Cryptocurrency has been on the investment scene for some time since the launch of Bitcoin in 2009. Bitcoin is still the most popular cryptocurrency and its name has become somewhat synonymous with cryptocurrency. But there are many other cryptocurrencies — over 9,000 at last count.
Check out: 13 Cheap Cryptocurrencies with the Highest Upside Potential for You
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Since the advent of Bitcoin, cryptocurrency investing has gone from an endeavor shrouded in mystery and accessible only to the tech-savvy few to an easily accessible and potentially profitable asset for the average investor.
Here’s what you need to know about building cryptocurrency wealth in 2024.
Find out what cryptocurrency is — and what it isn’t
Cryptocurrency is a decentralized currency that is digital and encrypted. It is not tied to any country or group of countries, like the US dollar or the euro. It uses blockchain technology to record and verify transactions, so it theoretically cannot be tampered with, lost or stolen.
Cryptocurrency is a volatile investment, so be aware that you can lose money on these transactions.
You don’t need to buy physical bitcoins
In January 2024, the SEC approved a Bitcoin ETF. These funds hold Bitcoin as the underlying asset, unlike previous crypto ETFs that used futures contracts. Buying a spot bitcoin ETF means you can buy shares of an ETF that is backed by physical holdings of the cryptocurrency. The SEC is considering the next spot Ethereum ETF approval.
You can trade Bitcoin and other crypto ETFs in most brokerage accounts, so you may be able to do so in the account you already have.
Crypto exchanges
You can also buy and sell cryptocurrencies on a crypto exchange. Coinbase is a simple crypto exchange. To invest this way, you will be trading cryptocurrency pairs, similar to how an exchange works with currency pairs. For example, you can trade Bitcoin for Dogecoin or vice versa.
Cryptocurrency ETFs
If the idea of buying a single cryptocurrency is intimidating to you, consider a cryptocurrency ETF. These funds do not hold physical cryptocurrencies, but invest in futures. The ProShares Bitcoin & Ether Market Cap Weight Strategy ETF (BETH) is an example of this type of fund. Another option is the Global X Blockchain ETF (BKCH), which holds Coinbase and other crypto exchange companies. These funds offer more variety than spot ETFs.
Some crypto ETFs hold more than one cryptocurrency, giving you more diversification than you would get by buying a fund that only holds bitcoins.
Building a Cryptocurrency Wealth in 2024
Today, buying crypto is as easy as buying stocks, mutual funds or ETFs. You can probably already buy crypto ETFs in your existing brokerage account. If you want to buy physical cryptocurrency, you can use a cryptocurrency exchange. After that, it’s just a matter of managing your investment.
Learn more: 8 Best Cryptocurrencies to Invest in 2024
Investing in crypto for the purpose of building wealth is guided by many of the same principles that investors follow in the stock market. Know what you are buying (“Buy what you know” as a certain successful investor would say), be patient, do your homework and be rational. This is the best way to build wealth in 2024 and beyond.
This article originally appeared on GOBankingRates.com: A Beginner’s Guide to Building Cryptocurrency Wealth in 2024.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
