Cryptocurrency is having its day in the sun, as investors take advantage of the market’s momentum. Here’s everything you need to know about this virtual currency before you purchase your first coin.
For more than a year now, you would’ve been bombarded with cryptocurrency news. It’s also safe to say that this digital asset would’ve snuck into conversations with your friends and family. And who could blame them?
Cryptocurrency prices have been on a warpath ever since early-2020 and the bull run isn’t slowing down anytime soon.
For instance, Bitcoin needed just two months to double in value after hitting a low of US$4106.98 (S$5,500) on March 8, 2020. Add another 10 and it would go on to trade at a high of US$61,683. And that’s just one coin’s worth.
If Papa John’s Pizza kept the 10,000 received as payment for two pies in 2010, it can wipe out its current debt in one fell swoop.
Ironically, it’s easier than ever to invest in cryptocurrency, with more secure wallets and a greater number of exchanges globally. Even DBS has joined the fray, setting up a cryptocurrency exchange for institutional and accredited investors.
Retail investors can heave a sigh of relief, because that’s not the only option available in Singapore.
Here’s everything you need to know about investing in cryptocurrency, from A(ave) to Z(illiqa).
What is a cryptocurrency?
Cryptocurrency: Digital Money Gone Wild
There’s No Central Boss
- Decentralised – Imagine every person who wants to play the game becomes a referee. No single corporation or government can dictate how the cash behaves.
- Every transaction gets a public record. Think of an open ledger where anyone can see exactly how many coins have been minted and how many are still out there to chase.
Less Rust, More Trust
- Because everything’s on the blockchain, your money is as secure as having a bank‑note printed with laser‑engraved, high‑resolution security strips that even the most clever counterfeiters can’t reproduce.
- Audit trails are transparent. No hidden vault in a basement or mysterious “admin” office deciding how much to print. You can peek at the supply at any time.
From “It’s a Payment Tool” to “It’s Gold”
- Coin originally started as a shopping card – paying for coffee, groceries and that fancy online game without the hassle of a credit card number.
- Today, most folks see Bitcoin as a digital gold. It’s finite, just like coins minted for a town festival that will eventually hit the roof of “all you can eat.” Bitcoin’s supply shrinks yearly, adding a touch of scarcity that makes it feel like a trendy collector’s item.
Mix‑n‑Match – The Growing Village of Other Coins
- Ethereum, Litecoin, Ripple – they’re like cousin cousins in the crypto family – each snags their own niche.
- Some focus on smart contracts that automatically enforce agreements. Others get into instant cross‑border payments that would leave traditional banks shaking in their boots.
- For investors, it’s a buffet. Pick your favourite flavour or be an adventurous sampler.
Bottom Line – A Smash Hit for the Curious
Cryptocurrencies are a modern playground where the rules are open, no one’s bossing anyone around, and you can even keep your receipts forever. If you’re looking for an engaging mix of security, transparency and a chance to own a piece of the next gold rush, you might want to take a closer look. And hey – if nothing else, it’s a fun way to talk about money without using official jargon. Enjoy the ride!
How do I start investing?
Despite the dizzying heights that Bitcoin and its brethren have reached, there’s actually no better time to start investing in cryptocurrency. Just 1.3 per cent of the world’s population are cryptocurrency users, highlighting that the market is still in its infancy.
Although investing in cryptocurrency is much easier now, you’re still going to need a few tools before you start hodl-ing.
First and foremost, you need an account on a cryptocurrency exchange. The king of the hill here would be Binance, which has the highest daily trading volume by far and supports over 300 cryptocurrencies. Unfortunately, the exchange doesn’t support SGD deposits.
[[nid:526725]]
On the bright side, you can bypass this by using your multi-currency bank account to make a USD transfer.
If you’d like to avoid the hassle of doing this, you’re in luck. Singaporean exchange Coinhako allows for local bank transfers and supports over 20 cryptocurrencies.
