A Beginner’s Guide: Cryptocurrencies to Invest In
Imagine if you were able to time-travel back to the 2000s and were given the chance to invest in the likes of Google or Facebook? Would you take the opportunity? In this article we look at the three of the most exciting cryptocurrencies that crypto beginners can invest in, in 2022.
Should I invest in cryptocurrency?
Every day, thousands of investors are making profits by buying and selling the 8,000+ cryptocurrencies available in the market. Naturally, you want a piece of the growing crypto pie!
Which cryptocurrency should I invest in, in 2022?
Well, that of course is the million-dollar question. If we were able to answer that question ourselves, we would already be on our private island somewhere in the Caribbean, relaxing on a deckchair. So how can someone who is just starting out on their crypto journey approach this new adventure?
In this article, we make it a bit simpler for you. We take a look at three of the most popular coins available on the market now: Bitcoin, Ethereum, and Dogecoin. We present each of their benefits and their disadvantages and analyse whether you should invest in each coin.
Are you ready? Let’s go!
Should I Invest in Bitcoin?
The mysterious Satoshi Nakamoto started the crypto revolution when he mined the very first Bitcoin way back in January 2009. So, what’s the verdict? Should beginners invest in Bitcoin?
The Pros
Most beginner crypto enthusiasts tend to start their crypto journey by investing in the king of crypto. Given it is the first and longest-running cryptocurrency, this lends peace of mind to the investor.
The most important factor that contributed to a sense of trust towards Bitcoin and the larger crypto industry is the fact that over the years, Bitcoin’s value, while volatile, has grown exponentially. Ten years ago, one Bitcoin would have set you back around $5. Fast forward to today and one Bitcoin in 2022 will cost you between $30,000 and $40,000 (as of February 2022). This inspires confidence in the average investor, signaling that if you hold onto your Bitcoin, you are bound to be rewarded.
The Cons
Analysing the flip side of Bitcoin’s rise in value, this means that if you are just getting in on the action now, it will most definitely cost you more. While you can buy as little as $50’s worth of Bitcoin, you will need to hold onto your Bitcoin a long time before it can yield considerable rewards. If you are a seasoned trader, you can reap the benefits that volatility can offer by buying and selling at the right time. However, if you are a complete beginner, selling Bitcoin at the wrong time can result in more losses than profits. In this case, it is best to stick to a safer investment strategy and play the waiting game.
Takeaway
If you are just starting out on your crypto journey then this is a good option for your first investment. Bitcoin is the safest, most secure coin around and while it will cost you more to own a whole coin, its value is set to continue climbing, making it more likely that you will profit from the king of crypto.
Should I Invest in Ethereum?
Ethereum is not just the second-largest cryptocurrency after Bitcoin. Ethereum also runs the decentralised, open-source technology that hosts a number of decentralised finance (DeFi) applications as well as non-fungible tokens (NFTs). So should investors put money in Ethereum?
The Pros
Ethereum’s Blockchain technology has made this coin gain incredible value at times at a far faster pace than Bitcoin as well as offer certain benefits that Bitcoin does not offer. While Bitcoin is considered primarily as a store of value and means of exchange, the Ethereum network opens up a number of possibilities that are just not possible on the Bitcoin blockchain. This gives Ethereum an added layer of security and value.
Ethereum transactions are much faster given Ethereum’s newer technology is much faster than Bitcoin’s. As an investment, Ethereum is often seen as a better buy for longer-term investors. This is largely due to the fact that it is starting from a smaller base than Bitcoin meaning there is more potential for growth.
The Cons
The second-largest cryptocurrency by market capitalization does have some downsides. Ethereum’s fees for transactions are quite sky-high. This is due to the high demand associated with this coin.
However, Ethereum’s latest upgrade has seen Ethereum recently turn deflationary. The milestone has been welcomed as an indicator of what’s to come. Ethereum’s coming switch to the Proof-of-Stake consensus mechanism is expected to drive a further 90% reduction in ETH issuance putting an end to block rewards for Proof-of-Work miners. This means Etherum too, could soon be seen as “ultrasound money”. Similarly, Ethereum’s high transaction fees have long been cause for concern, though this is something that is due to be addressed in Ethereum’s coming upgrades.
