence for about a year it is already a lighter, faster alternative to Bitcoin. Throughout 2017, its price soared frequently at different instances, skyrocketing it to a rank of fourth place on the list of digital assets. For these reasons, it is currently regarded as one of the fastest growing cryptocurrencies.
Bitcoin cash was initially created in August 2017 to solve Bitcoin’s block size problem. As BTC users increased, so did the number of transactions that needed to be processed. The limit in block size caused blocks to pile up and as a result, transaction confirmation speeds slowed down significantly.
In May 2017, the network grew worse, boiling down to a situation in which users had to pay higher transaction fees for their transactions to be confirmed early. This handicapped bitcoin as a payment method especially where micropayments are concerned. In response, Amaury Séchet, a former engineer at Facebook, and his team, proposed the first implementation of the Bitcoin Cash protocol. When the asset was implemented, all Bitcoin users who had their tokens in cold wallets were given an equivalent number of BCH tokens.
Why Invest in Bitcoin Cash?
There are several reasons why investors may want to try their luck with Bitcoin Cash, including:
- The adoption boost that BCH has gotten since its arrival has been great. It is now accepted by several major businesses which accept cryptocurrencies including Microsoft and more than 20,000 restaurants.
- Bitcoin Cash is backed by a massive community of users, professionals, and influencers who are bent on seeing its continued progress.
- The BCH network has a huge number of active users, pushing its adoption.
- Like several other cryptocurrencies, BCH is currently going through a recovery from its peak of more than $3000 in December 2017. This presents a great opportunity to buy low and sell high during its next peak.
How to Buy and Store Bitcoin Cash
When Bitcoin cash was created, it was distributed freely to Bitcoin users since it was a hard fork. However, new users have to find other ways to get it. Just like other cryptocurrencies, there are several ways this can be done:
- By exchanging fiat currency for Bcash in exchanges like Kraken, Cex.io and GDAX.
- By exchanging Bitcoin, Ether or Tether for Bcash in exchanges like Bitfinex.
- By buying BCH directly from other users.
BCH can be stored in wallets such as Coinomi, Jaxx, and Ledger Nano S.
3. Ethereum (ETH)
This is currently the second largest cryptocurrency, with a market capitalization of $22 billion and at press time, the price of Ethereum is $214.53. Despite its recent performance, Ethereum remains one of the safest investment options. This is mostly due to its numerous real-world applications, including smart contracts and decentralized applications.
Unlike several other popular cryptocurrencies which only function as transferrable stores of value, Ethereum provides a way for developers to build apps on its platform. This is advantageous in situations where users do not want applications that compromise their security and efficiency. These apps can also use create their own tokens on the ethereum platform and offer them to the public during an ICO. As a result, these new projects, numbering more than 2000, continue to populate the cryptocurrency space with exciting and innovative ideas.
This uniqueness of the Ethereum platform constitutes an attractive investment opportunity for those who want a self-sustaining system. It was proposed by Vitalik Buterin 2013 and released in 2015 by the Ethereum developer team.
Why Invest In Ethereum?
There are a couple of solid reasons why Ethereum is a standout investment:
- Before the fall of ETH price, it saw a 10,000% increase from $7 per unit in January 2017 to over $1,400 in December. A user who had 100 ETH worth $700 in January, would have had $140,000.
- Compared to Bitcoin which only saw a 1500% increase due to its high price, Ethereum is relatively cheaper to acquire and thus more profitable.
- Ethereum is accepted as a means of exchange at a number of places including but not limited to Cryptopets, Overstock, Flokinet, Tapjets, and Snel
- More than just a currency, Ethereum is a platform that gives users the opportunity to create solutions for everyday problems.
- ICOs are increasing and a lot of them are tethered to the Ethereum platform.
- It has a strong community of investors and supporters who continuously work on its development.
- Like Bitcoin and Bitcoin cash, Ethereum has seen a significant retracement, presenting an opportunity for users to buy low.
