When it comes to cryptocurrency, it seems like you are either an expert or a complete neophyte. There doesn't seem to be much room to occupy the middle ground. Perhaps that's one reason some people entertaining the thought of getting into crypto never actually make the leap.
One of the stumbling blocks to crypto adoption is the sheer number of choices. Choice is good, but too many choices can be overwhelming. That is the case with crypto for a lot of people. They see half-a-dozen coins and don't know which one to choose. Present them with a few hundred and they cannot wrap their brains around it.
This post has been written with the cryptocurrency neophyte in mind. It is intended to help those new to crypto figure out one or two coins they can buy and actually make use of. We will start with a brief introduction to five of the most popular coins on the market.
The 'Big Five' cryptos
There are thousands of cryptocurrencies you could purchase. That does not mean they are all worth buying into. In fact, most are not. If you are looking to get into crypto as a new user, we recommend one of the following, which we call our 'big five' digital coins:
- Bitcoin - Bitcoin (BTC) was the very first viable cryptocurrency to be made public. As such, it is the standard by which all others are measured. It is also the most expensive coin to own. As of the time of this writing (May 2019), a single coin was worth about USD $6,000. No worries, though. You can buy smaller denominations.
- Bitcoin Cash - Bitcoin Cash (BCH) was created as a hard fork of the original Bitcoin. It allows for larger block sizes and a few mining modifications that make transaction processing faster.
- Litecoin - While not as valuable as Bitcoin, Litecoin (LTC) is seen by some as the one crypto that can successfully compete with Bitcoin in the long run. LTC is gradually being accepted by more merchants around the world.
- Ethereum - Ethereum was the first blockchain developed as a software platform rather than a crypto. The coin associated with it is not actually called Ethereum. It is known as Ether (ETH). Ethereum enjoys a lot of public and corporate exposure.
- XRP - XRP is the digital coin associated with the Ripple electronic payment system. Its strength is that it can operate independently of Ripple. This is a big plus for many crypto buyers, as evidenced by the fact that XRP is second only to Bitcoin in market capitalization.
If none of these suit you, consider looking into Monero, or Neo, or the Binance Coin. Whatever you decide, make sure you first read the rest of this post and then do some online research of your own.
Online gambling with crypto
The main point of this post is to help you decide on a crypto or two that you can buy and make use of. As such, let us talk about the most common reasons people buy digital coins. The first is to facilitate online gambling. Indeed, online gambling is second only to investing as the primary reason for buying crypto.
Let's say you are a huge fan of the MegaMoolah.com slot game. We certainly understand that. But what if you don't want to make deposits using your credit card or bank account? What if you're not comfortable revealing sensitive information to online casinos? You make a crypto deposit, of course.
Your first task would be to find an online casino that deals in crypto. Their numbers are growing, but they are still in the minority right now. Among those that do take crypto deposits, some deal exclusively in crypto. Others accept crypto alongside credit cards, bank transfers, and electronic payment systems.
Almost all crypto-friendly casinos accept Bitcoin and Bitcoin Cash. Litecoin, Ethereum, and Monero are also popular with casino operators. You should be able to find several online casinos that offer multiple crypto options.
Making crypto payments
Maybe online gambling is not your thing. You are looking at crypto to make online payments without having to divulge banking information. Your best bet is to start with Bitcoin. As the first among many, Bitcoin is almost universally accepted by organizations that allow crypto payments.
Litecoin and Ethereum are gaining traction for payments as well. Ethereum is proving especially attractive because its blockchain can be used by organizations to not only accept crypto payments, but also to handle the accounting of those payments.
Some organizations already doing business with the Ripple network will take XRP. If your sole purpose for buying crypto is to make online payments, it would be hard to go wrong with a combination of XRP and BTC.
Local commerce with crypto
Crypto is not as strong as many people would like for local commerce. We say that as a setup for the fact that choosing a crypto for local commerce can be somewhat of a crapshoot. Once again, the default coin here is BTC. If local merchants are going to accept just one coin, it is going to be Bitcoin.
Having said that, it's not unheard of for a local merchant community to be sold on a coin other than BTC. There are communities in New Zealand and Australia that are particularly sweet on Bitcoin Cash, for example. It would be wise to take a look around your community for a few weeks - just to see what everyone is doing.
Getting involved in development
There are some crypto buyers who want to get involved because they want to be part of the development process. They buy in as early adopters with the knowledge that their investments will give them a voice in how the blockchain is developed moving forward. They might even do some of the heavy lifting by contributing code or helping to create the new coin's governance.
In such a case, there really are no limits. Feel free to look at any early-stage project soliciting first-round funding. The only caveat here is that you have to be prepared to spend. Getting involved in early-stage development usually requires a significant investment. But if everything goes well, the investment will pay off.
Crypto as an investment asset
Finally, some people put their money into cryptocurrencies as investment assets. Have you ever heard of 'crypto millionaires'? They are the very people being referenced here. They put significant money into crypto just as securities investors put money into stocks, commodities, etc. The goal is the same too: make money by buying low and selling high.
As for particular cryptos to choose here, we really cannot offer a lot of advice. Investing in any asset - crypto included - involves so many different things. For example, there is risk aversion to consider.
Risk aversion is an investing term used to measure how much risk you are willing to take in order to make the kind of money you are hoping to see. If your aversion to risk is low, that means you are willing to take more risks than the average investor. High risk aversion means you are especially cautious.
Another big concern for investors is return on investment (ROI). This can be understood as the amount of profit made compared to the amount invested. If you invested $100 and got back $102 when you sold your coins, your ROI would be a mere 2%. Would that be enough to make it worth it to you?
If you made that 2% in just a few hours, fine. But if it takes months to earn 2%, you are not doing any better than a savings account at a retail bank. ROI has to be considered in light of both total return and time.
Long- and short-term views
One last thing about crypto investing relates to your investment view. You can adopt either a short- or long-term view for each crypto you look at buying. A short-term view says you are only going to hold your coins for a limited amount of time. This usually means setting a target price at which you sell.
A long-term view suggests you are going to hold on to your coins for at least 12 months, maybe longer. This type of strategy does not put so much emphasis on daily price swings. It is based in the knowledge that nearly every asset will appreciate over time. It is just a matter of how much time you want to wait.
Getting into crypto as a brand-new player can be quite an adventure. There is a steep learning curve, that's for sure. Just deciding which coin to buy first can leave you scratching your head. Knowing this, starting out slowly is always advised. Concentrating on the big five is not a bad strategy either.
Bitcoin, Bitcoin Cash, Litecoin, Ethereum, and XRP are the most widely accepted coins for commerce. Bitcoin and XRP are the most popular for investment purposes. Figure out what you want to do with your coins and then let that be your primary guide.