Top 8 Reasons to Invest in Cryptocurrency

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July 20, 2022

Top 8 Reasons to Invest in Cryptocurrency

Cryptocurrencies have sparked a worldwide debate. Questions centered around its legitimacy and viability have kept the investor’s mood pretty cautious, while others have hailed the unregulated currency as the future of all financial exchange. Dogecoin and Bitcoin have achieved public legitimacy due to widespread use, especially by large and well-reputed corporations. Other cryptocurrencies, such as Cardano and Ethereum, have led to profitable returns for many investors in recent years.

However, cryptocurrency is a highly complicated domain. Consequently, a fair proportion of the general public is on the fence about whether or not to invest in it. In this blog, we are going to concentrate on the top 8 reasons why it is a good idea to put money into cryptocurrency:  

1. High Liquidity

In case you are still unsure if the cryptocurrency market is for you, we have another compelling reason. Cryptocurrencies are characterized by high liquidity. In the context of the financial markets, “liquidity” refers to the ease with which you can convert a commodity into cash without encountering any significant obstacles. According to recent statistics, the number of crypto wallets has increased to 83 million. The figure shows the recent surge in trade volumes in cryptocurrency exchanges, which indicates that these markets are becoming more liquid. So whether you want to buy Bitcoin or sell litecoin, you can do so in a breeze.

2. Super Easy To Get Started

The technology and philosophy of cryptocurrencies may appear to be somewhat intricate. But, in reality, getting started is relatively simple. You need to give some thought to the fundamental guidelines to get things off the ground. First and foremost, cryptocurrencies should only make up a modest portion of your investment portfolio, especially if you are still on the base level of your learning curve.

Second, you have a host of tokens at your disposal. Do your homework and learn more about the ones that spark your interest. However, at the same time, do not forget that a host of cryptocurrencies have been quite volatile, and investors have seen their prices soar before plummeting and eventually disappearing from the scene. These unstable mushroom currencies make a compelling argument in favor of putting the primary emphasis on Bitcoin.

Next up, you should open an account on a reputable cryptocurrency exchange forum. Put in a small initial investment of a few dollars, and start teaching yourself about the fundamentals of the cryptocurrency market. You should also set up a cryptocurrency wallet, which you can save on your desktop or mobile device or a storage hardware device like a USB card.

3. Anonymity And Transparency

Cryptocurrency investors can have several public keys recognized by numerical codes. This digitalization eliminates the possibility of public tracking and prevents users’ transactions from being linked to them.

Although the transactions are always visible, blockchain technology protects them from fraud. In addition, the wallet owner is the only person who can see the total number of cryptocurrencies they possess. Moreover, even if the address associated with your wallet gets public, you could maintain the confidentiality of your financial information by generating a new address for your wallet.

4. Getting Away From Inflation

Unlike fiat currencies, the value of cryptocurrencies does not depreciate over time. It is because the supply of cryptocurrency is limited and decentralized. Any bank or government cannot arbitrarily control crypto. As a result, cryptocurrencies have the potential to generate returns that outperforms the rate at which the value of a fiat currency depreciates over time.

Remember, cryptocurrencies are not immune to inflation. There is a possibility that the value of cryptocurrencies would decrease as more of them are mined. But the good news is that there are already plans to mitigate this risk. Bitcoin is the best example of that. Every four years, Bitcoin mining is reduced by half, which has two significant implications. First, the level of scarcity continues unabated, and second, the inflation rate hits rock bottom.  

5. Fast Transactions

Financial institutions in the United States typically settle most transactions in three to five days. An average wire transfer takes about 24 hours. Using a cryptocurrency enables you to complete a transaction in a matter of seconds. As soon as the network confirms the block containing your transaction, the money is ready for use.

6. Diversification

Investors looking to diversify their investment portfolio from conventional financial assets, including bonds and stocks, may find cryptocurrency an attractive alternative for diversification. Although there isn’t enough data available on the price activity of cryptocurrencies compared to bonds and stocks, their price changes appear to be independent of other markets. It makes them a valuable tool for portfolio diversification.

Combine assets with low price correlation to achieve more stable returns. Your crypto asset’s value may rise if your stock portfolio’s value falls, and vice versa.

7. Hefty Return On Investment

Whether you like it or not, money makes the world go round. Hence, lucrative financial gains are one of the key drivers behind cryptocurrency investments. The prices of cryptocurrencies can be highly volatile, shifting dramatically on a monthly or even daily basis. For example, in March 2017, the cost of Bitcoin was $975.70, which rose to $20,089 in the next few months. A few years later, in April of 2021, the price of Bitcoin soared to a record high of $64,000. Likewise, the cost of Ethereum had surged roughly 5,000% in five years. It shows that though cryptocurrency prices are highly unstable, a well-planned investment could result in substantial profits along the way.

8. More Businesses Are Accepting Cryptocurrency

Until recently, cryptocurrency was incomprehensible to many people. How could something untouchable carry any value in the physical world? However, things have changed now. An increasing number of businesses now accept Bitcoin and other notable tokens. To put it another way, you may transfer the necessary amount in the form of cryptocurrency to a merchant and get a product or service in return.

Conclusion

Cryptocurrency has only existed for a decade or so. However, this timeframe has proved to be sufficient to revolutionize the financial sector. Particularly, cryptocurrencies have a lot to offer those who value speed and security in their transactions. As time goes on, it will become easier to use cryptocurrencies with fewer technological barriers.

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