Getting to Know Different Types of Crypto
Cryptocurrency is something that just about everyone across the globe has been talking about for the past few years. For some, it’s an exciting opportunity, for others it may seem overwhelming and risky. One thing is for sure, and that is that leaping in without doing a bit of research is a bad idea and could lead to potential losses – though this can be said for any type of investment. However, buying cryptocurrency is as easy as clicking a button – you can buy Shiba Inu coin in Canada (SHIB) in just minutes via an app or website. This has made it extremely accessible, which can be a good thing but many have been burned by making investments when they’re foggy on the details. Here are a few important things to know before you get started on a crypto journey.
What is Cryptocurrency?
To get started, let’s first dive into what exactly cryptocurrency is. Often referred to as simply “crypto”, a cryptocurrency is a digital or virtual currency (rather than physical cash or your money in your bank account) that doesn’t rely on banks to verify transactions. Owning cryptocurrency doesn’t mean owning anything tangible and therefore isn’t an asset in the traditional sense of the word, however, many people use crypto as a form of long-term (or short-term) investment, as many of these currencies have proven to grow at exponential rates.
How Do You Get Started?
First of all, do some extensive research before you get started. There are many different types of cryptocurrencies, different ways of purchasing them, and different investment tactics you could consider. Once you have a clearer idea of the ins and outs of how crypto works and which options might be a good buy for you, you can start looking into purchasing your currency of choice. You’ll first need to choose a platform – either a traditional broker (online, of course) who will assist you in buying and selling cryptocurrency, usually at somewhat lower trading costs. If you don’t want to use a broker, you can get started yourself by using a cryptocurrency exchange. There are many to choose from, each offering different currencies, features, and options. Take a look at fees, security, and withdrawal options before committing.
Once you’re linked up to a broker or an exchange platform, you’ll be able to fund your account with your cash, and begin trading. The steps are simple and you’ll find easy-to-follow instructions within any platform you choose.
What Different Types Are There?
Next, you’ll need to know a little more about what currencies are available to you and which of them might be your best option. Though there are hundreds available, here is a list of some of the biggest and potentially best options for you to look into for the beginning of your journey.
Known as the grandaddy of cryptocurrency, Bitcoin was the very first crypto and is still the biggest and most commonly traded. Bitcoin (BTC) has many advantages as an investment, including liquidity, a lower inflation risk, and minimalistic trading, all of which are appealing features, especially for a first-time investor. However, like many cryptocurrencies, Bitcoin is still relatively volatile with prices dipping and soaring over just a few weeks.
Bitcoin’s biggest competitor is most likely the cryptocurrency giant, Ethereum (ETH) which is the second-largest cryptocurrency by market capitalization. ETH is super widely available, just like Bitcoin, due to its size and popularity, so it’s an easy and straightforward purchase. In terms of whether or not it’s a good investment, ETH has seen steady growth since its launch and is predicted to grow by as much as 400% in 2022.
Cardano (ADA) is a cryptocurrency that is well known for its focus on sustainability and environmentally friendly energy consumption trends. It makes use of an eco-friendly blockchain that is far more energy-efficient, making it an appealing option for sustainability-conscious investors across the globe. Aside from its eco power, ADA is also the 8th-largest cryptocurrency in the world, and heavily researched with a blockchain developed by engineers and other leading experts in crypto.
Another cryptocurrency almost as old as time itself is Litecoin (LTC) which is still one of the largest around today, ranking 21st. While the currency fell in 2020 due to a failure to perform, there’s still a lot of value in the coin and it could still be a good investment option. With fast transaction times and easy purchases, LTC could be a good option for a beginner who is simply looking to dabble in the world of crypto and learn the ropes.
Memecoins are cryptocurrencies inspired by or based on popular internet memes, which is essentially how they gain traction and following. Dogecoin (DOGE) is considered the original memecoin and is based on the ‘Doge’ Japanese shiba inu meme of circa 2011 – leading to a few spinoff coins such as SHIB.
Meme coins are attractive firstly for their low cost, and secondly because of their famous following – celebrities such as Snoop Dogg and Elon Musk have openly involved themselves with currencies like DOGE, making them popular amongst their following.
Another category of cryptocurrencies is stablecoins – coins that attach themselves to another currency or other external force to reduce volatility. Tether (USDT) is directly tethered to the US dollar (as the name suggests), making it a lower-risk investment for sure. Of course, this makes USDT and other stablecoins a good option for beginners or other risk-averse investors to get involved in cryptocurrency.
Before investing in any shape or form, it’s always a good idea to do extensive research, or better yet, work with a. professional until you feel comfortable and confident in your understanding and tactics. Investing in cryptocurrencies is incredibly speculative which implies a higher risk overall. This doesn’t mean that crypto investment is a bad idea, but the decision should be thoroughly researched and understood before deciding what to do with your money.