For the past ten years, thousands of cryptocurrencies have entered the market. While some have earned quite a reputation, not every project makes it. This is because not all cryptocurrencies are the same; they all differ in the kind of technology, features and characteristics offered to investors.
But hey! If you have already picked a digital asset to add to your portfolio, you just need to find the best way to do that.
While there are many ways to potentially profit from cryptocurrency, including mining, crypto marketing, hodling, and purchasing stocks from a crypto company, in this article, we present four popular methods to invest in crypto.
An exchange-traded fund (ETF) is like a mutual fund, or a company that pools money from investors and invests it in different assets. Unlike mutual funds, though, ETFs are more flexible.
Investing in a cryptocurrency ETF would often involve future contracts. In a future contract, your fund manager will buy an asset at a price that’s predetermined to a future date.
Note that if you choose to explore crypto ETFs, this type of investing does not mean you own any cryptocurrency. Usually, the money earned will be used to reinvest, gradually increasing your initial investment.
Crypto index funds are another way to invest in a group of digital assets. Index funds usually are based on benchmark indexes.
Note that, unlike ETFs that can be traded at any time of the trading day, index funds can be traded at a price set at the end of the day. Thus, for day traders, ETFs may be more suitable.
Again, using crypto index funds does not grant you ownership of any cryptocurrencies. If you want to own cryptos, then you should buy via an exchange – you can even hodl a crypto until its price increases enough to help you eventually sell and profit.
The third type of crypto investment is buying a cryptocurrency. This is the process in which you purchase a token and store it safely. You have to first select a crypto exchange of your choice or a broker to do that on your behalf.
Do not forget that a broker and an exchange are two different things and that you should be aware of their differences. A cryptocurrency exchange is a platform or a marketplace used to trade cryptocurrencies. Nowadays, there are also decentralised exchanges. One advantage of using an exchange for buying a digital coin is that some charge very low fees.
On the other hand, a cryptocurrency broker will be an intermediary between a marketplace and you, which can spare the hassle of dealing with crypto on your own.
The cryptocurrency market is more than exciting, and nowadays, even individual traders can choose from different ways to invest in crypto based on their trading goals.
Just remember that while lucrative, the cryptocurrency investment sector is highly risky. Always do your research before getting started!
I am James, a UK-based tech enthusiast and the creative mind behind Mighty Gadget, which I’ve proudly run since 2007. Passionate about all things technology, my expertise spans from computers and networking, to mobile, wearables, and smart home devices.
As a fitness fanatic who loves running and cycling, I also have a keen interest in fitness-related technology, and I take every opportunity to cover this niche on my blog. My diverse interests allow me to bring a unique perspective to tech blogging, merging lifestyle, fitness, and the latest tech trends.
In my academic pursuits, I earned a BSc in Information Systems Design from UCLAN, before advancing my learning with a Master’s Degree in Computing. This advanced study also included Cisco CCNA accreditation, further demonstrating my commitment to understanding and staying ahead of the technology curve.
I’m proud to share that Vuelio has consistently ranked Mighty Gadget as one of the top technology blogs in the UK. With my dedication to technology and drive to share my insights, I aim to continue providing my readers with engaging and informative content.