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Alternatively, if you prefer to outsource your active investing, there is an ever-growing number of funds you can leverage. Many of the active funds will achieve this by picking the right cryptocurrencies at the right time. While this may mean higher absolute returns, it also means that somebody is managing your risk. This can prove significant in the high-volatility world of crypto: Double-digit percentage price swings within 24 hours are not uncommon.
A disadvantage of these funds is that their fees are higher than those for passive products. Another option is to construct the exposure yourself—something that virtually nobody would do in the equity space given the multitude and low cost of passive products. However, in the crypto space, it is more appealing given the current dearth of products.
One approach is to buy a vehicle that tracks one very liquid cryptocurrency. Since Bitcoin BTC is the original cryptocurrency and has long dominated the space, the few passive products in existence today track BTC. Furthermore, you do not have to worry about logistical issues like how to buy, sell, or store your cryptocurrencies. However, one disadvantage is that they may be trading at a premium to underlying net asset value.
Going one step further is an investment product that tracks several cryptocurrencies. Currently, various products are being developed for this purpose. As always in investing, this diversification will likely provide better risk-adjusted returns, such as a higher Sharpe Ratio. That is, although you will not match the returns of the single best-performing cryptocurrency, your risk should drop more than enough to compensate for this.
It is not yet clear how such products will allocate between the various cryptocurrencies, but the obvious options are either equal weighting or market capitalization-based weighting. In any event, your fund manager will handle this weighting for you. There is now another, well-publicized way to get exposure to BTC: Bitcoin futures.
These futures are meant to help manage price volatility and allow investors to speculate on the price of BTC without having to directly own it. Second, in geographic regions where BTC trading is prohibited, such as Bolivia and Bangladesh , these futures would allow investors to participate. Needless to say that futures are advanced financial products, so you should procure adequate information and advice before using them. Perhaps unsurprisingly, security is of utmost importance when it comes to cryptocurrencies.
This includes writing down private keys on a piece of paper, storing them on a hardware device such as Trezor or Ledger , or using a cold storage company such as Xapo or Swiss Crypto Vault which store your BTC private keys in Swiss bunkers.
For either type of storage, you typically simply send your coins to the public address of your storage. Once you need your coins, you can send them to wherever you need them, like an exchange account. The trade-off here is between liquidity and security because you may need hours check exact time with your cold storage provider to get your coins out of more secure storage, which can be an eternity in crypto trading time.
So, the decision around how much of your crypto portfolio goes into what kind of storage depends in part on your propensity to trade and your view of imminent market movements. Still, security and storage should be key items on your crypto to-do list.
Just as investing in another asset class, you should monitor your investment, even if you are a long-term holder. This includes tracking price information on sites such as coinmarketcap. Personally, I also like the mobile app Blockfolio , which allows you to input your crypto portfolio and track its value in real time.
To stay up to date with the newsflow in a rapidly evolving industry, social media are indispensable for cryptocurrencies, including Twitter, Reddit, and Medium. On Reddit, you should join the appropriate boards, while on Twitter, you can search for the appropriate hashtags such as BTC and bitcoin for BTC, or LTC or Litecoin for Litecoin and follow frequent, knowledgeable commentators on the subject.
There are also other sites that provide more technical data for example, number of transactions or hash rate. These sites often differ by the specific cryptocurrency you are looking at, but for BTC, valuable resources include bitinfocharts. Few would argue that tax regulations have fully caught up to the rapid development of the cryptocurrency space. In , the IRS Revenue Ruling dictated that cryptocurrencies should be treated as personal property , with gains or losses on purchases or sales.
Therefore, capital gains or losses should be recorded as if it were an exchange involving property, and if utilized as payment, it should be treated as currency but must first be converted to its fair market value.
Still, the ruling left many questions unanswered. And, even within the US, states are treating cryptocurrencies differently. Consider New York State, which remains wary and has created the BitLicense system , which imposes guidelines on crypto companies conducting business with New York residents. In contrast, Vermont and Arizona have both recognized smart contracts and have assigned legal standing to records tied to blockchain , the underlying technology of all cryptocurrencies.
