A cryptocurrency, broadly defined, is currency that takes the form of tokens or “coins” and exists on a distributed and decentralized ledger. It is also a digital money that isn’t managed by a central system like a government, instead it is based on a blockchain technology with Bitcoin being the most popular one.
Most cryptocurrencies use blockchain technology, making all transactions transparent and easy to track. Although, it doesn’t necessarily make it harder for hackers to steal your cryptocurrency but it makes it easy for users to track their Investments so it can be recovered rather than being lost following fraud.
Currently there are more than 5,000 cryptocurrencies on the market. While you can use cryptocurrency to make purchase, most people treat it as a long-term investment. However, cryptocurrency can be risky if you don’t know about it or where to begin.
These are the top 3 cryptocurrencies to invest in today
Bitcoin has been dominating the market since the first bitcoins were mined in January 2009. It has been around for the longest of any cryptocurrency, which is why it is the leader with a price, market capitalisation and value much higher than any other investment options.
It’s price surged to almost $60,000 in April 2021 with a market capitalisation of more than $1 trillion meaning Bitcoin accounts for more than 45% of the crypto-currency market.
Many businesses already accept Bitcoin as payment which makes cryptocurrency a smart investment. Visa transacts with Bitcoin, same as Tesla CEO, Elon Musk who recently invested $1.5 billion in it.
The risk of investing in Bitcoin is that it tends to fluctuate a lot. The price may go up and down of dollars within a month. Another reason to consider before investing in Bitcoin is its price. With a single share costing more than $50,000, most people can’t afford to buy whole shares of the stock. For investors who want to avoid buying partial shares, this is a negative.
With a market capitalisation of over $300 million, Ethereum is the second largest crypto-currency created in 2015.
Ethereum is a decentralized software platform that enables Smart Contracts and Decentralized Applications to be built and run without any downtime, fraud, control or interference from a third-party. Even though it came out years after some other cryptocurrencies, it has far exceeded its place in the market because of its unique technology.
The risk of investing in Ethereum is that it uses blockchain technology and has one “lane” for conducting transactions which can lead to delay in transaction process when the network is overloaded. Also, a hack in 2016 led to more than 60 million Ether dollars lost because of a flaw in the Ethereum wallet. While the company has made strides in increasing its security, loopholes are always a risk with any cryptocurrency investment.
3. Binance Coin
This is the third largest cryptocurrency, launched in 2017 and a market capitalization of $90.9 billion. The coin is the native cryptocurrency of not only the Binance exchange, one of the largest in the world, but also the broader ecosystem Binance is developing, including the Binance Smart Chain (BSC). Those who use the token as a means of payment for the exchange can trade at a discount.
Binance aims to become the primary infrastructure services provider for the blockchain ecosystem. The Binance coin price has climbed from $38.80 at the start of 2021 to trade around $600 this month, attracting the interest of investors rather than just exchange users. Market observers expect the Binance coin to climb further to $1000.