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A Beginner’s Guide to Building Cryptocurrency Wealth in 2024
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Cryptocurrency is on the investment scene for a whilesince the release of Bitcoin in 2009. Bitcoin remains the most popular cryptocurrency and its name has become somewhat synonymous with cryptocurrency. But there are many other cryptocurrencies – more than 9,000 at last count.
Check: 13 Cheap Cryptocurrencies with the Highest Upside Potential for You
Read next: 5 Awesome Things All Rich People Do With Their Money
Since the advent of Bitcoin, investing in cryptocurrencies has evolved from a venture shrouded in mystery and accessible only to a few technically savvy individuals to an easily accessible and potentially profitable asset for the average investor.
Here’s what you need to know about creating wealth through cryptocurrencies in 2024.
Understanding What Cryptocurrency Is – and What It Isn’t
Cryptocurrency is a decentralized, digital, and encrypted currency. It is not tied to any country or group of countries, like the US dollar or the euro. It uses blockchain technology to record and verify transactions, so theoretically it cannot be tampered with, lost or stolen.
Cryptocurrency is a volatile investment, so keep in mind that you could lose money on these transactions.
You don’t have to buy physical Bitcoin
In January 2024, the SEC approved Bitcoin ETFs. These funds hold Bitcoin as the underlying asset, unlike previous crypto ETFs that used futures contracts. Buying Bitcoin ETFs for cash means you can buy shares of the ETF, which are backed by physical holdings of the cryptocurrency. The SEC next plans to approve Ethereum spot ETFs.
You can trade Bitcoin and other crypto ETFs in most brokerage accounts, so you may be able to do it in the account you already have.
Cryptocurrency Exchanges
You can also buy and sell cryptocurrencies on a crypto exchange. Coinbase is a common crypto exchange. To invest this way, you will trade pairs of cryptocurrencies, similar to how foreign exchange works with currency pairs. For example, you can exchange Bitcoin for Dogecoin, or vice versa.
Cryptocurrency ETF
If the idea of buying a single cryptocurrency intimidates you, consider a cryptocurrency ETF. These funds do not hold physical cryptocurrencies but invest in futures contracts. The ProShares Bitcoin & Ether Market Cap Weight Strategy ETF (BETH) is an example of this type of fund. Another option is the Global X Blockchain ETF (BKCH) which owns Coinbase and other cryptocurrency exchange companies. These funds offer more diversity than spot ETFs.
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Some crypto ETFs hold more than one cryptocurrency, giving you greater diversification than you would get by purchasing a fund containing only Bitcoin.
Create wealth with cryptocurrency in 2024
Today, buying crypto is as easy as buying stocks, mutual funds, or ETFs. You can probably already buy crypto ETFs in your existing brokerage account. If you want to buy physical crypto, you can use a cryptocurrency exchange. Then it’s just a matter of managing your investment.
Learn more: 8 Best Cryptocurrencies to Invest in for 2024
Investing in crypto with the goal of building wealth is guided by many of the same principles that stock market investors follow. Understand what you’re buying (“Buy what you know” as a certain successful investor would say), be patient, do your homework and be rational. This is the best way to create wealth, in 2024 and beyond.
This article was originally published on GOBankingRates.com: A Beginner’s Guide to Building Cryptocurrency Wealth in 2024