Cryptocurrency is a high-risk, high-reward investment class that has the potential to generate life-changing wealth. It represents a revolutionary shift from centralized to decentralized financial systems and has skyrocketed in value, popularity and complexity in the 21st century.
However, not all cryptocurrencies are made equal. Most will die in the long run, which will leave a few projects that reap all the rewards. Picking winners is an art within the crypto sector – the ultimate key to survival and long-term success.
The following article will explore the value behind cryptocurrency, the rationale for investing in cryptocurrency and two specific cryptos that are likely to dominate in the long-term.
- Why Invest in Cryptocurrency?
- The Origin
- Does Crypto Have Value?
- High Risk, High Return
- Best Long-Term Crypto Investments
- Where to Buy Cryptocurrency
- How to Store Cryptocurrency
- Best Hardware Wallet – Ledger
- Best Software Wallet – ZenGo
- So, is Crypto a Good Long-Term Investment?
Why Invest in Cryptocurrency?
To understand why the cryptocurrency market is full of lucrative investment opportunities, you must first learn why it was created and what it stands for. This story begins with Bitcoin – the original cryptocurrency.
Amid the chaos of the 2008 financial crisis, Bitcoin was born out of a need for decentralization. Satoshi Nakamoto, whose true identity remains unknown, published a whitepaper outlining a new way of handling money without the need for central authorities. This revolutionary concept was created in response to the growing mistrust of traditional financial institutions and the reliance on centralized power.
The purpose of Bitcoin was to bypass the middleman in financial transactions, reducing costs, improving efficiency and increasing financial accessibility. Over time, more cryptocurrencies have emerged, each of which solves new problems with an emphasis on decentralization.
Does Crypto Have Value?
Ok, so you understand the origin. The next step is to attack perhaps the biggest question asked by investors: why does crypto have value?
The intrinsic value of cryptocurrency is reflected by its convenience of exchange and transaction advantages compared to other currencies if it were to become widely adopted. This is known as a convenience yield — a concept that is empirically sound for cash-like assets.
A common example of the convenience yield at play is the decision to keep money in a bank account, despite the fact that the interest rate offered by the bank may be lower than other investment options such as Treasury bills or AAA corporate bonds.
Crypto’s convenience yield is multifaceted. On one hand, cryptocurrency was created to be a hedge against inflation, seigniorage and failing monetary policy. It operates independently of central banks, relying on complex algorithms and decentralized governance instead. Additionally, cryptocurrency is designed to be more efficient, decentralized and capable of handling a larger volume of transactions. As a result, it has the potential to outperform traditional fiat currencies in terms of convenience, efficiency and reliability.
Note, this is a simplified explanation. The value of each crypto reflects the platform or exchange it is built on top of – each of which offers differentiated value propositions as explored further in the article.
High Risk, High Return
The value of cryptocurrency is known to fluctuate wildly, making it a potentially risky investment. However, risk is not a definitive measure of success or failure. Whether high-risk investments are right for an individual investor depends on their goals, risk tolerance and overall financial strategy.
After its recent surge to $60,000 in late November 2021, Bitcoin became the best-performing asset of the decade – beating all stocks, commodities and other forms of asset-based investments. However, a key caveat to using Bitcoin to measure the return of cryptocurrency is survivor bias (the tendency to ignore coins that have died out). Most altcoins (cryptos that aren’t Bitcoin) die out in the long run.
Given cryptocurrency’s speculative nature and uncertain regulatory future, it is best practice to only invest money you are willing to lose. Cryptocurrency can be a great hedge for a balanced portfolio, offering tremendous upside potential without requiring significant capital investment.
Best Long-Term Crypto Investments
In the vast sea of cryptocurrency, it can be challenging trying to find value. So many projects exist, each with unique use cases and shiny roadmaps. However, the sad truth is that the overwhelming projects will wither away in the long run – leaving a handful of winners that take all the glory.
With each subsequent bull run, new and innovative coins emerge that offer unique and improved use cases. As a result, choosing a winner is akin to picking a needle in a haystack – a risky gamble at best and a delusion at worst. Recent data by CoinMarketCap indicates that over 20,000 cryptocurrencies are available on the market. This number likely falls in the low range. Thousands of coins never picked up enough steam to be listed on the site.
However, the good news is that this cycle of replacement doesn’t apply to all cryptocurrencies. Throughout cryptocurrency’s history, two cryptocurrencies have stood the test of time through multiple boom and bust cycles – Bitcoin and Ethereum.
Bitcoin and Ethereum are established winners – the cornerstone of the crypto narrative and indisputably the best long-term investments in cryptocurrency. While this doesn’t mean that Bitcoin and Ethereum are guaranteed to survive in the long term, they offer the best risk-to-reward ratio for investors without a crystal ball.
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Many individuals refer to Bitcoin as a speculative store of value, but this explanation is a simplistic representation.
Bitcoin offers a glimpse into a hopeful future of financial equality, where the rules of the game cannot be swayed by the selfish desires of individuals or governments. It’s not just a tool for everyday transactions, but a catalyst for unifying the world through a transparent and incorruptible form of currency. Bitcoin operates as a means for paving the way toward a more fair and just global economy.
