Nakamoto launched the Bitcoin network just a year later and began mining the currency— an estimated 1 million bitcoins were mined in the early years.

The creator(s) of this first-of-its-kind asset developed the cryptocurrency in response to the Great Recession of 2007-2009, spurred by a distrust of the traditional banking system and concerns about its stability. 

Given the recent values of Bitcoin, it’s hard to believe the currency first started trading on exchanges in 2010 at under $0.10. Since then, it’s experienced astronomical growth and some pretty wild price swings.

At its most recent high, one bitcoin was worth over $64,000—a far cry from trading for pennies in its earliest days. 

Whether you’re thinking of investing in Bitcoin or you’ve held this cryptocurrency for several years, it’s fun to look back at this groundbreaking asset’s history. Read on for insights on Bitcoin milestones, historical returns, and how its returns compare to those of other assets.

Bitcoin Performance Milestones

Since being created, Bitcoin has experienced several milestones. Here’s a look back at some of the most significant moments in the short history of this cryptocurrency:

• In March 2010, Bitcoin began trading on the now-defunct Bitcoin Market, one of the first-ever cryptocurrency exchanges.

• A Florida man named Laszlo Hanyecz bought pizza with 10,000 bitcoins in May 2010, making it the first time anyone used the currency to purchase something.

• In June 2011, Bitcoin saw its first significant price spike, climbing to a value of $29.60 (up from just $0.30 in January) before declining again later that year.

• The second half of 2013 marked another major spike—from $68 on July 4th to $1,237 on December 3rd before declining again.

• One of Bitcoin’s most significant increases happened in 2017, with its value surging from around $1,000 at the start of the year to $19,345 by mid-December. 

• The Bitcoin hype cooled in 2018, resulting in significant declines—its lowest value was around $3,232 in December of that year.

• In 2019, Bitcoin saw another spike, hitting $13,813 on June 26th before declining.

• After seeing modest ups and downs through October 2020, Bitcoin’s value began to surge again. It hit an astronomical high of over $68,000 in November 2021.

• Bitcoin dropped by over 75% in 2022

• Bitcoin continues to hover around the $30k mark in 2023

Bitcoin Total Return (10 Year, 5 Year, 3 Years, 1 Year)

While Bitcoin isn’t exempt from the volatility cryptocurrencies often experience, it’s delivered some impressive returns over the years. Here’s a look at Bitcoin’s annual returns from 2010 to 2022:

And here’s a look at monthly returns, if you feel like getting a deeper dive:

While Bitcoin has experienced some wild monthly price swings and a couple of years where its value has declined, you can see that its declines have been eclipsed by some incredible gains. Now let’s explore how Bitcoin’s value has changed over 10, 5, 3, and 1 years.

Bitcoin 10-Year Return

Let’s say you bought one bitcoin on August, 3rd 2013, for $1,106.75, its price at the time. If you held that one bitcoin until August 3rd, 2023, it would’ve been worth $29,310.44, and your total ROI for the 10 years would be 2,546.8%.

Bitcoin 5-Year Return

We’ll also assume you purchased one Bitcoin for this example. A single bitcoin was valued at $965.31 on August, 3rd, 2018, and its value climbed to $29,310.44 by August 2023. Using our calculation above, your total ROI for those five years would be 294.1%.

Bitcoin 3-Year Return

A single bitcoin was valued at $11,246.20 in August 2020, and its value climbed to $29,310.44 at the end of 2021. Your total ROI for those three years would be 160.6%.

Bitcoin 1-Year return

If you purchased a single bitcoin in August 2022, you would’ve paid around $22,626.83. In one year, that value would’ve increased to $29,310.44. Your total returns for that year would be 29.54%.

Bitcoin Multi-Year Returns Compared

How Much You’d Have If You Invested $1,000 in Bitcoin 10, 5, 3, or 1 Year Ago

Instead of buying one bitcoin, let’s say you decided to invest $1,000 into Bitcoin. Here’s a look at how this $1,000 investment would’ve performed if you bought and held your Bitcoin for 10, 5, 3, and 1 years.

While Bitcoin’s earliest investors would have benefitted the most from buying and holding their Bitcoin, those who’ve invested recently also fared well.

How Does Bitcoin Compare to Other Asset Classes?

If you’re curious how Bitcoin returns compare to those of other asset classes, here’s how its annual and total returns compare to gold, real estate, and the S&P 500.

(Spoiler alert: Bitcoin outperformed all three assets by an enormous margin.)

Bitcoin vs. Gold

If you compare Bitcoin’s returns to gold’s returns, you’ll notice a stark difference. Bitcoin has an average annual return of 1,576% and a total return of 18,912% from 2010 to 2022, while SPDR Gold Shares had an average annual return of just 5.14% and a total return of 61.67% over the same period. 

Bitcoin vs. Real Estate

Let’s see if real estate fared any better compared to Bitcoin. The cryptocurrency delivered a whopping 1,576% average annual return and an 18,912% total return from 2010 to 2021, while the Vanguard Real Estate ETF had an average annual return of 13.49% and a total return of 161.91% over the same period.

So, real estate saw slightly higher returns than gold, but it still didn’t come close to Bitcoin’s returns.

Bitcoin vs. S&P 500 (Stock Market)

The S&P 500 didn’t fare too much better in its head-to-head with Bitcoin. From 2011 to 2023, the Vanguard S&P 500 ETF delivered an average annual return of 15.74% and a total return of 173.14%. While those numbers aren’t too shabby, Bitcoin’s average annual return for the same period was a whopping 819%, and its total return was 9,012%.

How Does Bitcoin Compare to The Best Performing Stocks?

We’ve analyzed how Bitcoin compares to gold, real estate, and the stock market, but how does it stack up against some of the best-performing stocks? Here’s how this popular cryptocurrency stacks up against major companies like Amazon, Apple, Berkshire Hathaway, JP Morgan, Microsoft, Visa, and Walmart.

We looked at the average annual and total returns for each asset. This data assumes you bought the asset in 2010 and held it until 2023. 

The Bottom Line – Bitcoin Historical Returns

While some investors may be skeptical about cryptocurrency, citing concerns over market volatility and a high risk of loss, Bitcoin’s performance over time paints a rosy picture. With its longevity and astronomically high returns, Bitcoin has been worth the risk for many investors—especially early adopters. 

Of course, historical performance doesn’t guarantee future returns. So if you’re considering investing in cryptocurrency, only invest what you can afford to lose.

The post Bitcoin Historical Annual Returns (10 Years, 5 Years, 3 Years, 1 Year) appeared first on Good Financial Cents®.

If you’re looking into cryptocurrency for the first time, you may be wondering, “Can I start by investing $100 in Bitcoin?” The answer is definitely yes. But before you make your first investment, there are a few things you should know about crypto.

Here’s a closer look at what investing $100 in Bitcoin today looks like for new investors and veterans alike.

What Is Bitcoin?

Bitcoin is a digital currency that exists only on the Internet. But if you think about it, much of the money you have today only exists on the Internet. If you’re paid with direct deposit, you may have money coming in and out of your accounts without ever touching a physical dollar bill.

With that in mind, Bitcoin offers a completely new take on currency, and it’s controversial for some of the features that also make it so interesting (we’ll get into that later).

Bitcoin was created in 2009 by a mysterious figure who goes by the pseudonym Satoshi Nakamoto. But while Nakamoto is known as the currency’s founder, it is not controlled by any single individual. Instead, Bitcoin is a decentralized currency that operates through a network of computers worldwide known as cryptocurrency miners.

Cryptocurrencies, including Bitcoin, rely on a technology called blockchain.

Every single Bitcoin transaction that has taken place is tracked in this public database. Because many computers around the world have a copy, this record is extremely hard to manipulate.

Anyone with an Internet connection can participate in the cryptocurrency economy. To buy and hold bitcoin you can use a cryptocurrency wallet, like one from Ledger, Trezor, or MetaMask. You can also buy and hold your currency through a central exchange like Coinbase or Gemini.

While it’s fairly easy to buy bitcoin, especially if you’ve ever invested in the stock market, that doesn’t mean it’s right for everyone. When investing in Bitcoin and other cryptocurrencies, it’s wise to avoid investing more than you can afford to lose. We’ll take a closer look at why in the next section.

What Is Bitcoin Worth?

The value of a bitcoin goes up and down frequently; so much of its volatility is due to the controversy around Bitcoin’s worth. When it first launched in 2009, a single bitcoin was only worth a few cents, but at its peak, it was worth around $60,000. As of this writing, a single bitcoin is valued at around $30,000.

As you can see from those numbers, early Bitcoin investors who held on through the crypto’s ups and downs likely made a fortune. If you bought $100 of bitcoin when it was worth a few cents and held it until it was worth more than $50,000 apiece, you could have easily made millions of dollars.

The price of Bitcoin has been extremely volatile over time. Here’s a 10-year price history from the cryptocurrency tracking site CoinMarketCap.

But the controversy comes from the many detractors who say Bitcoin and other cryptocurrencies are effectively worthless. These include some high-profile Wall Street CEOs, analysts, and government officials. If they are right, Bitcoin will eventually fall to a value of zero or very close to it.

With enthusiasts saying Bitcoin price will go “to the moon “ and others saying it will go to zero, what is its true value? At this point, unlike buying stocks, it’s somewhat difficult to say exactly what a bitcoin is worth.

Bitcoin is in limited supply. There will only ever be 21 million created (about 19 million exist as of December 2023). The scarcity drives up the value and makes it useful as a store of value online, somewhat like a digital version of gold. But if it turns out to be fools gold, a big investment in Bitcoin may become a big mistake.

Can Beginners Invest in Bitcoin?

If you are brand new to the world of investing and have never bought stocks, mutual funds, exchange-traded funds, or other types of investments—for instance, a retirement account through your workplace—you may want to skip Bitcoin for now and start investing with the stock market. The stock market is a lot more established with hundreds of years of history and clearer methods of deciding the value of an asset.

However, if you have a little investing experience, you can absolutely invest in Bitcoin.

If you’re comfortable using a computer and have your information handy, you can create an account with most exchanges in about 10 minutes or less. Then it takes just a few minutes to link your bank account, make a deposit, and fund your cryptocurrency exchange account for the first time. Some exchanges offer the ability to instantly buy Bitcoin and other cryptocurrencies, even if your bank’s deposit has not yet been cleared.

If all of that sounds overwhelming, there’s no harm in skipping this particular asset class. But if you’re excited about digital currencies and believe blockchain technology is a big part of the future of finance, you may find the risks of Bitcoin well worth it.

What May Happen if You Invest in Bitcoin

An investment in Bitcoin is far from guaranteed. Things might turn out great, and you could earn your money back tenfold, maybe even more. On the other hand, your investment might drop down to zero. While I’d like to think your odds in Bitcoin are better than in Vegas, many riskier cryptocurrencies look like gambling.

Unlike government-backed fiat currencies, there is no large organization behind Bitcoin that guarantees its value. I don’t want to sound like a broken record, but it’s important to understand that you should only invest what you can afford to lose when buying cryptocurrency.

How Much Money Do You Need to Buy Bitcoin?

It’s not difficult to invest in Bitcoin, but keep it a small portion of your portfolio. You don’t have to buy a full Bitcoin at once. Like a dollar is divided into cents, bitcoin is easily divided into smaller slices.

Most cryptocurrency exchanges allow investors to start very small. You may be able to buy as little as two, five, or $10 of bitcoin when entering a transaction. If you have a $1000 portfolio and want to start with Bitcoin as only 5% of your investments, it’s easy to accomplish that using most centralized cryptocurrency exchanges.

To make a long story short, you don’t need much money to buy Bitcoin. If you’re nervous about making your first purchase, consider starting small with around five dollars. This limits your risk and gives you time to decide if it’s right for your investment goals. If you like the experience, you can always invest more later.

How Much Would I Have If I Invested $100 in Bitcoin?

Early Bitcoin investors who sold at the top, or even still hold their currency, have likely seen huge gains. If you bought Bitcoin early, even in small amounts, you could be a millionaire.

If you invested $100 in Bitcoin in Bitcoin in July 2013, over 10 years ago, you would have bought 1.47 BTC. At its peak, that was worth about $101,500. That’s an incredible gain!

As of this writing, 1.47 BTC is worth about $38,743.27.

