How to buy cryptocurrencies
Cryptocurrencies have undergone an outstanding development over the years and are increasingly coming into the focus of investors. Only a few years ago, Bitcoin and Ethereum were still considered speculative objects for IT freaks. However, this has changed, as more and more private and institutional investors are keeping an eye on the development of digital currencies. In total, more than 8,200 cryptocurrencies exist today.
eToro Experiences & Test 2021: Our Rating
9.3 / 10
eToro Experiences & Test 2021: Our Rating
- No deposit fees for all payment methods
- Cheap method to buy Bitcoin instantly
- One of the few providers that offer PayPal
- Very user-friendly trading for beginners
Best Crypto Exchange Brokers 2021
WHAT IS ON THIS PAGE?
- How to buy cryptocurrencies
- Beste Crypto Exchange Brokers 2021
- To be able to buy a cryptocurrency, you need to go through the following steps
- Distributed ledger technology as the technical basis of cryptocurrencies
- Blockchains are the best-known distributed ledger technologies
- Where can I buy cryptocurrencies?
- What type of investor am I?
- Buying cryptocurrencies with a broker
- The most famous brokers for Bitcoin
- Fees with crypto brokers
- Regulation & Verification
- Buy cryptocurrencies on an exchange
- Deposit options with crypto exchanges
- Regulation
- Buy cryptocurrencies P2P from other people
- Buying cryptocurrencies via an ATM
- Recommended brokers 2021
- Buy cryptocurrency – step-by-step guide
- Which cryptocurrency to buy?
- What cryptocurrencies are there?
- What should I look out for when investing in cryptocurrencies?
- FAQ
To be able to buy a cryptocurrency, you need to go through the following steps:
- Choose a suitable trading platform
- Trade FIAT money, such as euros, for the cryptocurrency.
- Cash out the cryptocurrency to a secure wallet or….
- … resell your purchased coins on an exchange (hopefully at a profit).
In the following article, we go into more detail about how and where you can buy cryptocurrencies. In doing so, we list various exchanges and trading platforms where you can invest in cryptocurrencies. We advise you to take a closer look at the provider before choosing an exchange. Large and well-known exchanges should always be preferred to smaller, unknown platforms. If you want to get started immediately, click on this link to get to the step-by-step guide with screenshots.
Distributed ledger technology as the technical basis of cryptocurrencies
Distributed ledger technology, or DLT for short, is a distributed and decentralised database. This technology offers a verifiable history of all information stored on this distributed ledger. Accordingly, DLT are digital systems that record the transactions of all assets and store them decentrally in the network. Unlike traditional databases, DLTs have no central data storage or management function. The validation of outstanding transactions and information is carried out by the nodes. The validation creates a record of the elements and distributes it in the network. This procedure creates a consensus within the network. Thus, the technologies are suitable for recording registrations or transactions.
Blockchains are the best-known distributed ledger technologies
Blockchains are probably the best-known type of distributed ledger technologies.
The functionalities are similar to those of DLTs in almost all respects. The biggest differentiating feature is the type of data storage, because this takes place in a blockchain in a block. Accordingly, a blockchain combines several transactions and stores them in blocks. These are strung together in a chain to generate a particularly high level of security.
Blockchains use cryptographic signatures - the so-called hashes - to link the blocks. Each block uses the hash of the previous block and thus prevents unintentional manipulation. In addition, this technology opens up the possibility of defining automated rules for transaction processing. These rules are intelligent contracts, also known as smart contracts.
In practice, there are also distributed ledgers that do not exist in the form of a blockchain - the best-known example is IOTA. The first blockchains were also based on so-called proof-of-work algorithms (PoW) for transaction validation. Today, it is apparent that blockchain technologies without PoW have better scalability and are thus more versatile. Probably the best known, because the first blockchain, is Bitcoin. Satoshi Nakamoto published the white paper for Bitcoin as early as 2008. In January 2009, the developer, who operates under a pseudonym, published the Bitcoin Blockchain. The success of Bitcoin and its disruptive potential is known to most users today.
Where can I buy cryptocurrencies?
The market for cryptocurrencies is no longer in its infancy, so there are now numerous options for buying cryptocurrencies.
In the following, you will learn more about the options for buying cryptocurrency.
To find the best crypto exchange for you, you should first define your trading habits. Do you want to buy once and then send coins to your wallet or are you more interested in price movements and active trading?
