Those individuals who jumped into cryptocurrency investing when Bitcoin first came onto the market have had the opportunity to get rich quickly if they made the right moves when it came to their investments. This has prompted waves of buying and selling that have made some cryptocurrency markets too volatile for many and others would prefer to invest instead of purchasing currencies outright.
This is a good choice for anyone who believes in the longevity of Bitcoin and other types of cryptocurrency but doesn’t want to maintain physical possession of this form of currency. In addition, these kinds of investments might prove more profitable in the long run.
These future contracts on Bitcoin began being offered on several exchanges last year and make it possible for investors to review changes in the prices of Bitcoin. If you buy a futures contract you can make money if the price of a cryptocurrency rises between the time of its purchase and the expiration date of the futures contract. Anyone who sells futures contracts can profit from drops in the price of Bitcoin. An advantage of this approach is that you don’t have to own Bitcoin to make money off its price moves.
If you are interested in blockchain technology and aren’t as confident in the cryptocurrencies that are built on top of it, then you can invest in companies working on different aspects of the industry. Ripple is a type of cryptocurrency which connects with a network that allows financial institutions to transfer money around the world rapidly. You can use tokens to further accelerate transactions, but it’s also possible to use the network without tokens. The company behind the token is Ripple Labs, and several institutions prominent in the financial world have begun to invest in its work. If Ripple Labs does well, then these institutions will also benefit, so shareholders could enjoy some of that success.
Other companies who are worthwhile investments if you’re a shareholder are the ones which create the graphics processing chips that complete the mathematical puzzles that miners have to solve in order to unlock new Bitcoin. NVIDIA and Advanced Micro Devices (AMD) have been dealing with an explosive demand for their graphics cards. But there is the issue of whether this increased demand and subsequent higher price of graphics cards will have a long term impact on the gaming community. AMD is coping with HBM2 and GDDR5 memory shortages which limits its ability to scale.
This is the dilemma for companies which supply components used by cryptocurrency miners and any other industry. They can focus on the demand of miners at the possible expense of other customers, design a graphics card intended only for mining, or even ban the sale of graphics cards to cryptocurrency miners. It would seem to make sense for such companies to find a middle ground, and anyone investing in cryptocurrency should be aware both of the stakes and how each company plans to scale and keep pace with new technological demands as mining evolves.
No matter what form of cryptocurrency investment you might be considering, it’s essential that you research it thoroughly and consider diversifying in order to account for shifts in the market and to protect your funds in the years to come.
