Six of the Top Reasons to Invest in CryptocurrenciesAug 15, 2022, 5:35PM
These days, crypto investment is all the rage. Whoever you talk to, they are investing, have invested, or are learning about it.
So, those who have not entered the crypto-boat might ask, “what is it that makes crypto so interesting?” So, today, we have decided to cut through the hype and tell you the top reasons for investing in cryptocurrency.
1. Easy to Invest
Some people complain about the complexity of the concept behind cryptocurrency. While the technology and concept powering crypto might be a little complex, probably a little esoteric, for less savvy people, investing in this currency is quite straightforward.
However, before you take a step forward and invest your hard-earned money to buy a relatively new digital currency, consider knowing a few details and rules.
First, ensure that crypto investment only represents a small percentage of your investment portfolio— especially if you are new in this field. As you become better skilled at it, you can increase your share of crypto investment.
Secondly, there are many tokens and coins to choose from. You might have only heard about Bitcoin, but the crypto game is long past the stage when Bitcoin was your only option. Therefore, study the coins (especially Bitcoin and Ethereum) and know their trends, dips, and surges in value over the years.
Knowing major coins is important because, being the pioneering ones, any change in their value affects the smaller coins and tokens. Also, know how their trade works. For instance, you should know how ETH/BTC and other major cryptocurrencies are traded. But bear in mind that at various moments over the years, a coin’s value has plummeted while the forecast was quite the opposite. Therefore, prepare yourself for everything.
2. Diversify Your Portfolio
You cannot dispute the fact that you should only invest a small amount in crypto— according to the loss you can bear. But you can also not deny that even with a small investment, crypto still represents a portion of your investment that exists in a different sphere whose behavior is quite different from other traditional investments.
A sudden dip in your stock market investments, the inflation nose-diving dollar’s value, and government regulations tightening its noose around the traditional financial markets may not affect your crypto investment. It is mainly because the crypt world works by its own rules.
Adding cryptocurrencies into your investment portfolio may mean having an asset that shields you from the adverse effects of the sweeping events that permeate all traditional financial markets. Despite its extremely volatile nature, it can still provide a buffer when your other investments face a downward trend.
3. Good choice for long-term investment
Although people often get afraid of fluctuations in cryptocurrencies, they are still a good choice when it comes to long-term investment. Bitcoin often referred to as the “digital gold,” is still the number one choice as a long-term asset.
Investors still believe that Bitcoin will gain more value in the future. One reason for this forecast is the fixed cap of Bitcoin. There is only a limited number (fewer than 21 million coins) in which Bitcoin can be floated in the market, unlike the fiat currencies such as the dollar, pounds, etc. This fixed cap ensures that Bitcoin does not lose value due to overzealous investors buying the coin in bulk.
4. Enjoy a high return on your investment
While there is a chance your investments may lose value in the events of a dip in the market, the opposite is equally true. Studying Bitcoin trends over a certain period will tell you how much potential you have to earn a big return on your investment.
For instance, in August 2012, the price of one Bitcoin was a little over $112. Today, at the time of writing, in August 2022, Bitcoin is traded at around $ 23,211.8. Even after accounting for all the fluctuations in its value, it is a considerable gain in just ten years. The same goes for other crypt coins whose value at the launch was a small fraction of a penny. But they have gained a dramatic rise in a matter of months or years.
5. Buffers your investment from the effects of inflation
Inflation decreases the value of fiat currencies. A rise in inflation requires paying more for things that used to cost less. Luckily, inflation does not affect cryptocurrencies in the conventional sense. So, your crypto money has the same value even if inflation wreaks havoc in the conventional financial markets. Governments tweaking their policies or banks changing their rules cannot affect crypto at their whims either.
However, it does not mean that crypto cannot get into the clutches of inflation. It means that crypto is not impacted by the inflation rules that affect other fiat currencies. In crypto’s case, inflation affects when there is a change in the number of coins being floated in the market. For instance, if more coins are mined, it will theoretically decrease the value of the currently available coins.
But developers have put in place a solution for this situation too. There is a cap on the number of coins that can be mined or floated in the market, which keeps the scarcity of these coins maintained in the market. And Bitcoin advocates have long argued that this scarcity will shield it from the effects of inflation.
6. There is still time to aboard the crypto wagon
Seeing other people who bought cryptocurrencies at a meager value enjoying high returns may make you doubt that you have lost a golden opportunity.
Truly, if you did not invest in Bitcoin or other high-performing coins five years back, you have lost the opportunity to earn big returns because these coins have become zero to the hero during this time. But it does not mean you have completely missed the wagon.
You can still start your portfolio with small investments. Many tokens and coins have very optimistic forecasts and don’t cost much. Remember, a lot of people were skeptical about Bitcoin as well. And now you see it ruling the crypto-world in less than fifteen years after its introduction in 2009. So, who knows, your chosen coin might become the next big hit.
The reasons for investing in cryptocurrencies are quite alluring. Don’t be afraid of the volatile nature of these currencies because people have earned a lot due to the same volatile nature of this currency. If you have not made your first investment yet, conduct your research and start your crypto journey.
Disclaimer: information contained herein is provided without considering your personal circumstances, therefore should not be construed as financial advice, investment recommendation or an offer of, or solicitation for, any transactions in cryptocurrencies.