How to Buy and Store Ethereum
Ethereum can be bought on most major exchanges including Coinbase. It can be stored on wallets like Metamask and Ledger Nano S.
4. Litecoin (LTC)
Popularly known as the silver to Bitcoin’s gold, Litecoin is known for its host of qualities that differentiate it from Bitcoin. One of these qualities is the transaction confirmation speed of 2.5 minutes which contrasts greatly with that of Bitcoin at 10 minutes per transaction. Another difference lies in the algorithms that power both networks.
However, they have certain similarities too, like the fact that they are both good investment vehicles. Litecoin is currently the seventh largest cryptocurrency with a market capitalization in excess of $3 billion. At press time, the price of Litecoin is $51.31.
Although it has seen its fair share of ups and downs like other cryptocurrencies, it remains one of the best coins to hold, especially in the long term.
Litecoin was created and released in October 2011 by Charlie Lee, a Google developer at the time. He sought to fix the problems associated with Bitcoin including its mining process, scalability, transaction speeds, and fees. Lee created Litecoin from the original Bitcoin source code and made several changes that would make it more efficient. By November 2013, the currency had achieved a market cap of $1 billion.
Why Invest in Litecoin?
The reasons why every user should consider a Litecoin investment include:
- Litecoin has remained in the top 10 cryptocurrencies since its release and has been around through seven years of development.
- It is one of the most stable, popular coins that has continued to show progressive growth.
- It has not as volatile as other cryptocurrencies and has managed to maintain price variations that are relatively mild.
- Its growth pattern over time has shown that its performance is progressive over a long-term period.
- It has shown the ability to generate incredible ROI in the past. In January 2017, LTC was valued at $4 per unit and by December 2017, it had risen by more than 9000% to its peak price of $375.29. A user who invested $5000 in Litecoin in January 2017, would have earned $469,112 at peak price.
How to Buy and Store Litecoin
Unfortunately, it is difficult to purchase LTC using fiat currency. Users have to exchange fiat currency for Bitcoin which they can exchange for Litecoin on exchanges like Poloniex, or shapeshift. Litecoin can be stored in hardware wallets like TREZOR and Ledger Nano S or other wallets like Jaxx and Exodus.
5. Ripple (XRP)
Ripple has had a slightly better year than other cryptocurrencies so far. From bull runs to getting listed on Coinbase, XRP may be gearing up for a repeat of its 2017 numbers. The third largest cryptocurrency with a market cap of almost $21 billion at $0.44 per unit, the platform is known for its banking-related functionality. All these qualities have propelled it to become one of the best currencies to invest in this year.
Released in 2012 as a way to facilitate blockchain-based global settlement, Ripple acts as a driver for financial transactions. Remittance drives the world of commerce, yet the process is made difficult by the slow transaction time and fees. XRP provides a way to send money across borders the same way platforms like Western Union and Moneygram are used to transfer fiat currency.
Why Invest in Ripple?
The many reasons to invest in Ripple include:
- Ripple’s platform connects banks, enterprises, exchanges, and payment platforms via RippleNet. There are currently more than 100 banks in its portfolio, including Bank of America. As a result, it is exempt from most of the hesitation that banks have when dealing with cryptocurrency.
- Under the backing of several of these banks, Ripple continues to expand all over the world.
- Within the span of one year (2017-2018), Ripple saw a massive 36,000% growth and is predicted to show strong gains as the year progresses.
How to Buy and Store Ripple
Like Litecoin, it is difficult to buy XRP tokens with fiat currency. Usually, they are exchanged for Bitcoin or Ethereum on an exchange like Binance, Bitstamp or Kraken. XRP can be stored in several wallets including Toast, an online wallet as well as a hardware wallet like a Ledger Nano s.
What are the Best Altcoins to Buy?
Altcoins are also great for investment and the following ones easily take the cake as the best altcoins to buy.