In the following article, we go into more detail about how and where you can buy cryptocurrencies. In doing so, we list various exchanges and trading platforms where you can invest in cryptocurrencies. We advise you to take a closer look at the provider before choosing an exchange. Large and well-known exchanges should always be preferred to smaller, unknown platforms. If you want to get started immediately, click on this link to get to the step-by-step guide with screenshots.
What type of investor am I?
| Buying cryptocurrency physically | Trade crypto prices |
| • I understand the principle of addresses and private keys • I would like to learn more about blockchain technology • I would like to participate in smart contracts | • I mainly want to profit from the price development • I intend to actively buy and sell • I do not want to worry about the safekeeping of my cryptos |
Buying cryptocurrencies with a broker
Probably the easiest way to trade cryptocurrencies is through crypto brokers.
Crypto brokers often offer trading in Contracts for Difference - CFDs for short. This is a type of security that reflects the price of a cryptocurrency.
Especially the platforms of eToro, Plus500 and Libertex convince with a good user experience and a very good product range.
The most famous brokers for Bitcoin
| eToro | Plus500 | Libertex | |
|---|---|---|---|
| Min. Deposit | 200 EUR | 100 EUR | 100 EUR |
| fees | 0.75 - 5% | 0.52 - 6.11% | Min. 0.001% |
| lever | up to 2: 1 | up to 2: 1 | up to 2: 1 |
| regulation | CySEC, FCA | CySEC, FCA | CySEC |
| Other instruments | Stocks, commodities, forex | ETF, stocks, forex, commodities, options, indices | ETF, stocks, forex, commodities, indices |
Fees with crypto brokers
Fee models of crypto brokers differ from crypto exchanges in that there are no transaction fees. Instead, spreads are charged on the prices through which the brokers make their money. The spread to buy Bitcoin, for example, is 0.75%. Let’s say you buy €1,000 worth of Bitcoin at a rate of €10,000. Then you pay a total of €7.50 in fees for your purchase of €1,000 in Bitcoin. If you trade with a broker with leverage, you should also pay attention to whether there are so-called “overnight fees”.
You can view the fees at any time in your portfolio overview at eToro.
Regulation & Verification
Crypto brokers are generally subject to the guidelines of the FAC (UK) or CySEC (EU) financial supervisory authorities. For you, this means that you have to verify your identity when registering with a broker.
Buy cryptocurrencies on an exchange
Crypto exchanges allow you to place direct orders on an order book to buy physical cryptocurrencies. The big advantage here is the sheer choice of cryptocurrencies and often low fees.
But beware: The risk also increases with crypto exchanges, because they are often not regulated and are not subject to any financial supervisory authority. It is therefore advisable to have purchased cryptocurrencies paid out immediately into your own wallet.
It is imperative that you understand the concept of private keys and addresses, because if you make a mistake here, this could result in a high loss, or even a total loss!
You should also make sure that you do not buy any dubious small coins on crypto exchanges, which have little liquidity and could crash down within a very short time. If you are unsure, crypto brokers might be a better choice for trading cryptocurrencies.
Deposit options with crypto exchanges
| Generally, you can deposit on a crypto exchange in various ways, but unfortunately, depositing with PayPal is currently only possible with crypto brokers. | The most important deposit methods are:
Fees of the largest crypto exchanges Crypto exchanges have different fee structures. For exchanges such as Kraken or Binance, the fee structure is determined by the monthly trading volume. Traders with large amounts have to pay less fees than small investors. We have compiled an overview for you in the following table: |
| 30 days trading volume | Coinbase | Binance | Octopuses |
|---|---|---|---|
| $0 – $50.000 | 1,49% | ca.0,1% | 0,16% – 0,26% |
| $50.001 – $100.000 | 1,49% | ca.0,1% | 0,14% -0,24% |
| $100.001 – $250.000 | 1,49% | ca.0,1% | 0,12% – 0,22% |
| $250.001 – $500.000 | 1,49% | ca.0,1% | 0,10% – 0,20% |
Crypto Prices (USD)
Bitcoin
Ethereum
Binance Coin
Cardano
Tether
XRP
Solana
Polkadot
USD Coin
Dogecoin
Recommended broker
eToro Experiences & Test 2021: Our Rating
9.3 / 10
eToro Experiences & Test 2021: Our Rating
- No deposit fees for all payment methods
- Cheap method to buy Bitcoin instantly
- One of the few providers that offer PayPal
- Very user-friendly trading for beginners
Regulation
Today, we are still in the early stages of cryptocurrencies.
