Staking cryptocurrencies is a process that involves committing one’s crypto assets to a blockchain network for a certain amount of time, in order to help the network confirm transactions. Staking can be a good way to use your crypto assets to generate an income, as some cryptocurrencies pay high rates of interest for such a commitment.
The choice of which currency to invest in is up to the individual investor. Obviously, it will change at different points in time and near-term price volatility often depends on shifts in market share or momentum.
Bitcoin is the starting point for many investors because its use case is simple, its network is among the most decentralized, and the long-term price momentum has been strong. Many professional investors, large corporations and even a sovereign nation (El Salvador) have invested in this original cryptocurrency.
However, it is often wise to diversify or spread your bets. While Bitcoin was the first cryptocurrency, newer cryptocurrencies offer different use cases. Indeed, second or third generation cryptocurrencies like Ethereum and Solana are backed by more advanced technology, which may boost demand for network capacity and their tokens.
It is difficult to predict which will be the dominant cryptocurrencies in 20 years’ time. For that reason, it may be wise to invest in a basket of cryptocurrencies. Investors should always consider risks when they invest in cryptocurrencies.