That’s still a massive return on investment.

Where to Buy $100 in Bitcoin

If you’re serious about learning the inner workings of cryptocurrencies, you may want to use a self-controlled digital currency wallet. But for anyone who doesn’t consider themselves a tech nerd, the easiest place to buy and sell cryptocurrencies is with a centralized cryptocurrency exchange.

Here’s a look at some of the most reputable cryptocurrency exchanges available to investors and traders in the United States:

• Coinbase: Coinbase is one of the biggest and most recognized cryptocurrency exchanges in the United States. While it doesn’t come with the lowest trading fees, it supports a large number of currencies and makes buying and selling easy.

• Gemini: Gemini is another large cryptocurrency exchange based in the US. The Winklevoss brothers of Facebook infamy founded this exchange. Gemini is a serious cryptocurrency exchange with many bank-like features, including the ability to earn interest from most cryptocurrencies held in your account.

• Binance.US: Binance.US is the arm of Binance focused on American traders. Binance is by far the largest global cryptocurrency exchange. However, the experience for users in the United States is not exactly the same as in the rest of the world due to US securities regulations. Despite those limitations, competitive pricing and access to a large list of currencies could make Binance.US a good home for your crypto.

• Kraken: Kraken is a cryptocurrency exchange that may be better for those with more cryptocurrency knowledge. Kraken offers a wide list of currencies, low, competitive fees, and a very good earn feature where you can receive generous rewards for staking or holding multiple currencies.

• Robinhood: Robinhood offers completely commission-free cryptocurrency trades. While it only supports a short list of cryptos, the low cost is very attractive. Also note that you can’t withdraw cryptocurrency from Robinhood to an outside wallet, though that feature may be coming with Robinhood’s new wallet product.

• Webull: Another commission-free trading app, Webull is built for active traders and supports up to 41 currencies depending on your location. The low costs are attractive, but again you can’t withdraw cryptocurrency holdings to outside wallets or accounts.

• Public: Public is another brokerage that started with stocks and grew to support cryptocurrencies. The public supports 30 cryptocurrencies. While there are no commissions, a 1% to 2% markup is included in the trade price as a fee.

How Much Are Fees to Buy $100 of Bitcoin?

Coinbase is one of the biggest and best-known exchanges, but trades can be costly. Using the main platform, trades are subject to a flat fee per trade plus a spread. The fee varies based on the trade size. Anyone can upgrade to the active trading platform with lower fees.

Robinhood Crypto offers fee-free cryptocurrency trades. While the list of supported currencies is shorter than some competitors, you can’t beat free trades!

Can You Mine $100 in Bitcoin?

Earlier in this article, I mentioned the concept of coin mining. Whether or not you participate in mining, the Bitcoin mining process greatly impacts coin holders and anyone making cryptocurrency transactions on the Bitcoin blockchain.

Bitcoin miners are computers competing against each other to process and verify the next block of transactions. The block—a group of transactions from the same period—is where blockchain gets its name.

When a miner is first to succeed in solving the complex math to process a new block of transactions, that person is rewarded with the transaction fees from recent users and newly minted bitcoin. Because Bitcoin is so valuable, there are many, many miners around the world competing to earn that reward. Once all Bitcoin has been mined, rewards will be reduced to only transaction fees.

Because so many miners compete to earn bitcoin rewards, it’s extremely difficult for solo miners to earn anything independently.

If you want to participate in Bitcoin mining, you may need to buy expensive computer hardware and have the in-depth technical knowledge to get everything set up and working properly.

To increase their chances of winning a reward, some miners pull their resources together and collaborate in a mining pool. But whether you mine through a pool or on your own, you are unlikely to get rich with Bitcoin mining these days.

In fact, miners may spend more money on the electricity powering their computers than they earn from mining rewards. Most people are best off buying Bitcoin through a favorite cryptocurrency exchange.

Bitcoin Safety and Security

If you decide to move forward and buy Bitcoin, it’s essential to follow online security best practices. That includes using a unique, difficult-to-guess password on every financial website, including cryptocurrency exchanges, banks, brokerages, credit card companies, and other lenders.

Cryptocurrency is not FDIC insured, and if a cryptocurrency account is hacked, you’re unlikely to be reimbursed by the exchange for your losses. If you don’t feel confident keeping your online account secure and using strong passwords, you may want to skip cryptocurrency altogether.

Other Cryptocurrencies to Know Besides Bitcoin

Of course, Bitcoin isn’t the only cryptocurrency that’s grabbed headlines over the last few years. Ethereum, Dogecoin, Shiba Inu, Stellar Lumens, Avalanche, Cardano, and Solana are just a few of the more than 10,000 cryptocurrencies on the marketplace today.

However, it’s important to note that Bitcoin and Ethereum are arguably the safest and most stable cryptocurrency projects today. Investments outside of these core currencies come with even more risk and volatility.

To learn more about other top cryptocurrencies, check out websites like CoinMarketCap and CoinGecko.

How to Decide if Bitcoin Makes Sense for You

Bitcoin has a lot of pros and cons. While it’s great to think about what would happen if you make an investment that grows tenfold or more, it’s also important to remember the risk of taking major losses.

For savvy investors, diversification is an important concept to follow. That could mean adding Bitcoin and other cryptocurrencies to your portfolio. If you’ve done your research, understand how Bitcoin works, and still think it makes sense for you, investing your first $100 in Bitcoin could be a good way to dip your toe in the crypto water before making a larger, riskier commitment.

Final Thoughts on What Might Happen if You Invest $100 in Bitcoin Today

Investing $100 in Bitcoin can yield substantial gains or significant losses due to its volatile nature and controversial status. Bitcoin’s unique features, like decentralization and limited supply, set it apart from traditional currencies. The cryptocurrency’s value has fluctuated dramatically, from mere cents to tens of thousands of dollars per bitcoin. 

While early investors profited immensely, skeptics argue it could eventually become worthless. Beginners should only invest what they can afford to lose, considering the risks. Bitcoin’s value remains uncertain, making it important to research and understand before investing. Diversification is wise, and starting small can offer exposure to crypto’s potential while minimizing risk.

The post What Might Happen if You Invest $100 in Bitcoin Today? appeared first on Good Financial Cents®.

While there is no simple answer, there are a few factors to consider that could help you make a prediction.

What Is Dogecoin?

Dogecoin (DOGE-USD) is a cryptocurrency that was created in 2013 as a way to satirize the Bitcoin craze. It is often called the “joke currency” because it was originally started as a prank.

However, Dogecoin has since gained a large following and has become a legitimate cryptocurrency with a market capitalization of over $600 million.

The “DOGEARMY” is a group of Dogecoin enthusiasts who are very active on social media and often promote the currency.

Thanks to their efforts, Dogecoin has become one of the most popular cryptocurrencies.

Where Can You Buy Dogecoin?

Dogecoin can be bought on a variety of cryptocurrency exchanges such as Binance, Kraken, and Robinhood. It can also be bought with fiat currency on several exchanges including Changelly and Shapeshift.

Price History of DogeCoin

Dogecoin has seen a lot of volatility in its price history. When it first launched in 2013, one Dogecoin was worth $0.00026.

In January 2018, the price of Dogecoin surged to $0.017 after reaching a market capitalization of $2 billion.

Dogecoin’s all-time high price was $0.018 in January of 2018 with its most recent low being $0.0027 in March of 2020.

Here’s a look at the price of Dogecoin dating back to 2014 to present day:

Dogecoin is currently trading just below $.10 ($.07722) with a market cap of over $10 billion (according to CoinMarketCap).

Elon Musk and Dogegoin

Dogecoin has gained a lot of attention due to tweets from Tesla CEO Elon Musk. Musk, given the ultimate title of “Dogefather”, has been a vocal supporter of Dogecoin, even calling it his “favorite cryptocurrency” at one time.

On his first Saturday Night Live appearance, Musk joked that Dogecoin might be the future currency of Earth. This sent the price of Dogecoin soaring 10% in a matter of minutes.

Musk has also allowed Tesla customers to pay for their cars with Dogecoin (according to their website you would need to set up a proper dogecoin crypto wallet). You can also purchase Tesla merchandise and they began rolling out accepting dogecoin as payment at a select few of their Super Charging stations.

During the recent crypto winter Musk hadn’t been as vocal in supporting Doge, but he did recently share this tweet:

While Elon Musk’s tweets have helped to increase the price of Dogecoin in the past, it is important to remember that he is not affiliated with the company and his tweets should not be taken as financial advice.

Will Dogecoin Hit $0.10?

Dogecoin has already hit that elusive price of $0.10 so the bigger question is:

“Will dogecoin hit $0.10 again?”

This is a difficult question to answer. Dogecoin has a lot of potential due to its large and active community, as well as the endorsement from Elon Musk.

Here are the key factors for whether Dogecoin will hit $0.10 again:

1. Increased Mainstream Adoption of Cryptocurrency

2. More Businesses Accepting Dogecoin as Payment

3. Continued Support From Elon Musk (And Other

4. Improved Infrastructure for Buying and Selling Dogecoin

If these factors continue to develop positively, there is a good chance that Dogecoin will reach $0.10

However, it is important to remember that the price of cryptocurrencies is very volatile and anything could happen in the future. Only time will tell if Dogecoin will hit $0.10 or not.

Dogecoin Price Predictions

I knew there were other Doge enthusiasts that had their opinion on its future price and I wanted to hear their take.

Matt Wallace, a crypto content creator with over 236k subs on his Youtube channel has been a huge Dogecoin supporter through the years.

I hit him up on Twitter to see if he thought Dogecoin to hit 10 cents again.

This was his optimistic view provided that Space X delivered on its promise.

The original creator of Dogecoin, Shibetoshi Nakamoto, still follows the project closely and recently tweeted at how the meme coin has been stuck at its current level for quite some time.

Glauber Contessoto, known as the “SlumDOGE Millionaire” went all in on the meme coin investing $250,000 which eventually exploded into over $1 million (at least on paper) is still highly bullish on Doge, Tweeting this:

Dogecoin Future Price – Bottom Line

The bottom line is that predicting the future price of Dogecoin is a difficult task. However, there are a number of factors that suggest that the price could reach $0.10 again in the future.

Only time will tell what the future holds for Dogecoin.

What are your thoughts? Will Dogecoin hit $0.10 again? Let us know in the comments!

The post Dogecoin Price Prediction: Will DOGE Hit 10 Cents? appeared first on Good Financial Cents®.

Many folks are debating getting into cryptocurrency investing but feel overwhelmed by the process. While cryptocurrency has become easier over time, there are still those who are confused about buying Ethereum since the technology hasn’t been fully adapted yet.

When you buy Ethereum, you’re technically purchasing “ether” or “ETH,” the native currency used on the Ethereum blockchain. You convert your fiat currency (regular money) into Ether on a cryptocurrency exchange where you can either hold your Ethereum there or move it into a crypto wallet.

That’s the simple answer for how to buy Ethereum. In this article, we’ll look at everything you could want to know about how to buy Ethereum.

Why Should You Buy Ethereum? What’s the Potential of Investing in Ethereum?

Before we look at the exact steps for how to buy Ethereum, we need to look at what Ethereum is and address the logic behind investing in this cryptocurrency asset.

What Is Ethereum?

Ethereum is a form of cryptocurrency that’s currently number two behind Bitcoin based on market cap. Ethereum has a market cap that hovers around $135B. Ethereum was created by Vitalik Buterin in 2013 and went live in 2015. Ethereum is a decentralized global computing platform that’s powered by blockchain technology. You can run a variety of applications on the Ethereum network. You can also build and execute smart contracts on the blockchain. Many NFT projects are being minted on the Ethereum network.

Ether is the official currency used on the Ethereum network (used for transactions and gas fees), so when you invest in Ethereum, you’re buying Ether.

Why Should You Buy Ethereum?

There are a few different types of Ethereum investors and users:

• You can buy Ethereum (Ether) as an investment because you feel that it’s going to increase in value as the technology becomes more popular.

• You use the Ethereum blockchain for smart contracts. Ethereum provides real-world applications, and it’s where many NFTs are minted.

Here are the exact steps to buy Ethereum, so you can break into cryptocurrency investing.