None of the major crypto exchanges are located, which is why few if any crypto exchanges are regulated.
If you prefer to buy on a trading platform regulated by a financial market supervisory authority, choose a crypto broker.
Buy cryptocurrencies P2P from other people
Of course, you can also buy cryptocurrencies “in real life” from other real people. However, great caution is advised here, because in the past there have been several robberies, especially of larger sums. Therefore, you should never appear alone at such a meeting and rather exercise caution than take an unnecessary risk.
Buying cryptocurrencies via an ATM
In a few large cities, it is possible to buy Bitcoin via an ATM.
These machines function similarly to change machines at an airport and allow you to exchange euros for bitcoin for a fee. If you have the option and there is a BTC ATM near you, this can be a good way to buy the cryptocurrency.
However, if you also want to invest in altcoins (alternative cryptocurrencies) such as Ethereum, IOTA or Polkadot, you will have to go to a crypto broker or crypto exchange.
Recommended brokers 2021
According to their website support forum, this is “for security, regulatory compliance and fraud prevention�?. The limits are based on several factors that include the payment method you used, how old your account is, your purchase history, and more. These limits are calculated automatically.
eToro
Binance
Coinbase
Bitpanda
Buy cryptocurrency - step-by-step guide
To get you started, we’ve put together a step-by-step guide on how to buy cryptocurrencies.
Below we describe the process on eToro, one of the most beginner-friendly crypto trading platforms.
If you would rather use a different platform, take a look at our comparison of the best trading platforms for cryptocurrencies in the EU-regulated space.
eToro impresses with a huge active trading community and offers stocks, commodities and precious metals for trading in addition to cryptocurrencies.
The company was founded back in 2007 and is regulated in Europe, the UK and Australia and thus authorised for financial transactions.
In our view, the security of the platform is particularly noteworthy.
While other crypto trading platforms are often in the spotlight because of security problems, this does not apply to eToro. So far, attackers have not been able to steal any cryptocurrencies.
One of our personal highlights at eToro are the deposit methods. You have the possibility to buy cryptocurrencies with PayPal at this trading venue.
Now create an account with eToro.
You can, of course, use an existing account via Facebook or Google. If you don’t want to do this, you only need to enter your first and last name, email address, a secret password and your personal address.
We have taken our screenshots in English. You can also change the language at any time by clicking on the flag icon at the top right.
Clicking on the highlighted button will take you to the registration page
You will then need to confirm the e-mail sent to you. Simply click on the link in the e-mail.
Now the account is opened and you can log in using your e-mail address and password.
Enter your personal data for registration.
In the account you can now choose between the virtual and the real securities account.
In the virtual account you will receive an amount of 100,000 US dollars in play money. With this money you can first develop a feeling for the different assets.
If you now want to buy a cryptocurrency “for real”, you must of course use the real securities account. However, before you can carry out an action in the real securities account, you should complete your profile. This includes (according to legal requirements) the specification of your trading experience, the assets to be traded and your personal income and asset situation.
After completing the questionnaire, eToro will give you a general rating of your financial situation. Although you can trade differently if necessary, experience has shown that the information and assessments are very accurate.
Now you can finally deposit money into your account to start trading.
With some payment methods, the deposit can also be made within a few seconds. You will find the button for depositing money directly at the bottom left. Clicking on the button will take you directly to the corresponding screen. Withdrawals can be initiated later via the menu item “Withdraw money”.
eToro has stored the most popular deposit sizes directly as predefined amounts. However, if you would like to invest a different amount, you can set this via “Custom amount”.
The minimum deposit is 200 US dollars. The euro exchange rate is always converted on a daily basis. In the case of transfers, a conversion always takes place after the payment has been received.
For this reason, we can recommend fast methods such as Sofortüberweisung, PayPal or RapidTransfer.
Payment by credit card is also possible and is only charged at the end of the month with the card statement.
Once you have selected the appropriate amount and payment method, you can complete the process by clicking “Send”.
The money will be credited to you immediately with the appropriate payment method. In the case of a bank transfer, it may take a few days for the money to arrive.
The safest way to make a deposit here is with PayPal. Simply enter the amount and your email address. You will then be redirected to PayPal and can continue the usual process.
Now the deposited credit is available to you and you can start trading cryptocurrencies directly.
To do this, click on “Markets” and then on “See all” under Coins.
In the overview you will find Bitcoin Ethereum as well as all other cryptocurrencies that you can buy. Open your own position by clicking on “Sell” or “Buy”.
