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Direct investments

Buying cryptocurrencies directly is a breeze these days.

Mainstream payment platforms like PayPal and Square have integrated services enabling users to buy, hold and sell crypto. Investment app Robinhood offers crypto trading too. In other words, you can own digital assets directly within these platforms.

The main advantage of direct investments is that you have full custody over the digital assets and don’t have to pay management fees. That said, you’ll need to be extra vigilant if you choose to own and manage your digital assets directly.

Investing in a hardware wallet, cybersecurity tools, or a password manager are a few different ways to help keep your digital assets safe.

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Crypto mining stocks

Institutional investors used to view crypto mining companies as largely uninvestable. Generally speaking, the only way crypto miners could fund more growth assets — like buying more hardware — was through selling the bitcoins they had already minted.

But crypto miners have started to gain access to equity financing by way of going public, meaning they can now keep more of their digital assets in reserve.

Case in point: Marathon Digital Holdings (MARA). The company recently expanded its reserves to 8,027 BTC — worth $220 million or about 12% of the company’s current market value. If cryptocurrencies surge, Marathon and other miners could see plenty of upside ahead.

The advantage of crypto mining stocks is that they’re easy to buy and sell. They can also be owned in retirement accounts like a 401(k) or Roth IRA. These stocks also amplify the upside of their underlying crypto assets through leverage.

The disadvantage is that the crypto mining industry is highly competitive and margins could come under pressure in the future.

Crypto service providers

Service providers in the crypto industry could also serve as a proxy for digital assets. Coinbase is probably the best example.

The cryptocurrency exchange is probably the most popular on-ramp for new adopters. The company helps over 89 million users across 100 countries buy, sell, store and transfer cryptocurrencies. It even offers a crypto staking service, payment card and institutional investment service.

The advantage of betting on service providers is that they offer exposure to the entire sector. Coinbase generates revenue on hundreds of different crypto products. The disadvantage, of course, is that these service providers face competition, regulatory uncertainties and the constant threat of cyberattacks.

The best strategy for investing in cryptocurrencies depends on your long-term objectives and appetite for risk.

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