Five Steps to Buy Ethereum

Are you ready to buy Ethereum? Here are the five steps you will go through as a new cryptocurrency investor:

Step 1: Decide How Much Money You Want to Invest in Ethereum

Some experts believe you shouldn’t allocate more than 5% of your portfolio to cryptocurrency assets. Others claim that cryptocurrency is the future.

Nobody can tell you how much money you can afford to risk since nobody else knows what your financial goals are or what your risk tolerance is like. It’s generally advised that you allocate only 1-5% of your portfolio towards cryptocurrency.

You must decide what kind of cryptocurrency investor you want to be before buying Ethereum.

Here are a few questions to think about when buying Ethereum:

• Will this be a one-time purchase of Ethereum?

• Will you buy a little bit of Ethereum weekly?

• Will you hold Ethereum for the long term?

There are many different types of cryptocurrency investors. Once you figure out your strategy for buying Ethereum, it’s time to move on to the next step.

Step 2: Choose a Cryptocurrency Exchange to Buy Ethereum

There are many options for purchasing cryptocurrency these days, and you don’t have to worry about visiting the dark web or using an ATM in a plaza. You can easily buy Ethereum from your phone while sitting on your couch.

How do you choose which crypto exchange to use? This will depend on what you’re looking for. Here are a few common options for buying Ethereum:

• Your Online Stock Broker: You can often purchase your cryptocurrency assets using the same tool you use to purchase stocks.

• Centralized Cryptocurrency Exchange: Many centralized exchanges allow you to buy various forms of cryptocurrency. Beware of fees and scammy exchanges, as both are prevalent in the crypto industry.

There are new crypto exchanges constantly popping up. While we can’t comment on the safety of every platform, it’s in your best interest to go with a trusted crypto exchange when you buy Ethereum for the first time.

We went through the process of buying Ethereum with the popular exchanges to show you what the process would be like.

Step 3: Open Your Crypto Account

You have to go through the process of opening an account on a crypto exchange. You have to verify your identity and complete the entire application process.

What kind of questions will you be asked?

You’ll be asked about all of your specific personal information. You’re also going to have to prove your identity. Some platforms will even ask you questions about your investing knowledge.

Everyone has to be verified on a cryptocurrency exchange. Some apps will ask for voice or video identification next to your passport/government document to confirm your identity.

What Are the Best Places to Buy Cryptocurrency?

The key here is to find a reputable cryptocurrency exchange that you’ve heard of from trusted sources. You’re going to want to use a centralized exchange.

Here are some of the best exchanges for purchasing cryptocurrency:

• Coinbase

• Crypto.com

• Binance

• Kraken

• Gemini

Your goal is to find a crypto exchange that’s easy to use and offers educational resources to help you out. Exchanges like Coinbase offer tutorials and easy-to-read educational pieces if you want to learn more about buying Ethereum.

Step 4: Fund Your Crypto Account So That You Can Buy Ethereum

Once your crypto account has been confirmed, it’s time to decide how you will fund your new account. You can usually transfer money from your bank account or payment card to buy Ethereum. The other option is transferring to any other cryptocurrency that you currently own.

Once you’ve funded your account or decided how you’re going to buy Ethereum, you can make your purchase.

Here’s what this looks like at the popular Coinbase exchange:

The simple Ethereum purchase form at Coinbase

Once your account has been created and funded, you can easily purchase Ethereum in seconds.

Step 5: Look Into Crypto Wallets for Storing Your Ethereum

Where do you plan on storing your Ethereum once you’ve purchased it? There are generally two types of crypto wallets. Those are hot (connected to the internet) and cold (stored offline) hardware wallets.

Many experts advise that you always store your crypto in a cold wallet so that your assets remain close to you and avoid any security concerns with the exchanges.

Should you take your Ethereum off the crypto exchange?

This is a decision that you have to make on your own. It will likely be determined by how much money you plan on allocating towards buying Ethereum. Moving your money off the crypto exchange into a cold wallet won’t make much sense if you’ve only put in a small sum.

Where can you store your Ethereum?

• Crypto Exchange: Buyers can store currency in the cryptocurrency exchange account used for purchasing ether. You can leave your Ethereum as is, though there are security risks if the exchange goes bust or your account is hacked.

• Digital Software Wallet: You can transfer your Ethereum to another digital wallet where you can start swapping Ethereum for other coins. MetaMask is a popular option.

• Cryptocurrency Hardware Wallet: This would completely take your Ethereum off the exchange and offline, making it extremely difficult to hack.

That’s how you can buy Ethereum. It may seem overwhelming at first, but once you get your account set up, you’ll notice it’s a fairly seamless process.

How Should Ethereum Fit Into Your Portfolio?

You may be wondering how to structure your investment portfolio now that you’re looking to buy Ethereum. This depends on your risk tolerance and your financial goals.  If you have a balanced portfolio and are looking to add some cryptocurrency exposure into the mix, then Ethereum could be one of the safest places to start.

There are many speculative coins and “meme coins” in cryptocurrency. You have heard of “Dogecoin” or “Shiba Inu” over the last few years. You’re going to be tempted to purchase coins that promise astronomical returns. This is just a friendly reminder that for every crypto success story, there’s a depressing tale of how someone lost their life savings in crypto.

Is Investing in Ethereum Risky?

Investing in Ethereum can be risky, considering the volatility and the price movement in recent months. Ethereum reached an all-time high in November of 2021, only to fall below $1,000 at times in 2022.

Investing in speculative assets of any kind is risky when you’re using money that you need in the short term. For example, if you’re saving up for a wedding or a big purchase, it’s not recommended that you invest this fund in Ethereum since you don’t know where the price will be when it’s time to liquidate your investment.

How to Buy Ethereum: Bottom line

This article should give you all the information you need to buy Ethereum for the first time. Once you decide how much money you will allocate towards buying Ethereum and find a crypto exchange that suits you, the process becomes fairly straightforward.

Please keep in mind that investing in cryptocurrency assets can be risky, so it’s important that you only use money that you can afford to lose. Good luck with buying Ethereum.

The post How to Buy Ethereum (ETH) in 2024 appeared first on Good Financial Cents®.

That said, the best crypto wallets all work differently, and some offer more security features and services than others. If you’re ready to move your crypto from an exchange to a crypto wallet where you have more control, read on to learn about our top picks.

Our Picks for Best Crypto Wallets

• Guarda Wallet: Best Overall

• Exodus: Best for Flexibility

• Coinbase Wallet: Best for Beginners

• Ledger Nano X: Best Offline Crypto Wallet

• Electrum Crypto Wallet: Best for Bitcoin

• Crypto.com DeFi Wallet: Best DeFi Wallet

Best Crypto Wallets – Reviews

Guarda Wallet lets users set up a desktop wallet, a mobile wallet, or an online wallet for their crypto. Each type of wallet is entirely free to use for storage and can be downloaded from the Guarda website. Once the wallet is set up, customers can earn interest on their crypto deposits or stake crypto in order to build streams of passive income.

Guarda customers also have access to a broad range of resources, including a Guarda Academy learning center and a Knowledge Base customer support portal. Privacy and security are also a key focus for Guarda, and this wallet lets users own and fully manage their private keys and user data. Custody-free service from Guarda also makes your fund management much easier and faster, and your private data is never stored on the company servers.

If you’re interested in short-term investing and you’re hoping to turn a profit by holding crypto for a while, the Exodus wallet could work for your needs. Its desktop wallet app offers a user-friendly interface that’s perfect for beginners, and customers never pay any fees for receiving crypto. This wallet is perfect for HODLing (holding on for dear life), but it’s also ideal if you want to send, receive, and exchange Bitcoin and 180+ cryptocurrencies with a platform that has top-notch security features.

Coinbase is easily one of the best crypto exchanges available today, yet the fintech company also offers its own crypto wallet for storage. This wallet lets users store all their cryptocurrency and NFTs (non-fungible tokens) in one place, and it supports hundreds of thousands of tokens around the world. The Coinbase wallet also lets you explore the decentralized web using your favorite mobile device.

This crypto wallet is a self-custody wallet as well, meaning that you have complete control over your crypto and private keys. The company also offers industry-leading security, including multi-signature and 2-factor authentication support. Also, note that the Coinbase wallet offers an easy-to-navigate user interface that makes it perfect for beginners and experienced crypto traders. Finally, its app has connectivity to most major bank accounts.

The Ledger Nano X is a hardware crypto wallet that offers cold storage you can hold in your hand. This wallet lets you store and manage more than 5,500 coins and tokens including Bitcoin, Ethereum, XRP, and more. It’s Bluetooth-enabled, and you can also use the Ledger Nano X to store your NFTs.

This wallet is different from software wallets that store your crypto data and keys on your desktop or your mobile device. Instead, this crypto wallet is a physical product that is built on a versatile security operating system called BOLOS. Investors can also grow their crypto by staking their Tezos, Tron, Cosmos, Algorand, or Polkadot directly in the Ledger Live app on Android or iOS, or they can use the wallet to hold crypto for long-term growth.

If you’re learning how to invest in Bitcoin and you want a secure place to store your digital assets, the open-source Electrum Crypto Wallet may be what you need. We chose it as the best Bitcoin wallet because this software wallet verifies that your transactions are on the Bitcoin blockchain, and lets you split the permission to spend your coins between several wallets for maximum flexibility. You have the option to keep your private keys offline and go online with a watching-only wallet, and you can even see your funds recovered with a secret phrase.

With all this being said, Electrum is only supportive of Bitcoin. This means it’s not the best option if you are looking for ways to invest in various cryptocurrencies like Ethereum, Dogecoin, Cardano, or Polkadot.

The Crypto.com DeFi wallet is a non-custodial wallet that grants access to a full suite of DeFi services within a single platform. Users get full control of their crypto and their keys, and they can easily manage more than 100 types of coins including Bitcoin, Ethereum, Cosmos, Cronos, and more. Crypto.com also makes it easy to import your existing wallet with a 12/18/24-word recovery phrase.

This crypto wallet lets you send crypto with ease, and you can also earn interest on more than 35 tokens you hold with the platform. Investors can also swap DeFi tokens directly from the DeFi Wallet. Also note that Crypto.com encrypts your private keys locally on your device using Secure Enclave, which is protected by Biometric and 2-factor Authentication.

Crypto Wallets Guide

The leading crypto wallets make it easy to store your digital currency in a safe and secure environment. They’re different from wallets offered as part of cryptocurrency exchanges in that these are dedicated products with robust security measures and tend to be targeted less by crypto hackers.

Read on to learn why cryptocurrency may be one of the best long-term investments available today, and why you should store your crypto in a wallet instead of an exchange.

What Are Crypto Wallets?

Where traditional wallets store your cash and your credit cards, a crypto wallet serves as a crypto portfolio, storing the private keys to your crypto, any NFTs you have, and other digital assets. If you lose the private keys to your crypto, you lose access to your money. A crypto wallet helps ensure that never happens since it can safely and securely store this private data where only you can access it.

How Do Crypto Wallets Work?

When someone sends you digital currency, regardless of whether it’s Litecoin, ERC-20 tokens, Dogecoin, or Bitcoin cash, you need two digital codes to perform the transfer of ownership: a public key that’s automatically generated by the crypto wallet provider and a private key that only you should know.

Either way, crypto wallets store your private keys, which are required to unlock access to your crypto and other digital assets. These wallets also offer beefed-up security features that can protect your digital assets and keep your crypto working on your behalf.

• Related: 4 Ways I’m Making Money with Crypto

Types of Crypto Wallets

There are three major types of crypto wallets, and each type comes with its share of pros and cons. 

• Software wallets must always be connected to the internet, which is why they’re also called hot wallets. The most common types of software wallets include web wallets, desktop wallets, and mobile wallets.

• Hardware wallets store your private keys on a physical device that you purchase and store on your own. Most cold storage wallets look and act similar to a flash drive, which you can connect to your computer when you need to access your crypto.

• Paper wallets store your private keys on a physical piece of paper, often through printed-out QR codes. This obviously creates a security concern, but paper wallets are popular for investors who don’t trust third parties to keep their crypto safe and secure.

Important Factors to Consider

As you learn more about crypto wallets, it’s fairly easy to figure out what you should be looking for as you choose one. Just like you would consider different factors if you were comparing the best robo advisors, here’s everything you need to factor in before you choose a crypto wallet.