This is undeniably a lot to digest. However, if you are an equity investor, there surely was a time when you hardly knew anything about the markets. Perhaps you timidly opened your first brokerage account, bought your first mutual fund, then your first individual stocks, international stocks, and perhaps eventually graduated to options and futures.
Is it worth it? I am a biased person to ask. And I admit that there is a steeper learning curve, but you are also entering a new asset class at an early stage, possibly providing you with opportunities harder to find in the relatively efficient world of established asset classes. For the record, I do not advocate substituting all other asset classes with crypto—merely that crypto should also be considered, though you should remain aware of its risk.
If you are curious and decide to move forward with crypto investing, then you may want to start slowly and simply. I personally started by putting an amount of money that I was comfortable losing completely into one of the established exchanges, bought a little of the mainstream cryptocurrencies, and soon started to get a feel of whether this was for me.
The best way forward for you will depend, of course, on your specific circumstances and preferences and may well include not investing in crypto at all. Just do not simply ignore the space and discard it out of hand without doing a little research for yourself. Good luck. The views expressed in this article are for informational purposes only. The article is not intended to be investment advice, and should not be used or relied upon as such.
Seek a duly licensed professional for investment advice. Furthermore, nothing in this article is an offer to buy or sell or a solicitation of an offer to buy or sell any security, product, service or investment.
All information and opinions expressed in the article are believed to be current as of publication and are subject to change without notice. The author has not received and will not receive direct or indirect compensation in exchange for expressing specific views in this article. You can buy cryptocurrencies via exchanges, finding a counterparty, cryptocurrency ATMs, or directly via a private bank since some banks are now offering cryptocurrency trading services and related products.
You can sell cryptocurrencies via the same buying channels: exchanges, finding a counterparty, cryptocurrency ATMs, or directly via a private bank. You can also utilize cryptocurrency debit cards, which allow users to spend cryptocurrency directly from their virtual wallets.
Subscription implies consent to our privacy policy. Thank you! Check out your inbox to confirm your invite. Finance All Blogs Icon Chevron. Filter by. View all results. Finance Processes. Raphael is a partner at a crypto hedge fund. Prior, he founded and exited a fintech company, and worked as a banker and equities investor. Executive Summary Active Investing Buying via exchanges. The most popular way to trade cryptocurrencies is via cryptocurrency exchanges , websites where individuals can buy, sell, or exchange cryptocurrencies for other digital currency or traditional currency.
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Kraken also offers margin trading and futures trading. With its margin accounts, you can borrow up to five times your account balance to trade crypto assets. Futures trading — contracts which allow you to buy or sell an asset at a set price on an upcoming date — is available for bitcoin, ethereum, litecoin, bitcoin cash, and ripple. The exchange also offers its own futures trading platforms.
But institutional clients can take advantage of expert insights, one-on-one consultations, account management support, and more. All clients can utilize Kraken's staking rewards, iOS and Android mobile app access, and educational resources.
What to look out for: Kraken's futures mobile platform isn't currently available to US traders. In addition, only institutional and high-net-worth clients can utilize the exchange's consultation and account management services. The exchange also gives you access to bitcoin and more than other crypto assets. All users can access CEX. IO's instant buy feature this is only for credit and debit card purchases , mobile app, staking rewards, and crypto-backed loans. But more advanced traders might prefer CEX.
IO's spot trading feature this option lets you place different types of crypto market orders and margin trading accounts. Institutions and businesses can use its aggregator and payment management services. It's also important to point out CEX. IO's fee schedule. Maker orders can't be executed immediately since there are no other orders to match with them; however, taker orders match immediately, according to CEX.
Its maker fees range from 0. You can also access CEX. IO on iOS or Android devices. What to look out for: Transactions with debit or credit cards can be pricey at CEX. For Visa and Mastercard deposits, you'll be have to pay a 2. Mastercard users can expect a service charge up to 1. There's also a commission up to 1.