Ditto for New York-based Gemini, whose American and Singaporean platforms have the added benefit of letting you earn interest on your holdings.
Secondly, you might want a cryptocurrency wallet. Cryptocurrency exchanges are highly secure these days and cryptocurrencies themselves are designed to prevent counterfeiting, but it doesn’t hurt to have an extra layer of security.
The best option would be a cold wallet, letting you store your cryptocurrency offline via a specialised USB device or sheet of paper (seriously).
Here are several that you can consider:
Best cryptocurrency cold wallets
Name and wallet type
Price
Benefits
Paper
Free
Hassle-free and low-cost
Multiple copies can be printed
No risk of device malfunction
Ledger Nano X (USB device)
$189
Approximately 1,800 cryptocurrencies supported
Small and light
Connectivity over Bluetooth or USB
Certified by France’s ANSSI
Trezor Model T (USB device)
~$240
Approximately 1,600 cryptocurrencies supported
Coins can be recovered even if device is broken or lost
Open-source software used, allowing for better community feedback
KeepKey (USB device)
$117
Approximately 40 cryptocurrencies supported
Priced competitively
Ability to convert cryptocurrencies that you own
What cryptocurrencies can I invest in?
Choice overload is a gross understatement when it comes to cryptocurrency because there were over 4,000 being circulated as of January 2021. However, it’s not feasible to invest in most of these due to their lack of traction in the market.
The following are some of the more lucrative coins that you can invest in, but do your due diligence before you take the plunge.
1. Bitcoin
You can’t talk about cryptocurrency without mentioning Bitcoin. The granddaddy of all coins was first brought to life in 2008 and is currently viewed as digital gold.
In fact, it’s ‘mined’ like actual gold and is currently just as scarce. Close to 19 million out of a possible 21 million Bitcoins have been ‘mined’ and every coin that follows will take longer to hit the market.
Key financial indicators include a current market cap of over $1.3 trillion, an all-time high that’s close to $86,000, and daily trading volume of approximately $60 billion.
Not only is it currently the most valuable cryptocurrency, it’s also the most widely accepted. Whether you’re buying a self-driving electric car or paying taxes in Switzerland, Bitcoin has you covered.
2. Ethereum
Ethereum, on the other hand, is a very different beast. Currently regarded as the most versatile cryptocurrency, it was launched in July 2015 as a way for individuals to build decentralised applications and serves a variety of other purposes today.
Yes, you can create NFTs from the Ethereum blockchain too. And unlike Bitcoin, Ethereum does not have a maximum supply, throwing scarcity and comparisons to gold out of the window.
Key financial indicators for Ethereum include a current market cap of over $400 billion, an all-time high exceeding $3,600, and daily trading volume of over $43 billion.
Ethereum will also be receiving an upgrade soon, changing its model to a Proof of Stake one. This is a win-win move, as it will be more energy-efficient and equitable for miners.
3. Cardano
Cardano: The Unsung Hero of the Crypto World
People often give Bitcoin and Ethereum a quick glance and wonder why anyone would bother with Cardano. But the story behind this coin is a lot more intriguing than it first looks.
Dreaming Bigger Than the Pack
When the founders of Cardano set out to build a new cryptocurrency, they weren’t just chasing hype or price spikes. Their mission was to craft technology that actually makes a difference—
- Security: Keeping everything foolproof so your data stays safe.
- Transparency: No more secret‑keeping, everything’s on the blockchain.
- Fairness: Ensuring everyone gets a fair shot, whether it’s a product or your education record.
Imagine being able to verify the authenticity of a product or confirm an individual’s credentials with just a quick scan—Cardano makes that possible.
What the Numbers Say
Let’s break down how Cardano’s in the financial arena right now:
- Current market cap: over $50 billion.
- All‑time high: $2.06 peak in mid‑April 2021.
- Daily trading volume: more than $3 billion on average.
