Cryptocurrencies are decentralised digital currencies that have become extremely popular over the past few years. The global crypto market capitalization as of March 20, 2022, is $1.81 trillion, with an average of $82 billion in daily trading volume. Cryptocurrencies like Bitcoin and Ethereum are gaining more and more popularity as a worldwide currency. With the increasing adoption among the general populace and with public companies like Tesla, Block getting holding cryptocurrency this begs the question WHY?
Before you start pouring money into cryptocurrencies it’s crucial to understand the advantages of investing in cryptocurrency. Here are the major benefits of investing in cryptocurrencies.
Lower inflation risk
Unlike fiat money which loses value as governments keep printing more money. Bitcoin, Ethereum and other cryptocurrencies have a limited supply made possible by a mathematical algorithm. Thus offering protection against inflation as its value can not be diluted. This means their purchasing power increases over a period making cryptocurrency a reliable store of value.
Ease of use
Getting started is easy. All you need is a computer or smartphone and an internet connection. Setting up a cryptocurrency wallet is easy and extremely fast.
The intuitive user interface provided by many crypto exchanges abstracts the complex underlying technology behind cryptocurrency.
Fast and Secure Transaction
One of the major benefits of cryptocurrency is secure transactions that are completed in a matter of minutes or seconds. They are extremely secure as long as someone else does not have access to your private key. They cannot authorize transactions or access your funds without your private key. However, if you lose access to your private key, there’s no way to recover your funds.
Transparency
Thorough transparency is one of the major benefits of cryptocurrency. Blockchain technology, a public distributed ledger that powers cryptocurrency allows for transparency. This makes every transaction verifiable by the public. This help protects all parties, eliminate hidden fees and reduce fraudulent transactions.
Control
The quintessential decentralised nature of cryptocurrency puts the owner in total control without any involvement or infringement of any other party.
Huge growth potential
Despite their volatility, many cryptocurrencies have been proven to generate incredible returns over the long term. When compared with other asset classes the return difference is staggering. Even more stable cryptos like Bitcoin and Ethereum still generate an incredible return. To put into perspective, if you had invested $100 in 2015, you would have made a profit of over $13,838.85 which is 13,838.85% of ROI!. Though, this historical return does not guarantee future returns nevertheless it is an eye-catching performance.
Diversification
Cryptocurrency is an attractive alternative asset class, it does present a unique opportunity to diversify traditional financial assets such as stocks and bonds.
Flexible market hours
Due to its decentralised nature, they are available to trade 24hours a day and seven days a week. Making it extremely flexible to buy and sell.
Final Thoughts
Before taking the plunge in cryptocurrency investing, it’s prudent to also research and consider the drawbacks of investing in cryptocurrency to have a balanced understanding of its risk-reward profile.
