Investing in crypto: bitcoin is by far the most well-known crypto coin due to its peaks and troughs, but nowadays you can also invest in many other cryptocurrencies. These are just like the bitcoin digital coins, but often with their own development team and strategy. What is a cryptocurrency?
A crypto-currency can be described as a digital currency. The best known cryptos are bitcoin and ethereum.
Although a cryptocurrency – also called cryptocurrency or cryptocoin – is actually not money, but a kind of programming code based on a new technology (the blockchain). You can move them around and check these transactions easily.
Please note: investing in cryptocurrencies such as bitcoins involves great risks, you can (partly) lose your investment.
You can trade in cryptocurrencies, but many people expect the applications of cryptos and their code to be much larger in the future. For example, many experts expect that in the long term the technology behind cryptocurrencies will also replace other securities. By investing in crypto you can benefit from this. Although there are also many specialists from the financial sector skeptical because crypto usually has no underlying value and the price of crypto coins therefore depends on supply and demand. If demand decreases for even a moment, prices can collapse quickly. Brokers who (also) trade in crypto
To trade in crypto you need a digital wallet. If you open an account with an online broker, a wallet is usually included, but you can also open separate digital wallets via mobile apps or special USB sticks for physical storage. After that, you can easily buy cryptos from large and well-known platforms such as:
BUX Zero
Via the Dutch investment platform BUX Zero you can trade stocks, ETFs and 30 cryptos via a user-friendly app on your phone. The investment app is aimed at new investors and with Zero orders you do not pay any purchase costs. Bitvavo
Bitvavo was founded in Amsterdam and with one and a half million users, it is the largest crypto exchange in the Netherlands. Bitvavo offers over 150 digital currencies at low transaction fees and an easy way to strike your cryptos. It is listed with the AFM and registered with De Nederlandsche Bank. eToro
If you want to invest with maximum freedom, eToro is an international champion among brokers. Millions of users from more than a hundred countries trade here quickly and cheaply in stocks but also in commodities, currencies and 41 types of crypto. eToro also offers options and CFDs but please note that 68% of retail CFD accounts lose money.
See also our complete list of cryptocurrency brokers. Determining the value of a cryptocurrency
Which cryptocurrencies bring new applications is highly uncertain. Online you can already find all kinds of visions and strategies of organizations that launch cryptocoins for this. There are two possibilities. Some of these currencies are so-called stablecoins. The value of these digital coins is predetermined or established through a combination of factors, such as the value of the euro or dollar.
You can sometimes make money with stablecoins if the value they represent changes. For example, with a stablecoin that represents an amount of gold. There are also stablecoins where the issuing party pays dividends. But most people who invest in cryptocurrencies do so in cryptocoins that let the market determine their value. Making money with price differences of cryptos
So there are cryptocurrencies where the price is relatively fixed, but the most famous cryptos owe their value entirely to the market of supply and demand. With cryptocoins such as bitcoin, ethereum or ripple xrp, the price is strongly in motion, and that gives opportunities for investing. Often it is predetermined how many of these coins will come into circulation, but usually there is no underlying asset. So there is no exchange value in return. How much money a cryptocoin is worth then depends entirely on the buyers and sellers.
The most well-known cryptocoins owe their value entirely to the market of supply and demand.
If they are really used worldwide, there may be a scarcity, which can result in a huge increase in the value of this crypto. Investing money in a cryptocurrency such as bitcoin, ethereum or ripple xrp can yield a good return. But there are also many cryptocurrencies where the development team has already dropped out and which have therefore ended completely worthless.
Through Bux Zero an online broker you can easily buy cryptos in addition to shares and ETFs. The crypto exchange Bitvavo offers 150 digital currencies and an easy way to strike cryptos. Investing in bitcoins Investing in bitcoin is very popular.
Most people who buy cryptocurrencies invest in bitcoins. There are several reasons for this. To begin with, buying bitcoin is easy, and to buy other coins you sometimes have to pay with bitcoin. And even if you want to exchange your cryptocurrency for euros again, you sometimes have to exchange it to bitcoin first. As a result, there is a good chance that as a crypto trader – in addition to other coins – you also have bitcoin in your portfolio.
In addition, bitcoin is one of the oldest, most valuable and best-known digital cryptocurrencies in which many transactions take place every day. That makes it easy to buy or sell. Many people who invest very limited in crypto only buy bitcoins.
Most people who invest in crypto (also) buy bitcoin.
Also, when you want to invest a lot of money in digital money, given the popularity of bitcoin, it can be tempting to spend the entire amount you want to invest in crypto on bitcoin. This sounds logical, because the currency is an important indicator of the whole phenomenon. Many market developments follow the price of bitcoin. The moment the bitcoin rises or falls, this often affects the value of other cryptocurrencies. That way you can almost see the bitcoin as a tracker or ETF in stock trading.
Investing all your money in bitcoins?
Whether you can make the most money with bitcoin, or with other crypto, is very difficult to say. Bitcoin has shown that it can rise rapidly in a short time. But this crypto may be popular and have a big impact, but it remains just a single cryptocurrency that has been known for years and already represents a great value. There are about 17 million bitcoins in circulation and a total of up to 21 million will arise.
This means that the scarcity of the cryptocurrency is already a reality. And since this is known, it remains to be seen whether this cryptocurrency will rise the fastest. Or even maintain the current course. As with other investments, the advice to spread your chances is also popular with crypto. Although sometimes people also mean that you should not invest all your money in crypto. After all, the chance that things will go wrong is at least as big as the chance that a cypto investment will make you rich.
Index investing in cryptocurrencies? Mercury Redstone offers a broadly diversified crypto portfolio based on MVIS’s Digital Assets 25 Index: the 25 largest and most liquid crypto assets. What are altcoins and can you invest in them?
Bitcoin was the first cryptocoin. All other cryptocoins, which have come on the market after bitcoin, are described as altcoin, or alternative coin. These are both the better-known names such as ethereum and litecoin, but also numerous other cryptocurrencies that have not or hardly proven themselves yet.
Many investors have started with bitcoin, but now also invest in some other crypto. What the ideal ratio is if you are going to invest in different cyptocurrencies depends on how you like to invest, the extent to which you are willing to take risks and the time you have to compensate for any losses.
In addition to bitcoin, there are many cryptocoins in which you can invest.
Non-fungible tokens
Crypto investing also allows you to trade digital art, videos or music. For tradable cryptos, a solution has been devised with non-fungible tokens. So you can best see an NFT as a digital collectible.
The buyer receives a digital file, an NFT always remains in the blockchain. Each NFT is unique, cannot be multiplied and can only be transferred in its entirety. This is different with other cryptocurrencies. A bitcoin or ether can be divided into small pieces. In addition, every bitcoin or ether is always equal to another bitcoin or ether in value.
An NFT is a digital collectible. These cryptos cannot be divided into small pieces.
