Cryptocurrency investing can be an incredibly lucrative venture but can also be quite risky, intimidating, and confusing.

Firstly, we should make the distinction between investing and trading – the biggest difference being the time horizon. With investing in any asset, it is a disciplined plan to meet specific financial goals over a longer period of time, usually five years or more. Investors may build a strategy in order to save for college, buy a house, or plan for retirement.

Trading, on the other hand, is short-term and often more speculative in nature. It is not uncommon for traders to execute dozens of trades a day in order to take advantage of intra-day price fluctuations. However, trading is not any less disciplined as investing since successful traders carefully manage their exposures.

Here, we will focus on investing in Cryptocurrencies. The most popular cryptocurrency investment method is to buy Bitcoin and Ether and different altcoins directly by buying the digital currency outright.

Investing in cryptocurrency has become more advanced with the introduction of crypto derivatives, such as futures. We also have more and more exchange-traded funds (“ETFs”) that invest on behalf of investors in physical cryptocurrencies or futures.

Lastly, there is also an investment case for buying stocks in publicly-traded companies that focus on the industry, such as Centralized Cryptocurrency Exchanges (“CEXs”) and crypto-specific hardware manufacturers.

Authors

Dean Lowell