As the world’s most decentralized and widely-recognized cryptocurrency, Bitcoin has cemented its place as a leader in the market – Bitcoin possesses over 40% market share in the crypto industry. Its anonymous creator, organic growth and rigorous testing have also contributed to its merit-based success. In the world of cryptocurrency, Bitcoin stands out as the most secure and proven option.
What Does Bitcoin Do?
The easiest way to think of Bitcoin is as digital gold. Like gold, it is an immutable, perfectly scarce, non-sovereign, divisible savings technology with a hard-cap supply. However, it improves off gold through its portable nature. Gold needs to be mined and transported; Bitcoin can be sent anywhere in the world at any time in a matter of minutes.
In this way, Bitcoin is virtually a super commodity – by no means perfect – but a fantastic alternative to inflationary fiat currencies.
Delving deeper, Bitcoin is a Layer 1 blockchain, a type of project that represents the base network or underlying infrastructure in a blockchain-based financial system. Layer 1 blockchains are the backbone of decentralized ecosystems, capable of operating without the need for another network.
Bitcoin, like other cryptocurrencies, uses a technology called blockchain to help secure its transactions. Blockchains are decentralized, digital ledgers that keep track of the origin and movement of digital assets.
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Right at the forefront of cryptocurrency alongside Bitcoin is Ethereum – the second-largest cryptocurrency by market capitalization and the largest altcoin in the industry. Ethereum was founded by Vitalik Buterin and Charles Hoskinson, among other founders in 2013.
Despite often being compared to each other, Ethereum and Bitcoin are not competitors – they complement each other. Comparing Ethereum to Bitcoin is like comparing apples to oranges. They both serve different purposes within the crypto industry.
How Does Ethereum Work?
Ethereum can be thought of as a massive, global computer network that exists across thousands of devices around the world. It’s not bound to a single machine but rather runs concurrently on a network of devices. People all over the globe contribute their own computing power to keep the network secure and are rewarded in Ether (ETH) for their efforts. ETH is the cryptocurrency native to Ethereum, functioning as the driving force behind the network. It can be thought of as the fuel that keeps the network running smoothly.
The purpose of Ethereum is to allow developers to create and launch decentralized applications (dApps) that run across a decentralized network instead of a centralized server. These dApps serve a wide range of applications, from decentralized finance (DeFi) to NFTs to gaming – the use cases are endless.
Like Bitcoin, Ethereum is a Layer 1 blockchain. However, while Bitcoin is designed to be a slow and inflexible fortress to maximize security, Ethereum is flexible and allows for a greater degree of programmability. This is the key distinction between Bitcoin, which is a first-generation blockchain and Ethereum, which was the world’s first second-generation blockchain.
Although Ethereum has many competitors such as Binance Smart Chain and Solana, it dominates by a long shot. Within the programmable blockchain sector, Ethereum is the market leader. It is home to over 50% of the liquidity that exists on all blockchains and has the largest ecosystem of developments, dApps and partnerships.
Where to Buy Cryptocurrency
Bitcoin and Ethereum can be purchased on centralized exchanges such as Crypto.com, WeBull and eToro. Before you proceed to buy either Bitcoin or ETH, be sure to research and compare your options to find a trustworthy source that meets your needs. Important considerations include the fees, trading features, security measures and regulations associated with each cryptocurrency.
Crypto.com strives to make cryptocurrency a part of everyday life by offering a full suite of services for crypto users. The company offers a Crypto.com App, Exchange, Visa Card, DeFi swap, DeFi Wallet, DeFi Earn, Crypto.com Price, staking, crypto lending, and many other services. What really sets them apart, however, is the combination of super low fees and incredibly generous rewards programs for their users.
- Traders who want access to a secure, low-cost cryptocurrency exchange
- Passive investors who want to earn interest on their balance without frequent trading
- Mobile investors who prefer to handle all their crypto needs via their phone or tablet
- Low fees
- High security
- One-stop shop for all your crypto needs (wallet, trading, spending, and more)
- Lots of ways to earn interest, rewards, and rebates
- Low privacy
- Customer service response time could be improved
eToro is headquartered in Cyprus, England and Israel. A major eToro plus is its social trading operations, which allows new clients to copy trade the platform’s best performers. Its social trading features are top notch, but eToro loses points for its underwhelming research and customer service features.
- Investors looking to CopyTrade other traders
- Simple user interface
- Several major cryptocurrencies and altcoins
- Expansive network of social trading features
- Large client base for new traders to imitate
- Only 29 coins available
Webull, founded in 2017, is a mobile app-based brokerage that features commission-free stock and exchange-traded fund (ETF) trading. It’s regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
Webull offers active traders technical indicators, economic calendars, ratings from research agencies, margin trading and short-selling. Webull’s trading platform is designed for intermediate and experienced traders, although beginning traders can also benefit.
Webull is widely considered one of the best Robinhood alternatives.