Takeaway
The second-largest cryptocurrency is an attractive investment for both seasoned and beginner crypto investors, given it is powered by innovative technology that is crucial to the blockchain industry. Many believe it presents more potential for growth than Bitcoin, giving investors the opportunity to invest in one of the biggest cryptos today at a much lesser price than Bitcoin’s.
Should I Invest in Dogecoin?
One recent star of the crypto industry is Dogecoin. Created as a joke based on the meme of a Shiba Inu dog, it soon ceased to be considered just a joke as it continued gaining buzz in the media thanks to billionaire entrepreneurs like Elon Musk and Mark Cuban. This caused the cryptocurrency to surge in value, ranking as one of the top coins to invest in in 2022. But is there value for crypto investors in 2022?
The Pros
Despite Dogecoin being a new coin, it shares several similarities with Bitcoin, mainly its coding. This means it is as secure and as easy to transact as Bitcoin. As with all crypto investments, its volatility presents new opportunities to profit from. The way in which it differs from Bitcoin and other altcoins is that given it is backed by big names who regularly tweet about it, it may be more volatile than other altcoins and so presents unique opportunities to investors that other altcoins might not have. Moreover, given a strong Reddit community has rallied to increase its value even more, it makes it very profitable for investors if they know the right time to buy and sell their Dogecoin.
The Cons
One of the disadvantages of Dogecoin is that, like Ethereum, it has no hard limit on the supply of coins. This makes it less likely to serve as a hedge against inflation. Moreover, given it has no well-defined purpose, like Bitcoin or Ethereum, it might not stand the test of time. The fact it derives value primarily from the buzz generated around it has been a source of criticism. However, one cannot help but notice that this was exactly the kind of criticism that was aimed at Bitcoin in its inception. A criticism that was proven wrong over the years.
Takeaway
Despite the fact that Dogecoin has been heavily criticised for its inflation, it can prove to be a smart move for investors who want to profit from its volatility. The endorsement from big names from the entrepreneurial world like Elon Musk and Mark Cuban landed it to be one of the top cryptocurrencies around. However, due to its inflationary dynamics, and volatility resulting from activity on social media and meme sharing, beginners are advised to proceed with caution as the potential for a strong future is questionable.
Summary
If you want to dip your toes in the booming crypto industry, then we suggest you play it safe. Bitcoin and Ethereum are both investments that are considered musts for any crypto beginner. They have been around the longest and have yielded a good return on investment when holding them long-term. Dogecoin, on the other hand, has earned its place as one of the top coins in the world today against the odds. Crypto investors just starting out should proceed with caution when it comes to Dogecoin due to its highly volatile nature, while more experienced investors may profit from the volatile nature of these cryptocurrencies by buying and selling at the right time.
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FAQs
Should I invest in cryptocurrency?
Every day, thousands of investors profit from buying and selling cryptocurrencies. However, it is always recommended to seek financial advice before investing in crypto and to learn as much as possible before taking the plunge.
If I’m a crypto beginner, which cryptocurrency should I invest in?
There is no right or wrong answer, however we advise beginners to stick to cryptocurrencies that are within the top 5 best-performing cryptocurrencies by market cap within the last year. Amongst these, we recommend Bitcoin and Ethereum as the the cryptocurrencies most worth looking into. Dogecoin has shown astronomical growth at times and often bucked the trend, but it should be treated with greater caution.
Should I invest in Bitcoin?
If you are just starting out on your crypto journey then this is a good option for your first investment. Bitcoin is the safest, most secure coin around and while it will cost you more, its value is set to continue climbing, making it more likely that you will profit from the king of crypto.
Should I invest in Ethereum?
Ethereum is an attractive investment given it is powered by innovative technology that is crucial to the blockchain industry. Although it has no limited number of tokens, many now believe it presents more potential for growth than Bitcoin, giving investors the opportunity to profit from one of the biggest cryptos today at a price far less than Bitcoin’s.
Should I invest in Dogecoin?
Dogecoin can be wildly profitable for investors who want to profit from its volatility. However, due to its inflationary dynamics, and volatility resulting from activity on social media and meme sharing, beginners are advised to proceed with caution as the potential for a strong future is questionable.
As always, this article does not constitute financial advice and you should be sure to do your own research and consult a professional financial advisor before making any investment decision.
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