Ten years ago, most people would not understand you if you said that you kept a part of your investment portfolio in virtual currency, which is protected by cryptographic algorithms. These days, however, information about Bitcoin and blockchain is being heard everywhere, not just from traders and technical experts.
Today the crypto industry is developing rapidly, paving the way for an entirely new, faster, more convenient, and more reliable way to pay for products and services. In fact, many traditional companies are integrating cryptocurrency into their platforms in one form or another, or are using it to launch other types of products. DeFi, Metaverse, NFT, GameFi, and Web 3.0 are just a few examples of the great variety of crypto projects that are developing and being implemented in our lives today.
This article will take an in-depth look at cryptocurrency as a modern investment method. You will also learn about this type of investment’s features, advantages, and disadvantages and what trends in the crypto industry exist today. In the end, we will tell you about the 5 most promising crypto projects to invest in 2023.
Today, the number of investors deciding to invest in cryptocurrency is growing rapidly. Blockchain technology is the first reliable decentralized solution for the use of cryptocurrency and allows for publicly negotiated transactions. Just five years ago, cryptocurrencies were only of interest to professional IT specialists. Today, everyone wants to make money with cryptocurrencies.
There are many different types of making money with cryptocurrencies, but we will look just at the most popular ones.
This type of earning is the most widely heard. Basically, mining is the processing of transfers of cryptocurrency between users. The miner is paid remuneration for this. The method is very attractive because the work is done by machines (computers or special equipment), and the money goes to the owner. It seems easy on the surface, but it isn’t so in reality.
The scheme is simple: buy at the beginning of growth and sell at the end of growth. If you do everything correctly, you can make plus 10-20% of your capital in a day or two. Then wait for the fall and buy again. And so around to infinity. It is realistic to double or triple your capital in a month. There are cryptocurrencies that can jump by 100-200 or more percent in a few days.
Staking is a method of passive earning in which users store coins on the Proof of Stake (PoS) algorithm, ensuring that the blockchain works. This gives holders the right to profit. This feature is only available to cryptocurrencies that run on PoS, such as EOS, Tezos, TRON, and Cosmos.
The point of staking is to ensure all transactions are on the blockchain and keep the network running. Digital coin holders are rewarded for participating.
Even after several years since the emergence and active development of cryptocurrencies, many investors are wary of investing in this sector. Like all other spheres, the cryptocurrency market is subject to the strongest fluctuations at the stage of rapid maturation — this can be partially explained by the constant ups and downs in the value of the most popular virtual coins. Investing in cryptocurrency can be risky, so when studying this topic, it’s necessary to consider all aspects to be prepared for all scenarios.
Investing in crypto assets has its pros and cons. To begin with, let’s look at the main pros:
The process of issuing cryptocurrency is not regulated by any banks, reserve systems, or governments. Even the creators themselves have no control over the process. In such a situation, imposing restrictions on the distribution of coins is impossible. The lack of a single central data custodian (e.g., a central server in a bank) also eliminates the situation where a single crash will bring down the entire payment system.
When we make payments, the banking structure analyzes a lot of information about us: passport data, residence address, family composition, sources of income, debts, etc. Cryptocurrency makes it more simple. All that is known about the participant of the chain is the number of his public key. No personal data is transmitted or asked for; it is simply unnecessary. This quality of crypto is valuable today when information has become the “oil of the 21st century.”
The simultaneous storage of data on many computers in different parts of the world and the transparency of exchange operations make it impossible for any fakes and transfers without confirmation by all participants. Moreover, the more participants are involved in the process, the more reliable and popular the coin becomes.
Now let’s take a look at a few disadvantages inherent in crypto investing.
The cryptocurrency market is highly volatile. Price dynamics can vary by up to several tens of percent. For classic financial instruments, such changes are enormous, while for the crypto market, it is a common phenomenon.
If there is a dispute between the parties or if someone mistakenly sends funds to the wrong wallet address, the coin cannot be returned by the sender. This can be used by many people to scam other marketers out of money.