Once you have decided on a strategy, you can enter the appropriate amount and make a few settings for your trade. Here you have the following options:
- Stop Loss:
As soon as this set price is reached, your investment is automatically liquidated. This way you limit your losses.
- Leverage:
If you use a leverage of 1, you are trading a real cryptocurrency trade. A leverage of 2 means that price changes are doubled. Here the potential return is higher, but so is the risk.
- Take Profit:
The Take Profit option is the exact opposite of Stop Loss. As soon as the entered limit is reached, your position is automatically triggered. Your trade was successful.
Open your position with “Trade”.
After you have opened your trade, you can sell your cryptocurrency at any time. If, for example, you have not set a stop loss or a take profit, you must manually place a sell order.
Under the “My Portfolio” menu you will find all your active positions.
Via Buy or Sell you can decide whether you want to open another position. With the “Buy” function you are betting on rising prices (you are “Long”), while “Sell” means a position on falling markets (you are “Short”).
If you want to trade your existing position, you can do so by clicking on your respective position. There you will get to the overview of all your active positions. Now click on the “X” in the respective line, then close this position.
Which cryptocurrency to buy?
According to the overview site CoinMarketCap.com, there are currently over 8000 cryptocurrencies.
However, many projects have been abandoned by the developers and are no longer being developed, whereas other projects strongly resemble scams and pyramid schemes.
To give you a good overview of technically sound projects, we have created an initial list of interesting technologies for you below:
What cryptocurrencies are there?
Cryptocurrencies are purely digital currencies that do not exist in the form of coins or notes.
Projects can be divided into groups that pursue different goals and use cases. These range from pure store-of-value, to smart contracts and dApps, to use cases in industry or the Internet of Things.
| Bitcoin (BTC) |
Bitcoin is the largest and also the best-known cryptocurrency. Bitcoin is also known by the synonym “digital gold”. |
| Ether (ETH) |
Ethereum is an open source network and is known for its programmability. The cryptocurrency Ether is the basis of the network and thus of the smart contracts. |
| Bitcoin Cash (BCH) |
This cryptocurrency is the result of a Bitcoin hardfork. In contrast to Bitcoin, Bitcoin Cash convinces with a higher transaction speed. |
| Ripple (XRP) |
Ripple is an international payment network. With the help of the native coin XRP, transactions between banks can be processed within the shortest time frames at low costs. |
| IOTA (MIOTA) |
IOTA is a digital currency for the Internet of Things. IOTA is not based on a blockchain but on the tangle. The native MIOTA tokens serve as the network’s means of payment. |
| Tezos (XTZ) |
Tezos is a platform for smart contracts and a direct competitor to Ethereum. With Liquid-Proof-of-Stake, the Tezos developers have developed a new and innovative governance method. |
| Litecoin (LTC) |
This is a technical copy of Bitcoin with faster transaction confirmations. Also, the limit on the maximum number of tokens is 84 million. |
| Cardano (ADA) |
Cardano (ADA) is primarily a project to research challenges in the crypto sector. In the long term, Cardano aims to establish scalable solutions for the use of digital currencies. |
| Chainlink (Link) |
This is a cryptocurrency that aims to solve the problems of decentralised oracles. |
| Polkadot (DOT) |
Polkadot is an “interoperability protocol designed to enable blockchains to communicate with each other.” |
| Dash (DASH) |
Dash is also a clone of Bitcoin. The biggest differentiator is Dash’s focus, which is on user privacy. |
| Monero (XMR) |
Along with Dash, Monero also focuses on privacy. The mining algorithm used is also considered user-friendly and is based on commercially available hardware. |
| NEO (NEO) |
The blockchain of the same name is used to create smart contracts and digital assets. NEO tokens can be converted into GAS tokens - these are necessary to operate the network. |
| EOS (EOS) |
The blockchain company Block.One is behind EOSIO. By using multithreading, the developers want to meet the requirements of professional users. |
| Stellar Lumens (XLM) |
The cryptocurrency XLM enables international currency trading. Similar to XRP, Stellar is also intended to enable an international payment network. |
| Dogecoin (DOGE) |
The cryptocurrency Dogecoin is a meme coin. Dogecoin was meant to be a parody of Bitcoin, meanwhile the applications are increasing. |
What should I look out for when investing in cryptocurrencies?
Before you buy cryptocurrencies, you should decide on an investment type.