The coin has a maximum supply of 45 billion units, and about just over 70% of those have already been mined. That means there’s still plenty of room for growth.
Bottom Line
While Cardano might not have the same name recognition as Bitcoin or Ethereum, its ambitious goals—like easier verification and secure, transparent processes—make it a contender worth watching.
Is cryptocurrency trading the only way to invest, then?
Akin to equities, you don’t need to go through the hassle of actually trading cryptocurrencies to invest in them.
For Bitcoin, the Grayscale Bitcoin Trust (GBTC) and Osprey Bitcoin Trust (OBTC) are available for purchase via an online brokerage platform. There’s no need to sign up with a cryptocurrency exchange as the funds themselves are the ones managing the Bitcoins.
[[nid:526187]]
Alternatively, you can invest in cryptocurrency or blockchain companies. American cryptocurrency exchange Coinbase debuted on the Nasdaq at US$381 in April 2021 via a direct listing.
Nasdaq-listed electronic signature frontrunner DocuSign has been dabbling in blockchain technology since 2015 and has been trading at over US$200 since August 2020.
Finally, you can mine cryptocurrencies to generate coins. However, the environmental costs are grave, depending on the cryptocurrency that you choose. And because you’re competing with other miners, you’ll need a custom-made computer.
Unfortunately, the most crucial component costs over $1,000 and it isn’t readily available as gamers and miners are clamouring for it.
What are the risks of investing in cryptocurrency?
It’s widely known that there aren’t any risk-free investments in the world, even for safe-haven assets. Remember when gold was trading at just US$34,000 per kilogram in 2015?
Cryptocurrency is no different, being a highly volatile asset due to its relative youth. Sharp price movements within a single day are still par for the course.
[[nid:460379]]
Then there’s the issue of realising the gains you’ve made. Selling your now-valuable coin requires you to undergo a multi-step process, much like buying it in the first place. From there, you’re subjected to transaction fees and (possible) foreign exchange rates.
Finally, there’s the perennial issue that cryptocurrency faces: its inherent worth. For shares, they largely reflect a company’s performance. For commodities, they are daily necessities and have already been traded for centuries.
Cryptocurrency might be seeing real-world applications grow as more established companies accept it, but they can easily drop it in an instant too.
If you have a conservative risk appetite and need more time before investing in this newfangled asset, you can consider safer vehicles like robo-advisors in the meantime.
In conclusion
Cryptocurrency: A $2 Trillion Playground
Ever since the pandemic‑brought‑popularity surge of 2020‑2021, “crypto” has been the darling of investors everywhere. Even though its true value is still a bit fuzzy, experts just put a tidy number to it: a US$2 trillion market cap. Think about that—an asset that size simply can’t just vanish in a blink.
Visa & Mastercard Join the Party
Big‑name card networks like Visa and Mastercard are now dipping their toes into the crypto world. That opens up a whole new set of real‑world use cases. The fact that these giants are getting involved sends a clear signal: the industry is becoming more stable and mainstream.
What You Can Do With Crypto Now
- Buy a coffee with Bitcoin or Ethereum—your coffee just got a little more “futuristic.”
- Pay for a movie ticket or a small chunk of that smart‑watch you’re eyeing.
- Leverage the new payment gateways to shop online without exchanging your digital bucks for fiat.
- Invest in crypto‑based funds if you’re ready to play the long‑term game.
Hold on—Don’t Flip Your Coins on Junk Food Yet
Before you decide to spend your newly minted virtual coins on pizza slices or gaming gear, keep a few things in mind: crypto’s a volatile playground. Colorful ad slogans are great, but the market can swing wildly. It’s better to think of it as an exciting, high‑risk side hustle rather than a guaranteed cash flow.
Disclaimer: This piece first appeared on SingSaver.com.sg. All information is for general knowledge only and does not constitute professional financial advice. Happy investing—but always do a thorough read‑through before tacking on the moolah!
