By now, most investors have probably heard about cryptocurrencies. Cryptocurrencies are pervasive in news headlines as an asset to invest in for the future.
The hoopla surrounding cryptocurrencies makes it difficult for investors to distinguish between investments, and to know which cryptocurrencies to invest in.
Like any new investment, there will be survivors and ones that fail. Dot-com era investors probably remember all the search engine startups and many that no longer exist.
So, you’re probably asking yourself which cryptocurrencies to invest in, and which should you avoid? First, we will discuss what a cryptocurrency is and its risks.
Cryptocurrencies are digital money or virtual currency. It is a digital asset stored on a network of distributed computers. The computers use cryptography and encryption to make and verify transactions between people and institutions.
Like any investable asset, there exist risks to an investor. Early on, cryptocurrencies had a reputation for being used in criminal activities. However, they are now increasingly mainstream, with banks, large companies, governments, and the wealthy investing in or backing cryptocurrencies.
In any case, Bitcoin has the longest track record and has the largest market share of digital currencies. However, Bitcoin’s dominance has declined, and it now has about 40% of the total market share due to the proliferation of other cryptocurrencies.