Crypto stocks are digital assets that you can trade on cryptocurrency exchanges. They derive their value from the underlying blockchain technology and can be used to purchase goods and services. Crypto stocks can be bought and sold like any other, and their prices are determined by supply and demand.
Bitcoin
Bitcoin is the most popular cryptocurrency, with a market capitalisation of over $1 trillion. Bitcoin is often seen as a store of value and has been compared to digital gold. It is also a payment system, with users able to send and receive payments using cryptocurrency.
Ethereum
Ethereum is the second-largest market capitalisation, with a market cap of over $200 billion. It is a decentralised platform that runs smart contracts, which are applications that run exactly as programmed without any possibility of fraud or third-party interference.
Ripple
Ripple is a cryptocurrency with a market capitalisation of over $50 billion. Ripple is different because it does not aim at individual users but banks and other financial institutions. Ripple is used to facilitate cross-border payments and has been tested by several central banks.
Litecoin
Litecoin is a cryptocurrency with a market cap of over $10 billion. Litecoin was created in 2011 as an alternative to Bitcoin. Litecoin has faster transaction times and is seen as a more efficient way of conducting transactions.
Dash
Dash is a cryptocurrency with a market capitalisation of over $1 billion. Dash is similar to Bitcoin but offers improved privacy and speed. Dash also has a self-governing and self-funding model, allowing it to offer its users benefits.
Benefits of trading crypto stocks
Access to a new asset class
Crypto stocks offer investors access to a new asset class that is not correlated with traditional markets. It means that you can use crypto stocks to diversify an investment portfolio.
24/7 trading
Crypto stocks can be traded 24 hours a day, seven days a week because they are traded on cryptocurrency exchanges open 24/7.
Lower fees
Cryptocurrency exchanges impose lower fees than traditional stock exchanges because they do not have the overhead costs that traditional exchanges do.
Increased liquidity
Crypto stocks tend to be more liquid than traditional stocks. It means that they can be bought and sold more efficiently, and investors can access their money more quickly.
Risks of trading crypto stocks
Volatility
Crypto stocks are known for their volatility. It means that prices can fluctuate rapidly, and investors can experience significant losses in a short period.
Lack of regulation
Cryptocurrencies and crypto stocks are currently unregulated, meaning investors have no protection if something goes wrong.
Security risks
Cryptocurrency exchanges have been subject to hacks, resulting in the loss of billions of dollars. It highlights the need for investors to be aware of the risks of trading crypto stocks.
How to invest in crypto stocks
Do your research
Before participating in stocks investing, it is essential to do your research. It includes understanding the risks and benefits associated with the investment and getting an idea of the stock’s price movements.
Choose a broker
Several brokers offer crypto stock trading. Choosing a reputable broker that offers good customer service and security is essential.
Open an account
Once you have chosen a broker, you must open an account. This process usually requires some personal information, as well as proof of ID.
Deposit funds
After opening your account, you will need to deposit funds. You can do this using a credit or debit card, bank transfer, or cryptocurrency.
Start trading
Once your account is funded, you can start trading crypto stocks. It is important to remember to use stop-loss orders to limit your losses.