• Crypto Security: The whole point of storing your crypto in a wallet is increasing security, so you want to make sure you choose an option that has the security features you want the most. In addition to encryption and other standard features, look for crypto wallets that offer multi-factor authentication.

• Investing Style and Goals: Some wallets let you store your crypto without giving up the chance to buy, sell, or trade crypto along the way. Many wallets even let you earn interest on your crypto deposits, so make sure to check for these features.

• Compatibility: Make sure any wallet you’re considering functions in a way that makes sense for you. For example, choose a crypto wallet that operates on a desktop or online if you prefer that option, or opt for a hardware wallet that lets you store your keys on a device. Also note that some software wallets are compatible with hardware wallets, which gives you the best of both worlds.

How We Found the Best Crypto Wallets of March 2024

To find the best digital crypto wallets and hardware wallets, we read through countless number of user testimonials and reviews. We focused on crypto wallets that are free to use for storage, but we also considered wallets that require the purchase of a hardware device. Other factors we considered include overall functionality, the ability to earn money via interest or staking, and the ease of use with which users can buy, sell, or trade their crypto assets.

• Guarda Wallet: Best Overall

• Exodus: Best for Flexibility

• Coinbase Wallet: Best for Beginners

• Ledger Nano X: Best Offline Crypto Wallet

• Electrum Crypto Wallet: Best for Bitcoin

• Crypto.com DeFi Wallet: Best DeFi Wallet

The post 6 Best Crypto Wallets of 2024 – Hot & Cold Options appeared first on Good Financial Cents®.

For example, there was this article from CNBC with the headline, “Meet the 12-year-old coder set to earn over $400,000 selling NFTs,” which explained the tween’s process for buying and selling digital artwork consisting of “weird whales.”

Then there was this article in Fortune, which describes a teenager who has built an NFT empire that’s reportedly worth $26 million dollars.

All of this sounds crazy for sure, but that’s especially true if you don’t even know what an NFT is. Clearly, NFTs are some sort of asset that can be bought and sold online, but how do NFTs actually work? More importantly, how do you make money?

Finally, how are kids as young as 12 cashing in on something the regular world barely even knows about?

While I am personally very into crypto investing and everything that goes on in the crypto space, NFTs or Non-Fungible Tokens are a type of asset that I don’t have a lot of experience with.

With that in mind, I decided to interview an NFT expert — Robert Farrington — to learn more about NFTs and how they work.

Farrington is not only the owner of the popular website The College Investor, but he also has a separate site called Cult of Money that’s all about cryptocurrency and NFTs.

If you’re eager to learn what an NFT is, how this type of asset works, and how to get started investing, you’re definitely in the right place. As a side note, you can also listen to my podcast interview with Robert using the link below.

What Is an NFT?

Before we dive into how to invest in NFTs for a profit, it’s crucial for readers to understand what they really are. According to Farrington, NFTs are a lot more than a .jpeg photo, which is what some people tend to believe they are.

For the most part, Farrington says that non-fungible tokens (NFTs) are blockchain-based digital representations of a smart contract. However, NFTs can truly be anything, from a collectible to a piece of digital art. An NFT could even be a pass that lets you access a specific community, like a ticket.

At the same time, NFTs are also used for play-to-earn gaming, which is a type of online gaming that lets participants earn crypto based on the time they put in. According to Farrington, NFTs have even been sold at Sotheby’s just like mainstream art.

Top Shots from the NBA are another type of NFT that I am personally acquainted with. For example, you can buy an NBA Top Shot NFT that includes a digital video of LeBron James dunking the ball. In some cases, only 25 or 50 copies of each NFT are released, so the NFT you buy is almost like a piece of art.

According to Farrington, these are collectibles that people have been buying since the beginning of time.

“There’s so much out there, and people have always loved collecting things that are unique and rare,” he says. “This just happens to be the digital format of it.”

Beyond thinking of NFTs as art, he also notes that non-fungible tokens are very good at showing ownership and provenance. You may have heard of provenance in the context of traditional art.

If not, then “provenance” is a term used to describe the ownership history of a piece of artwork that shows its authenticity.

Other Ways NFTs Are Used

As I mentioned already, NFTs can also be marketed as passes to a specific event. As an example, Gary Vaynerchuk recently sold around 10,000 tickets to a conference he is offering for the next three years. These are the only tickets he will sell to the conference, so they have the potential to go up in value.

What’s interesting here is how content creators are able to benefit from selling tickets as an NFT instead of through traditional means. With an NFT, the content creator is able to include royalties back to themselves in the digital contract.

This means that when an NFT is sold later on the aftermarket, the original creator receives royalties from that sale.

Farrington says that, in this case, Vaynerchuk is actually making a 5% cut of every future sale. So, if he sells 10,000 tickets to the conference and 30% of them go on the resale market, he makes 5% of the 30% of tickets sold.

Since there won’t be any more tickets sold to these events, and since the purchase price has the potential to go up in value, Vaynerchuk gets to capitalize on the growing value of each NFT along with the person who sells them.

The same can apply to season tickets to sports games, which could easily be sold as NFTs in the future. If you sell your season tickets to a friend, nobody gets a cut. However, season tickets sold as NFTs would include royalties back to the owner of the team.

In summary, NFTs can come in myriad different forms, some of which have more utility than others. But that’s part of the reason why they’re growing in popularity. NFTs are interesting and unique, and the ways they can be used are only going to increase over time.

Where Do You Buy NFTs?

If you’re interested in NFTs, your next question is probably going to be where you can find them. I remember I had this same question when I first started investing in cryptocurrency. I had all these regular brokerage accounts, but none of them were actually offering crypto at the time.

Just like with crypto, it takes a certain amount of upfront work to find out where to invest in NFTs and then to move the cash you need for your investment to the platform.

“It’s definitely a process, and it all starts on where you own your crypto,” says Robert.

The whole premise of crypto is that it’s decentralized, and it has ownership, he says. However, platforms like Coinbase are holding your crypto for you.

“You have ownership of it because it’s in your name, but you don’t have true ownership of it yet. They’re acting as your custodian and holding your private keys.”

As a result, you have to move your crypto to a hardware wallet if you want to invest in NFTs. On a personal level, Farrington says he uses a Ledger hardware wallet and a platform called Metamask.

This combination of products lets him hold the actual keys to his crypto, which is what it takes to be able to invest in NFTs. Not only that, but Farrington says this step is what prevents people from getting hacked and watching their crypto assets disappear overnight.

Hacking is a major concern when it comes to crypto, so that’s one thing to keep in mind as you break into this space and begin learning more about NFTs. The fact is, there are all kinds of crypto scams to watch out for, and new scams surrounding NFTs are popping up all the time.

Farrington says that losing your crypto can take place in two different ways.

First, platforms like Coinbase can lock your account, and there’s really nothing you can do about it.

Second, hackers use some pretty complex methods to hack into cryptocurrency exchanges like Coinbase with the goal of wiping out your account. And when that happens, there’s really no recourse since crypto accounts don’t come with the same consumer protections as regular bank accounts do.

Farrington says that, for these reasons and others, he recommends that anyone with more than $1,000 in crypto should get a hardware wallet and Metamask for storage.

“As you do more and more in the digital space, that wallet with Metamask is going to enable you to buy your own NFTs and own the keys to your own crypto,” he says.

Once you have your crypto keys and your account is secure, you can buy NFTs at places like OpenSea and Rarible.

“These are basically like the eBay of NFTs,” says Farrington. In fact, just like eBay, you’ll find some NFTs that have a “buy now” option and others being sold via auction.

The Popularity of NFTs Explained

At the moment, the top NFT is the CryptoPunks collection, which you can browse on OpenSea. Next Up is the Bored Ape Yacht Club.

In both collections, the NFTs just look like a bunch of weird digital photos of people and actual apes. Yes, I said apes!

I asked Farrington if he could explain why anyone would fork over thousands of dollars worth of crypto for what amounts to a digital photo anyone could screenshot if they wanted to.

According to Robert, some of the most popular NFT collections are built around a community, so you’re buying into a community of 10,000 like-minded individuals who might be doing things you’re interested in.

The NFT you buy is a digital representation of that, and some of these NFT groups have in-person meet-ups and other ways they add value.

“You’re buying a membership in the club,” he says.

There are also ways NFT collections work within the traditional world of marketing to grow in popularity. For example, Bored Ape Yacht Club recently announced a collaboration with Adidas.

“The most valuable collections are driven by really strong communities that are very tech-focused,” he said.

And if you truly want to understand the value of some NFTs, you can do so by thinking of them as valuable baseball cards. For one person, a rare and valuable baseball card is a collectible that features their favorite athlete.

To others, though, the same baseball card is an old piece of cardboard they couldn’t care less about.

Farrington is pretty open about the NFTs he owns, which include assets from the Royal Society of Players (a poker-based NFT community), Axie Infinity (a play-to-earn gaming platform that lets participants earn crypto), and Carl Richards of Behavior Gap, who also writes for the New York Times.

Based on Farrington’s NFT assets, it appears his strategy mostly involves investing in his areas of interest and things he loves. That’s definitely one way to invest in NFTs.

“If you support the artist and the art, you can invest in NFTs that way,” he says.

The Takeaway

I asked Farrington if he had any final thoughts for people who are “crypto curious” and ready to invest in NFTs. For the most part, he says you really have to start investing to learn more about how it all works.

“You just have to do it,” he says. “There’s no easy way around it.”

You can start the process by looking around at NFT options on platforms like OpenSea and Rarible. From there, you can start comparing projects and learning why they came to fruition in the first place.

“Once you do, you’ll really start opening your eyes to what I’m talking about with the community,” says Farrington.

You’ll also realize that NFTs are a lot more than a .jpeg. Some experts say NFTs are the future of art as we know it.

The post What Is an NFT and Should You Invest in One? appeared first on Good Financial Cents®.

“What I can do with Bitcoin is similar to what I can do with a piece of real estate….“

“Bitcoin has all the positive attributes of real estate with none of the flaws…..“

The above were a few quotes from a good friend of mine who I’ve always viewed as a real estate expert.

For as long as I’ve known him he’s been determined to become the most successful real investor. He’s always adapting his business to reflect market conditions and always staying one step ahead of the curve.

So I was a bit surprised when he contacted me after he saw some of my videos on cryptocurrency. But not as surprised after I sent him a text after Bitcoin pulled back last fall and got this response:

His response blew me away and I immediately knew I needed to hear more so I asked if he would be willing to join me on the GFC podcast (you can listen to the show below).

There was so much good information he shared on cryptocurrency and Bitcoin that it made me look at it much differently. I was already excited about the crypto space but his views made me THAT much more ecstatic.

What really fascinated me was how he looked at Bitcoin as having all the pros of real estate without many of the cons. And that’s what I want to tackle in this article: Bitcoin Vs. Real Estate – Which is the Better Investment?

Why Bitcoin Is a Better Investment Than Real Estate

The best way to make the point is to compare Bitcoin and real estate side-by-side, analyzing the advantages and disadvantages of each.

The Case for Bitcoin – Pros

In the next two sections, I want to present the pros and cons of both Bitcoin and real estate. But ultimately, I believe the Bitcoin pros outweigh its cons and even eclipse the pros of real estate.

1. Let’s Start With Investment Return

I’m listing this as the first pro because it’s the most obvious advantage. The return on Bitcoin since 2010 has been nothing short of mind-boggling.

According to calculations run on dqydj.com, Bitcoin has had a total return of 39 million percent between August 10, 2010, and September 20, 2023.

That works out to be almost 267% annually.

There isn’t another investment or asset class that’s come close in such a short space of time.

2. Bitcoin Is Both an Asset and a Currency

There’s little doubt Bitcoin’s primary attraction over the past decade has been its investment performance. Numbers like those above are impossible to argue against.

But Bitcoin is also a currency. It can be used to buy and sell products and services with both merchants and individuals. Even though the price of a single coin is far too high for most transactions, Bitcoin is divisible. It’s available in smaller denominations, referred to as Satoshi.

There are 100 million Satoshi per one Bitcoin. The rough conversion into dollars is about 10 Satoshi to one penny, and 1000 Satoshi to $1. Bitcoin may be too expensive to use for everyday transactions, but Satoshi may be just right. Meanwhile, the number of merchants accepting Bitcoin and other cryptocurrencies has been growing steadily. A recent article on Inc.com reported that one-third of US small businesses now accept cryptocurrencies as payment.

