Possibilities to Invest in Crypto
In the world of crypto, there’s a lot of ways you can buy a coin/token. Today I’ll try to list and explain at least every type of those ways with some examples. I’ll also share with you what I use and how I’m using it.
If you see a word related to crypto and you don’t know what it means, I’ve defined some of them at the bottom of this article to help you understand.
Nothing in this article is Financial Advice, always do your research.
1. Centralized Exchanges (CEX)
As of 2022, CEXs are the most used mode of operation for cryptocurrency exchanges. The speed and cost-efficiency of processing transactions by a single point of authority is convenient for day traders and crypto investors to purchase and sell crypto.
However, CEXs are operated by a central entity, they don’t reveal their internal operations to the public. This leads to a lack of transparency which can be disadvantageous.
CEXs are often the biggest targets for potential hackers because they’re holding custody over users’ assets.
In 2021, over $200 million worth of customer funds have been stolen.
Technical issues or coordinated attacks can lead to significant downtime of CEX services. Finally, centralized exchanges represent a target for governments, allowing regulators to freeze and/or seize your funds and force the exchanges’ parent companies to reveal your personal information.
2. Decentralized Exchanges (DEX)
Decentralized Exchanges are similar to CEXs but no one has control of your funds except you. The transactions are facilitated through the use of self-executing agreements written in code called smart contracts. You don’t give up your privacy because no one is holding or requiring that information, it is made automatically using a hot wallet like Metamask and a so-called Decentralized Application (DAPP).
Here you are responsible for everything you do, if you lose your funds due to a mistake, it will be your fault and no one will help you. This is where scams come in, on DEXs you have a lot of scams happening, so be careful and do your research.
In 2021, over $2.2 billion in cryptocurrencies have been stolen from DeFi platforms.
DEXs are set on blockchains with smart contracts capabilities. This means that there can be multiple DEXs on a single blockchain, and there can be a single DEX that is working on multiple networks.
Some DEXs have possibilities to transfer funds from one network (ex: ETHereum) to another one (ex: SOLana), this functionality is called a “Bridge”.
Some examples of DEXs on their networks:
- Ethereum: Sushiswap, Uniswap, 1inch
- Binance Smart Chain: Pancakeswap, BiSwap, 1inch
3. Hybrid Exchange (HEX)
Hybrid Exchanges give users real-time service access and provide solutions to privacy and availability. Traders can perform transactions on them and at the same time, instead of keeping your funds in hot wallets, as the Centralized Exchanges do, they keep them in cold storage. Those platforms also do not allow third parties to regulate exchanges in cryptos.
Those type of exchanges gives the user privacy, security, and availability at the same time, but remember, even if the funds are in cold storage, those are not in your wallet, those wallets are owned by the exchange first.
“Not Your Keys, Not Your Crypto”
4. Launchpads
Launchpads are composed of a couple of things:
- First, you have a website of a project, this project will have its token.
- Second, you have to have a certain amount of those tokens to participate in those launchpads.
- Third, there is a certain tier that you get depending on the number of tokens you hold, for example, “POLS”, Polkastarter:
The tier or level will determine the amount of allocation you get, the more POLS you hold, the more you can invest in those launchpads.
Here’s an example of a project and its profit made using the POLS launchpad :
This project would have made you more than 5.5x of your invested funds in a period of 1 to 2 months.
There’s a lot of launchpads in the world of crypto but often the entry price is high, we’re talking even 20.000$. On top of that, you will have to have more funds to invest in the projects you’re eligible to.
5. Private Sales
This is the type of investment everyone dreams about, here you will find the best prices for tokens.
They can easily make 1000% from the day you invest to the day they launch. But there’s a catch, a small one, you have to be a big fish, a whale to invest.
And the truth is, the good private sales, not those you see on social media, but those that you’re invited to, or you’re a part of a community that’s launching it, are really hard to get into.
My opinion and what I use
I operate In different ways, everything depends on the Market Cap of the token or the type of investment I’m making.
Large-cap coins
Approximately above $10B Market cap.
I will buy those from a reputable exchange and either withdraw them to my Cold/Hot wallet or hold them on the exchange itself.
I usually withdraw every token that I believe in, or if the amount exceeds $10k. If it’s not supported by the Cold wallet I will use the Hot one instead but Cold storage is always prefferable.
You should note that those will make the least profits because they already have Big Market Caps. That said if a coin like this makes you 2–3x, you should be happy.
Some reputable exchanges you should try:
- Coinbase: https://www.coinbase.com/join/sacewi_x
- Binance: https://accounts.binance.com/en/register?ref=54559733
- Kraken: https://www.kraken.com/sign-up
- FTX: https://ftx.com/referrals#a=55311307
- Crypto.com: Use my referral link https://crypto.com/app/ngtywsqk9n to sign up for Crypto.com and you’ll get $25
Medium-cap coins
Approximately between $1B and $10B Market cap.