EOS is a decentralized system which uses blockchain technology to eliminate the transaction fees normally associated with cryptocurrency. It also accommodates the development of decentralized apps like Ethereum, its major competitor. This quality makes it attractive, especially for frequent micropayments.
Easily one of the best altcoins to invest in, EOS has held on to its position as the sixth largest cryptocurrency with a market capitalization of almost $5 billion at $6.97 per unit. It also had the most successful ICO of all time, in which the platform raised $4.1 billion within a year (between June 2017 and June 2018). During this ICO period, one billion EOS tokens were distributed.
EOS was created in June 2017 by Dan Larimer, who also created Steem and Bitshares. It possesses unique qualities including the ability to process transactions in parallel, faster transaction speeds and a constitution which its users operate based on. The EOS network also used a different and unconventional mining algorithm.
Why Invest in EOS?
- EOS is self-sufficient and flexible in its ability to evolve.
- The operation of its platform takes a 5% annual inflation rate into account, which is used for further development of the network.
- Ethereum, its immediate competition has dropped in performance. When considering which one to choose, it is important to take this into account.
- Holding EOS tokens gives investors to vote during decision-making processes on the platform.
How to Buy and Store EOS
EOS can be bought using any of the following methods:
- Converting a PayPal balance to Bitcoin using Virvox and exchanging the BTC tokens for EOS on Binance.
- Using a fiat exchange like Kraken to purchase BTC and exchanging it for EOS.
EOS tokens can be stored on a web-based wallet like Scatter, a mobile wallet like Infinito, or a desktop wallet like SimplEOS.
Zcash is a utility coin that focuses on ensuring the privacy, anonymity, and non-traceability of its users. Just like Bitcoin, it is a decentralized platform that uses a blockchain to advance financial transactions. However, unlike Bitcoin, its core functionality lies in the masking its users’ identities. It is currently the nineteenth largest cryptocurrency with a market cap of $768,853,757 USD and a price value of $169.69.
It was created by Zooko Wilcox in 2016 as a fork of the Bitcoin blockchain and uses a cryptographic function known as Zero-knowledge proofs. This protocol secures its network from malicious attacks and double spending. Unlike Bitcoin, Zcash is known for a faster transaction speed of 2.5 minutes, similar to Litecoin, another currency created from the Bitcoin source code. It also has a block size limit of 4MB and its network block rewards are halved every four years.
Despite these fundamental difference in operation, Zcash still bears one major similarity to Bitcoin: a cap of 21 million on the number of tokens that will ever be in existence.
Why Invest in Zcash?
There are several reasons why Zcash could come across as a good investment:
- It has proven its ability to generate reasonable short-term and long-term profit in several instances. As an example, between the start and end of April 2018, Zcash saw a 53.61% rise. This means that investors gained $0.53 cents on every dollar invested.
- Privacy coins are highly sought after, for users who would rather remain unknown and untraced.
- ZCash was listed on Circle app, alongside cryptocurrencies like Bitcoin and Ethereum.
- Grayscale Investments, an asset management subsidiary of Digital Currency Group, one of the largest cryptocurrency-focused venture capital firms, recently added Zcash to its portfolio of offerings.
- Matthew Beck, an associate at Grayscale Investments has also predicted in a company thesis, that Zcash could hit $60,000 by 2025.
- At press time, the price of ZCash is $132.52
How to Buy and Store Zcash
Bitcoin can be exchanged for Zcash on an exchange like Cex.io, Kraken, Shapeshift or even Changelly. ZEC can be stored in desktop wallets like Kozyilmaz (mac), Zcash QT Wallet and
ZelCore Wallet. It can also be stored in stored in hardware wallets like Trezor and ledger but the ZCash account becomes transparent with those options.
8. Digital Cash (DASH)
Dash is a peer-to-peer decentralized digital payment platform which allows users to transact anonymously. It is free from centralized authorities like banks and the government and is one of the best altcoins to invest in because of its focus on anonymity and privacy. This differentiates itself from other systems which strive to provide app development platforms
This altcoin, which provides faster transactions and more privacy than a lot of other coins, recently made it past the $1 billion market cap mark. It ranks as the 13th largest cryptocurrency with a growing market capitalization of $1,375,782,903. At press time, the price of DASH is $162.78.