3. Limited Supply/Inflation Hedge

We’re going to go into this a little deeper later in this article, from my podcast interview with a friend I refer to as The Crypto Guy. But this is an important quality because it largely explains why Bitcoin is an outstanding inflation hedge.

When Bitcoin was first launched, it was programmed with an absolute limit of 21 million coins. That gives a limited supply, and while the limit has yet to be reached, the price may continue rocketing higher once it does.

Compare that with the U.S. dollar, which can be printed in unlimited quantity by the Federal Reserve. That printing capability, which, accelerated by the coronavirus pandemic, is the reason we have inflation.

Dollars can be printed in unlimited quantities, but Bitcoin will never exceed 21 million coins. That’s a guarantee that Bitcoin will continue to outpace inflation.

4. Bitcoin Is Completely Portable

This is another feature that makes it suitable as money. But it’s also an advantage over real estate.

Real estate is not portable at all. If you decide to move to another state or country, you’ll need to liquidate your real estate holdings before you move. You can’t bring it with you.

Bitcoin acts just like electronic money. You can move to another state, or even another country, and still have access to your crypto.

5. Bitcoin Is Completely Liquid

This is yet another quality that makes it suitable as money. You can easily liquidate Bitcoin, even in a matter of minutes. You can use it to buy goods or services, convert it into another crypto, or even into fiat currencies, like the dollar or the euro.

That also makes it easy to speculate on price swings. You can sell out of a Bitcoin position just as quickly and easily as you can buy in.

You can’t do any of that with real estate.

6. Bitcoin Is Low Maintenance

Unlike real estate, you don’t have to invest time, effort, or money in maintaining it. And you’ll never get a phone call in the middle of the night from an angry tenant.

“Bitcoin has been the best-performing asset of the last decade, regardless of where the Bitcoin holder is in the world,” according to Ian Kane, CEO, and founder of Unbanked.com, a company that connects individuals and organizations with the financial benefits of the blockchain. “The same cannot be said for real estate. Bitcoin is similar to real estate in the fact that it’s an inflation hedge. However, there is no upkeep on BTC—you don’t have to worry about real estate taxes, cutting the grass, fixing the roof, etc. You only have to buy your BTC and hold it to let it do its thing. You can even earn interest on your BTC.”

Ian Kane, CEO of Unbanked.com

7. Bitcoin Is Shaping up as the Future of Money

Most people believe money is a fixed commodity. It’s not. It’s been evolving for centuries. Up until a couple of hundred years ago, people largely used barter to transact business. Mostly that involved trading commodities. Two farmers might have traded 10 bushels of wheat for 20 gallons of milk.

For thousands of years, gold and silver have served as money, each recognized because it’s valuable, rare, and widely accepted. But gold and silver gave way to paper money in the early 20^th century, and paper money has largely been replaced by electronic transfers and plastic cards.

Cryptocurrency is increasingly being seen as the next evolution of money, with Bitcoin being the leader in the space.

If that’s true, it’ll just be a question of time before the money we’ve been using all our lives is replaced by crypto.

Changes in technology are affecting everything in the world. That includes money, which may be going through a historic transition right before our eyes.

The Case Against Bitcoin – Cons

As an investor in crypto, I’ll be the first to admit there are a few negatives. But we also have to factor in that crypto is a new and evolving technology. It’s very likely some or all of these disadvantages will be addressed.

1. Price Volatility

The same price volatility that’s creating crypto millionaires has the real potential to undo crypto’s primary mission, which is to act as a medium of exchange—money.

My guess is that volatility probably has more to do with the novelty of crypto than anything else. As a new asset class coming onto the scene, investors are flocking into crypto, especially Bitcoin.

Eventually, that should settle down. As crypto continues to gain acceptance as money, its price movements are likely to become more predictable. But even when it does, it’s likely to see big price swings in response to major events, like economic booms and busts, war, political instability, pandemics, and energy/commodity shortages.

2. Lack of Universal Acceptance

Even though crypto is rapidly gaining acceptance among merchants and individuals, there are still major areas of the economy that don’t recognize it.

For example, you still can’t transact business at your bank with crypto. You also can’t pay your taxes, or buy gasoline or groceries. And neither insurance companies nor utility companies accept payments in crypto.

That said, I think this is an issue that is already working itself out right before our eyes.

3. The Threat of Government Regulation, or Shutdown

This has been a concern of crypto investors from the very beginning. But I believe the threat of a crypto shutdown is unlikely, despite the ban by China last year.

And, as it turns out, regulation may not be such a bad thing.

“As 2021 comes to a close, the 117th Congress has introduced 35 bills in 2021 focused on cryptocurrency and blockchain policy,” reported Forbes contributor Jason Brett in December. “As the Infrastructure Investment and Jobs Act (H.R. 3684) made headlines with language on crypto tax reporting that is now law, the surprising reaction from the crypto lobby showed that this industry was likely here to stay.”

I highlighted the last sentence because it’s evidence the crypto industry accepts that regulation is inevitable. But that’s hardly a bad thing. After all, both real estate and the stock market are regulated, and that hasn’t stopped investors from making money in both asset classes for generations.

4. Security Threats

The cryptosystem faces many of the same threats all other financial networks do, including the banking system. Systems can be hacked, and there’s always the possibility of some sort of mechanical meltdown.

There are also security threats at the individual level. For example, crypto investors have been known to lose their security codes or digital wallets.

But like every other new system or network put in place, it’s likely most of these bugs will be worked out. They will not be eliminated completely, just as is the case with other systems. But it’s likely the threats will be reduced to a small level that is no longer considered a threat to the entire system.

5. Lack of Recourse or Insurance Protection

This may be the single biggest con keeping more investors out of crypto. Bank assets are covered by FDIC insurance, while brokerage accounts are protected by SIPC. No such blanket protections are currently available to crypto investors.

But all that can change as crypto gains greater acceptance and becomes a mainstream asset. If enough people are invested in any asset, governments will inevitably set up some sort of safety net.

There is already evidence of progress on this front. One major crypto exchange, Gemini, is both regulated by the New York State Department of Financial Services and offers private insurance coverage for crypto you hold on the exchange. It’s likely other crypto exchanges will follow the same path if only to be in a better position to compete.

6. Widespread Use in Illegal and Fraudulent Transactions

Who hasn’t gotten one of those shadowy emails demanding payment in Bitcoin? This probably owes to the fact that crypto is unregulated and has famously been reported as being completely anonymous. We can also suppose any time an asset becomes particularly valuable, it also becomes a prime target for criminal activity.

But the anonymity factor may be overrated. Last June, the FBI successfully recovered $2.3 million in Bitcoin from a ransomware extortion scheme. They did it using an old-fashioned and time-tested method of following the money.

Ultimately, crypto may not be the playground for illegal activity that many suppose it to be.

7. System Glitches

There’s been a fear of system glitches from the very beginning. Maybe some unforeseen technical problem takes down the entire system, wiping out billions of dollars of cryptocurrencies.

Though there have been some such glitches over the past 13 years, each has been resolved. What may be more remarkable is that we have yet to experience a crypto system collapse while crypto is in its infancy and most vulnerable to those outcomes.

The Case for Real Estate – Pros

As you might guess, I’m a big fan of crypto. But that doesn’t mean I think real estate is a bad investment. Quite the opposite, it’s an excellent investment.

In fact, a majority of millionaires have made their wealth due to their real estate investments.

90% of all millionaires become so through owning real estate.

I just don’t think it’s as good as crypto, and I believe that will continue to be the case in the future.

1. Real Estate Is a Long-Term Wealth Builder

It can be hard to figure out what investment returns will be on real estate since there are so many different ways to invest. You can invest in residential rental property, commercial property, fix-and-flip deals, or just own your own home.

According to the National Association of Real Estate Investment Trusts (NAREIT), the average annual return on all types of real estate has been  11.8% for the last 40 years. That’s very close to the average annual rate of return on stocks. With returns like that, real estate has proven to be one of the best long-term, all-weather investments.

With an average return that high, a $25,000 investment in real estate today could grow to $220,910 in 20 years. That’s a near 10-fold increase in your investment. It doesn’t come close to matching the performance of Bitcoin over the last decade, but it comes out looking good compared with every other investment.

2. Real Estate Is a Hedge Against Inflation

Considering that inflation has averaged about 3% per year over the past 30 years, the 11.51% average return on real estate has investors well ahead of that spiral.

3. Real Estate Can Generate a Positive Cash Flow

Of course, I’m referring to rental real estate. Whether you invest in residential or commercial real estate, rental income can produce a positive cash flow. Real estate investment trusts pay out net rental income to investors through quarterly distributions.

In that way, real estate can produce a steady income while its price is increasing for an eventual windfall on sale.

4. It’s One of the Most Tax-Advantaged Investments Available

As a real estate investor, you’ll have the benefit of claiming depreciation expense against the property. Since depreciation is a paper expense, your net rental income will be at least partially tax-deferred.

Meanwhile, you get the benefit of a lower long-term capital gains tax rate when you sell your property after several years. That will lower your tax rate on the profit on sale to between 0% and 20%. And that’s a lot lower than the ordinary income tax rates, which range between 10% and 37%.

5. There Are Multiple Ways to Invest in Real Estate

As I said earlier, you can invest in real estate by purchasing your own home, buying rental property, or starting a fix-and-flip business. But more passive ways to invest in real estate, the kind you can hold in an investment portfolio, are real estate investment trusts and real estate crowdfunding platforms.

Real estate investment trusts, or REITs, are like mutual funds that hold commercial properties rather than stocks or bonds. You’ll buy shares in a fund on major stock exchanges, just as you would with a mutual fund or an exchange-traded fund. REITs pay dividends that can include both net rental income and capital appreciation.

Real estate crowdfunding platforms are more specialized ways of participating in real estate investing. A platform like Fundrise can provide investments based on income, growth, or a combination of both.

6. Real Estate Can Be Leveraged

I save this pro for last, since it can also be a con, but you can purchase an owner-occupied primary residence with as little as 3% down. That’s a $9,000 investment in a $300,000 home.

Investment property usually requires a larger down payment, typically 20%. Still, you can purchase a $300,000 investment property with $60,000 down and borrow the rest. Since your investment returns will be based on the $300,000 purchase price, they’ll be a lot higher based on your $60,000 investment.

For example, let’s say you sell the property in five years for $400,000. After the sale, you’ll have earned a $100,000 profit on your $60,000 investment. That’s a return of 167% in five years.

That said, leverage does have a dark side. If property values drop, as they did during the last recession, leverage works in the opposite direction. The wave of foreclosures that hit during the recession was largely due to people owing more on their homes than they were worth.

The Case Against Real Estate – Cons

1. Requires a Big Upfront Investment

You can invest in Bitcoin with as little as $100 (or less) through most crypto exchanges and investment brokers. Real estate will require a large upfront down payment, especially if you purchase an investment property.

The high initial investment required to purchase a single property can make it difficult to diversify across several.

2. The Investment Time Horizon Requires Years

While you can conceivably make big profits on Bitcoin in a matter of days, you generally have to wait at least five years for investment real estate to pay off. That will give you the time needed for you to gradually increase the rents, while the property value increases.

3. Real Estate Is Not Liquid

Even in the strongest real estate markets, it can take months to sell a piece of property. It can be an even bigger problem with commercial property since each is unique.

In the meantime, the only way to get cash out of real estate is to borrow against it. There are limits to how much you can borrow, and while you may get the cash you need, you’ll also be creating an ongoing liability.

4. High Transaction Costs

Between real estate commissions, transfer taxes, seller pay closing costs, and other expenses, it can cost up to 10% of the property’s sale price to sell a residential home. The percentage may be even higher for commercial property. That will take a big chunk out of your profit, and also limit your ability to sell the property quickly.

5. Real Estate Investing Is Not Passive

Despite all the get-rich-quick-in-real estate-without-doing-anything books and programs, real estate investing is not passive (except for REITs and real estate crowdfunding).

When you own investment property, whether residential or commercial, you’ll need to find tenants, collect rents, replace tenants when they leave, make repairs when needed, periodically renovate, and cover the cost of lawn maintenance, snow removal, and even certain utility costs.

Many of those same costs apply to your primary residence.

