Within the $2 trillion cryptocurrency market, there are literally tens of thousands of different cryptocurrencies. So, understandably, the choice of which one to add to your portfolio can seem daunting.

The good news is that there's one cryptocurrency that has an established, 15-year track record of delivering market-beating returns for investors. This same cryptocurrency is a favorite of both retail and institutional investors, and is the most followed by the mainstream financial media. That cryptocurrency, of course, is Bitcoin (CRYPTO: BTC). If you are investing in crypto for the first time, this should be the first cryptocurrency into your portfolio.

Upside potential

The primary reason to invest in Bitcoin is its tremendous upside potential. In the span of just over a decade, Bitcoin has skyrocketed in price from $100 to $60,000. Along the way, Bitcoin has turned in some eye-popping annual returns.

In seven of the past 10 years, Bitcoin has been the top-performing asset in the world, and it hasn't even been close. In the period from 2011-2021, for example, Bitcoin delivered annual returns of 230%. In comparison, during that same time period, tech stocks delivered annual returns of just 20%.

Granted, Bitcoin is a highly volatile asset, and there have been some colossal market downturns along the way. For example, in three of the past 10 years, Bitcoin was actually the worst-performing asset in the world. So, in many ways, Bitcoin is similar to a hitter in baseball who only hits home runs or strikes out. But seven out of every 10 times it comes to the plate, Bitcoin will hit a home run. Not even Yankees slugger Aaron Judge can promise that.

The key, though, is being willing to hold Bitcoin for the long haul. Cathie Wood of Ark Invest has crunched the numbers and determined that you need to be willing to hold Bitcoin for at least five years.

That's because, over longer time horizons, Bitcoin has outperformed every major asset class. So, yes, there are some years when Bitcoin can fail. But if you wait long enough, it will eventually catch up.

Downside risk mitigation

While Bitcoin's volatility can be a bit difficult for first-time crypto investors to stomach, it has a number of different properties that help to mitigate its overall risk. In fact, there's growing discussion among institutional investors that Bitcoin can be both a "risk on" and "risk off" asset.

Bitcoin has long been referred to as "digital gold," since it shares some unique characteristics of physical gold. For example, Bitcoin has a limited lifetime supply that is capped at 21 million coins. Currently, almost 20 million of those 21 million coins are in circulation. That introduces enormous scarcity, especially as more use cases arise for Bitcoin on a global basis.

Increasingly, investors view Bitcoin as a potential safe haven asset. In other words, during times of enormous political, economic, or geopolitical uncertainty, investors have an alternative to buying gold. They can now buy Bitcoin. Several billionaire hedge fund investors have even suggested that buying Bitcoin might actually be preferable to buying gold.

There's one more characteristic of Bitcoin that helps to mitigate risk: A lack of correlation with other asset classes. Put another way, Bitcoin can zig when other asset classes zag. So even if the stocks in your portfolio are losing value, there's still a chance that Bitcoin is either holding ground or going up in value.

What's the best way to buy Bitcoin?

Prior to January of this year, the most popular way to buy Bitcoin was via a cryptocurrency exchange. This necessitated setting up a new account, creating a digital wallet, and becoming familiar with the basics of how cryptocurrencies actually work. But that all changed with the introduction of the spot Bitcoin ETFs. Investors can now buy Bitcoin as easily as they buy their favorite tech stocks.

The most popular of these new spot Bitcoin ETFs is the iShares Bitcoin Trust (NASDAQ: IBIT), and this is the one that I would recommend for first-time crypto buyers. The primary appeal of the iShares Bitcoin Trust is that it offers 1:1 exposure to the long-term price performance of Bitcoin. So, even though you are not holding Bitcoin directly, you are getting the same performance.

While there is no guarantee that Bitcoin can replicate its phenomenal performance of the past decade, there's certainly cause to be hopeful. A growing number of high-profile investors are now predicting that the price of Bitcoin will skyrocket to $1 million or higher by the year 2030. If you are willing to hold Bitcoin for at least five years, you might end up being pleasantly surprised at just how much your initial investment in Bitcoin has grown.

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Dominic Basulto has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.

If I Were Just Entering the World of Cryptocurrency, This Is What I Would Buy was originally published by The Motley Fool