Why it stands out: Gemini offers a wide variety of crypto trading services for individuals and institutions. Traders can take advantage of multiple platforms, including the Gemini web exchange, Gemini iOS and Android mobile apps, Gemini Active Trader platform, Gemini Fund Solutions, and institutional trading tools. But the exchange also provides a few other notable features: Gemini Wallet, Gemini Earn, Gemini Clearing brokerage services for off-exchange crypto trades between parties , Gemini Custody, Gemini Pay, and Gemini Dollar a digital asset backed by US dollars.
Though Gemini isn't strictly a personal wallet service, its two storage and custody options — Gemini Wallet and Gemini Custody — give you the choice of online storage or institutional offline storage for your crypto assets. Gemini Earn gives you the option to receive up to 7. What to look out for: Gemini has multiple fee schedules for different accounts and account actions.
While you won't be charged for transferring funds through ACH or wire methods, credit or debit card transfers have a 3. The exchange also has a limited number of cryptocurrencies see its full list of supported assets here. Why it stands out: When it comes to account security, Bittrex is difficult to beat. In addition to two-factor authentication, the exchange says it uses a multi-stage wallet strategy to make sure funds are kept in secure, cold storage offline storage.
Bittrex's transaction fees are also notably lower compared to other exchanges. Like CEX. But unlike many of the investment apps listed above, Bittrex charges absolutely nothing for deposits USD deposits and withdrawals have no fees either. You can access Bittrex on iOS or Android phones. At Personal Finance Insider, we aim to help smart people make the wisest decisions with their money.
We also know that the word "best" is often subjective, so we make sure to highlight both the benefits and drawbacks of crypto exchanges. We spent hours comparing and contrasting the features and product offerings of various crypto exchanges so you don't have to. We also explored whether exchanges offered services both for individuals and institutions, and we paid close attention to other account options like staking rewards, margin trading, and Stablecoin support. A cryptocurrency exchange is like an online brokerage for cryptocurrencies, tokens virtual assets created through existing blockchains , and other digital assets.
Many of these exchanges offer investment options for active traders looking to buy, sell, or hold digital assets like bitcoin , ethereum, and litecoin. Most exchanges also offer custody and storage options for users looking to safely protect their crypto assets against theft and hacks.
But then again, most exchanges aren't solely personal wallet services. If you want to set up an external wallet with a bitcoin wallet provider or another storage wallet service, you can do so while maintaining your crypto exchange account. You can simply transfer assets between your exchange account and crypto wallet when necessary. This depends on your investment goals and needs. You can invest in cryptocurrencies in more than one place.
For instance, both PayPal and SoFi aren't strictly crypto-focused companies, but both offer digital assets. And if you're interested in low-cost options, note that you can also trade cryptocurrencies with fee-free brokerages like Webull and Robinhood. The catch with taking this route is that you won't have as many crypto-specific features as you would with a Kraken or Gemini.
You would essentially sacrifice a wider range of investments and account features for lower fees and limited cryptocurrency options. If you're looking for a wider range of crypto-specific trading tools and account features, a cryptocurrency exchange may be the best option. Disclosure: This post may highlight financial products and services that can help you make smarter decisions with your money.
We do not give investment advice or encourage you to adopt a certain investment strategy. What you decide to do with your money is up to you. If you take action based on one of our recommendations, we get a small share of the revenue from our commerce partners. This does not influence whether we feature a financial product or service. We operate independently from our advertising sales team. Check out: Personal Finance Insider's review of Coinbase.
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This book is an excellent starting point for newcomers to the cryptocurrency space, and the author does an excellent job at breaking down even the most complex concepts into easy to understand terms. Norman lays out the basics of cryptocurrency buying, selling and profiting from the process in a language that anyone can understand. As one of the best books on cryptocurrency, this one offers more than just the basics. It will not only introduce you to Bitcoin trading but help you perfect it as well.