Almost all of them can be found on all of the exchanges I’ve mentioned above. For those that are not available on them, I will check on Coingecko (CG) or Coinmarketcap (CMM) to see where I can buy them, under the tab: “markets” or “exchanges”.
There are also other possibilities for those, using a DEX, but in some cases like Ethereum where the Gas Fee is more than 100$ these days, I will never use this type of Exchange if the coin is already on a CEX. I will just withdraw the coins after I buy them on CEX to my Hot wallet.
Why would I pay 100$ in Gas Fees just to buy a coin?
That’s a good question, check the “Small-Cap Coins” and “Micro-Cap Coins” chapters for the answer.
You should note that those will not make you a lot of profits either because they already have Big Market Caps. That said if a coin like this makes you 2–5x, you should be happy.
Small-cap coins
Approximately between $50M and $1B Market cap.
If you’re starting in crypto with less than $10k like I did, this is the place you should search for profits and gains. I did start in crypto with 250$.
Usually, you can still find them on CG and CMM to easily access information about them. Some coins will not be on them and you’ll have to make a bigger effort to do your research, but trust me, it’s worth it.
If the coin is on CMM or CG I will look at the markets tab, if there’s a CEX available I will use that, but if not, I will use a DEX.
Here come the Gas Fees, I am willing to pay 100$ in Gas Fees if I see potential in the project, I will compare it to its competitors and calculate what is the most profit I can make with that token.
The profits you can make here vary between 2–100x. It is a lot, and yes it is possible. Imagine you’ve put 100$ (+100$ for Gas) and you make 100x on that, this is “100 x 1000= 100.000$”. The profits here can be enormous. Profits like this don’t come in days but rather weeks or months.
That’s the upside, but it can always go down 90%, it is also possible, that happened to me, not once. When you’re losing money on a simple 100$ investment, there’s no way you’ll sell that because of the Gas Fee and you should just forget about it at this point.
There’s also a lot of scams in this market cap range, if you don’t make proper research you can lose ALL your funds. Always do your research before making a decision, research has to be your priority in this field.
It can always go both ways, don’t underestimate that and invest only what you can lose.
Micro-cap coins
Approximately less than $50M Market cap.
You will not find those on CEX, sometimes you won’t even find them on CG or CMM. You have to make a great effort to find them.
Profits in this market cap range can vary between 2–1000x, this market cap range is very small, your funds can skyrocket 100% and tank -90% in the same day, that’s a high volatility place and you should invest here only if you already have a great knowledge. The thing is, even if you find only one gem, it can make you this 1000x and change your life.
You should be aware that It is very rare and hard to make such trades. I never succeeded to make such a trade, the most profit I made was somewhere around 70x.
There’s also a lot of scams here, always do your research.
Stablecoins
I hold them everywhere, on exchanges, on hot wallets, in DeFi.
I hold a percentage on exchanges and hot wallets to buy into good opportunities. I’m also lending some stablecoins on DeFi to make a good yield on my money. One of them is $UST and Anchor protocol where I make approximatively 20% APR, but DeFi is for a future article.
The last place I’m holding my stablecoins is on Wallets like BlockFi or Celsius, I will also transfer here some of my other cryptos to earn some passive income.
Launchpads and Private Sales
I am eligible for a couple of launchpads and if I see a great project coming out I will heavily invest in it. Then when I receive those coins I will make a strategy that is depending on how much I’ve bought them for, and how much are they worth right now.
I am also an investor in some Private Sales I can’t disclose here because they’re not yet shared anywhere.
Some keywords to help you understand
- Order book: a collection of buy and sell orders posted by individual traders
- FIAT: is a government-issued currency like USD, EUR.
- Orders are requests to buy or sell a certain amount of a specific cryptocurrency at a certain price.
- Cold wallet: wallet not connected to the internet at all times, it is a physical electronic wallet. (Example: Ledger Nano S/X)
- Hot wallet: wallet connected to the internet but you hold the private keys, it can be an app on your phone, PC, or an extension in your browser. (Example: Metamask, Trustwallet, Daedalus)
- Market cap: the market capitalization of a coin is the total value of all the coins that have been mined. (Tokens In Circulation X current Market Price)
- DeFi: Decentralized Finance, those are apps on the Web3 where you connect through a hot wallet, I will write an article about it shortly.
- UST: is a stablecoin in the Terra Luna Ecosystem
- APR: Anual Percentage Rate
- yield: just another word for APR
- Gas Fee: this is the cost you have to pay for your transaction to proceed, it may vary a lot. Some networks Gas Fees are less than 1$ and some of them are more than 100$.
- NFA: Not Financial Advice
- DYOR: Do Your Own Research
- CG: https://CoinGecko.com/
- CMM: CoinMarketCap.com
- passive income: that’s an income where you make little or no effort and it generates you a certain amount. This can be daily, weekly, monthly, … it all depends on where you get this type of income.
Thank you for reading and don’t forget, Not your keys, not your crypto.