The Dash platform was launched by Evan Duffield in 2014, using the original Bitcoin source code like other founders including Charlie Lee, the founder of Litecoin. The platform is also expanding rapidly, evident in its integrations and partnerships since 2017. These include partnerships with Blockcypher, Bravo Pawn Systems, and WebMoney. There have also been announcements that Dash will be offered on prominent exchanges including Bitfinex.
Why Invest in Dash?
There are a host of reasons to invest in Dash cryptocurrency including:
- It has shown profitability since its launch. In January 2017, 1 Dash token was worth about $11 USD, but by March its value had skyrocketed to $100 USD. In December 2017, Dash also peaked in value to a price point of $1,370.16 per unit.
- Dash is listed on several exchanges including BitINKA, Bitcoin.vn, GoCoin, Piiko, Strike Social, and Bitnovo.
How to Buy and Store Dash
Dash can be bought on any of the exchanges listed above. Mostly, it has to be exchanged for Bitcoin which can be bought on a fiat exchange. Dash can be stored on desktop wallets like Dash Core, Dash Electrum, Exodus, Jaxx, and Guarda. Mobile wallet options include Edge wallet, Coinomi, Abra, Evercoin and Ethos. It can also be stored on hardware wallets like ledger and Trezor.
9. Monero (XMR)
Similar to Zcash, Monero is a popular utility coin, known for its focus on anonymity and privacy. It is currently the 9th largest cryptocurrency with a market cap of $1,743,539,366 USD and a current price value of $105.04. It was created in 2014 as a fork of Bytecoin after users reported shady occurrences on the network. The platform claims to offer privacy, high levels of security, and untraceable transactions. It is also open source, crowdfunded and supported by an expert team of software developers of which five have chosen to remain anonymous.
Through cryptographic methods, the platform ensures that transactions network cannot be traced back to the users who make them. These transactions simply have no trail so that other users can’t find out a token’s transaction history. The protocol for this solid approach to privacy is complex and has worked well till date, making Monero one of the most appealing coins despite setbacks with US security authorities.
Monero provides its users with great features including fungibility, the interchangeability of one asset with another asset of the same type. Since XMR cannot be traced, the differentiation of “clean” and “dirty” coins is eliminated. The Monero platform is also highly scalable because its blocks have no size limit like other cryptocurrencies including Bitcoin and Litecoin.
Monero was formerly known as Bitmonero and emerged when users were increasingly worried about the privacy of their transactions on the Bitcoin network.
Why Invest in Monero?
Some good reasons to invest in Monero include:
- Monero has shown rapid growth since it was created, mostly due to its ability to hide users’ transactions. People have different reasons for wanting to keep their financial data private and with Monero, this can easily be done.
- It has Low fees since it was not primarily created as a store of value. Generally, Its fees have stayed low, ranging from $0.60 to $6.70 per transaction since its launch, compared to $3.30 to $33.10 for Bitcoin.
- Monero has an active development team that works continuously on the platform. It also has the backing of an active user community.
How to Buy and Store Monero
Monero can be bought using Bitcoin on several exchanges. However, to store Monero, the following steps should be followed:
- Download the Monero paper wallet generator at moneroaddress.org and copy it to a USB. It should be located here.
- Unzip the file and open the paper wallet generator in HTML format, into a web browser on an air-gapped computer with a new OS installation.
- The paper wallet will have a Monero public address for receiving funds to the wallet. This will serve as an account number for one user to send Monero to another.
- The wallet will also come with a Monero mnemonic seed which serves a method of storing the whole paper a way that users can easily recognize. This is all a user needs to restore the wallet later.
- A Monero private spend key is included, to be used to send funds from the wallet to another user’s wallet.
