Trying to make sense of cryptocurrencies can be a bit overwhelming for investors. It's a nascent but promising asset class built on technology that has the potential to disrupt a wide range of industries. For investors, what's probably most attractive is the possibility of life-changing returns. 

Don't worry. You're not late to the crypto party. We're likely still in the very early innings, leaving you with lots of time to put money to work and learn about this burgeoning market. 

If you're new to crypto, look no further than these three investments. 

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Image source: Getty Images.

1. Bitcoin: The internet's currency 

The world's first and most valuable cryptocurrency is Bitcoin (BTC -4.23%). Released in 2009, it now holds a market value of more than $800 billion. What made Bitcoin truly revolutionary was that it became the first peer-to-peer payments network that didn't require a central authority to process transactions. This decentralization was a much bigger deal than it might have initially seemed.  

As a result of its limited supply (there will only ever be 21 million coins), Bitcoin is generally viewed as the equivalent of digital gold. But while its legitimacy as a true inflation hedge is questionable, the returns have been outstanding. Over the past five years, Bitcoin has jumped more than 4,500%, easily making it one of the best assets to own during that time. Ark Invest's Cathie Wood believes that Bitcoin will be worth $500,000 by 2026 as more institutional investors allocate a small percentage of their portfolios to the digital asset. 

Besides being a speculative vehicle, Bitcoin's real-world utility is on the rise. El Salvador recently became the first country to accept it as legal tender. In other developing nations with economies that rely heavily on remittances, sending Bitcoin back home to family members (and avoiding hefty fees from money-transfer businesses) makes a lot more financial sense. 

2. Ethereum: The world's decentralized computer

You've also probably heard of Ethereum (ETH -0.80%). Worth about $400 billion, making it the second-most-valuable cryptocurrency, it differs from Bitcoin in that it is a programmable blockchain. This means that developers can use it to create and support smart contracts, or self-executing computer programs. Like Bitcoin, Ethereum is decentralized. But unlike Bitcoin, it provides much more functionality. 

Mark Cuban, the billionaire Shark Tank investor and owner of the NBA's Dallas Mavericks, is one of the biggest believers in Ethereum primarily because of its utility. Decentralized applications (dApps), including decentralized finance products and non-fungible tokens (NFTs), are mainly built on the Ethereum network. Newer projects will definitely gravitate toward Ethereum. 

Besides the growth of dApps, which have the potential to disrupt industries like financial services and social media, there are two important reasons to believe that Ethereum's fantastic run, gaining more than 35,000% over the past five years, is far from over. First, talent is flocking to the platform. Ethereum has the largest developer network of any cryptocurrency. 

Second, while Ethereum's proof-of-work consensus protocol limits the network's scalability, an update called ETH2 is expected to be implemented sometime this year. If executed correctly, this could be a major catalyst, drastically reducing Ethereum's energy use while increasing the speed of handling transactions, giving it a leg up on Bitcoin.

3. Coinbase: Building the crypto economy

In my opinion, the best stock in the crypto universe is a business called Coinbase (COIN -3.13%). The leading crypto brokerage and exchange in the U.S. became a publicly traded company in April 2021, and it's been an extremely volatile stock from the outset. That's because roughly 90% of its sales are derived from unpredictable trading fees, a revenue source that can fluctuate quarter to quarter based on what's happening to cryptocurrency prices. 

Management is trying to diversify the business by focusing on increasing subscription and services fees. Coinbase Prime provides institutional investors with advanced trading, custody, and analytics. Coinbase Cloud is a developer platform that has the potential to be the Amazon Web Services of crypto. And the anticipated launch of Coinbase NFT, a marketplace to create, collect, and discover NFTs, will certainly attract new users and support higher levels of engagement. 

What makes Coinbase compelling as an investment is that individuals don't have to guess which cryptocurrencies will soar in value. Buying the stock is essentially a bet on the growth of the entire crypto market. Coinbase is building the infrastructure to bring crypto from the outskirts of the financial world to the mainstream. Its powerful brand, relentless focus on security, and superb financials (50% profit margin) make the stock worth owning.