Do you want to buy cryptocurrencies and speculate purely on prices? The answer to this question is crucial for choosing the right trading platform.
If you want to be able to hold cryptocurrencies in your own wallets for years, you should choose a crypto exchange. If the technology is secondary to you and you are mainly interested in price fluctuations and price gains, then crypto brokers are for you.
Important:
No matter which type of investment you choose, you should only ever invest as much money as you are prepared to lose.
You have probably already asked yourself the question “Why should I invest in cryptocurrencies?”.
Cryptocurrencies are a new, highly volatile asset class where high price jumps up and also down are the order of the day.
If you are a more risk-averse investor, cryptocurrencies are most likely the wrong investment for you.
However, for investors who are less risk averse, there may be good reasons to invest. These include:
Diversification effect in the portfolio
Owning disinflationary assets in a phase of high inflation
Rising adaptation
When investing in cryptocurrencies, different trading strategies can be used:
Day trading
Day trading involves buying and selling cryptocurrencies on a daily basis.
The whole process requires a high degree of concentration, emotional resilience and experience. Likewise, day traders also have to pay higher fees overall due to the increased trading of cryptocurrencies.
Therefore, this strategy should only be used by experienced traders.
Technical analysis also works for Bitcoin and other cryptocurrencies.
Swing Trading
Swing trading is an attempt to take longer swings.
If the Bitcoin price has doubled within a short period of time, a correction could be imminent. Swing traders try to sell at the local peak in order to re-enter at a lower price after such a correction.
Those who use this strategy correctly have a very good opportunity to further increase their portfolio in addition to pure appreciation.
Holding (HODL)
In crypto jargon, HODL stands for “holding”, i.e. holding cryptocurrencies for a long period of time.
Crypto-hodlers believe in the value of cryptocurrencies and are also prepared to hold out over long phases in which the price can drop by more than 50%.
With this strategy or attitude, however, one should not underestimate how strongly the emotions can be burdened. Sometimes it can be better to sell, even if one is slightly in the red, than to blindly hold out and hope for a renewed price increase.
If you have decided to buy crypto CFDs, you do not need to store your investment yourself. The following section only refers to physical cryptocurrencies purchased from Binance, Bitpanda or Coinbase, among others.
Cryptocurrencies are stored in a so-called wallet. In practice, different types of wallets can be distinguished.
Investors who only invest in cryptos via CFDs can safely skip this section. A CFD is merely a securitised financial derivative that reflects the price of another asset. Accordingly, no physical storage takes place here.
·        Hot Wallet
A hot wallet is used to store cryptos temporarily. The wallet is online and connected to the internet.
In particular, online services that accept crypto payments can be used with the help of such a wallet. In addition, the temporary storage of acquired cryptos at a trading centre can be described as a hot wallet.
However, the use of a hot wallet comes with a certain risk, as computer systems always have vulnerabilities. In the past, hot wallets have increasingly been the focus of cyber attacks.
·        Cold Wallet
The direct opposite of a hot wallet is a cold wallet.
This is also a virtual wallet that is used to store your own coins. Nevertheless, there is a decisive difference, because a cold wallet is not connected to the internet. All the keys that contain the personal tokens are offline.
We recommend this additional protection because a large part of the established crypto exchanges have already been the target of hacker attacks. For us, the Ledger brand hardware wallets offer by far the best solution. The devices support numerous cryptocurrencies and are particularly stable and of high quality.
Paper Wallet
A paper wallet is a document that contains copies of the wallet’s private and public keys.
Such a paper wallet usually also contains QR codes. These codes can be used to execute and validate transactions. Unlike other wallets, the paper-based form is completely analogue. Consequently, they cannot become the target of a cyber attack or a hardware failure.
However, users should bear in mind that paper can also be lost. Moreover, even with a paper-based wallet, investors should think about its storage. Moisture in particular is considered a major challenge. But theft is also a latent risk.
For larger amounts of money, for example, it is advisable to store them securely in a safe or to store them piecemeal in different locations.
If you are interested in investing in cryptocurrencies, we would like to briefly discuss the important topic of taxation.
However, we also recommend professional advice from a tax advisor here.
Disclaimer: Blockchainwelt is purely an information portal and not certified tax advice!
In general, not only the buying and selling of cryptocurrencies is considered a tax-relevant process. Mining or staking also generates new tokens and is therefore relevant for tax.
Understanding taxes on cryptocurrencies
Understanding taxes on cryptocurrencies
An important factor influencing the tax burden in the crypto sector is the personal tax rate.
