It seems like every investor out there is investing in cryptocurrency. Studies show that as many as 106 million people worldwide are investing in some kind of cryptocurrency and reports, according to Motley Fool, show that up to 46 million Americans are considering investing in cryptocurrency in the next year.
But there are many types of cryptocurrency, so which one or ones should you invest in?
Bitcoin
Bitcoin was created as the first digital cryptocurrency, created primarily as a payment system outside the control of any single person or group, and is supported by blockchain technology.
Created by a person or a group of individuals who go by the anonymous name Satoshi Nakamoto, (of which nobody knows the real identity) not only was Bitcoin the first cryptocurrency but so famous is Bitcoin that most people consider it to be synonymous with cryptocurrency.
Bitcoin had humble beginnings but went from less than a dollar to $31 dollars, to a high of $200, then $1,000, till it reached its ultimate high of nearly $69,000 in 2021.
Along the way, Bitcoin has had tremendous drops as well, and with the overall investment crisis due to inflation and now increasing interest rates, Bitcoin right now is hovering around as low as $20,000.
Being the most popular cryptocurrency, perhaps more is known about Bitcoin than any other cryptocurrency, so if you are a new investor and want to get into crypto, Bitcoin is likely your best and safest investment.
Ethereum
Ethereum is perhaps the second most popular cryptocurrency in the world although they differ quite a bit in their function. In essence, Bitcoin has become just a function for investing, while Ethereum is a ledger technology that is very robust.
Many crypto analysts predict that it is therefore only a matter of time before Ethereum overtakes Bitcoin as the number one cryptocurrency in the world.
Some analysts see Ethereum as rising from today’s market price of roughly $1100 to as much as $1500 to $2300 by the end of 2023.
Historically Bitcoin has had the largest rises (and falls) in its prices, while Ethereum has typically gone up more slowly, but with less volatility.
Tether
Tether is the third most popular cryptocurrency in the world, but unlike Bitcoin and Ethereum, since tether is tied to the US dollar, buying Tether is not really an investment strategy.
True you can buy things with Tether and also gain interest, but as an investment Tether is not the place to go.
USD Coin
Like Tether, USD coin is also a stable cryptocurrency based on the price of the US dollar.
The same factors affect USD Coins like Tether. With USD coins you can obtain interest or buy things, but not really much of a benefit for the long-term investor.
Dogecoin
Perhaps the most popular of the crypto coins is Dogecoin, created in 2013. Never a cryptocurrency with much real value, Dogecoin was created with the meme face of the dog Shiba Inu.
Nevertheless, fans loved the satirical nature of Dogecoin, and the cryptocurrency became highly popular when Elon Musk became a fan of this cryptocurrency.
However, Dogecoin has had 12 straight months of losses, and recently Elon Musk was sued by a major investor of Dogecoin who accused Musk of running a pyramid scheme to prop up the cryptocurrency, so the future doesn’t look bright for Dogecoin for a long time.
Other Cryptocurrencies
There are dozens of other cryptocurrencies, so many that it is hard for a typical investor to keep track of them all. And while it is possible to reap large rewards with other cryptocurrencies, the Motley Fool among others suggest that outside of Ethereum and Bitcoin, that most alternative cryptocurrencies are risky at best.
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The bottom line
Most analysts suggest it will be well into 2023 and possibly as late as 2024 before cryptocurrencies bound back and roar as inflation is tackled by the Fed. But if you can invest for the long run and not pay attention to each and every rise and fall in both Bitcoin and Ethereum, you may have a very pleasant outcome in the longer future.