- A Monero private view key is also included, to view all transactions entering the wallet. This can be used to set up a view-only wallet which sees all incoming transactions live on the blockchain when they are sent to a cold storage wallet.
10. IOTA (MIOTA)
IOTA is a decentralized distributed system that replaces blockchain for machine-to-machine interactions. It is an internet of things (IoT) based altcoin for sensor-equipped systems and machines. Rather than a blockchain, IOTA uses a different node system known as a Directed Acyclic Graphs (DAG) which the team calls a ‘Tangle’.
In this system, users confirm two transactions before theirs and have their own transactions confirmed by the next user and so on. Since users need to continuously confirm each other’s transactions, transaction speeds increase as more nodes enter the tangle. This leads to an efficient system in which users do not have to wait for a long time to be confirmed because there are more users available to confirm all waiting transactions.
IOTA was created in 2015 by David Sonstebo, Dominik Schiener, Dr. Serguei Popov and Sergey Ivancheglo. Since then, it has risen to become the twelfth largest cryptocurrency with a market capitalization of $1.3 billion. According to the team behind IOTA, the platform has the ability to scales “infinitely” and handle the load that IoT devices will exert. IOTA also aims to enable users to carry out transactions on its network without paying any fees like other networks, making micropayments easier and cheaper.
Why Invest in IOTA?
- Taipei, the capital city of Taiwan, has partnered with IOTA to make it a smart city.
- IOTA is currently being tested in several IoT functions, including a mini Tesla charging itself and paying for it.
- The platform has a strong backing including a supervisory board of experts including Johann Jungwirth, the Chief Digital Officer (CDO) of Volkswagen and Dr. Hongquan Jiang, a partner at Robert Bosch Venture Capital.
- Its price has stabilized at a high level and its market share increased by more than 4 times to $13 billion in 2017.
- The platform recently partnered with Bosch to integrate its new data collection with the IOTA marketplace
How to Buy and Store IOTA
IOTA tokens can be bought on Bitfinex, Binance, Bit520, and the IOTA Exchange. They can be stored on a desktop GUI wallet downloaded from its website. There are also paper and desktop options available.
What are Some Good Investment Strategies?
Cryptocurrency investments have been called every name under the sun, from Ponzi schemes to a huge scam and bubble. Despite the criticism, the numbers do not lie and as such, records show that this form of investment has been incredibly profitable, both for seasoned and amateur investors.
Although these profits are generated quickly and often seem unrealistic, it is possible to lose massive amounts of money as well. This is why picking the best strategy is a top priority.
Cryptocurrency investment is a relatively new concept but it adopts the same strategies as the traditional market. These two strategies will ensure that users make the most out of their investments:
1. Long-term Cryptocurrency Investment
This refers to an investment method in which users choose cryptocurrencies which they would like to hold for a long time. Unlike trading, holding onto digital assets involves patience since a lot of the time, the investments do not mature for years.
However, the ROI gotten from long-term investments can be massive, even more so than their short-term counterparts if the right asset is picked.
Before diving in, investors must consider the following:
- Whether or not a future token sale will be decided by a price or a time target.
- Whether or not all holdings will be sold or just a fraction.
- The possibility of loss occurring.
- The liquidity of chosen assets.
Short-term Cryptocurrency Investment
This is the exact opposite of a long-term investment option and does not always achieve the same results due to the use of different strategies. It is also due to the fact that some coins are better suited for generating short-term gains while some aren’t.
Typically, a short-term cryptocurrency investment is one in which investors trade their tokens within a short period of time ranging from a few minutes to a few hours.
Since the market moves quickly between profit and loss, this type of investment would require the investor to be vigilant of the market changes so that they do not lose any money.
Although cryptocurrency investment comes with as many drawbacks as upsides, it is immensely rewarding when done right. The best cryptocurrencies to invest in 2018 are those with a solid roadmap for the future, whether in upgrades, partnerships, exchange listings or even token distribution.