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How to invest in cryptocurrencies and which are the most profitable in 2021

What are cryptocurrencies

The most widespread definition of virtual currency is that it is a digital currency, not a physical one, that uses cryptography to secure and manage transactions, as well as to create new currencies.

This explanation of what a cryptocurrency is includes the two most important characteristics of these electronic currencies. The first is that it does not have a physical support. That is, there are no bills or coins like there are euros, dollars or pounds . Cryptocurrencies are virtual and although they can be stored in physical devices (wallets such as hard drives or USB sticks) they do not have a physical representation.

The second is that cryptography is used to create new units, which for practical purposes implies that it does not depend on any government or country. With virtual currencies there is no central body or government in charge of creating new currencies and putting more money in the market. As an example, Bitcoin uses blockchain technology to regulate the creation of new units . Also, in this case, the number of coins available is limited, something that is not always the case with other cryptocurrencies.

Types of cryptocurrencies

Dash, Ethereum, Ripple, Litecoin … there are many virtual currencies beyond the famous bitcoin. In fact, today the number of virtual currencies far exceeds 1,300 worldwide.

What differentiates the types of cryptocurrencies  is the technology they use on the one hand and their philosophy on the other. To understand it better, most virtual currencies use blockchain technology but with certain changes that can make them faster in processing transactions, for example. In addition, there are also currencies that use completely different formulas. To this is added the philosophical part such as putting a finite number on the  currencies that will be in circulation (bitcoin ) or not, as well as the degree of transparency in the transactions.  

Although when investing it is necessary to have sufficient financial knowledge and to know exactly what are the products in which we are depositing our money and what risks we are assuming. At Finect we tell you which are the best cryptocurrencies to invest  and what you should take into account to choose them.

List of cryptocurrencies

How many cryptocurrencies are there? Over 2000 and counting. Every week some new virtual currency is created in a process called ICO, which we will summarize later.

The most popular virtual currencies right now are the following:

List of cryptocurrencies

BitcoinLitecoinNxt

EthereumBitcoincashTron

RippleDashIota

CurrencyZcashCardano

StellarNoNeo

The number of existing virtual currencies is much larger and continues to grow every day. To consult the legal cryptocurrencies you can use these two links with more than 800 virtual currencies and their corresponding price : World Coin Index  and CoinMarketCap .

In both places you will be able to consult a list of the most important virtual currencies and also see the price of these virtual currencies . We also leave you here a page where the current price of the main cryptocurrencies appears .

New cryptocurrencies

The world of virtual currencies never stops and new proposals appear almost daily, known as altcoins or alternative coins in reference to the fact that they are alternatives to bitcoins . In the previous point we have already reviewed some of the most important and now we are going to see how to invest in new cryptocurrencies.

Just like there are company IPOs, cryptocurrencies also have their coming-out. They are the so-called ICO or Initial Coin Offering and that the investor in the stock market will remind the IPO or Initial Public Offering that collect the market exits and are called IPOs in Spanish.

ICOs are used to finance business projects and culminate in the birth of new virtual currencies . With the ICO, the company puts new virtual currencies into circulation in exchange for money. 

If you are considering investing, within the world of digital investment, an easy, simple and safe way to start investing and learning is through an intelligent manager. Also benefit from the 50 euros welcome, the best promotions and its low commissions 

What cryptocurrency to invest in

Winning coins with cryptocurrencies is possible, but you have to know which one to bet on and how to do it. In this sense, there are different ways to invest in cryptocurrencies from trading with cryptocurrencies to mining virtual currencies. Choosing the asset well and the form of exploitation is key, especially when they are so volatile and have so much risk.

Best cryptocurrencies to invest in 2021

What have been the most profitable cryptocurrencies of 2020 and so far in 2021? What currencies have achieved the best returns? The following list includes the ones that accrue the most benefits for a year. You can see the full list here . 

  • Aave. Accumulates a profitability of + 6398.22% in the last year.
  • Kusama. Accumulates a profitability of + 5222.37% in the last year.
  • Celsius Netowork. It accumulates a profitability of + 3843.88% in the last year.
  • Band Protocol. It accumulates a profitability of + 2850.66% in the last year.
  • Theta Token. Accumulates a profitability of + 2299.39% in the last year.
  • Reserve Rights. It accumulates a profitability of + 2,138.28% in the last year.
  • Loopring. Accumulates a profitability of + 1939.66% in the last year.
  • THORChain. It accumulates a profitability of + 1797.66% in the last year.
  • SwissBorg. Accumulates a profitability of + 1669.58% in the last year
  • Zilliga. Accumulates a profitability of + 1,454.44% in the last year.

In addition, in this very complex year, the technology sector is one of the most boosted. All this situation has caused online sales to skyrocket, the use of food delivery platforms at home, to watch series and movies, etc. This has caused large technology companies to have had a strong rebound in the stock market, placing the RV Technology Sector category among the best performing so far this year. For this reason, at Finect we have developed this  showcase with the best funds that invest in technology companies  at the moment: 

Most profitable cryptocurrencies 

As the stock market saying goes, past returns do not ensure future returns. The evolution of a virtual currency is a good indication of its potential, but that does not mean that it is the best cryptocurrency to invest in 2021 . The price of virtual currencies , with falls of more than 50% since the beginning of the year is a good example. Is this an indication that you have to flee the sector in a hurry? Not much less, just that the price was too inflated.

