According to a report published in February 2021, the cryptocurrency market shows no sign of stopping. If the market’s total value had reached $792 million in 2019, by 2026, it’s on track to exceed $5.1 billion, and awareness is at an all-time high. Word of crypto has made it across all corners of the world, reaching regular individuals who love tech or just want to invest in exciting assets. Recently, there has even been some media hype, with celebrities like Elon Musk and Snoop Dogg showing their support for cryptocurrency. With one single tweet, Elon Musk managed to triple the value of dogecoin – a cryptocurrency that started as a joke. It just goes to show that crypto has become a colossal industry in its own right, and it’s hard even for skeptics to ignore it.
But, as popular as cryptocurrency may be, it remains a mystery to most. After purchasing their first bitcoin, Ethereum, Litecoin, or other currencies, many ask themselves: now what? Should you hold on to it (or HODL, if we’re using the popular term) and wait for it to grow, or should you use it as actual currency?
A few years ago, when Bitcoin was pretty much the only cryptocurrency around, and most people who had it were tech supporters, there wasn’t much you could do with crypto except for hold on to it. But, as crypto gained mass adoption, more and more retailers started to accept it as a valid payment method. You still can’t spend crypto with the same ease as fiat currency, but if you want to make crypto payments in 2021, you have a pretty decent list of options.
When to hold on to your cryptocurrency
Most people who invest in crypto do so for its investment potential. Bitcoin, in particular, stands out as the best cryptocurrency to invest in, but Ripple, Ethereum, and Litecoin also stand out. Sometimes, the HODL strategy pays off. We’ve all heard those famous stories of people who received one Bitcoin from a friend in 2013, forgot about it, and now they can’t believe it’s worth over $57,000. However, if you’re going to hold on to crypto, there are a few things you should know:
- Cryptocurrency is extremely volatile. So much so that you need a lot of discipline to refrain from checking on your wallet several times a day. Seeing how crypto value goes up and down is a great way of observing the mechanics of supply and demand, but when money is at stake, it’s easy to lose your nerve. That’s why personal finance experts recommend starting with an inexpensive cryptocurrency, such as dogecoin, and see if you’re comfortable with an asset that’s so volatile.
- You need to know when to sell. It may not be the case with Bitcoin, which, according to many, is too big to fail, but if you invested in a lesser-known cryptocurrency, it might not be such a good idea to hold it forever. For example, if a cryptocurrency you invested in is slowly starting to die out, shows no sign of recovery, and the media has completely lost interest in it, that may be a sign you need to sell. Many coins are overhyped, and once the hype runs out, you realize they weren’t a good investment, to begin with.
- Don’t put all your investment money into cryptocurrency. As much as we all loved cryptocurrency, even avid fans acknowledge that it’s a volatile asset. Crypto may be here to stay, but putting all your money into the same basket is one of the biggest investment mistakes and will sabotage you down the line. To avoid stress and unpleasant surprises, diversify: invest a percentage you are comfortable with crypto, but keep some for traditional, low-volatility investments.
Part of knowing when to hold and when to sell crypto comes from understanding your investment style and preferred level of risk. If you’ve traded or invested before, you probably know a bit about that already. If not, learning about the basics of investing is an important step you shouldn’t skip. You might also want to check out this list of interesting crypto apps for smartphones to cover all your cryptocurrency needs.
How can you spend crypto in 2021?
If you believe in crypto’s potential of one day reaching the status of fiat currency, or you just want to spend it, you can. As mentioned previously, you won’t be able to use crypto everywhere, and not all cryptocurrencies are accepted, but you definitely have more options than a few years ago. The list of vendors and retailers that accept crypto is getting bigger every day. The most recent example is Tesla. After showing his support for Bitcoin on Twitter, Elon Musk recently announced that Tesla would soon be accepting Bitcoin as a method of payment. So, if you want to buy a Tesla and you have Bitcoin to spend, now you can do that.
You can also use Bitcoin to fund your Microsoft account, including the Xbox store. So, if you need to renew your Xbox Ultimate subscription or buy a new game, you’re not limited to your debit or credit card. Other ways to spend your bitcoin include:
- Buying digital vouchers from vendors such as CoinCards and Bitrefill
- Paying for hotel accommodation. For example, Expedia, which is one of the largest travel booking platforms, accepts Bitcoin.
- You can buy home renovation materials from Home Depot
- You can purchase your next website domain from Namecheap
- You can buy groceries from Whole Foods via the Spedn app.
- Some sports teams, such as the Dallas Mavericks and the Miami Dolphins, accept Bitcoin payments for tickets and merch.
- On Twitch, you can pay your favorite creators with Bitcoin.
And these are just a few examples. Even in your area, there may be restaurants and shops that accept Bitcoin, so it’s worth running a Google search. Last but not least, you can make donations with crypto. For example, you can donate to the Wikimedia Foundation, which is behind Wikipedia, or you can use a platform like The Giving Block to see if your favorite nonprofits accept cryptocurrency.
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