How to Invest in Cryptocurrency
Investing in Cryptocurrency is alien to many people. Despite the successes of adventurous investors, many remain hesitant about putting their hard-earned money in a highly volatile instrument. However, investing in digital currencies does not make people jittery if they know how to invest in Cryptocurrency. This article answers a few of the common questions that beginner investors might have about investing in Cryptos.
Can I Invest in Bitcoin with $1?
Yes, it is possible to invest $1 in Bitcoin or any other Cryptocurrency. It is worth noting that Crypto has millions of subunits comprising a single Crypto. For example, the smallest Bitcoin unit is the “satoshi” equivalent to one-hundred millionth (1/100,000,000) of a Bitcoin or 0.00000001 Bitcoin.
One can compare this to a flat currency. For example, one US dollar comprises 100 cents or pennies. Hence, the number of units per dollar is only 100. On the other hand, a single Bitcoin can have a million units.
The Cryptocurrency Ethereum’s subunits are more staggering. One Ethereum equals one quintillionth (1/1,000,000,000,000,000,000). It is crucial to know that Ethereum’s currency is “Wei” and not Ethereum.
Why do these figures matter?
Suppose 1 Bitcoin is equivalent to $38,000. In that case, one satoshi equals 0.00038 US dollars or about 0.038 cents. There are 26.32 0.038 cents in a dollar. Hence, one can get 26.32 satoshis or 0.0000002632 Bitcoins.
While it is possible to invest $1 in Bitcoin or any other Cryptocurrency, one cannot expect a handsome return on investment. In the calculation above, the investor only has 0.0000002632 Bitcoins. It only nets him 0.009921 dollars or 0.99 cents.
There are also fees that crypto exchanges charge for each transaction. That is why many crypto exchanges have a minimum investment amount required from potential investors. For example, Coinbase has a $2 minimum, while eToro requires investors to use at least $10 when investing in Crypto.
Which Crypto to Buy for Beginners?
Bitcoin (BTC) remains the choice of beginners to investing Cryptocurrency because it is the world’s largest, oldest, and most popular. It revolutionized the way people transact business in the digital world, ditching real-world money for a virtual currency. In 2017, Bitcoin lorded the cryptocurrency market with 87%. However, other cryptocurrencies started eating into Bitcoin’s lead, that it only has 48% of the total crypto market value by 2021.
One of the best Cryptocurrency for beginner investors other than Bitcoin is Ethereum (ETH). This Crypto ranks second in market capitalization after Bitcoin. However, its principal advantage is Ether’s (Ethereum’s currency) ability to run applications on the Ethereum network. It also allows investors to buy Ethers on every Crypto exchange and store them in various Crypto wallets operating on different systems.
Other popular options for beginners include Ripple (XRP), Bitcoin Cash (BCH), and Litecoin (LTC).
What is the Minimum Amount to Invest in Cryptocurrency?
The minimum amount of money one can invest in Cryptocurrency depends on the flat-to-crypto exchange. Some exchanges allow people to invest in Crypto for as low as $2, while others require a $10 minimum investment.
It is worth remembering that buying and selling Cryptocurrency always involves fees. In general, the greater the investment amount, the lower are the fees. For example, Coinbase has four pricing tiers. Takers investing less than $10,000 have a 0.50% fee. On the other hand, if their investment is between $100,000 and $1 million, the taker fee is only 0.20%. The same rule applies to makers, where lower investments have higher charges.
Which Cryptocurrency is Best to Invest?
Bitcoin remains the best Cryptocurrency to invest in, although other Cryptocurrencies are worth considering. Bitcoin showed exceptional resilience throughout its 13-year history. In November 2021, BTC reached an all-time high of $68,000 per Bitcoin. Although it currently hovers at the $37,000 mark, many Cryptocurrency experts expect BTC to make a rebound within the year.
Although playing second fiddle, Ethereum is an excellent alternative to Bitcoin. Introduced in 2015, this six-year-old Cryptocurrency reached an all-time high in November 2021 at $4,400 per Ether. The current market price is $2,400, making it a wise investment.
Final Thoughts
Investing in Cryptocurrency is not different from other investment vehicles. The only concern is its extremely high volatility. Bitcoins, Ethers, and other Cryptocurrencies can skyrocket one moment and plunge back to earth the next. Hence, it would be best for potential investors to consider their risk tolerance before putting their hard-earned money in Crypto.