What cryptocurrencies are performing best in 2021? This is a list of digital currencies with the best future taking into account their potential and evolution so far.

Bitcoin

Whether we like it or not, bitcoin is still the main cryptocurrency, and the best to invest,  the one that sets the standard of behavior for the rest of virtual currencies. There are several reasons why investing in bitcoin can be thought of as a reasonable investment, and it is because it is decentralized, that is, there is no central institution that controls the supply of bitcoin.

There will be currencies that appreciate more, especially ICOs, but if there is one with a future, this is bitcoin. In this article we explain how to buy bitcoin .

Ethereum

Ehtereum is the great alternative to Bitcoin and the second virtual currency in terms of capitalization. Still far from the leader and discarded the possibility of it surpassing it as digital money, its strength is in the development of applications and how it uses smart contracts in development environments.

Ethereum and Ether were already one of the most profitable cryptocurrencies in years past.

An alternative to direct investment in Ethereum is to buy cryptocurrencies based on its technology such as Aragon or Stox .

Ripple

We are facing the fourth virtual currency in terms of capitalization after Bitcoin, Ethereum and Bitcoin Cash . It is a currency that has grown less than the rest in the last quarter of last year and has great potential.

Ripple is not a rookie, since it has 5 years of life. It is based on technology and allows up to 1,000 transactions per second, much faster than Bitcoin. In addition, its technology can be used as a protocol

IOTA

IOTA is one of the most ambitious projects in the field of cryptocurrencies. Its objective is to incorporate virtual currencies to the internet of things and does so by neglecting the blockchain technology used by most currencies of this type. IOTA is based on Tangle technology , which in theory is much more scalable, faster, and lighter than blockchain.

NEO

Known as China’s Ethereum, its future will be linked to what the Asian giant decides about the future of cryptocurrencies. The Chinese government has already announced greater control over the sector and banned ICOs at the time.

Litecoin

Litecoin is one of the veterans in the sector. Created in 2011, it sought to reduce transaction time compared to bitcoin.

Like Bitcoin, Litecoin’s limit is 84 million coins, of which there are already about 55 million in circulation.

Reddcoin

Reddcoin or RDD is one of the low cost cryptocurrencies. It defines itself as a social currency and its use is limited to social networks.

Reddcoin has its own social tipping platform that can now be used on Twitter and Reddit.

Currency

Monero is the anonymous cryptocurrency. With it the details of the coin transaction cannot be traced. That is its main strength compared to other options and what gives it value.

How to buy cryptocurrencies

There are mainly two ways to invest in cryptocurrencies : buy cryptocurrencies or mine them. The first option is the most common and also the most accessible.

Buying a virtual currency is not that different from investing in commodities, for example. What changes is the platform through which it is done. And it is to invest in cryptocurrencies in 2021  there are specialized websites and with their own cryptocurrency wallets, which is where cybernetic currencies are kept.

Cryptocurrency wallets

There are several types of wallets for virtual currency depending on their operation and security. Sorted according to security would be the following:

  • Cold wallets. It is hardware or a physical device where the coins are kept. It is the safest against theft, but also the least practical when making transactions.
  • Portfolio Applications. It is software that simulates a wallet and is accessed after downloading the program on your computer.
  • Online wallets. They are the most widespread. They are accessed online through the internet, without the need to download anything. Their main advantage is that they are very practical when making transactions.
  • Exchange houses. They are the cryptocurrency banks and they work in a very similar way to a broker. It is, without a doubt, the easiest way to buy and sell cryptocurrencies.

Where to invest in cryptocurrencies

Which specific purse to choose? Where can I buy cryptocurrencies ? It will depend in the first place on the virtual currency you want to buy, since not all of them accept all currencies. From there this is a list with the most popular sites:

List of cryptocurrencies

Coinbase (online wallet)CEX.io (online wallet)Mycelium (online wallet)

Xapo (cold wallet with mobile application and exchange house)Exodus (wallet app)Bitcoin Core (online wallet)

Jaxx (online wallet and wallet app)Blockchain (online wallet)Electrum (online wallet and cold wallet)

Trezor (cold wallet)Bread Wallet (wallet app)Bitgo (online wallet) in

Bitstamp (exchange house)Kraken (exchange house)Bitfinex (exchange house)

Mining cryptocurrencies

The second way to invest in cryptocurrencies is how to mine cryptocurrencies . In other words, join the group of people who seek to solve the mathematical algorithms that will give you a piece of the digital currency that you are mining.

The most repeated question at this point is how to mine cryptocurrencies, what does it take to become a virtual miner. To start you will need a machine, a computer. In theory, any computer works but in reality, if you want your activity to be profitable, you must have a specialized machine .

The more valuable the coin you want to mine, the more power the machine will need, the more electricity it will consume and the more noise it will produce. The reason is that there are many more mining and if your machine is not powerful or you do not have many machines, it will not be profitable because you will spend more energy in obtaining it than what you will get by mining.

In recent times, an alternative has emerged to mine cryptocurrencies without a computer. It’s all about cloud mining . In this case, what you do is hire the mining power you want in a mining farm. The higher the power, the higher the gains. Thus, instead of having computers in your home dedicated to mining cryptocurrencies, you pay because they are elsewhere. Obviously, the performance will be lower because you will pay the Cloud Mining company to rent the machines to you or, rather, they give you mining power.

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