Cryptocurrency is digital money that isn't controlled by a central authority. Not surprisingly, the most widely used blockchain technology is bitcoin. As Wall Street embraces digital currency, additional choices open up. Currently, there are about 9,800 cryptocurrencies.
It is possible to buy cryptocurrency, but most individuals use it as a long-term investment. Due to the volatility of cryptocurrency, it is crucial to understand the risks and clarify some important doubts before investing. These are the best three cryptocurrencies to invest in 2022.
Data is accurate as of April 11, 2022.
Bitcoin is the oldest and most popular cryptocurrency. With a price and market size much greater than any other crypto investment choice, it's clear to understand why many companies currently accept bitcoin, making it a good investment opinion.
Visa, for instance, uses bitcoin. Larger banks are starting to accept bitcoin transactions.
For a while, Tesla accepted bitcoin as payment for its vehicles, and it may again if mining becomes more eco-friendly. CNBC reported on April 8 that Tesla's solar array and Megapack battery would be used to power a bitcoin mine in Texas.
Bitcoin Investing Risks
Bitcoin's value fluctuates a lot. The price might fluctuate by thousands of dollars every month. If these unpredictable changes make you uncomfortable, you should avoid bitcoin. Otherwise, bear in mind that cryptocurrency may be a good long-term investment.
The price of bitcoin is another cause to rethink. Most individuals cannot afford to acquire full bitcoins at approximately $43,000 each. This is a drawback for investors who don't want to acquire a bitcoin.
Developers may use Ethereum to build their own cryptocurrency. While Ethereum lags behind bitcoin in value, it outperforms its rivals.
Even though it came out years after other cryptocurrencies, its unique technology has allowed it to dominate the industry. Now the most popular blockchain and second-biggest cryptocurrency after bitcoin. It will gain much more ground after ‘The Merge’ software is launched later this year. The update will lower the quantity of coins and make mining useless by switching to proof-of-stake consensus. The Merge should help lower Ethereum's energy usage.
Ethereum Investing Risks
While Ethereum uses blockchain technology, there is only one “lane” for transactions. When the network is overcrowded, transactions might take longer to process. Transaction costs are substantial. As a result of increasing demand for block space, the Ethereum blockchain's “gas” price climbed 13% in March
Security has been a concern. In 2016, a hacker exploiting a security hole lost almost $50 million worth of ether. However, the Merge update should safeguard the blockchain.
For numerous reasons, investors prefer the Cardano network's limited footprint. Cardano transactions use less energy than bigger networks like Bitcoin. Faster and cheaper transactions.
Cardano introduced a ‘hard fork’ last year, an update that enabled smart contract implementation.
Cardano promises to be more secure and flexible. It keeps improving to stay ahead of hackers.
Suggested read: Is Crypto Trading a Good Investment?
There’s no debate about it: Cryptocurrencies are here to stay.
As you select whether cryptocurrency is the best investment for you, here are some more points to bear in mind:
If you’re solely wanting to invest without trading inside the network, understand that cryptocurrency isn’t a get-rich-quick scheme. Instead, you should consider it a long-term investment.