Cryptocurrency in 2022: asset rescue or road to nowhere?

Against the background of the unstable economic situation caused by the events in Ukraine, many people are concerned about the safety of their savings. Difficulties with traditional investment options – currencies, securities, real estate, gold – force us to look for alternative tools for generating income. One of them is cryptocurrencies. However, this market has its own nuances.

Beginners – and not only – have a lot of questions. Is it worth buying cryptocurrencies now? How to formalize the purchase of virtual assets, what should you pay attention to in the process, and what are the ways to withdraw fiat? The answers to these questions are in our article.

Does it make sense to buy crypto now?

Recently, analysts have noted an increased interest of private investors in the cryptocurrency market. After the start of full-scale hostilities on the territory of Ukraine, many world markets were shaken. The Russian stock market collapsed, severe restrictions were imposed on the withdrawal of currency both in the Russian Federation and in Ukraine. The real exchange rate of the Russian ruble against the dollar doubled. No one can say what will happen tomorrow, let alone in the longer term. Millions of people were forced to leave their permanent place of residence and seek refuge from war in neighboring countries. Of course, in this case, I would like to take my savings with me, or at least be sure that they will not depreciate in a week or a month.

The stock market is in a fever, hard limits are set on the withdrawal of currency. Now you need to stand in lines in the hope that there will be enough dollars for everyone. It makes sense to buy real estate only somewhere abroad. But it’s scary to take out a large amount in cash dollars or euros, and keeping it under your pillow is simply dangerous. What to do in such a situation? As an option, buy a cryptocurrency with at least a part of the available funds.

This option has its undeniable Benefits:

• you can withdraw assets to fiat anywhere in the world where there is an Internet connection;
• on a regular flash drive you can store millions in dollar terms;
• when traveling abroad, the crypt does not need to be declared;
• no one can confiscate or steal coins from a cold wallet (flash drive) without physical access to it and its owner.

Of course, there are also limitations:

• loss of the cold wallet key file will close access to the cryptocurrency forever;
• frequent price fluctuations in a wide range;
• choosing a reliable cryptocurrency;
• beginners may have difficulty.

Summarizing, we can say that cryptocurrencies are definitely worthy of attention both as an investment tool and as a means to save one’s capital in an economic crisis. Of course, this does not mean that it is necessary to keep all the funds in the crypt, but some part in modern realities is a must.

How to buy digital currency?

So, if the decision to buy cryptocurrency is made, how to do it? There are several options for purchasing it:

• through a crypto exchange;
• through an online exchanger;
• directly from another person.

For beginners, it is better to choose the first 2 options. If you need to buy quickly and a little, then it is better to use an online exchanger. In the event that it is planned to spend several tens of thousands of dollars on the purchase of cryptocurrency, it is more profitable to do this through the exchange.

Advantages of online exchangers:

• a wide range of payment instruments for depositing/withdrawing fiat money;
• there is no need to go through the registration procedure;
• simple and understandable for beginners;
• fast payouts.

Disadvantages of exchangers:

• not the most profitable course;
• limited number of cryptocurrencies available for purchase;
• as a rule, they operate with relatively small amounts ranging from tens to thousands of dollars.

It turns out that online exchangers are convenient to use when you need to buy a small amount of cryptocurrency without unnecessary gestures. But what if you decide to invest a substantial amount in virtual assets? This is where crypto exchanges come to the rescue. This option is also convenient for trading, by making a profit from buying and selling cryptocurrencies due to exchange rate differences.

Exchange advantages:

• a large number of cryptocurrencies and payment options;
• favorable exchange rate;
• in some jurisdictions, customers can count on legislative protection of their rights;
• many trading tools for trading.

Disadvantages of crypto exchanges:

• the functionality is overloaded and redundant for one-time purchases;
• account registration is required, and often its verification;

Despite their shortcomings, top cryptocurrency exchanges are more reliable in terms of fraud or computer hacking. Yes, and you can withdraw your coins to a cold wallet at any time. Due to the benefits, crypto exchanges are most often used to buy or sell cryptocurrencies.

Buying crypto on the exchange

For example, here are instructions for buying cryptocurrency on the TOP-1 exchange in terms of trading volume in the world – Binance:

• We go through the registration process. To do this, you must specify a phone number and email address, create a password.
• Then we go through verification. The user must provide their photo and photo of an identity document.
• We are waiting for verification. After that, the new user gets access to all the functionality of the exchange.
• We replenish the balance of a personal account. To do this, go to the “Wallet”, select the currency of replenishment and a convenient method. Residents of the Russian Federation have limited options for replenishing and withdrawing fiat funds in accordance with sanctions restrictions. And for Ukrainians, on the contrary, a 0% commission was set for withdrawing funds to bank cards.
• We buy cryptocurrency. The option is available immediately after entering the money. Spot and p2p markets can be used for this. In the first case, the transaction takes place through the mediation of the exchange at the market rate. In the second – directly between 2 people.

After the purchase, the cryptocurrency can be left on your account or withdrawn for cold storage. If the amount is relatively small or you plan to make money on trading, then it is better to leave the assets on the exchange. For long-term investment, a cold wallet will be more reliable.

What is the best crypto to buy?

For beginners, the issue of choosing a cryptocurrency for purchase is the most relevant. The best solution is to purchase coins from the TOP-10 rating of cryptocurrencies by capitalization. These are BTC, ETH, BNB, ADA, XRP, SOL, etc. Beginners should give preference to reliability over potential profit. For example, bitcoin is an analogue of gold in the crypto world and an indicator of the entire market. If the cryptocurrency collapses, then this coin will disappear last. Ethereum is the most technologically advanced cryptocurrency, many projects have been created on its blockchain. It was he who gave life to technologies such as profitable farming, DeFi, NFT and many others.

Lesser-known cryptocurrencies may show greater growth over a distance, but one or two out of hundreds of projects can shoot. And there is practically no chance that a beginner will choose the right coin.

For those who just want to save capital from economic risks, you should pay attention to stablecoins. These are cryptocurrencies, the rate of which is pegged at a ratio of 1:1 to real currencies. For example, USDT or USDC. If necessary, they can be exchanged back at any time for rubles, dollars or hryvnias with virtually no loss or even a small profit. But this is not the case with cryptocurrencies. Perhaps, it is at this moment that the market will be drawn down and it will be necessary to wait for its recovery in order not to go into the red.

Therefore, cryptocurrencies are better used as long-term investments (1-2 years), and stablecoins – to protect capital from depreciation. In general, the popularity of virtual assets as investment instruments is constantly growing not only among ordinary users, but also among institutional investors.

Perhaps the time has come for you to buy some ETH or BTC?

Disclaimer. Investing in any financial asset carries the risk of losing capital. Nothing in this text can be considered an investment recommendation or an offer to buy/sell any financial instruments. For all their actions in the stock market, each investor bears full responsibility independently.