How to invest in cryptocurrency?

 How to invest in cryptocurrency?

In  2022, cryptocurrencies have appealed to an ever-expanding buyer group. Institutional investors are storing Bitcoin, Ethereum, or other coins as well as private investors. Meanwhile, even German savings banks are working on the idea to enable their customers to trade cryptocurrencies in the future. The most popular immigrants for investors in 2022 are Soros Fund Management, investor company, and billionaire George Soros. The company's manager confirmed rumors of major purchases in early October. Managing the Soros Fund no longer sees Bitcoin as inflation protection, but as an independent asset with potential and a positive outlook for the future.

Bitcoin (abbreviated as BTC) is the largest cryptocurrency in terms of market capitalization. Then comes Ethereum (ETH) far away. These two are also the most popular cryptocurrencies. Several other coins have been very successful this year: For example, Solana (SOL) and Cardano (ADA) have become very heavy Ethereum. They all reached their highest levels in 2021 - sometimes several times - just to crash again.

Overall, the year 2021 shows: There are great opportunities for cryptocurrency investors, but also many risks. Investors will also expect a significant change in the value of cryptocurrencies in the future as well. So investors buying cryptocurrency need strong nerves. Here you can find out where you can buy cryptocurrency - using the app, PayPal, and more.

What is cryptocurrency?

Cryptocurrencies are direct currencies that fit into a payment system. Banks do not need this. Digital money is also not paid by central banks. Bitcoin and others are far more valuable than peer-to-peer currencies. This means: Transfers take place among independent participants with equal and interconnected rights. The participants of this broad network jointly manage the transactions and generate new pieces of money themselves. The basic technology for Bitcoin and many other cryptocurrencies is blockchain-Technology. Blockchain is a collective computing system that is stored on a large number of computers. In any economy - for example, when someone buys or sells cryptocurrency - the corresponding data is stored in a blockchain, where it cannot be changed afterward.

Buy cryptocurrency in Germany

All cryptocurrencies that came on the market after Bitcoin are now abbreviated as Altcoins (other coins). Although cryptocurrencies have been around for more than a decade, Bitcoin and Altcoins have not yet been widely used in digital currency. You can usually not pay for purchases at a store or cryptocurrency cinema tickets in Germany. However, this is not because this is technically not possible: Crypto money is stored in digital wallets, known as wallets, verified with code numbers. It will not be a problem to open a wallet when needed and pay it offline to the store - which will work with cryptocurrencies as well as PayPal. However, since cryptocurrencies are subject to strong price fluctuations, retailers take more risks compared to accepting cryptocurrencies as payment methods. Still, some - especially online stores - allow their customers to pay with Bitcoin and other cryptocurrencies.

Cryptocurrencies are as widespread as an investment - and this trend continues into 2021. If you want to buy Bitcoin and other cryptocurrencies, you need a wallet, as mentioned above, which digital money storage. There are different types of bags, hot bags, and cold bags. Hot bags are software-based and connected to the internet, so they are a target for thieves. In the cold box, on the other hand, the physical storage media is only temporarily connected or not completely connected to the computer. Cold bags are special USB sticks or other external storage media that you can safely store inside the wall or elsewhere. Tips on a bag.

Many trading platforms have specialized in cryptocurrency trading. Some even offer the option to purchase cryptocurrencies in the app. The best-known providers if you want to buy and sell cryptocurrency in Germany are eToro, Binance, Bitpanda, BSDEX, Coinbase, and Bitcoin.de. When comparing aspects of the demo account, security, fees, minimum budget, payment types, available cryptocurrencies, and regulation, many comparisons on the internet have concluded that eToro is especially suitable for beginners who want to buy cryptocurrency. The Trade Republic of Berlin also offers the possibility to trade with cryptocurrencies Bitcoin, Ethereum, Litecoin, Ripple, or Bitcoin Cash. As with everything at the Trade Republic, you can buy cryptocurrency in the app here. Compared to pure crypto platforms, eToro and Trade Republic have the advantage that you can also trade stocks and ETFs here.

What cryptocurrency to buy?

Bitcoin is the most widely used cryptocurrency with by far the largest market cap. In other words: Bitcoin has already proven itself. If you want to buy cryptocurrency, Bitcoin is usually the first choice. However, this does not change the fact that exchange rate fluctuations are huge and Bitcoin will not one day be exchanged for another cryptocurrency. Then you should know the alternatives. Ten interesting coins with growth potential in 2022 can be found in an additional article. Read more about a selection of currencies below.

Bitcoin, Ethereum & Co.: The original goal of cryptocurrencies was to create a decentralized payment system, independent of banks, anonymous to all users, and at the same time secure. In 2009, Bitcoin was the first cryptocurrency to meet these requirements, paving the way for countless other virtual currencies. The biggest differences between Bitcoin and Altcoins are mainly technical, for example, what the blockchain looks like or how the data is processed and stored. Alternative cryptocurrencies are often created (mined) much faster than Bitcoin due to new insights and therefore newer technology, and trading with them is also more dynamic. Some well-known altcoins are also associated with specific purposes or products. For example, Ethereum, the most widely used altcoin after Bitcoin, is also suitable for concluding contracts and distributing food stamps in crisis areas. Cryptocurrencies are also widely known and traded in Litecoin (very fast), as well as in the independently developed Bitcoin Cash branch.

Cardano (ADA): More and more investors have been buying Cardano (ADA) since last year. Like Ethereum, Cardano uses smart contracts that allow regular transactions between two parties without a third-party intermediary. This means that the coin has a real use case that can be important to many industries. Also, unlike Bitcoin, Cardano does not rely on resource-intensive mining. In the context of stricter climate laws, coins such as Cardano (ADA) are arguably the most sustainable alternative.

Solana (SOL): Smart contracts can also be programmed using the Solana blockchain. The system should be able to perform 50,000 transactions per second. More and more investors are buying Solana and seeing it as an alternative to traditional cryptocurrencies. In terms of market capitalization, SOL is now the 5th largest cryptocurrency. The value of the cryptocurrency increased several thousand percent in one year. With this said, SOL has fared better than Bitcoin. Some analysts predict that the price of Solana could rise to $500 by the end of the year.

Ripple (XRP): Ripple is a special case. First of all, Ripple is not a cryptocurrency per se, but a platform preferred by banks and other large financial service providers for the rapid processing of as many transactions as possible at the same time, for example, as an alternative to the widespread SWIFT system. payment system. Blockchain technology is not used here, but it is a multi-stage and very fast approval process for each transaction. The cryptocurrency in circulation with the abbreviation XRP has a special feature: in the beginning, issuers specified a fixed number (100 billion) of tokens that could be traded. Critics continue to assert that a large percentage of XRP tokens are owned by platform operators and that only a much smaller portion (around 30-40 percent) can be traded by network members.

How to invest in cryptocurrencies?

One way of making money with cryptocurrency is currency trading, i.e. the targeted purchase and sale of Bitcoin or other coins. Similar to foreign exchange trading, you use exchange rate fluctuations and changes in exchange rates to make a profit. Coinbase Germany is the first financial service provider to receive a license from the Federal Financial Supervisory Authority BaFin for the crypto custody business, which was newly introduced as a financial service, at the end of June 2021. In this context, BaFin has once again made it clear that it only supervises the service providers: “There is no supervision of the corresponding crypto values ​​or units of account themselves,” reports BaFin. In other words: BaFin still does not supervise financial instruments such as Bitcoin. Specifically the beginners for their future needs