There are many ways to invest in cryptocurrencies. Some involve direct investments while others are indirect. This article will show you many different ways of investing in this space.
- Direct purchase
The easiest way to invest in cryptocurrencies is simply going to buy it.
While there are many crypto-crypto exchanges, many users do not feel comfortable sending coins from the exchange to the exchange. This is absolutely satisfactory because I believe this technology will evolve to simplify this process (such as internet and email). For now, however, if you want the most direct way to invest, go to Coinbase or another fiat-to-crypto exchange and buy your favorite coins. Just remember: "Not your keys, not your crypt". If you're going to invest this way, read this article (click here), explains the different types of portfolios and what are the advantages of each.
- Mining, Masternodes and stakeout
If you're tech savvy, mining is a great option. Using the CPU and / or GPU of your computer, you can extract certain cryptocurrencies (BTC, BCH, LTC, DOGE). In exchange for energy expenditure, you receive the coin you are digging.
Some miners sell all, some or none of their cryptocurrencies to remain profitable during mining, but this decision depends entirely on you.
Another option is to create a masternode or to bet on your coins. These two types of investment give you a percentage return over a set period of time.
While some coins are Proof of Work (PoW), some cryptocurrencies such as TOMO, ICX, EOS and ETH (early) use some variations of Game Trial (PoS).
With a masternode, you run the full version of the blockchain in real time to provide network security. To do this, your computer must always be up and running. The Masternodes are very similar to mines, apart from the fact that there is not much electricity used.
The other option is betting your coins. With a masternode, you are required to have a certain amount of coins, but the stakeout does not require a minimum. It is important to note that usually when you tap or execute a masternode, you lock the coins for a predetermined period of time.
We have multiple tutorials on how to run masternodes and cryptocurrencies on our YouTube channel. Check them by clicking here.
- Work for this
This is the most controversial in this list because it concerns a regulated activity. Each jurisdiction and country is different, before choosing to accept the cryptocurrency as payment, make sure it is legal with local officials.
Many companies accept Bitcoin and other cryptocurrencies as forms of payment. If your company is in a good financial situation, open up to accept this volatile resource as a payment method. Or choose to work with BitPay to allow users to pay with their Bitcoin and receive a credit card. This is a great way to use other people's money to buy cryptocurrency.
- Institutional products
This is where the investment ends up directly and the indirect investment begins. With institutional products, you can not withdraw or withdraw any coins because you have no control over them.
The most popular products are the CME and CBOE e futures markets The Swiss Bitcoin ETP, HODL. The Swiss product is very new, November 2018, but has been well received in the European markets. The futures contracts started in December 2017 and for better or worse they were a way to invest in Bitcoins without buying volatile assets directly.
In the future, products like Bakkt and a potential ETF from Van Eck & SolidX, Bitwise or another group could radically change the market landscape. It remains to be seen whether this will be good or not for the future of space.
The latest product I will talk about is a stock called Grayscale's Bitcoin Investment Trust (GBTC). This product is a security in which the company owns Bitcoin and has been publicly listed since May 2015. Essentially, owning shares in the company, it "owns" its own Bitcoin.
The biggest disadvantage of this is the premium paid on the product. It is estimated that there is about one 18% premium on the cost of Bitcoin compared to the purchase of an equivalent amount of Bitcoin with GBTC. Although this is a big disadvantage, you do not have to worry about your cryptocurrency being compromised as it is controlled by Grayscale.
- Indirect actions
This last group of investments is not only directly related to the cryptocurrency markets, but has its own businesses that have been very successful long before the high crypto markets in December 2018 and January 2019. These companies are Overstock.com , Microsoft, Nvidia and AMD.
Nvidia is a hardware company that became public in the early 2000s. During the bull market in 2017, GPU prices have risen sharply and the company's shares have increased from about $ 100 to $ 223 in January 2018 and then to a maximum of about $ 280 at the end of September 2018. The price action of this company is mainly due to the people who buy the miners at a premium to extract their favorite coins.
AMD has been Microsoft's longstanding rival and has been a public company since the 1980s. While this stock has not seen the dramatic rise in Nvidia, the share price is still about twice the price of what it was at the start of 2017 (from $ 11 to about $ 20 starting now). While Nvidia is best known for making GPUs, AMD also makes the hardware used for cryptocurrency mining.
Microsoft has been one of the largest manufacturers of computer hardware since the 1980s. In early 2017, their stock was around $ 62 and climbed to a maximum of $ 114 in September 2018. Microsoft was one of the first big companies to accept Bitcoin as a payment in November 2014. In subsequent years, the their decision was definitely the correct one with Bitcoin passing from a few hundred dollars to about twenty thousand.
Last but not least, Overstock.com, like Microsoft, was one of the first big companies to accept Bitcoin as a payment method in 2014. Their shares have increased from about $ 17 in January 2017 to a maximum of around $ 84 in January 2018. This the price of the company seems to be the most related to the price of Bitcoin, since it returned to pre-2017 prices.
CEO Patrick Byrne has created Tzero which is a platform to allow the regulated exchange of tokenised securities. If your vision is satisfied, returns could be huge.
I hope I have given you an idea on how to invest in cryptocurrency markets directly and indirectly. The more your investment is managed, the more unstable it is due to the childhood of the cryptocurrency markets. If invested properly, together with a bit of luck, indirect investments can help mitigate losses or make you gain while cryptographic markets are going down.
* This is not a financial advice. Please do your due diligence when selecting investments. *