Trying to make sense of it CRYPTOCURRENCY It can be a bit overwhelming for investors. It is a nascent but promising technology-based asset class that has the potential to disrupt a wide range of industries. For investors, what is probably most attractive is the possibility of obtaining life-changing returns.
Do not worry. You are not late to the crypto party. We’re likely still in the early innings, leaving you plenty of time to put money to work and learn about this burgeoning market.
If you are new to the world of cryptocurrencies, look no further than these three investments.
1. Bitcoin: the currency of the Internet
The world’s first and most valuable cryptocurrency is Bitcoin (CRYPTO: BTC). Launched in 2009, it now has a market value of more than $ 800 billion. What made Bitcoin truly revolutionary was that it became the first peer-to-peer payment network that did not require a central authority to process transactions. This decentralization was far more important than it might have initially seemed.
As a result of its limited supply (there will only be 21 million coins), Bitcoin is generally considered the equivalent of digital gold. But while its legitimacy as true inflation coverage it’s questionable, the returns have been outstanding. In the last five years, Bitcoin has risen more than 4,500%, easily making it one of the best assets to own during that time. Ark Invest’s Cathie Wood believes that Bitcoin will be worth $ 500,000 by 2026 as more institutional investors allocate a small percentage of their portfolios to the digital asset.
In addition to being a speculative vehicle, the real-world utility of Bitcoin is on the rise. El Salvador recently became the first country to accept it as legal tender. In other developing nations with economies that rely heavily on remittances, sending Bitcoin home to family members (and avoiding high fees from money transfer companies) makes much more financial sense.
2. Ethereum: TThe world’s decentralized computer
You’ve probably also heard of Ethereum (CRYPTO: ETH). With a value of around $ 400 billion, making it the second most valuable cryptocurrency, it differs from Bitcoin in that it is a programmable blockchain. This means that developers can use it to create and support smart contracts or self-executing computer programs. Like Bitcoin, Ethereum is decentralized. But unlike Bitcoin, it provides a lot more functionality.
Mark Cuban, the billionaire Shark tank Investor and owner of the NBA’s Dallas Mavericks, he is one of the biggest believers in Ethereum mainly because of its usefulness. Decentralized applications (dApps), including decentralized finance Non-fungible products and tokens (NFT), are mainly built on the Ethereum network. The newer projects will definitely gravitate towards Ethereum.
In addition to the growth of dApps, which have the potential to disrupt industries such as financial services and social media, there are two major reasons to believe that Ethereum’s fantastic run, which has gained more than 35,000% in the last five years, is far off. decide. First, the talent is coming to the platform. Ethereum has the largest developer network of all cryptocurrencies.
Second, while Ethereum’s proof-of-work consensus protocol limits the scalability of the network, an update called ETH2 is expected to roll out sometime this year. If executed properly, this could be a major catalyst, drastically reducing Ethereum’s energy use while increasing the speed of handling transactions, giving it an edge over Bitcoin.
3. Coinbase: Building the cryptoeconomy
In my opinion, the the best stocks in the crypto universe it’s a business called Coinbase (NASDAQ: CURRENCY). The leading cryptocurrency exchange and brokerage firm in the US became a publicly traded company in April 2021, and it has been an extremely volatile stock from the start. This is because roughly 90% of their sales are derived from unpredictable trading fees, a source of income that can fluctuate from quarter to quarter based on what is happening to cryptocurrency prices.
Management is trying to diversify the business by focusing on increasing subscription and service fees. Coinbase Prime provides institutional investors with advanced trading, custody, and analysis. Coinbase Cloud is a development platform that has the potential to be the Amazon Crypto web services. And the anticipated launch of Coinbase NFT, a marketplace for creating, collecting, and discovering NFTs, will undoubtedly attract new users and support higher levels of engagement.
What makes Coinbase an attractive investment is that people don’t have to guess which cryptocurrencies will increase in value. Buying stocks is essentially a bet on the growth of the entire crypto market. Coinbase is building the infrastructure to bring crypto from the outskirts of the financial world to the mainstream. Its powerful brand, tireless focus on safety, and excellent finances (50% profit margin) make the stock worth owning.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are variegated! Questioning an investment thesis, even one of our own, helps all of us think critically about investing and make decisions that help us be smarter, happier, and wealthier.