Those who hold physical tokens for longer than one year can generally sell them tax-neutrally. If a sale takes place within the first year, the profit is subject to the personal tax rate, the solidarity surcharge and church tax.
If the tokens are lent out as part of the lending process or if capital income is generated through staking, the profits are subject to the final withholding tax, the solidarity surcharge and church tax. In addition, the holding period until tax exemption is extended to ten years.
Private mining is considered a miscellaneous service. Here, 256 euros per year can be earned tax-free. Higher profits are subject to personal income tax.
A CFD is also subject to the final withholding tax. Accordingly, investors only have to pay 25 per cent plus solidarity surcharge and church tax on profits here, in contrast to the purchase of physical assets on a crypto exchange.
CFDs on cryptocurrencies offer tax advantages for many investors, as they only have to be taxed with the final withholding tax.
FAQ
Frequently asked questions about buying Bitcoin
Where is the best place to buy cryptocurrencies?
Cryptocurrencies can be traded on crypto exchanges or via CFD brokers. Exchanges allow you to buy physical cryptocurrencies, whereas crypto CFDs offer tax advantages and allow you to trade with leverage.
Can you buy cryptocurrencies at the bank?
Traditional banks such as the Sparkasse or Volksbank do not yet offer cryptocurrencies for purchase. However, there are start-ups such as the Berlin bank Bitwala or the Stuttgart stock exchange that allow you to invest in cryptocurrencies.
Which cryptocurrencies should I buy?
No one can predict exactly which cryptocurrencies will ultimately prevail. However, in our article we provide insight into coins like Bitcoin, Ethereum, Ripple, IOTA, Cardano, Tezos and Chainlink that have great potential.
Are cryptocurrencies safe?
Cryptocurrencies are based on mathematical encryption methods that cannot yet be cracked. Most mistakes and losses happen mostly due to human error and not the technology itself.
Some projects, such as IOTA, have already generated algorithms that are supposed to be immune even to attacks from quantum computers.
Are cryptocurrencies money?
Money as we know it today is not backed by any intrinsic value. The confidence that we can buy goods promised in the long term for our cash gives value to FIAT currencies, such as the euro.
It is the same with cryptocurrencies. If there is interest in the currencies and the user numbers continue to rise, as in recent years, then the currency increases in value and can also be exchanged for real goods.
Why is a Bitcoin so expensive?
In total, only 21 million Bitcoins will be mined. Many Bitcoins have already been lost in the early years, it is currently calculated that over 5 million Bitcoins have already been lost.
This means there are fewer Bitcoins in the world than there are millionaires, pushing the value of a single BTC into the thousands of euros.
What time should I buy cryptocurrencies?
This is a difficult question to answer. In general, cryptocurrencies can be traded 24/7 worldwide, which means that buying and selling is possible around the clock, even on weekends.
At times, it could be seen that cryptocurrencies performed better at the start of the week than at the weekend. However, this has decreased recently, so that one can probably no longer expect price advantages by trading early at the weekend.
Can I buy all cryptocurrencies?
Theoretically, you could buy all cryptocurrencies that exist. However, it is not advisable to do so, as a large part of the projects are no longer being developed and some projects can also be pyramid schemes.
As a good basis, it can be said that with cryptocurrencies from the top 50 by market capitalisation, you already achieve a very good diversification level.
Are cryptocurrencies a new financial instrument?
Several factors play a role in the value of Bitcoin. On the one hand, Bitcoin plays a role as a means of payment. The cryptocurrency convinces with transparency and at the same time guarantees anonymity. In addition, the blockchain is decentralised, so no third parties are involved in the transaction process.
Furthermore, Bitcoin is considered a store of value. Microtransactions in particular are not part of the currency’s intended field of application. Instead, many investors interpret the currency as digital gold. In crisis-ridden regions, the currency also protects against the effects of the devaluation of the reserve currency. Consequently, Bitcoin helps to overcome political and bureaucratic hurdles.
The technological innovation of blockchain also plays a role in Bitcoin’s value, as the currency introduced the first blockchain. Meanwhile, the technology is on the verge of holistic adaptation in the market.
What returns do cryptocurrencies promise?
An exact statement about the achievable return on a crypto investment is difficult to predict. Asking several investors also offers no added value, because if you ask three investors, you get four opinions.
For this reason, we advocate broadly diversified portfolios. A well-diversified selection of individual coins should provide a clear outperformance to popular indices compared to the stock market.