Beginner's Guide to Investing in Digital Currencies: Why Are These 5 Coins Worth Watching?

Cryptocurrency markets have moved beyond niche circles and entered mainstream view. However, for beginners, the choice among over 20,000 cryptocurrencies can be overwhelming. What should you invest in? How can you avoid pitfalls? This guide outlines the core logic of investing in digital currencies.

Cryptocurrency Basics: Why Are More and More People Paying Attention?

Digital currencies are not a new concept. From electronic money and virtual currencies to today’s cryptocurrencies, regulatory policies are gradually improving worldwide. Currently, there are over 300 million crypto users globally, with a daily trading volume exceeding $100 billion. More than 18,000 companies accept cryptocurrencies as payment.

When we talk about digital currencies, we mainly refer to decentralized cryptographic assets issued and circulated over the internet based on cryptography and P2P technology, not centralized payment systems like PayPal or Payoneer. The main features of these currencies are:

• Fixed total supply: Prevents excessive issuance and inflation
• Transparent and secure: Every transaction is confirmed through network consensus and cannot be tampered with
• Low transaction costs: No intermediaries needed, faster and cheaper cross-border remittances
• Free circulation: Users can transfer directly between each other with high flexibility

Golden Rules for Beginners: 5 Must-Choose Cryptocurrencies

Although there are up to 20,000 cryptocurrencies, beginners should remember two “don’ts”:

❌ Don’t choose altcoins (especially those ranked outside the top 100 by market cap), as these are highly volatile and prone to wipe out your investment.

❌ Don’t pick projects without whitepapers, with anonymous teams, or heavily hyped, as nine out of ten are scams to fleece investors.

1. Bitcoin (BTC) — The Safe Entry Point

Current Price: $64.15K | Market Cap: $1,282.68B

Bitcoin is the gold standard of cryptocurrencies and the safest choice for beginners:

• Low barrier to understanding: As a digital store of value, it’s simple to grasp without complex technical knowledge
• Highest liquidity: Largest market cap, deepest trading volume, supported by almost all exchanges
• Institutional recognition: Included in balance sheets of Tesla, MicroStrategy, and other major companies
• Strong security: Based on PoW consensus and decentralized network, never been compromised
• Hedge asset: Often used as a safe haven during economic turbulence

2. Ethereum (ETH) — Balance of Stability and Growth

Current Price: $1.86K | Market Cap: $224.33B

Ethereum is the infrastructure for DeFi, NFTs, and blockchain gaming, with ongoing demand:

• Large ecosystem: Most blockchain applications are built on Ethereum, with high practical value
• Technical upgrades: Transition to PoS improves scalability and reduces energy consumption
• Ample liquidity: Second in market cap, making buying and selling easier for beginners

3. Ripple (XRP) — High Risk but Practical Use

Current Price: $1.36 | Market Cap: $82.74B

XRP focuses on cross-border payments for financial institutions, with clear use cases:

• Explicit purpose: Low-cost international remittances completed in 3-5 seconds, some banks are adopting
• Very low transaction costs: Suitable for high-frequency trading, relatively affordable price
• High scalability: Can process 1,500 transactions per second, far exceeding Bitcoin

⚠️ Important Tip: XRP is relatively centralized and faces regulatory risks. It’s recommended to hold only a small portion for testing.

4. Binance Coin (BNB) — Benefits from Exchange Ecosystem

Current Price: $585.90 | Market Cap: $79.89B

BNB is the platform token of the world’s largest exchange, offering utility and risk control:

• High utility: Using BNB to pay trading fees grants discounts, saving costs long-term
• Reasonable price: Much lower than BTC, more accessible for beginners
• Excellent liquidity: Binance’s trading volume is the highest globally, no worries about “no buyers”
• Relatively lower volatility: During bull markets, exchange tokens tend to perform steadily
• Deflationary mechanism: Quarterly buybacks and burns with profits, potential for long-term appreciation

5. Stablecoins (USDC, USDT) — Zero-Risk Practice Tools

USDC Current Price: $1.00 | Market Cap: $74.89B

Stablecoins are essential tools for beginners, not investment assets:

• Zero volatility: Pegged 1:1 to USD, ideal for learning trading, transfers, or temporary hedging
• Practice platform: Use stablecoins to familiarize with buying, selling, and withdrawal operations
• Fast settlement: Instant cross-border transactions with much lower fees than bank transfers
• Market downturn hedge: Quickly convert to stablecoins during market crashes to protect capital

⚠️ Recommendation: Choose USDC over USDT, as USDC is more transparent and safer under regulation.

The Real Challenges of Digital Currencies: Pros and Cons

👍 Why Invest in Digital Currencies?

◾ Strict monetary rules
Issuance rules are hardcoded in the code, unchangeable even by developers, preventing inflation and over-issuance at the source.

◾ Safer credit assurance
All transactions require network consensus, fully transparent and tamper-proof, with minimal transaction costs.

◾ More flexible transaction methods
Can circulate freely among users without relying on banks or intermediaries, supporting online and offline applications (Japan has accepted Bitcoin for real estate transactions).

◾ Central Bank Digital Currencies (CBDC) pilot
In the future, central banks may directly distribute digital currency to citizens, bypassing banks and improving transfer efficiency.

👎 Risks of Investing in Digital Currencies

◾ Price volatility
Market reacts sensitively to sudden events; price swings are unpredictable and can amplify losses.

◾ Natural deflation
Total supply is fixed and does not grow with the economy, which may not be beneficial for long-term economic development.

◾ Storage security vulnerabilities
Forget your wallet password, and your assets are gone forever—no recovery mechanism, which can be catastrophic.

3 Steps to Start Your Digital Currency Investment Journey

Step 1: Register
Choose a secure, regulated exchange platform, fill in your information, and submit your application.

Step 2: Deposit
Quickly fund your account via bank card, Alipay, or other methods.

Step 3: Trade
Start with stablecoins to familiarize yourself, then invest small amounts of cryptocurrencies, gradually building your portfolio.

Investment Tip: Beginners should prioritize large-cap coins like BTC and ETH, allocating 70-80%; hold a small portion in BNB or XRP for growth opportunities; always keep cash or stablecoins reserved to handle market fluctuations. The crypto market is full of opportunities but also risks—caution and patience are key to success.