Investing in the digital currency Bitcoin is becoming increasingly popular. However, many people are hesitant to buy bitcoin, because it has a very negative carbon footprint. According to one study, the carbon emissions needed to mine bitcoins have increased 126-fold over the last five years.
Fortunately, there are a number of greener cryptocurrencies worth investing in. Ethereum was already greener and has become eco-friendlier since the Merge. Many people are now turning to digital currency for a range of different purposes, from online shopping and buying from independent businesses to investing as a way of growing their wealth over time. They are pleased that there are a lot of green alternatives out there.
Within a matter of years, crypto has gotten a strong foothold in many modern markets, and people all over the world now have access to countless digital currencies. As these have become more popular, they have also become increasingly valuable, with entire markets forming around trading them for profit. Since there are a number of eco-friendly cryptocurrencies to choose from, many people are buying them as well.
But what should you know before you jump in and buy eco-friendly cryptocurrencies of your own?
There are a lot of cryptocurrencies and many are green
Many people initially see Bitcoin as the only “real” cryptocurrency at first, but in reality, there are thousands of individual currencies in existence at any one time. Many of these are lesser-known coins that might only get a small amount of attention, but they still exist and have value in the crypto market. They are becoming even more popular as people discover their benefits, such as having lower carbon footprints.
While a lot of trading revolves around the popular and well-known crypto types, some types of these lesser-known currencies do grow in popularity. While popular coins are often quite volatile and can see major price increases and decreases, smaller ones tend to be more stable at the expense of being less profitable in general. They also require a lower carbon footprint to mine. Chia, SolarCoin and Algorand are examples of cryptocurrencies made specifically to be eco-friendly. Other cryptocurrencies, such as Ethereum, are better for the planet than bitcoin, even if that wasn’t their main selling point.
Choosing an eco-friendly cryptocurrency to invest in is important. Many people get into the industry and find themselves overwhelmed with choices, forcing them to research each coin that might suit their needs because they went in unprepared.
There is no “perfect” cryptocurrency to invest in. Each one has its own advantages and disadvantages that make them a worthwhile or unwise purchase depending on your needs, as well as a varying value. Go to Skrumble or similar sites if you want to learn more about specific crypto types, especially if you are new to the world of crypto and do not know where to start.
The value of green cryptocurrencies can change rapidly
The value of digital currencies can change very quickly, and this is mostly because of the nature of their status as a digital, independent currency. Aside from stablecoins, a single coin of any cryptocurrency is usually based on supply and demand, as well as anything that coin happens to represent or tie back to.
For example, Ethereum might be highly valued for its potential to be used for a multitude of blockchain-based decentralized applications, while Bitcoin is valued for its long-standing reputation and name recognition. Both of these have strong value, and both are worth something when sold on the market.
Green cryptocurrencies may be even more price sensitive, since growing concerns about sustainability can further increase demand. This makes buying and selling for profit a great way to start growing your wealth, but it also forces you to think carefully about when you buy and sell. Green cryptocurrencies may gain popularity even more quickly.
A great rule of thumb for cryptocurrency trading is that you should always try to get in before a major spike in value. If you buy or sell and miss a major value spike, you are more likely to be losing money on your investment than gaining.
Important points to remember prior to buying eco-friendly cryptocurrencies
You can help the planet by investing in eco-friendly cryptocurrencies over bitcoin. However, it is important to understand the following guidelines.
Make sure they are eco-friendly
We have already linked to a list of some of the eco-friendliest digital coins. You can also find out about some more from The Motley Fool, which can help you choose the right ones.
Learn about investing
There are platforms that can help you to learn how to deposit and withdraw fiat currency in the crypto ecosystem. These can also help you with the basic steps of selling, buying and trading cryptocurrencies.
Creating a balanced portfolio
When buying cryptocurrency you’ll need to focus on creating a diversified and balanced portfolio. Don’t put all your money on one crypto coin in the hopes that its value will rise, as you need to keep in mind that cryptocurrencies are highly risky assets in comparison to investments. There’s no legal backing like insurance companies to recover when you suffer a loss in cryptocurrency. Expert sites will give you tips on how to spread your portfolio across various projects in different sectors.
Research, research and more research
All types of investments require a good amount of research. Researching also helps you take note of the risks associated with a specific cryptocurrency of your choice. Go to expert sites should you have any doubts about cryptocurrencies and learn ways on how to judge better when it comes to investing in cryptocurrencies.
If it’s too good to be true, then it probably is
There are many scammers who’d take the first opportunity to weave far-fetched stories about their projects. If the cryptocurrency promises unrealistic benefits, then you must check into it.
Getting the right wallet
Get a suitable crypto wallet that can hold your cryptocurrencies safely. Which type of wallet should you choose as a beginner? If you are unsure go to Skrumble as it’ll help you in choosing a crypto wallet that can safeguard your assets with ease.
Don’t invest more than you can afford to lose
Since there’s no guarantee that the value you put into a token will hold in the long term, it can take years to regain what was lost once a bear market sets in. So never invest more than what you can afford to lose. Manage the risks, remember the downsides of investing can be sudden and sharp, and there’s a higher chance that crypto can go to zero than any other assets or investments.
It’s not a get rich quickly type of investment. Remember to relax, forget about the FOMO and take a more measured approach to investing in the crypto market in order to ensure your best chance at long-term success.
Taxation and regulations
Crypto is taxed a lot like stocks, but due to the industry being fairly new the tax rules keep on changing rapidly.
Prepare yourself for the risks and make sure you have assessed its long-term potential prior to buying.
Limit your allocation to an amount you can afford to lose.
As with all financial holdings, make sure you understand all the tax implications.
When all is said and done, keep the risk management at the forefront of your crypto trading strategy.