By contrast, Bitcoin has no such ongoing maintenance expenses.

6. Real Estate Equity Can Be a Capital Trap

This is a combination of a large down payment requirement and the number of years it will take to realize a profit. In the meantime, your money will not be available for other purposes. That includes making other investments, like buying additional properties or investing in other asset classes.

7. Real Estate Has Experienced Prolonged Downturns

There’s no doubt real estate increases in value over the long term. But there have been times when property values went down. The most recent example was the Great Recession a few years ago. Property values crashed, real estate became illiquid, and millions of people lost their homes in foreclosure.

This is something similar to the big price drops experienced by crypto. But while crypto collapses can reverse in a matter of weeks, real estate declines tend to last for several years.

As the saying goes, “Markets can stay irrational longer than you can stay solvent.”

That’s a bigger problem with real estate than it is with other investments.

8. Legal and Regulatory Problems

This is a potential problem with investment real estate. If someone is injured on a property you own, they’ll pursue compensation against you. Even if you have property insurance, it may not be sufficient to cover the amount of a claim. The claim may also relate to an event that’s not covered by your policy. Either situation could lead to a lawsuit against you personally.

On the regulatory side, local governments can pass laws that affect landlords. Rent control is one example. But we had a more general episode during the COVID-19 pandemic when thousands of municipalities declared moratoriums. Those enabled tenants to stop making rent payments, while the landlords were still responsible for paying for the cost of the property.

A Former Real Estate Investor Goes All in on Bitcoin

This is a good time for me to confess that I was not an early adopter when it came to crypto. It would be much closer to the truth to say that I was an early crypto skeptic. That’s changed, and now I’m all in.

Part of my epiphany was a podcast interview I did with the former real estate investor who switched gears into crypto during the COVID pandemic in 2020. You can listen to the podcast at GFC S2 Ep. 102 – Real Estate Investor Sells 90% of His Business to Do Crypto – Here’s Why. Before the interview, I had been dabbling in crypto. But after—let’s just say the light went on for real.

The person I interviewed, who I call simply The Crypto Guy, was a real estate agent I met when I sold my first home back in 2008. He absolutely blew me away with his knowledge of real estate. You see, he wasn’t just a real estate agent, but an investor as well. Mostly, he flipped properties and short-term rentals. We’re talking about 40 flips per year!

The Crypto Guy was cruising along on real estate easy street, working just two days per week. That is, until the pandemic hit.

As the pandemic shutdown gripped the economy, Crypto Guy reevaluated his real estate empire and began repositioning his portfolio. Mostly that meant selling off the majority of his properties.

Crypto Guy was experiencing problems unique to anyone working in the fix-and-flip side of real estate. That included fast rising cost of materials and a chronic shortage of contractors, both of which are critical to that type of investing. Then there was the issue with the ban on tenant evictions.

It’s easy enough to see why Crypto Guy felt the need to rethink the business he was so successful in.

Why the Crypto Guy Moved Into Bitcoin

It’s a funny thing about a crisis; it can cause you to rethink everything you thought you knew. And that’s what happened with The Crypto Guy.

He engaged in a deep study of cryptocurrencies. After spending about 50 hours studying the digital asset, he knew what his next move would be.

You can listen to the podcast to get the full line of Crypto Guy’s reasons for turning to crypto, but here’s a summary of the highlights:

• He felt both real estate and stocks were in a bubble.

• Sensed that inflation was not transitory and needed an investment that would provide a long-term response.

• Bitcoin has been the best performing investment of the past few years.

• Bitcoin can be leveraged, just like real estate, but was easier to liquidate—it could be sold with a single keystroke.

• Crypto earns interest—over 6% per year. That was way better than the 0.0-something being paid by the banks in cash.

“Bitcoin is a new asset and very volatile,” The Crypto Guy told me. “Price volatility is where the profit is. I’m happy when the price drops because that means I can buy more.”

Is Crypto a Fad?

Even though I was already investing in crypto myself, I had to ask the question that’s on a lot of crypto investors’ minds: Is crypto a fad?

Crypto Guy doesn’t think so. “The major currencies of the world are ‘fiat money’, and none of the 700 or so that have existed in history ever lasted. The U.S. dollar is one of the latest versions. But it’s backed by the promise of the government, and nothing else.”

“Crypto is evolving into another form of money, and its acceptance is increasing. Meanwhile, the Federal Reserve has painted itself into a box on the money supply. They can’t stop printing money, which lowers its value. Inflation is simply too much money in the system, with not enough places to go. The CPI is being reported as 6%, but I think it’s more like 14%–15%.”

Crypto Guy also pointed out that Bitcoin has now been around for 13 years and is still here despite being banned by China.

Crypto Guy believes Bitcoin is always going to outpace inflation because it’s limited to just 21 million coins, while the Federal Reserve can literally print an unlimited number of dollars. He sees Bitcoin as Gold 2.0, and as a transition that will ultimately change the way people transact business.

“Everything is being digitized,” Crypto Guy said. “Think music, maps, and payment systems, among others. Millennials live their lives on their phones, so this is a natural transaction for the younger generations. When your parents were on a long trip, they took the latest version of the Rand McNally Road Atlas with them. Today, most people rely on their smartphones.”

He had me on the road atlas point. And like everyone else, I’ve seen what the investment returns have been on Bitcoin and other cryptos.

I think this interview is where I experienced my conversion from crypto dabbler to crypto investor.

Final Thoughts on Bitcoin vs Real Estate: Why Bitcoin (Crypto) Is a Better Investment

Bitcoin prevails as a superior investment over real estate due to its unmatched liquidity, accessibility, transparency, and security. With minimal capital requirements and round-the-clock availability, Bitcoin caters to a wider investor base. Its blockchain technology ensures transparent, fraud-resistant transactions. While real estate holds its merits, Bitcoin’s potential for rapid growth and adaptability in the digital age make it an enticing choice for those seeking to diversify their portfolios and capitalize on the evolving financial landscape.

The post Bitcoin vs Real Estate: Why Bitcoin (Crypto) Is a Better Investment appeared first on Good Financial Cents®.

Not only is there the risk of losing money from dramatic price swings, but fraud and scams are on the rise. That’s hardly surprising, given that Bitcoin is now more valuable than ever.

The Federal Trade Commission reports that crypto-related scams are on the rise across the board. Since the start of 2021, 46,000+ have reported losing over $1 billion in crypto scams.

Statistics like that make it clear that crypto investors need to take whatever steps are necessary to make Bitcoin safe – or at least safer.

What Is Bitcoin?

Bitcoin is a cryptocurrency, which is the term used to describe a decentralized digital currency. 

Launched in early 2009, Bitcoin was the first cryptocurrency and has since grown to be the largest and most widely tracked of the many thousands that are available.

As a cryptocurrency, Bitcoin uses cryptography to keep its network – the blockchain – secure. It’s a public ledger, accessible to all participants, that tracks and records all transactions, as well as account balances.

When Bitcoin was originally issued, it was limited to no more than 21 million coins, most of which are already in existence. The process of increasing the number of coins is known as mining.

Miners are the people who verify Bitcoin transactions on the blockchain. For their services, they’re paid in Bitcoin. As they are, the new Bitcoin is “mined” into existence, increasing the overall supply.

What Is a Blockchain and What Does It Have to Do With Bitcoin?

The blockchain can be thought of as the network, or operating system Bitcoin works within. The blockchain exists entirely on the Internet and provides a record of all transactions on the network using Bitcoin. 

The blockchain makes it possible to view and verify transactions, even without the identities of the parties involved.

The blockchain enables Bitcoin transactions that take place without the use of an intermediary, like a bank. 

Each person participating in the network is assigned a private key, which is a string of at least 30 alphanumeric digits that are created by a mathematical encryption algorithm. 

The personal key enables each participant to transact in Bitcoin. Without it, the user loses all access to the network.

What Are the Risks Associated With Bitcoin?

Given all the excitement surrounding the rapid run-up in the price of Bitcoin in the past few years, many are unaware of the risks – and there are plenty. Below is a list of nine of the most common risks, but there are certainly more.

1. Wild Value Fluctuations

Because of the speculative nature of Bitcoin, the price can rise 100%, then lose 75% in the same year. 

Since it’s most exciting for investors to pile in at or near market tops, the possibility of taking the long ride down the opposite side of the slope is very real. Bitcoin may be profitable, but it’s anything but stable.

2. Transactions Aren’t Private

It may be more private than credit card transactions, but it’s not completely private, either. Each user is assigned a personal key for making transactions. 

Though the key doesn’t readily identify you to the casual observer, it can be traced by a determined individual or organization.

3. Theft of Your Private Key

If a thief gains access to your private key, he or she may be able to make transactions that will drain your Bitcoin balance.

4. You Can Lose Your Private Key

Just as people sometimes lose account numbers and passwords, you may also lose your private key. If you do, there will be no recourse to recover your loss. Once your private key is gone, so is your crypto.

5. You Can Lose Your Cold Wallet

Storing your Bitcoin in a cold (external) wallet is the most secure way to hold it. But if you lose the wallet, you’ll also lose any Bitcoin stored on it.

6.  The Exchange Where You Hold Your Bitcoin Could Get Hacked

Anywhere holding anything of value is a natural target for hackers. Just as hackers gain access to bank and credit card records, they can also hack into a crypto exchange. 

The exchange may put a stop to the hack, but any crypto stored on the platform that’s stolen will be gone forever.

7.  Phishing Schemes

If you have an email address, you’re familiar with this technique. A hacker poses as an organization you work with and requests access codes and even your private key. Thinking it’s a legitimate request, you supply the information. 

But once you do, the thief can clean out your account.

Any institution you do business with on a regular basis will have any necessary access codes, as well as information about you. The fact that the information is being requested is the sign of a scam.

8.  Illegitimate Vendors

Any time you’re dealing with an individual, merchant, or other organization that insists on being paid only in Bitcoin, it’s a red flag. It’s likely a scammer is looking to receive payment – without delivering a product or service – in a transaction that will be nearly impossible to trace. Think of it as the perfect crime.

9.  Broker/Exchange Failure

Though it hasn’t been an issue so far, it is possible for a crypto exchange to fail and shut down its website. If it does, any crypto you have stored on the exchange will be lost.

This is an outstanding time to point out that crypto exchanges are not protected against broker failure by FDIC or SIPC. Unlike banks and brokerage firms, if a crypto exchange fails, no government agency will step in and reimburse you for your losses.

What Are Common Myths About Bitcoin?

As Bitcoin has exploded in price to levels not imagined just a few years ago, myths about this crypto abound. Some of the more common ones include:

• The value is only going higher. That Bitcoin has seen a dramatic rise in price up to this point is indisputable. But no one can guarantee the value will rise forever.

• Transactions are both private and anonymous. Each is only partially true, but should mostly be ignored. Each transaction completed creates a permanent record on the blockchain.
  And since it’s tied to your personal key, it can be traced back to you. But at the time of the transaction, third parties won’t know it’s you personally.

• You can recover lost or stolen crypto. Nope, once Bitcoin is lost or stolen, it’s gone forever. And no insurance program will bail you out.

• Bitcoin will eventually replace traditional money. This is highly doubtful. Throughout history, multiple means of payment have existed. Today, we can transact using cash, checks, credit and debit cards, electronic transfers, or wire transfers.
  Adding crypto to the mix may be nothing more than expanding the menu of options available.

There’s yet another common claim that may be part myths and part potential reality, and that’s that Bitcoin may eventually be made illegal. The concern stems from the fact that crypto will compete with national currencies, which won’t be tolerated by governments.

While it is a possibility, and a recent article reports the banning of crypto by more than 50 countries, it’s more likely major world governments will develop some sort of coordination between national currencies and cryptos. 

It is certainly a development to keep an eye on, but it doesn’t seem at all imminent.

What to Consider Before Buying Bitcoin

The first consideration is your risk tolerance. This centers not only on the price volatility of Bitcoin but also on the unique security concerns it involves.

If you generally have a low tolerance for risk, you probably won’t want to invest in Bitcoin, or even consider it for transactions. Consider 9 investing alternatives best.

But even if you do have a sufficient risk tolerance, you’ll need to be prepared for the ride ahead. That means, first and foremost, investing no more in crypto than you can without keeping yourself awake at night. 

