Investing in cryptocurrency in 2021 is a practice that is becoming more and more open to the general public. In the year 2021, according to some investors, buying cryptocurrency is more profitable than ever, even more so than in 2020. Nevertheless, this activity remains risky: no one can know which cryptocurrency(s) are destined to increase in value and which are destined to lose value. How to invest in cryptocurrency without risk in 2021? Is it a good idea? Tacotax tells you everything!
How to invest in cryptocurrency in 2021?
How to buy cryptocurrency? In 2021, many platforms are available on the web to create a virtual wallet. This wallet, which takes the form of a sequence of numbers and a secure password called a code, is intended to hold crypto money. There are many processes you can use to invest in cryptocurrency in 2021, including:
- Buying tokens (cryptocurrency coins),
- Online broker offering cryptocurrency trading with Contracts for Difference (CFDs),
- Sell real estate to an individual for cryptocurrency,
- Using the American platform Bakkt of the Intercontinental Exchange to invest cryptocurrency in the stock market,
- Specialized marketplaces.
Cryptocurrency in 2021
Some state that the value of Bitcoin is expected to grow by the end of 2021. Because this cryptocurrency has a limited amount (only 21 million Bitcoins), its value is determined by the difference between its supply and demand. Production (known as "mining") drops every 4 years by 50%.
There have been a total of two production cuts in the history of Bitcoin (notably, between 2013 and 2017) that have resulted in an increase in the value of Bitcoin. This is the reason why some state that Bitcoin is expected to increase in value in 2021.
Moreover, by the end of 2021, Diem (ex-Libra), Facebook's virtual currency, should offer a means of payment already accepted by Uber, Whatsapp, Spotify, eBay... Thanks to the Calibra application, a virtual wallet designed to store Diem, the user will be able to transfer money to another peer via different applications (PayPal and Lydia in particular).
Focus on security
You should be prepared to lose your entire stake in the worst-case scenario! Find out beforehand how the cryptocurrency financial markets work, which apps you want to use, and what type of cryptocurrency you want to invest in. If possible, don't hesitate to join an online community (such as Reddit or Slack) to interact with others and learn more about the pros and cons of investing in cryptocurrency. For example, you can buy cryptocurrencies to store in a virtual vault to resell after reaching a certain amount.
Which cryptocurrency to invest in in 2021?
The two most important crypto-currencies
The two most well-known cryptocurrencies are Bitcoin and Ethereum whose creation process is called "mining". Here are their characteristics:
Bitcoin. Created in 2009 by a person or group of people under the pseudonym Satoshi Nakamoto, Bitcoin is currently the most well-known cryptocurrency. By 2021, many predict that Bitcoin will become more valuable. In fact, every year, production is cut in half. In all, the creation of 21 million Bitcoins was predicted back in 2009. However, this decrease in production has led, at least between 2012 and 2016, to a drastic increase in its value, also known as halving.
Ethereum (ETH) is the second most well-known cryptocurrency after Bitcoin. Created on July 30, 2015, Ethereum is a decentralized exchange protocol. Thanks to this system, users will be able to set up pre-established contracts, known as "smart contracts". In particular, thanks to Ethereum a user can establish a future contract stipulating that he will buy something only when certain conditions are met, and this, without going through a notary, therefore, without paying additional fees. From 2020 to 2021, Ethereum went from $150 to over $150 billion.
Other promising cryptocurrencies in 2021
Several crypto-currencies have emerged in recent years and are quite popular, including the following:
- Cosmos (ATOM): still in the experimental stage, Cosmos works with a blockchain network technology.
- Tezos (XTZ): a competitor to Ethereum, this is a smart contract platform that works with proof-of-stake. Since its launch, as evidenced by Binance or Kraken, the price of Tezos has been rising.
- Kleros (PNK): a decentralized dispute resolution project, it allows individuals to serve as jurors in a decentralized court and profit from the parties.
- Stellar Lumens (XLM): a decentralized and open-source platform, its value has been increasing since its launch in 2014. It is rising in early 2021 towards $0.40.
- MakerDAO (MKR, DAI): this cryptocurrency is three years old. In 2021, it could become the reference currency within the Ethereum network.
- Ripple (XRP) which refers to a payment protocol with a market capitalization of over 19 billion euros,
- Tether: the market capitalization of this cryptocurrency is more than 35 billion euros,
- Litecoin is a cryptocurrency with a market capitalization of more than 11 billion euros,
- Nano: the hack of 2018 has greatly shaken its value,
- Basic Attention Token (BAT), which exceeded 10 million active users at the end of 2019.
TIP
before you do anything, you should keep in mind that investing in cryptocurrency is a very risky business. The probability of losing the invested amounts is high. Don't bet all your capital on a single crypto asset!
Attention
This article is for information purposes only. Before making any financial decisions, consult a (real) financial advisor.
Investing carries a risk of loss.
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