Cryptocurrencies are legal in many countries but not fully or universally regulated. Investors should be aware of possible problems with law enforcement in their country and research relevant information in advance.
Today, there are many areas in which blockchain technology is being developed. Below is a list of some of the most popular and rapidly developing blockchain fields.
Cryptocurrencies have become increasingly popular in recent years because of nonfungible tokens (NFTs). Essentially, NFTs are unique digital certificates stored on blockchains that guarantee the items’ originality and give them exclusive rights. As well as tokenization of real assets, they are used to create collectible tokens, fan tokens, digital art, in-game items, document management systems, and more.
The metaverse is basically a permanent virtual space where people are able to interact with one another and digital objects through their avatars with virtual reality technologies. By joining forces with social networks, payment systems, and augmented reality applications, human interaction is expected to reach a whole new level.
DeFi is an open global financial system designed for the Internet age. It is an alternative to an opaque system with strict controls based on decades-old processes and infrastructure. It gives you control and visibility of your money. DeFi opens global markets to the user and creates alternatives to national currencies and standard banking products. DeFi products open up access to financial services to anyone with Internet access.
So, now that you know cryptocurrency, despite its pros and cons, it has great popularity among investors, it’s time to consider a few crypto coins to buy now.
Ethereum is a prime candidate among coins to buy, and for a good reason. Now the project is in the spotlight after the recently released Ethereum 2.0 update, which resulted in the second-largest cryptocurrency by market capitalization changing its Proof-of-Work (PoW) model to Proof-of-Stake (PoS). After that, there was a short-term rise in the price, but what happens by 2023? Next year, Ethereum will still be an integral part of important cryptocurrency technologies like smart contracts, DeFi and NFT, but it will also become faster and more scalable. Cryptocurrency will be more in demand for developers and enterprises and will likely become more expensive in the long term.
When considering tokens to invest in 2023, it is impossible to miss Decentraland. Decentraland (MANA) is the control token for the metaverse. Decentraland is a platform for virtual reality, games, digital advertising, creative collaboration, NFT creation and exchange, and more. Of the many cryptocurrency projects, the Decentraland metaverse is one of the most popular, and the MANA token performs relatively well. Metaverses attract many people and different industries because they offer incredible opportunities to develop different areas of human life. At the same time, a decentralized metaverse tied to cryptocurrencies and managed by users could eventually win. In such a development, MANA could bring excellent returns to investors.
Cosmos (ATOM) is one of the most promising crypto projects to invest in, which not only uses a scalable consensus algorithm but also includes features that facilitate communication between different blockchains. Such functionality is essential for the future of blockchain, and the ATOM token is essential for working with this system. Thus, there is a good chance that when the blockchain ecosystem matures, Cosmos could break its previous record of $44 per token.
Solana (SOL) is a unique open-source crypto project focused on DeFi applications. Although the cryptocurrency is only a couple of years old, it has quickly risen in value and become one of the highest-rated altcoins thanks to its innovative Proof-of-History (PoH) consensus algorithm, which makes it fast, scalable, and attractive to developers of decentralized applications. Solana went from $35 to $258 during the last market boom. As of this writing, the cryptocurrency is trading at around $12 per coin, but there is no doubt this project will be able to surprise crypto investors more than once in 2023.
Ripple (XRP) does not often attract public attention, but it is in demand from financial institutions and international payment service providers because of its fast and energy-efficient processes. Western Union and MoneyGram are known to be testing XRP for their services, and the World Economic Forum recently named Ripple as its partner. As cryptocurrency becomes more popular and fast, secure, cross-border transactions grow in importance, XRP stands a good chance of tripling its value, as it has done in previous market booms.
Despite the collapse of the cryptocurrency market in 2018, the industry is still attracting the attention of investors, and many experts say that the current time is the most favorable for crypto investments since 2023 can bring a rapid increase in the rate of virtual money. And there is some truth in it because having a clear understanding of how the crypto market works, what advantages and disadvantages it has, and having the right money and risk management, cryptocurrency can provide an exciting experience to increase capital.