Price gyrations with Bitcoin are severe and can test the nerves even of someone with the highest risk tolerance.

You’ll also need to be fully prepared to study the risks associated with crypto. In this guide, we’ve provided known threats and their solutions up to this point. But crypto, including Bitcoin, is still evolving. That means there will be new threats and new solutions.

You’ll need a keen desire to take whatever steps are necessary to protect both your investment and your transactions if you decide to invest in Bitcoin in 2024.

How to Keep Your Bitcoins Safe

There is no 100% secure way to protect yourself from all potential threats. But maintaining good practices – just the way you do with banks, credit cards, and brokerage accounts – can go a long way toward preventing most threats.

Below are eight strategies you can use to keep your Bitcoins safe:

1.  Never Invest More Than You Can Afford to Lose

Because of the volatility, Bitcoin should never occupy more than a low single-digit percentage of your total investment holdings. And never think of crypto as a substitute for an emergency fund.

2.  Use a “Cold Wallet”

You may want to use a hot wallet (one provided by the crypto exchange) if you are a short-term trader. But all other balances should be held in a portable device, like a USB stick.

3.  Store Your Cold Wallet and Private Key Safely

The cold wallet should be kept someplace secure, like a fireproof safe. Your private key is much too long to be committed to memory, and should also be stored securely.

Storing it on a portable media device and keeping it in a safe is a good strategy. Meanwhile, never, ever share your private key with anyone – even with family.

4.  Keep Bitcoin Held on a Crypto Exchange to a Minimum

Maintain only enough for trading purposes and immediate transactions. The rest should be held in a cold wallet.

5.  Maintain Adequate Computer Security

You’re probably already doing this to protect bank and brokerage information. But you’ll also need to think about protecting your online Bitcoin transactions.

6.  Never Respond to a Phishing Scheme

If an email or phone call requests your personal key or account access codes, it’s a scam. Hang up, delete the email, and never click through to any URLs it contains.

7.  Only Do Business With Trusted Parties

If you’ve never done business with someone, and they ask for payment in Bitcoin only, end the transaction. Bitcoin lost in a transaction is not recoverable.

8.  Hold Your Crypto on Established Crypto Exchanges

Since there is no insurance backing up these exchanges, you’ll need to use careful judgment in deciding which to invest with. Like transactions, crypto lost in an exchange failure is not recoverable. Check out our recommended best crypto exchanges before diving in.

Where to Hold Bitcoin

As an entirely new asset class, Bitcoin and other cryptos are not yet available through banks and popular investment brokers. 

Instead, you’ll need to invest through what are known as cryptocurrency exchanges. Those are platforms that act something like stock markets for crypto.

Below are three of the most popular crypto exchanges. We’re also including one popular investment trading app where you can trade crypto along with other investments.

eToro

eToro is an international investment brokerage, currently being used by more than 20 million investors worldwide. Though they offer all kinds of investment securities globally, the platform is currently available only as a crypto exchange for US-based investors.

They offer trading in 27 cryptos, with fees ranging between 0.75% and 5.0%, depending on which crypto you’ll be trading in.

When you open an account, you’ll have access to a $100,000 virtual trading account. That will allow you to learn how to trade without using real money. They also offer their copy trading program that allows you to see what other investors on the platform are doing. You can then copy their trading strategies, at least until you develop your own.

Coinbase

Coinbase is one of the largest crypto exchanges in the world, offering one of the broadest service packages in the industry. You can begin investing with no more than $2 and have access to trading in 70 different cryptos.

They offer a two-tiered trading fee structure. You can either trade at a flat rate, starting as low as $0.99 per trade, or on a percentage basis, which ranges from 0.05% to 4.00%.

Coinbase gives you the option of either using their digital wallet or using your own. They also offer a Visa debit card where you can earn up to 4% cashback when you use the card for purchases.

Robinhood

Robinhood is the lone investment broker on this list, which comes with both advantages and disadvantages.

On the advantage side, you can engage in commission-free trading of stocks, options, and exchange-traded funds on the platform. 

You can also take advantage of commission-free trading of seven of the most popular cryptocurrencies. That’ll give you an opportunity to hold traditional investments and crypto in the same account.

The primary disadvantage is that you can only buy and sell crypto on the app. You can’t attach a digital wallet and move your crypto to another exchange. 

Also, you can’t access your crypto balance, either with a loan or a credit or debit card. Robinhood is set up strictly for crypto investing and does not offer services the way the crypto exchanges do.

Bottom Line: Bitcoin Safety in 2024: Assessing Risks

In the dynamic landscape of 2024, the safety of Bitcoin investing is a complex matter. 

The cryptocurrency’s soaring value has been accompanied by heightened risks, including fraud and scams, as evidenced by a staggering $1 billion in losses due to crypto-related scams since 2021. 

Bitcoin’s decentralized nature and blockchain technology underpin its security, but vulnerabilities persist. Its wild price fluctuations and susceptibility to hacking and phishing underline the need for cautious investing. 

Myths abound, including the idea of perpetual value growth and total anonymity. To venture into Bitcoin, understanding risks, maintaining low exposure, using cold wallets, safeguarding private keys, and engaging only with reputable parties are paramount. 

As the crypto world evolves, vigilance and prudent measures become crucial for safeguarding both investments and transactions.

The post Is Bitcoin Investing Safe in 2024? appeared first on Good Financial Cents®.

Not only that, but you’ll need to select a crypto exchange that makes it possible for you to send and receive crypto, whether your goal is building long-term wealth or making short-term trades for profit. 

In many cases, the easiest place to store your crypto is the exchange where you purchased it. To help you find the best crypto exchange for purchases and trades, we compared the most popular options out there today. In the meantime, we also conducted some research that can help you avoid crypto scams and the financial losses they cause.

According to the Federal Trade Commission (FTC), the digital nature of cryptocurrency means that if something unexpected happens, you can lose your crypto assets and find there are virtually no agencies that can help you recover your funds.

This can happen if “your online exchange platform goes out of business, you send cryptocurrency to the wrong person, you lose the password to your digital wallet, or your digital wallet is stolen or compromised,” they write.

With this in mind, you’ll want to choose the best crypto wallet for your needs and goals, but you’ll also want to learn about this industry, crypto safety, and common scams to avoid before you open an account.

Important Things to Know About Crypto

Before you settle on a crypto exchange or crypto wallet, there are certain details you should understand about how wallets for crypto work, as well as the broader industry.

• Security: Some exchanges are more vulnerable to hacking and fraud than others. Make sure you investigate the history of any crypto exchanges to see if it has a squeaky-clean record or if it’s run into any problems in the past.

• Types of Crypto Wallets: There are two main types of crypto wallets — software wallets, or “hot” wallets, that maintain your crypto assets online or by using a mobile app, and hardware wallets, or “cold” wallets, that let you store crypto off the web, both having their own particular use cases and features that make them useful.

• Crypto Exchanges: Where a crypto wallet lets you store your crypto, a crypto exchange makes it possible to buy, sell, and trade crypto.

• Liquidity: Some crypto exchanges make it considerably easier to cash in your crypto assets. Generally speaking, larger platforms make it easier to buy and sell crypto.

• Earn Interest: Some crypto exchanges offer products that make it possible to earn interest on your crypto assets, so make sure to check for this option.

• Fees: There are costs involved in buying and selling crypto, so make sure to compare options based on the fees they charge.

• Insurance: Unlike your bank’s FDIC insurance, cryptocurrency exchanges don’t have formal insurance programs, making them risky. Some do offer insurance in limited cases, however.

Our Picks for Best Crypto Exchanges

• Crypto.com: Best for Flexibility

• Binance.US: Best for Low Fees

• Gemini: Best for Safety

• Coinbase: Best for Liquidity

• KuCoin Best for Altcoins

Best Crypto Exchanges – Company Reviews

Crypto.com: Best for Flexibility

Crypto.com is another of the larger platforms to consider if you want a way to buy, sell, and store crypto assets in real-time. Their mobile app lets you purchase or trade crypto at its real cost, and you can also use the app to pay people or get paid in various cryptocurrencies. 

Crypto.com also has its own NFT platform, as well as a Crypto Earn account that lets you earn up to 14% p.a. for stablecoins. Finally, Crypto.com also boasts its own selection of credit cards that let you earn rewards as you stake crypto through the platform.

Binance.US: Best for Low Fees

Binance.US lets you buy, sell, and trade more than 50 cryptocurrencies with low trading fees. You can create an account in minutes, then make purchases and trades manually, or set up recurring buys that take place on a scheduled basis. 

This platform and its mobile app are easy to use and understand, making Binance.US perfect for new crypto traders. However, you will also find advanced features for experienced crypto experts, including an updated interface with real-time order books, charting tools, and trade history. Binance.US also uses state-of-the-art storage technology to protect your cryptocurrency and USD assets, so you can rest assured your crypto remains safe.

Gemini: Best for Safety

Gemini is one of the largest cryptocurrency exchanges available today, yet it makes buying and trading crypto easy thanks to its mobile app and online functionality. The company also offers some of the best features in terms of safety and security, including SOC certifications and the best-in-industry cold storage coverage with leading insurance providers.

Like some other crypto wallets, Gemini also features its own savings account called Gemini Earn, which lets users earn up to 8.05% on crypto assets they store with the platform. Users can also add their names to the waitlist for the Gemini crypto credit card, which will offer up to 3% back on purchases and payout rewards in cryptocurrencies like Bitcoin with no annual fee.

Coinbase: Best for Liquidity

Coinbase is yet another crypto wallet with a broad range of applications, including the option to buy, sell, and trade cryptocurrencies like Dogecoin and Ethereum. In total, Coinbase actually lets you deal in hundreds of different cryptocurrencies, which makes it a smart option to consider if you’re an experienced trader who wants to invest in up-and-coming coins.

Coinbase also offers more than its share of educational resources, which can help you learn crypto basics and get market updates in real-time.

KuCoin: Best for Altcoins

KuCoin offers a broad range of coins to invest in or trade, including an array of Altcoins. Borrowers can purchase cryptocurrency or trade crypto with low trading fees as well. 

Another standout feature is crypto lending, which lets users lend out their crypto and earn competitive interest rates throughout the process. A program called KuCoin Earn even lets customers secure interest in their crypto with the help of a professional asset management service. 

Because KuCoin is not licensed in the United States, this platform is best for international crypto investors. That said, KuCoin claims that 1 in 4 crypto investors worldwide use their platform.

Crypto Wallet Scams: What to Watch Out For

The digital nature and inherent privacy features of cryptocurrency are a large part of its appeal, yet you’ll need to be especially careful when it comes to securing your account and protecting your private keys. According to the FTC, you’ll also want to know and understand common crypto scams before you start investing.

First off, there are some important principles you should know about crypto, each of which underlines its differences from traditional currency. For starters, crypto payments do not come with legal protections such as FDIC insurance. You also don’t have anywhere to dispute transactions that were made with your account like you would if you made a purchase with a credit card. Also note that crypto payments are rarely reversible, meaning you cannot undo a mistake after you make it.

With that in mind, here are some tips that can help you avoid crypto wallet scams before they occur.

Investment and Business Scams

The FTC notes that many of the most common crypto scams try to disguise themselves and business or investment opportunities. For example, some scammers might ask you to pay a specific amount in crypto in order to be able to recruit others into a program. If you’re successful, they may promise you more crypto payments in exchange for your recruitment efforts. 

Other times, scammers will promise to grow your assets if you send them cryptocurrency from your own account. Ultimately, though, they typically move your assets into another account that requires you to pay even more money to access or withdraw your original assets. They might also just disappear with your crypto altogether.

Some thieves even send unsolicited job offers to help recruit cryptocurrency investors or people who will be hired to mine crypto or help convert cash to crypto. You may even find scam jobs listed on reputable recruitment and job posting websites, which the FTC says you should promptly ignore.

When it comes to business and investment crypto scams, you should watch out for:

• Anyone who guarantees you’ll make money

• Scammers who make big claims without any proof

• Any offer that seems too good to be true

Social Media Scams

Social media crypto scams are usually very easy to spot. Further, the FTC says that any request for crypto posted on a social media platform is a scam. This is true even if the message supposedly comes from a celebrity or someone you know.