Aziz introduces us to one of the few careers that brings income with a combination of freedom and flexibility. Through an analysis of past mistakes and comprehensive coverage of the right strategies to employ, you will come out with a better trader after reading this book. This book covers the basics of trading and how to make a profit from investing in Bitcoin and other cryptocurrencies.
In this book, Patel shows how personal experiences and principles can help you profit from cryptocurrencies. It goes through the basics of investing in stocks and bonds, which translates well for cryptocurrencies in general. For anyone that wants to deepen their understanding of technical analysis, look no further.
This book will help you understand trading on a superior level by helping you read the charts in order to predict market movements. It might sound like something from a martial arts movie, but Japanese candlestick patterns are the most commonly used form of technical analysis in cryptocurrency trading. A lot of successful traders praise this book as being the only one they ever needed to learn cryptocurrency market movements. One of the most thorough books on trading and the science behind it.
Grimes lays out a focused and personal view of what works in markets, providing a complete methodology for analyzing price action. Hopefully, this list will help you find something to your taste. Our selection ranges from basic and beginner literature to advanced trading strategies and techniques.
Your email address will not be published. Save my name, email, and website in this browser for the next time I comment. Home Educational guides The 30 Best books on cryptocurrency — Learn from the pros. The Bitcoin Standard — Saifedean Ammous The Bitcoin Standard traces the story of money since its prehistorical beginnings, written by a true Bitcoin maximalist.
The Internet of Money 2 volumes — Andreas M. Antonopoulos As a prolific cryptocurrency expert and author, Antonopoulos strikes again with a well-written piece that covers a lot more than just the basics of Bitcoin and the future of money. Digital Gold — Nathaniel Popper Digital Gold covers the possibilities of why Bitcoin might be the greatest store of value that the world has ever known. The Basics of Bitcoins and Blockchains : An Introduction to Cryptocurrencies and the Technology that Powers Them — Antony Lewis To get a clean transition into our next category, we present you a book that explains the basics of Bitcoin but also introduces you to the technology behind it.
Alternative Cryptocurrencies and Blockchain books Learn more about Altcoins and how the Blockchain works, by reading the books outlined bellow. Blockchain: Blueprint for a New Economy — Melanie Swan An introduction to Blockchain that covers real-life use cases, but also theoretical ones that are just a glimpse in the future. The Business Blockchain — William Mougayar A good in-depth analysis of how Blockchain can and already is implemented in businesses.
Mastering Ethereum — Andreas M. Antonopoulos Third entrance on our list from Mr. Libra Coin Revolution — Alan J. Crypto, Stephen K. Blockchain Basics : A Non-Technical Introduction in 25 Steps — Daniel Drescher A must-read for every tech enthusiast, this popular book introduces you to the basics of Blockchain technology in 25 easy-to-follow steps.
Casey The Truth Machine is a subtle and thorough look at what Blockchain is and what we might reasonably expect it to accomplish. Cryptocurrency trading If you are more interested to reap the benefits of crypto trading, the following are the best books on cryptocurrency trading.
Cryptocurrency Investing Bible — Alan T. Norman This book is an excellent starting point for newcomers to the cryptocurrency space, and the author does an excellent job at breaking down even the most complex concepts into easy to understand terms. It goes through the basics of investing in stocks and bonds, which translates well for cryptocurrencies in general Charting and Technical Analysis — Fred Mcallen For anyone that wants to deepen their understanding of technical analysis, look no further.
This book will help you understand trading on a superior level by helping you read the charts in order to predict market movements Japanese Candlestick Charting Techniques — Steve Nison It might sound like something from a martial arts movie, but Japanese candlestick patterns are the most commonly used form of technical analysis in cryptocurrency trading.
Ivan is an ID graduate that has been working in marketing and design since he finished university. His college background got him interested in cryptocurrencies since and he still follows industry developments daily. He now writes content about all things crypto, sharing his acquired knowledge through the years. Related Articles. Top 5 crypto myths that beginners have Crypto is a household name by now.