Every crypto serves a purpose: as a general-purpose currency, as a dApp development and deployment platform, as a blockchain oracle, and so on. In addition to their primary roles, each crypto is also available as an investment. That’s the crypto market.
Beyond buying coffee with Bitcoin, beyond finance apps running on Ethereum, beyond oracles and NFTs and and blockchain-powered games there is the crypto market, an unmoderated marketplace for buying, selling, swapping, and storing cryptocurrencies.
Here is a quick tour of the crypto market and the benefits it offers to investors.
Everything starts with Bitcoin
Bitcoin is the first modern cryptocurrency, and it’s an ideal example for exploring what we mean by “market.”
Bitcoin was created as a general-purpose currency to replace or augment government-issued fiat currencies. The idea was that you could go to a clothing shop and pay for your purchases by making a Bitcoin transfer as easily as swiping your credit card across the card reader. The number of purchases made with old-fashioned paper money is dwindling; it makes sense to have a new currency that takes advantage of advances in computing and networking technology, freeing consumers from the limitations of highly regulated government currencies and bank cards.
Cryptocurrency enthusiasts have a shorthand phrase for describing the digital-money future they dream of: “Buying a cup of coffee with Bitcoin.”
A funny thing happened on the way to e-utopia. The online platforms that allowed people to purchase Bitcoins also allowed them to sell their coins to others or to redeem their coins for fiat currencies. It became common for people to purchase Bitcoins with dollars or euros, wait for the value of Bitcoin to rise, and then sell their coins, converting them back to fiat currency and pocketing the profits.
In addition to serving its primary purpose as a digital currency, Bitcoin was now an investment.
Now Multiply By Several Thousand
Thousands of cryptocurrencies have been launched since Bitcoin made its debut in 2009. Each of them has a specific primary purpose. And each of them is also available as an investment.
This may seem an unlikely turn of events, but it’s quite common in the non-crypto world. Consider IBM. Its primary business is providing IT products and services to big corporations. But it is also an investment. IBM stock is traded on the New York Stock Exchange. IBM has a primary business function and it is also an investment opportunity.
If you want to purchase shares of IBM, you buy them at a stock exchange. If you want to purchase shares of Bitcoin’s total market capitalization, you buy them at a crypto exchange – a platform like Kriptomat that allows users to invest by buying, selling, swapping, and holding cryptocurrencies.
In the years since Bitcoin’s debut, some coins have been launched primarily as investment vehicles, but most coins have been launched in conjunction with projects in financial technology, gaming, gambling, entertainment, and other industries. The coins and tokens are available for purchase at exchanges where prices go up and down according to supply and demand – just like prices for corporate stock.
Crypto exchanges are the stock exchanges of the digital world. And just as stock exchanges list hundreds or thousands of stocks, crypto exchanges make it possible to buy, sell, and swap hundreds or thousands of digital currencies. Collectively, those currencies constitute the crypto market.
Beyond simple buying & selling
The Amsterdam Stock Exchange opened in 1611. The financial community has had four centuries to develop and refine tools and strategies for investors. Crypto exchanges are new to the scene, but they benefit from those centuries of trial and error.
For example, advisors at pre-crypto exchanges recommend cost averaging as a way to minimize the effects of market volatility. Cost averaging is a simple matter of making frequent investments and spreading them out over time. Instead of making a 12,000 euro investment at the beginning of the year and risking a price drop that would devastate your portfolio overnight, you make a 100 euro purchase every month or a 25 euro purchase every week. Over time, the result is that you own more shares that were purchased at a lower price – because the lower price means you get more shares in return for your regular investment. This has proved to be an excellent strategy, especially for investors building their portfolio over the long term.
Today, cost averaging is available to everyday cryptocurrency investors. Kriptomat’s Recurring Buy feature puts the power of cost averaging in your hands.
Another example: Brokers and investment bankers give wealthy investors access to high-end tools like trading bots that can be programmed to execute transactions when certain price thresholds are met. In the crypto world, Kriptomat calls that Automated Trading and it’s available to everyone.
Even advanced features like index investing and derivatives are making their way into the crypto world.
Better than real money
Regulations and a close-knit investing community have traditionally restricted powerful investing tools to wealthy clients. Bankers and government regulators get to write rules that exclude most people from full participation in managing their own finances. One of the most important benefits of the crypto world is that everyone gets access to the market. With crypto, everyone enjoys financial equity, dignity, and self-determination.
Bitcoin is primarily a general-purpose electronic currency. Ethereum is primarily a platform for running decentralized applications. MANA is primarily intended to support an in-game economy for the Decentraland gaming platform.
All three of these cryptos – and thousands of others – are also available as investment vehicles. Bullish on metaverse-style gaming? Look at Decentraland, Tron, Enjin, Loop, and WAX. Think decentralized financial apps are going to take off? Consider DeFI-related cryptos from Ethereum, Cardano, Polkadot, and Avalanche. No matter what industry segment you’re interested in, you’re likely to find multiple cryptocurrencies that are poised to play a key role. Do your homework, pick a coin, and make an investment.
In the crypto market, you’re in charge.
NOTE
This text is informative in nature and should not be considered an investment recommendation. It does not express the personal opinion of the author or service. Any investment or trading is risky, and past returns are not a guarantee of future returns. Risk only assets that you are willing to lose.
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