If you’ve heard about crypto from a friend, on social media or via headlines and are tempted to start investing, you’re not alone. Digital assets like bitcoin and ether have soared in popularity in recent years.
But understanding the technology, the risks and the best ways to invest can be a challenge. The crypto world is mired in technological jargon and in many ways, digital assets don’t behave like traditional assets such as stocks and bonds.
Still, it’s not too late to learn. Bitcoin, ether and solana are three of the most popular cryptocurrencies. Each one has a unique underlying technology and use case. Here’s how they’re different, and how to determine which makes sense for your portfolio.
The basics of owning crypto
When you buy crypto, you’re not purchasing shares in a company. But the asset doesn’t exactly function like money in a bank account either. Rather, you’re paying for digital assets or fractions of one which are recorded on a blockchain — a decentralized digital ledger spread across a network of computers.
Many beginners start buying crypto through an exchange or trading app. Those platforms hold the crypto on your behalf, similar to how a brokerage holds stocks. It’s convenient, but it also means you’re trusting a third party to safeguard your funds. That leaves them vulnerable to cyberattacks and the platform’s insolvency, like when FTX collapsed in 2022 and users were unable to access their funds.
The alternative is self-custody, or moving your crypto into a personal wallet. This method gives you control of your crypto’s private key, an alphanumeric code used to authorize transactions and prove ownership of digital assets. The trade-off is responsibility. Lose that key, and your funds could be gone forever.
Crypto wallets fall into one of two categories. “Hot” wallets are always connected to the internet and easier to use, making them common for everyday access. “Cold” wallets are offline devices designed for long-term storage and added security. Many investors use a mix of both, with the former used to hold and trade small amounts of crypto and the latter used to store larger amounts.
Bitcoin, ethereum and solana
Before choosing between bitcoin, ether and solana, it’s important to understand how they differ.
Bitcoin (BTC) is the original cryptocurrency, has the highest market capitalization and is viewed as a store of value primarily due to its scarcity (its supply is capped). Many investors treat it as a long-term holding, similar to how gold is used in traditional portfolios. It’s not typically used for frequent transactions or complex applications.
Ether (ETH) is the native token of ethereum, a blockchain network that acts as a platform for decentralized finance applications. Owning ether lets you engage with a broad ecosystem rather than just holding a static asset.
Solana (SOL) positions itself as a faster, lower-cost alternative to networks like ethereum. It’s designed to process transactions quickly and with lower fees, which has attracted developers building newer applications. That speed comes with trade-offs, including a shorter track record and technical risks.
Put simply, bitcoin centers on preserving value while ether focuses on powering digital activity and solana emphasizes speed and scalability.
Choosing between the three cryptos
When deciding which digital asset to invest in as a beginner, a useful starting point is to think in terms of purpose rather than price.
Bitcoin is one of the simplest cryptocurrencies to understand because its use is narrow: It can be held as a long-term store of value. Being the most popular crypto in the market makes it a common entry point for investors, while its longer history also provides a sense — though not a guarantee — of relative stability within a volatile market.
Ether can be slightly more complicated to understand, but also has more uses. Its value is tied not just to supply and demand, but to how much activity happens on its network.
Solana’s appeal is faster transactions and lower costs, making it attractive for developers and users who prioritize efficiency. But because it’s a younger, less established crypto, its long-term position is less certain than bitcoin’s. Beginners considering solana should be comfortable with that added layer of unpredictability.
Some investors split their crypto investment across multiple assets to reflect different use cases. For example, you might hold bitcoin for its perceived stability, while allocating smaller amounts to ether or solana for growth tied to network activity. Just make sure you understand what you’re actually buying.
Crypto grants investors a lot of control over how they manage the assets. It can be bought, sold, lent, traded for fiat currency or other crypto, and even set aside to generate interest. But that greater freedom also means more responsibilities on your end to keep your assets safe.
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If you’ve heard about crypto from a friend, on social media or via headlines and are tempted to start investing, you’re not alone. Digital assets like bitcoin and ether have soared in popularity in recent years.
But understanding the technology, the risks and the best ways to invest can be a challenge. The crypto world is mired in technological jargon and in many ways, digital assets don’t behave like traditional assets such as stocks and bonds.
Still, it’s not too late to learn. Bitcoin, ether and solana are three of the most popular cryptocurrencies. Each one has a unique underlying technology and use case. Here’s how they’re different, and how to determine which makes sense for your portfolio.
The basics of owning crypto
When you buy crypto, you’re not purchasing shares in a company. But the asset doesn’t exactly function like money in a bank account either. Rather, you’re paying for digital assets or fractions of one which are recorded on a blockchain — a decentralized digital ledger spread across a network of computers.
Many beginners start buying crypto through an exchange or trading app. Those platforms hold the crypto on your behalf, similar to how a brokerage holds stocks. It’s convenient, but it also means you’re trusting a third party to safeguard your funds. That leaves them vulnerable to cyberattacks and the platform’s insolvency, like when FTX collapsed in 2022 and users were unable to access their funds.
The alternative is self-custody, or moving your crypto into a personal wallet. This method gives you control of your crypto’s private key, an alphanumeric code used to authorize transactions and prove ownership of digital assets. The trade-off is responsibility. Lose that key, and your funds could be gone forever.
Crypto wallets fall into one of two categories. “Hot” wallets are always connected to the internet and easier to use, making them common for everyday access. “Cold” wallets are offline devices designed for long-term storage and added security. Many investors use a mix of both, with the former used to hold and trade small amounts of crypto and the latter used to store larger amounts.
Bitcoin, ethereum and solana
Before choosing between bitcoin, ether and solana, it’s important to understand how they differ.
Bitcoin (BTC) is the original cryptocurrency, has the highest market capitalization and is viewed as a store of value primarily due to its scarcity (its supply is capped). Many investors treat it as a long-term holding, similar to how gold is used in traditional portfolios. It’s not typically used for frequent transactions or complex applications.
Ether (ETH) is the native token of ethereum, a blockchain network that acts as a platform for decentralized finance applications. Owning ether lets you engage with a broad ecosystem rather than just holding a static asset.
Solana (SOL) positions itself as a faster, lower-cost alternative to networks like ethereum. It’s designed to pro
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