- Active traders
- Intermediate traders
- No charges to open and maintain an account
- No account maintenance fees or software platform fees
- Intuitive trading platform with technical and fundamental analysis tools
- Only offers 14 coins
How to Store Cryptocurrency
The most common way to store cryptocurrency is through the use of a crypto wallet. Unlike a traditional wallet that physically safeguards your assets, crypto wallets do not hold your coins, but rather, the private keys to your coins.
Instead, your cryptocurrency lies on the blockchain, and your wallet is the means by which you access and manage them. You can choose from two types of crypto wallets: software and hardware wallets. Software wallets store your private key online and are an easy and convenient way to manage your crypto. They can be accessed through a variety of mediums such as web browsers, apps or a desktop – all that is needed is an internet connection.
Conversely, hardware wallets are physical devices that store your private keys offline. This feature makes them safer than software wallets as they are immune to cyber attacks such as phishing and other forms of hacking. Generally speaking, hardware wallets are the gold standard of secure crypto storage. However, hardware wallets aren’t always the best wallets for everyone because of their inflexibility.
Best Hardware Wallet – Ledger
Ledger is the leader in the global hardware wallet industry, boasting the Ledger Nano X, Nano S Plus and Stax hardware wallets. The company is trusted by millions of users worldwide and provides users with a secure and user-friendly experience. The Nano X and Nano S Plus are both phenomenal options, supporting over 1,000 different tokens with state-of-the-art security. Ledger wallets support tamper-resistant Common Criteria (CC) EAL5+ certified Secure Element (SE) chips on all nanodevices, providing incredible security.
The Stax, Ledger’s newest wallet, is an innovative model that uses the world’s first curved E Ink touchscreen. It is a great option for savvy investors who want to manage day-to-day transactions in comfort.
Launched in 2014, Ledger has transformed into a fast-paced, growing company developing infrastructure and security solutions for cryptocurrencies as well as blockchain applications for companies and individuals. Born in Paris, the company has since expanded to more than 130 employees in France and San Francisco.
With 1,500,000 Ledger wallets already sold in 165 countries, the company aims at securing the new disruptive class of crypto assets. Ledger has developed a distinctive operating system called BOLOS, which it integrates to a secure chip for its line of wallets. So far, Ledger takes pride in being the only market player to provide this technology.
- ERC-20 tokens
- All experience levels
- Easy to set up and use
- Supports more than 1,500 different digital assets
- Tamper proof
- Long-lasting battery
- Bluetooth connectivity features
- Can be quite pricey
Best Software Wallet – ZenGo
ZenGo is the only self-custodial software wallet in the world without a private key. Why is this important? It means that users can rest easy knowing that they don’t have to remember a complex seed phrase. Instead, ZenGo supports three-factor authentication (3FA) to ensure ultimate security.
ZenGo has received high ratings from users worldwide, with an average rating of 4.8 on both the App Store and Google Play. Many people have had positive experiences with ZenGo, which is known for being user-friendly and versatile.
ZenGo is the most secure crypto wallet in Web3. Leveraging MPC technology, ZenGo removes the vulnerability of the need for a private key, making it much more secure than traditional crypto wallets. ZenGo’s simple recoverability process makes it easy for anyone to access their crypto from anywhere, at any time. Because of ZenGo, MPC technology usually reserved for multi-billion dollar institutions is now available to average crypto users.
ZenGo was developed by KZen Networks, an Israel-based company that specializes in building products for blockchains with a passionate focus on user interface (UI) and security. Founded by Gary Benattar, Ouriel Ohayon, Omer Shlomovits and Tal Be’ery in 2018, their unique mix of security, engineering and cryptography expertise enabled the ZenGo project to raise $20 million in series A investment.
The aim of the ZenGo team is to make the crypto economy more simple and secure for everyday users, removing technical barriers to entry while maintaining the highest levels of safety. ZenGo strives to support all relevant native crypto protocols, financial services and digital assets.
- ZenGo’s friendly and intuitive interface makes the wallet a great choice for novice investors. Unlike many other cryptocurrency wallets, ZenGo removes many technicalities and complexities from storing cryptocurrency
- ZenGo eliminates the vulnerability of having a private key. This makes it a phenomenal choice for novice investors who don’t want the burden of keeping their private key safe and secure
- Smooth and simple user interface
- Strong customer service — ZenGo has live 24/7 customer support that can be reached via email, live chat or social media
- Strong security — three security factors (3FA) protect ZenGo users
- No need for private keys — eliminates the risk of single point of failure, key hacking/phishing. At the same time, all actions are on-chain.
- While ZenGo is available in 188 countries, some features are available only in certain locations
- For users that are willing to take the full responsibility of managing and storing their private key, ZenGo’s approach may be unfit
So, is Crypto a Good Long-Term Investment?
The world of cryptocurrency has the potential to deliver substantial returns, as demonstrated by Bitcoin and Ethereum. The number of people investing in cryptocurrency has risen steadily and in recent years has seen a significant increase, even among institutional investors.
However, it’s important to recognize that investing in cryptocurrency comes with its fair share of risks. Cryptocurrency is highly speculative, and it is unclear what the implications of future regulations will be. It could reshape how financial systems operate on a global scale; however, only those who are willing to brave the potential ups and downs of the market should consider diving in.