Many people are still nervous to invest in cryptocurrency with a misconception that crypto is attempting to displace or replace existing currencies. Obviously, this is not the case! Cryptocurrencies like Bitcoin and Ripple can be used as substitutes for regular currency. Utility tokens like Etherium, ADA and DOT are not geared towards competing with currencies.
What are cryptocurrencies?
Simply put, cryptocurrencies are digital currencies that have been used to store value and facilitate transactions between parties. Most of these digital currencies are able to be used as substitutes for regular currencies because they embody all the same characteristics of regular currency including:
- Scarcity
- Divisibility
- Utility
- Transportability
- Durability
The demand for digital currency has increased because they cannot be counterfeited, cross border transactions can be completed in seconds and no central body controls the digital currency’s value.
Do digital currencies have value?
Due to their scarcity, as demand for digital currencies increases so does their value, making them a solid investment opportunity. Their value is influenced by basic economic principles of supply and demand.
What are utility tokens?
Utility tokens are digital tokens that are used to settle transactions on the blockchain. As an example, if you transact on the Ethereum blockchain, the investment fee would be paid in Ether. The price of Ether would increase as more people use the Ethereum blockchain.
Do utility tokens have value?
As usage of a blockchain network increases, the demand for the connected utility token will increase and thus drive up its value.
So why should I invest in Cryptocurrency?
While there is no way to say a certain cryptocurrency is set to be the next Dollar, their value is projected to continue increasing in the coming years. It is worthwhile investing in a diverse basket of cryptocurrencies and utility tokens as opposed to focusing investment on just one. The market is volatile so investors must be willing to accept the ups and downs in order to enjoy the long-term gains of cryptocurrency investment.