According to the BBC, Elon Musk impersonators have scammed people out of millions of dollars through this type of scam. Hackers and thieves typically execute this scam by making a fake account that looks like the real thing or by commandeering a celebrity’s true social media account.

The FTC says that you should report this type of scam to the social media platform directly and then report the fraud at ReportFraud.ftc.gov.

Blackmail Scams

Also, watch out for blackmail scams that may be sent out to thousands of unsuspecting people at once. In this type of scam, the hacker typically claims that they have embarrassing photos or personal information you wouldn’t want other people to know. In exchange for keeping your secrets private, the hacker demands payment in cryptocurrency.

“This is blackmail and a criminal extortion attempt,” notes the FTC. “Report it to the FBI immediately.”

Romance Scams

Finally, be aware that many crypto scams are predicated on fake romance. According to the Federal Bureau of Investigation (FBI), they are seeing a rapid rise in the number of people who are falling victim to this type of fraud. In the first seven months of 2021, they write, more than 1,800 people have lost approximately $133 million to fake lovers on the internet who roped them into investing in crypto.

With this type of scam, you might meet someone through a dating app or social media site who is willing to spend a lot of time gaining your confidence and trust. However, they eventually offer to help you make big money by investing in cryptocurrency, and that’s where things start to go wrong.

Ultimately, you should be incredibly wary of anyone you meet online who promises to help you earn money with crypto.  The FBI also notes that victims of crypto romance scams and other types of fraud should report the incident to the FBI’s Internet Crime Complaint Center at www.ic3.gov.

The Bottom Line: Top Crypto Exchanges 2024

The best crypto exchanges make it possible to buy, sell, and trade crypto with ease, but you’ll want to make sure you compare them based on their fees, features, and the type of cryptocurrency they support. Make sure to compare the options we included in our ranking to see if they offer the functionality you want and need, as well as fair trading fees that make sense for the way you plan to use your account.

In the meantime, you should decide where you ultimately want to store your crypto, whether that’s in a crypto wallet that lives online or in a hardware wallet that lets you store your crypto off of the web. You can also store your crypto in the crypto exchange where you make the purchase, although you’ll want to make sure the security is top-notch before you do.

Once you open a crypto account and start trading, you’ll also want to be careful to avoid the crypto scams we’ve outlined here, as well as any others that could be on the rise. In the meantime, take additional steps that are offered to help secure your account, such as multi-factor authentication, using a secure internet connection, and using a secure password that you change regularly.

Summary of the Best Crypto Exchanges of 2024

• Crypto.com: Best for flexibility

• Binance.US: Best for low fees

• Gemini: Best for safety

• Coinbase: Best for liquidity

• KuCoin Best for Altcoins

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We could ask the same question about any other asset class, or even national currency. And the answer would be the same: cryptos – like other assets – derive their value from the price people are willing to pay for it.

Lately, people have been willing to pay a lot for the more popular cryptos. But even if they are, how much value does it really have given that cryptocurrency has only been around for about a dozen years?

If you’re planning to invest in cryptocurrency soon, and especially if you’re already doing it, the answer to this question needs serious consideration. After all, if you’re investing, it’s important to know what it is you’re actually investing in.

The answer to that question isn’t always obvious when it comes to cryptocurrency.

Why Traditional Currencies Have Value

Traditional currencies, like the US dollar, euros, yen, and the British pound, have value for largely the same reasons other assets do. But when it comes to national currencies, the value is more formalized.

Historically, people and businesses have engaged in transactions using barter. It’s the process of exchanging one item of value for another. For example, a farmer might have exchanged bushels of wheat for an agreed-upon number of horseshoes from a blacksmith.

Even during the era of barter, certain commodities arose as mediums of exchange. These included, most commonly, gold, silver, and copper. They were valued because of their rarity and portability and could readily be used in everyday transactions. And because they held their value, precious metals also served as a store of value, much like a bank account does today.

Barter worked well for thousands of years, but it worked in less sophisticated economies, where most people earned their living producing goods. But as global economies began to industrialize, and most people became employees, barter was less practical.

That brought about the rise of paper money. For the first century or so of the Industrial Revolution, it was used concurrently with gold and silver. Having no intrinsic value itself, paper money was usually issued in denominations of a specific amount of gold or silver.

Enter Sovereign National Currencies

As the 20^th century unfolded, and demand for government services – and money – increased dramatically, countries gradually shifted over to national currencies. One by one, governments in the major countries declared government-issued money to be sovereign currency. That is, it was declared the only legal currency within the nation’s borders.

For that to happen, national currencies required general public acceptance. But since those currencies circulated for decades before becoming sole legal tender, that acceptance was already firmly in place.

Today, people and businesses transact in national currencies without giving it much thought. The major limitation of national currencies is that there are dozens of them around the world. While each currency works well enough within its own borders, payment of foreign debts and obligations is a bit of a complication.

That issue has been resolved by the status of the US dollar as the international reserve currency. Because the US has the world’s largest economy, and the largest and most liquid financial markets, the dollar has been the primary international reserve currency for nearly 100 years.

Other major currencies also fill this role, but the US dollar accounts for 60% of all international reserves. A handful of other major currencies make up the rest. As a result, most countries settle their foreign obligations in US dollars.

What Makes Crypto Different From Traditional Currency?

It’s probably best to say that crypto is in the early stages of becoming a currency. Though it is accepted for payment with certain transactions, it isn’t accepted at grocery stores, gas stations, or by government tax authorities. At the moment, crypto enjoys only limited status as a medium of exchange.

But that level of acceptance is ultimately what gives crypto its value. Though it has been functioning primarily as a speculation in the last few years, activity has been based largely on the promise that it will eventually become a standard form of exchange, possibly even replacing national currencies.

At this point in time, at least, it’s not known if that will happen, nor is it 100% certain governments will allow it. After all, the ability of a government to issue its own currency is one of the basic foundations of its power. That’s not an advantage that will be given up easily.

What Crypto Already Has in Common With Traditional Currencies

If cryptocurrency gains widespread acceptance – especially in international transactions – it may ultimately evolve into something like a global currency, hence its potential value.

This transition would hardly be unprecedented in human history. After all, we started with barter, moved to a hybrid system of paper money and precious metals, then to paper money only, and now primarily electronic money. It may even be that the current reliance on electronic money has paved the way for widespread acceptance of cryptocurrency.

Crypto has a head start in that direction. It already has some of the basic properties of money, including:

• It’s completely portable, working very similar to electronic money.

• It can be accepted for transactions.

• Each has a recognized value, though that’s currently subject to wide fluctuations.

• It’s available in limited quantities and cannot be counterfeited.

As an example of the last point, Bitcoin was created with a set limit of no more than 21 million coins. Over 90% of those coins have already been mined into existence, setting up an eventual scarcity.

Why Is Bitcoin More Valuable Than Other Cryptos?

There are thousands of cryptocurrencies available, and many more are being introduced every year. Yet Bitcoin continues to be the front runner, and by a large margin.

Bitcoin currently has a total market value of $970.2 billion. Ethereum is a distant second, with $521.7 billion – though it is growing fast. Among the many other thousands of competing cryptos, none have reached the $100 billion mark.

We’ve already touched on the subject of Bitcoin’s pending scarcity, but there’s more.

Founded in 2009, Bitcoin was the first – and for a long time, only – cryptocurrency. The crypto was gaining acceptance and value while others were struggling to get out of the starting gate.

Simply put, the average person has the greatest familiarity with Bitcoin. It’s not an exaggeration to say that the terms “cryptocurrency” and “Bitcoin” are practically synonymous. That highlights the public acceptance factor.

In general, crypto is continuing to advance. But Bitcoin is leading the herd forward. Its recognition has become so universal that it’s now common to see its price quoted by major financial media, right alongside stocks, bonds, and commodities.

Most investment scenarios focus on either Bitcoin or Ethereum, but mostly Bitcoin. The crypto continues to rise (in knee-jerk fashion), largely because an increasing number of people believe that it will. Meanwhile, the vast majority of its competitors are completely ignored.

In the end, the world may choose one crypto over the rest. Though the outcome is completely uncertain right now, you’d have to pick Bitcoin as the likely winner.

Who Regulates Crypto?

In two words, no one. That reality is part of what gives crypto its value as a currency but is also the source of the risks associated with it.

Since crypto is not issued by institutions, it’s not regulated by government agencies or any other organizations.

That said, the blockchain where crypto is stored is monitored and logged on a regular basis. Each user has a private and public key that makes transactions possible. So, while there is no regulation from government authorities, there is a specific order to how it works. That largely makes regulation unnecessary.

What Are Crypto Exchanges?

Cryptocurrency exchanges are essentially online marketplaces for digital assets. That includes mostly crypto, but also non-fungible tokens (NFTs), which are basically unique digital art that’s rapidly growing in acceptance and value. Some crypto exchanges provide other investments, but they’re few and far between.

The online factor with crypto exchanges is central. They operate entirely on the Internet, with no physical locations. The exchanges facilitate buying, storing, and selling cryptocurrency. But it’s now common for some to offer other financial services, like high interest on crypto balances, cash back debit cards, and even short-term loans.

Cryptocurrency exchanges are practically a requirement for crypto investors. Very few brokers – and no banks – make a market in crypto. But given the rise of crypto in the past few years, it’s very likely that those limitations will change, and mainstream financial institutions will begin offering crypto investing.

Where to Invest in Crypto

Relatively speaking, there are only a few places where you can buy and sell cryptocurrency freely. For example, banks don’t provide or accept crypto, and most investment brokers don’t offer it as an option.

That’s likely to change in the future, as crypto continues to gain acceptance. But for now, the best option for buying, holding, and selling crypto are crypto exchanges. These work much the way traditional investment brokers do, but they specialize in cryptos.

Below are three popular crypto exchanges. Not only are they widely used by crypto investors, but you’ll be pleasantly surprised to see that many also offer valuable additional benefits and services, beyond simply investing in crypto.

We’ve also included one increasingly popular investment trading app that accommodates crypto investing, along with more traditional investments. If you’re keen on investing in crypto through a broker, check out our best online stock brokers.

Coinbase

Coinbase is one of the largest crypto exchanges in the industry, and it’s one I use for my crypto investments. It has one of the largest menus of services, and you can begin investing with as little as $2.

Coinbase offers trading in 70 cryptos, which is one of the reasons why the exchange is so popular. Their trading fees are available either at a flat rate – starting at $0.99 – or on a percentage basis, ranging from 0.05% to as much as 4.00%. They provide a digital wallet, or you can use your own – it’s up to you.

If that isn’t enough, they also offer a Visa debit card that will not only allow you to access your crypto balance but also earn up to 4% cashback using the card for purchases.

eToro

eToro is a global investment brokerage, though general brokerage services are not yet available in the US. But you can currently participate in crypto investing on the platform. You can trade in 27 different cryptocurrencies, with fees ranging from 0.75% to 5.0%, based on the specific crypto the trade involves.

One of the best features eToro has is a virtual trading account to help you understand how crypto is traded. The account will start you off with $100K in virtual money, enabling you to participate in trading activities. They also offer copy trading, which enables you to observe the trading patterns of successful crypto investors, which you can then replicate.

Robinhood

Robinhood is the one entry on this list that is not a crypto exchange. Instead, it’s a popular investment app where you can trade stocks, options, and ETFs, commission-free. You can also invest in cryptocurrencies. Additionally, Robinhood charges no commissions on crypto trading, relying instead on bid and ask spreads for both purchases and sales. They currently offer seven different cryptocurrencies.

Robinhood can be the perfect crypto investment platform, given that you can hold more conventional investments in your account. But an important limitation to be aware of is that crypto can only be bought and sold on the app. It cannot be withdrawn and transferred to another exchange or account.

Final Thoughts on Why Is Crypto Valuable

The question of value persists, as it lacks physical substance and institutional backing. Similar to traditional assets, crypto’s worth hinges on what people are willing to pay. Unlike historical barter systems, national currencies derive value from public acceptance. As crypto evolves, its acceptance as a medium of exchange contributes to its worth. 

While Bitcoin leads due to familiarity, thousands of others lag behind. With no centralized regulation, crypto operates on blockchain technology. Exchanges facilitate crypto transactions, growing as mainstream institutions consider participation. Amidst uncertainty, the path towards universal recognition and potential global currency status awaits, as crypto’s unique attributes continue to shape its value.

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