We know, we know: Cryptocurrencies are confusing. And if you’re in the market to buy some of one, making a choice can be utterly overwhelming. After all, there are more than 10,000 cryptos to choose from. Most of those are ngmi, as they say—not gonna make it. (That is to say: buggy, meme-y, or scammy, just like your financial advisor warned you.)
But not all of them! Even in the novel world of crypto, there are blue-chip choices worthy of your consideration. If you’re not put off by the fundamental concept of spending your hard-earned fiat on fake internet money, well, read on.
The two titans
Two cryptos stand head and shoulders over the rest, representing nearly 70% of the total industry: Bitcoin and Ether. These two assets are as successful, secure, and established as a cryptocurrency can be, and deserve consideration as the first two assets you dive into.
Bitcoin (BTC)
Created in 2009, Bitcoin is the oldest cryptocurrency and maintains a dominant market share of about half the market. Bitcoin is often called “digital gold” for its utility as a store-of-value asset. (Translation: It’s the most likely one to retain its value, though don’t forget we’re talking about crypto here.) Bitcoin is a digital form of money that can be sent worldwide for a small transaction fee and is nearly impossible to hack. And, of course, it’s a hard-capped asset: there will only ever be 21 million Bitcoin in circulation by design.
Ether (ETH)
Ether—also sometimes called Ethereum after the name of its corresponding platform—is the second-largest digital asset, representing roughly 20% of the crypto market. Conceived in 2013, the project launched into the world two years later with the promise that its platform would be easier for software engineers to develop on. Because of its programmable nature, Ethereum can do more than just send, receive, and store cryptocurrencies; it is a digital marketplace where you can find financial services, play games, and interact with apps. Ethereum ultimately powers a network of decentralized crypto businesses that everyone can use and nobody can take down.
…and everybody else
Seeking crypto investment options beyond Bitcoin and Ethereum is no different than any other kind of experimental bet—in exchange for upping your risk profile considerably, you could give your portfolio exposure to bleeding-edge technology that could dominate the market in the future.
Dumpster fire or shrewd bet? Only time will tell. But here are a few areas you should keep an eye on.
Blockchain competitors
Bitcoin and Ethereum pioneered a new sort of public ledger technology called blockchain, which facilitates direct ownership, irreversible transactions, and all of the goodness necessary for such transactions.
But BTC’s and ETH’s success has bred more than a few rivals.
Examples: Cardano (ADA), Polkadot (DOT), Solana (SOL)
Governance tokens
Crypto businesses running on Ethereum (or other blockchains) are called “dapps”—short for decentralized applications—by those in the know. Many of these projects release governance tokens, which allow holders to vote on decisions concerning the protocol.
Examples: Uniswap (UNI), Aave (AAVE), Maker (MKR)
Infrastructure tokens
“Web 3.0” is the term people use to describe a vague, new Internet paradigm that relies on some combination of blockchain, media, and decentralized finance. To work, Web 3.0 requires infrastructure in the form of tech companies that can leverage and store data and make connections across chains.
Examples: Chainlink (LINK), The Graph (GRT), Filecoin (FIL)
The best of the rest
- Exchange tokens: Binance (BNB), FTX (FTT), Crypto.com (CRO)
- OGs: Bitcoin Cash (BCH), Dogecoin (DOGE), Ripple (XRP)
- Payment tokens: Litecoin (LTC), Terra (LUNA), Stellar (XLM)
- NFTs: Axie Infinity (AXS), Flow (FLOW), Decentraland (MANA)
In summary
In the crypto world, Bitcoin and Ether are the GOATs. But if you’re looking into what many people would call “altcoins,” there are many paths to take. So do your own research. Know that investing in cryptocurrencies—any of them—is risky, especially compared to traditional investment vehicles. These assets are new, prone to bugs, and extremely volatile. (Don’t say we didn’t warn you.)
However, as Wayne Gretzky Michael Scott famously said: You miss 100% of the shots you don’t take.
NBCUniversal
OK, you’ve decided to invest….some amount of money. You’ve read our above guide three or four times, you’ve made your choice(s), you’re feeling good about diving into crypto.
Now what? Where do you actually go and buy the stuff? Glad you asked.
Crypto-native platforms
There is an array of cryptocurrency exchanges in the US that offer varying degrees of the same service.
Here are some of the leading options by trading volume, per CoinMarketCap, and their claim to fame:
- Coinbase (successful 2021 IPO)
- Kraken (an OG)
- Binance.US (low fees)
- Gemini (the Winklevoss twins)
- FTX.US (leverage trading)
- Crypto.com (mobile app)
- Kucoin (300+ coins)
For the average investor, differentiating between these exchanges is tough. Each comes with its own risks. But spend hours researching the “best cryptocurrency exchange lists” and the above seven are most likely to come up time and time again, in some order or another.
How do you get started? The process will likely go as follows:
- Sign up
- Verification (also known as “KYC AML,” for “know your customer” identity verification and “anti-money laundering” regulatory steps)
- Connect your bank account
- Purchase crypto for 0.5% to 2% fee
- Hold crypto on the platform or move it to “hot” (Internet-connected) or “cold” (disconnected) storage
And that’s it! You’re off to the races.
Familiar fintech friends
A few traditional finance (ahem, “TradFi”) apps allow you to purchase crypto, albeit with typically less varied offerings. Those include:
- PayPal
- CashApp
- Robinhood
- Venmo (which is owned by PayPal)
- eToro
While most crypto-native exchanges offer 50 or more cryptocurrencies to choose from, these platforms provide, at most, 17 tokens to choose from. And outside of CashApp, you can’t move your investments off these platforms.
So you want indirect exposure, huh?
Let’s say you’re an investor with experience and you don’t want to go through the hassle of handling your own cryptocurrency trades. Are there options available to you? In a word, yes.
Grayscale
Grayscale Investments is the largest digital asset manager in the world, with more than $30 billion in total assets under management, or AUM. The New York City company currently provides 15 different products, including Bitcoin, Ethereum, and DeFi funds.
But the barrier to entry is high. Eligibility for Grayscale products is limited to accredited investors—and most people do not earn the $200,000 per year required for such a title.
Futures
In 2017, the CFTC (that’s the Commodity Futures Trading Commission, the US agency that regulates derivatives markets) approved Bitcoin for futures contracts, paving the way for an astounding range of products. In 2020, the CFTC did the same for Ethereum futures contracts.
You can trade crypto futures via:
- Chicago Mercantile Exchange
- Bakkt
Crypto stocks
There are several cryptocurrency companies with publicly-traded shares that you can get your hands on.
Examples:
- Coinbase (COIN) — the well-known crypto exchange
- MicroStrategy (MSTR) — a business services company and leading Bitcoin investor
- Silvergate Bank (SI) — a digital asset bank
- Marathon Digital (MARA) — a leading Bitcoin miner
Just remember…
Fake internet money—pardon, cryptocurrencies—is a trillion-dollar asset class marrying finance and technology in ways never before seen in either sector. It also remains highly volatile.
But in a world being eaten alive by software, the allure of grabbing some digital gold amid the rush is undeniable. It’s not hard to get started. First choose your crypto, then choose your platform. And in the immortal words of Ice Cube: Check yourself before you wreck yourself.