If you caught any part of Super Bowl LVI, you may have noticed a futuristic edge to the commercials. From electric cars to cryptocurrency, these future novels became more of a reality for the masses.
Advertisers took advantage of the country’s biggest stage to promote crypto companies such as EToro, Crypto.com, and FTX. The decision to advertise during perhaps the biggest American sports event of the year moves cryptocurrency from its dark, mysterious corner in the tech world to the main stage of investment opportunities.
If the commercials caught your attention and have you thinking about crypto investments, here’s what to know before you go all in.
The technology behind Bitcoin and most other cryptocurrencies is known as the blockchain, which maintains a tamper-resistant record of transactions and keeps track of who owns what. One of the main features of cryptocurrency is that it is decentralized, meaning it operates without a central authority such as a government or bank.
Types of cryptocurrencies
Not all cryptocurrencies are the same. More than 17,000 different cryptocurrencies are traded publicly, according to CoinMarketCap.com. Here are some of the more common types:
- Bitcoin is the first and most valuable cryptocurrency
- Ethereum is commonly used to carry out financial transactions more complex than those supported by Bitcoin
- Tether is what’s called a stablecoin and its price is anchored at $1
- Cardano is a competitor to Ethereum led by one of its co-founders
- Solana is another competitor to Ethereum that emphasizes speed and cost-effectiveness
- Dogecoin began as a joke but has grown to be among the most valuable cryptocurrencies
If the various cryptocurrencies weren’t enough to navigate, there are millions of NFTs — or nonfungible tokens — which are based on similar technology and offer ownership of content such as pictures and videos.
Investing in crypto
No matter how mainstream cryptocurrency may become, it’s a risky investment nonetheless. A general rule of thumb is that high-risk investments should make up a small portion of your portfolio – one common guideline is no more than 10%. Consider first securing your retirement savings, paying down debt, or investing in less volatile funds.
Most importantly, do your homework before investing in cryptocurrency. Find a financial advisor who is familiar with cryptocurrency and can drill down into the nuances of digital investments.
If you’re looking to diversify your portfolio to help you reach your financial goals, connect with us to get started.