Despite 2021 being a turbulent year for the crypto market, there were a few cryptocurrencies that performed well, while facing global chaos. Dealing with cryptocurrency, begins with understanding what it is and how it works. A cryptocurrency is a medium of exchange that is digital, encrypted and decentralized. It can be used to buy, sell, make payments and for other financial transactions as well. Since cryptocurrencies are digital, carrying out any financial transaction can get tricky, especially when we consider how easy it has become to breach virtual security. One of the best ways to exchange or invest in crypto is through a digital wallet. But before doing that, let’s take a look at all the cryptocurrencies that have had a good year and helped investors make a profit.
- Bitcoin :
With a total market cap of approximately $882 Billion, Bitcoin is the original and oldest cryptocurrency, founded in the year 2009. Bitcoin operates on a proof of work network, keeping it safe from fraudsters and virtual attacks. Starting 2021 at a value of $34,622, the BTC price in recent times had reached approx. $46,000, noting some massive gains.
- Ethereum :
A hybrid of cryptocurrency and a blockchain platform, the market cap of Ether is roughly around $447 Billion. Notably, Ethereum has a significant potential for growth, is secure and would make for a suitable addition to one’s crypto portfolio. Ethereum was the sole cryptocurrency whose value increased significantly and continuously throughout the year.
- Tether :
Tether is a stablecoin, making it slightly different from the other cryptocurrencies in circulation. Since it is a fiat-collateralized cryptocurrency, Tether’s value, in theory, is said to be more consistent and stable, making it more favorable than its other, more volatile counterparts. Being backed by fiat currencies, and in tether’s case the US Dollar, the value of USDT to INR is approximately 75 Rupees.
- Binance Coin :
Binance, being one of the largest crypto exchanges in the world, has its own cryptocurrency known as the Binance Coin. Since its launch in 2017, Binance Coin has expanded past merely facilitating trades on Binance’s exchange platform. It can also be traded or exchanged for other forms of cryptocurrency, such as Ethereum or Bitcoin. The binance coin is an accepted method of payment on its own app, making it a lucrative option for investors.
- Solana (SOL) :
Running on a unique hybrid proof-of-stake and proof-of-history mechanism which helps it process transactions quickly and securely, Solana has a market share of around $55 Billion. It was developed and designed to help control decentralized finance (DeFi) uses, decentralized apps (DApps) and smart contracts. SOL’s value showed gains of a whopping 22,000% in 2021.
Now that we know which cryptocurrencies had a good year, let’s understand how to start investing or exchanging these cryptocurrencies in a safe and secure manner, ensuring we remain profitable.
How To Invest In/Exchange Cryptocurrency?
Online cryptocurrency portals are offering services including but not limited to, buying, selling and exchanging cryptocurrency called crypto exchanges. These cryptocurrency exchanges in turn offer a crypto wallet, which is a digital safe or vault that allows you to collect, save and store your currency securely. It prevents your cryptocurrency from being attacked or stolen and acts as a digital storage space while enabling transactions of coins. It is the virtual equivalent of a regular bank. You can also use exchange wallets which are custodial accounts that the exchange provides but it is not a common practice as this type of wallet is not a private key holder, and that is why it is inadvisable to store your cryptocurrency on it. This process of exchanging cryptocurrency starts with downloading the necessary apps on our phones, making an account with the exchange, completing requisite formalities and registering for an account. Safely buying cryptocurrency is one thing whereas storing it safely while reducing the risk factor requires far more in depth knowledge of the system that cryptocurrencies work on. Considering the monetary value of cryptocurrencies, any loss will tend to make a large impact on one’s investment portfolio and overall investments as well. So maintaining caution is paramount.
Choosing a crypto wallet depends a lot on your needs and requirements. There is no ‘one size fits all’ or a general answer to which wallet would be better as they all provide certain services that may vary. More often than not, these crypto wallets also charge transaction fees to use their services. These fees also vary from wallet to wallet as some charge based on volume of transaction and some charge based on the size of transaction. It is best to check all these out before making a decision. There are different types of crypto wallets as well called, hot and cold wallets with the major distinction being that hot wallets provide online and accessible storage while cold wallets provide offline storage.
Make these vital decisions taking into account how involved you are in the crypto market and how far you plan to take it. You could also consult a professional in these matters who can help you make an informed choice.