So far, 2021 has been the year of cryptocurrencies. With Bitcoin smashing through the previous record to reach an all-time high of £42,000 ($58,000) and firms such as Tesla now investing, it appears that there has never been a better time to jump on board and start investing in crypto. Of course, while Bitcoin may be the most well-known cryptocurrency it is by no means the only one. Alongside this, there is also the likes of Ethereum, Litecoin, and Cardano to consider. Even looking at these additional cryptos is only touching the tip of the iceberg as there are literally thousands of them in existence.
With all of the media coverage of crypto and what this year has seen, now may be the time that you are considering investing. If you are unfamiliar with crypto terms such as algorithmic peg, altcoin, and bag there is a good chance that you may need to invest in some education before taking the plunge, but here’s a look at some of the key points that you’ll need to know.
Before considering how much you need to start investing, it is important to understand what crypto is and, just as importantly what it isn’t. Cryptocurrencies are digital currencies that exist online and in secure wallets. They can be used to buy goods and services, but more importantly, they can also be traded for profit.
Crypto works by using blockchain technology. This is a decentralised computer system that keeps information extremely secure. The fact that crypto is decentralised also means that no government or single person controls it. This means that, although values can change, it is not susceptible to world events like a traditional currency is.
When it comes to considering investing in cryptocurrency, it is worth taking a look at what are the most popular. With so many in existence, it is easy to get lost in a sea of names and not really be sure what you are investing in. The most popular cryptos to invest in are:
Bitcoin
The open-source software for Bitcoin was released in 2009. The person behind this is only known as Satoshi Nakamoto and has never had his real identity confirmed. The first time that Bitcoin was used was to purchase a pizza, but since then it has gone on to achieve incredible values and is now even accepted as a method of payment by PayPal, showing that it is now truly mainstream.
Ethereum
The work of Vitalik Buterin saw Ethereum being launched in 2015. At the time of release, there were 72 million coins made available. Although not reaching the heights of Bitcoin, it still has a respectable all-time high of £1,239 ($1,700).
Litecoin
The creator behind Litecoin was Charlie Lee who founded this in 2011. Going live in 2013, this crypto works in an almost identical way to Bitcoin although the technology allows for faster confirmation of transactions. Its all-time high was £262 ($360).
To invest in cryptocurrencies, you are going to need somewhere to buy it and then somewhere to keep it. This is where exchanges come into play. The most common of these is Coinbase. Here you can buy Bitcoin and Ethereum with your debit card. For other cryptos, you generally need to trade Bitcoin and Ethereum and can not use traditional currencies to buy them.
Given the high values of these currencies, investing may seem unobtainable for many. The good news is that you do not need to purchase an entire Bitcoin. Exchanges allow you to purchase fractions of cryptocurrencies which makes investing accessible for everyone. Potential new investors should not be intimidated by the rising values. Instead, this should be taken advantage of by using fractional options which remove any barriers to entry.
