3 Common Cryptocurrencies to Invest In If You Can Handle the Risk

Like any new investment, there will be survivors and ones that fail. Dot-com era investors probably remember all the search engine startups and many that no longer exist.

So, which cryptocurrencies should you invest in, and which should you avoid? First, we will discuss what a cryptocurrency is and its risks.

What is Cryptocurrency?

Cryptocurrencies utilize blockchain technology to record and verify transactions on a distributed ledger. It can be thought of as a shared public distributed database. The decentralized feature means transactions are permanent and irreversible.

Risk of Investing in Cryptocurrencies

Volatility is the price fluctuation of a tradeable asset. Cryptocurrencies, like Bitcoin, are volatile. For instance, Bitcoin’s price has fluctuated between a low of ~$29,800 to a high of about ~$67,600.

Bitcoin

The value of Bitcoin is perceived like gold. It is viewed as a store of value because investors think it has value, much like a fiat currency. The reasons are that Bitcoin is limited in number, cannot be copied, can be traded, and can be stored and moved in a digital wallet.

Ethereum

An important distinction between Bitcoin and Ethereum is the latter allows entirely new cryptocurrencies to be created within the platform, known as tokens. Examples include Chainlink and XRP. Additionally, Ethereum allows digital art sales using non-fungible tokens (NFTs).

USD Coin attempts to solve one of the shortcomings of most cryptocurrencies, their volatility. It is a type of cryptocurrency known as stablecoins. The token does this by trying to maintain a peg of one USDC to $1.00.

USD Coin

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