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Cryptocurrencies are now considered to be the most popular digital assets with Bitcoins and Ethereum being the most popular cryptocurrencies. Investments, in both especially in Bitcoin, have witnessed a skyrocketing price over the years since its coming in 2009. But other than bitcoin, there are more than a thousand Cryptos where you can invest into. From buying Cryptos to directly buying them from Crypto companies and funds, there exists a wide range of forms of Crypto investments. The following article will guide you in the steps to be taken for an investment in Cryptocurrencies.

What is meant by investments in Crypto?

Being a popular form of digital assets, cryptocurrency investments are the act of owning Cryptos directly or indirectly from the crypto exchanges and funds. The decentralized system of cryptocurrencies which works in blockchain technology makes it a highly encrypted and secured form of digital assets. What attracts people to its investments is that there is no third-party involvement in the entire business. It is more of a direct deal where banks or other financial institutions never have a role.

There are two ways in which we can have cryptocurrency. The first option is buying and the second one is mining it for yourself. Even though it is widely accepted as an investment, its usage and acceptance as currencies are still in the processing stage, since everyone doesn’t accept it as a digital currency. Because it’s a part of blockchain technology, every transaction of the cryptocurrencies is accurately recorded and stored in the blockchain. Blockchain is a kind of digital ledger that records every transaction made using cryptocurrencies which makes it more and more transparent.

Types of Cryptocurrency investments

There are many options made available for people to invest in cryptocurrencies, apart from buying crypto directly from the crypto exchanges and funds. It adds more crypto exposure to your portfolio. Following are some of the options or types of investments in Cryptocurrencies;

  1. Directly buying cryptocurrencies: Buying it directly is one of the common options in crypto investments. Other than bitcoin and Ethereum, two of the most popular crypto coins, there are many other cryptocurrencies you can buy directly. The newly emerging unknown crypto coins can be found in an initial coin offering (ICO).
  2. Investing in cryptocurrency companies: There are many crypto companies out there with varying levels of crypto exposure. Investing in one of them is a very good option to proceed with your crypto investments. There are crypto mining companies, mining hardware makers, and popular crypto companies like Robinhood Markets Inc., and PayPal Holdings Inc. Many other companies hold a big amount of cryptocurrency on their balance sheets like Microstrategy Inc. where you can invest in cryptocurrencies.
  3. Cryptocurrency-focused funds: Other than the individual cryptocurrency companies, there are cryptocurrency-focused funds which will allow you to invest in them. Exchange-traded funds (ETFs) like index funds and futures funds are there for you to do crypto investment. Apart from these exchange funds, there are investment trusts where you can start your crypto investments.
  4. Mining crypto for yourself: As mentioned earlier the two ways of owning crypto are buying it and mining it for yourself. A miner will get approximately 6.38 bitcoins for every successful mining. But the thing is that it is not as easy as it seems. It’s a highly expensive procedure which requires a high amount of energy which makes it a complex process. To start mining, one first has to solve complex math problems which require the help of super functional computers which requires a high amount of electricity. Terra watt hours of electricity are required for the mining of cryptocurrencies.
  5. Become a crypto validator: One of the ways to invest in cryptocurrency is to become a crypto validator.
  6. Cryptocurrency Roth IRA: It is the best way to gather the tax advantage afforded by an Individual Retirement Account (IRA) along with investing in cryptocurrency.

The above are some of the different techniques to invest in cryptocurrency and to own it, which prove to be highly efficient and successful. But everything is like a double-sided coin, both positives and negatives are there. There are also certain risks associated with crypto investments and it is important to have a clear understanding of all those associated risks.

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