Are you interested in invest in cryptocurrencies? Read on to discover the top 7 reasons why cryptocurrencies such as Bitcoin, Ethereum, Solana, and others are potentially worthwhile investments.
Cryptocurrency has grown in popularity recently, but many consumers and investors may wonder what the fuss is about. Why would anyone choose cryptocurrency when their local currency suffices for most purposes? Why would someone put money into a cryptocurrency?
Indeed, there are numerous benefits to using and investing in cryptocurrency (How to Invest in Cryptocurrency and Blockchain Online in 2023). Here are the top seven advantages to think about.
1. Earn Potentially Profitable Returns
Regarding cryptocurrency, the word potential can be used in two different ways. To begin with, crypto has a lot of potentials because it is a new concept. This opens the door to an infinite number of future possibilities.
For example, if a top non-crypto brand adopts cryptocurrency technology in the mainstream, Ether (ETH) coin is more likely to gain a lot of value.
Because of the future scope, early investors can earn potentially high returns. Bitcoin is the best example of how widespread adoption can help a cryptocurrency’s price skyrocket.
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2. Transaction Expenses
Compared to other financial services, the cost of transacting in cryptocurrency is relatively low—a domestic wire transfer, for example, commonly costs $25 or $30. However, international money transfers can be even more expensive.
Transactions involving cryptocurrencies are typically less expensive. However, you should be aware that increased demand on the blockchain may result in higher transaction costs. Nevertheless, median transaction fees remain lower than wire transfer fees even on the busiest blockchains.
3. Protect Your Wealth Against Inflation
Inflation devalues fiat currencies over time, but it does not have the same effect on cryptocurrencies in the traditional sense. Why? Because cryptocurrencies are decentralized, and supply is limited.
A government or bank cannot freely manipulate cryptocurrency. More importantly, this means that cryptocurrencies have the potential to earn higher returns than fiat currencies do over time.
This is not to say that cryptocurrencies are immune to inflation. For example, if more cryptocurrencies are mined, their value will theoretically fall, but safeguards are in place to prevent this.
Bitcoin is the best example. Every four years, the rate of Bitcoin mining is cut in half. This is known to have two broad consequences. One, scarcity persists, and two, inflation becomes insignificant.
4. Maintain Complete Control Over Your Investment
All roads return to decentralization. As previously stated, governments or federal agencies cannot manipulate the value of cryptocurrencies because they do not have control over them.
Only the crypto holder has access to their investment via a private key, which grants complete control over the buying, sending, and receiving of cryptocurrencies.
That being said, any government can effectively outlaw cryptocurrency with the stroke of a pen, as China did. However, free-market economies have decided not to go down this road.
The US, UK, and India are trying to understand and regulate cryptocurrencies to adopt fail-safes that made investing in stocks safe decades ago.
5. Encourage and Benefit from Innovation
Your cryptocurrency investment may be a “set it and forget it” exercise for you, but it benefits the project in two ways. For starters, it indicates social proof, trust, and belief in the project’s vision.
Second, it allows the project to innovate and expand its range of services, products, and partnerships, which can only benefit its investors (9 Important Things to Know Before Buying Cryptocurrency).
6. Increase Portfolio Diversification
The jury is still out on whether cryptocurrency is an asset class in and of itself. However, cryptocurrency is known to be inflation resistant and has the potential to generate substantial returns.
Indeed, cryptocurrency is known to be relatively uncorrelated with assets such as stocks and bonds, whereas the US dollar has a negative correlation with Bitcoin.
If an investor has an above-average risk tolerance, these factors may make cryptocurrencies a worthwhile addition to their portfolio. However, we advise you to seek the advice of a financial advisor at this point.
There is no such thing as cryptocurrency. That may change in the future, with Cube’s Tikka Token providing access to top-tier crypto advisors, but for the time being, you must exercise caution when investing in cryptocurrency.
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7. Transaction Speed
Sending money to the US is a simple process; here’s how to do it., there are a few faster ways to transfer cash or assets from one account to another than with cryptocurrency. Most transactions at US financial institutions are settled in three to five days. For example, a wire transfer typically takes at least 24 hours. Stock transactions are settled in three days.
However, one of the benefits of cryptocurrency transactions is that they can be completed in minutes. When the network confirms the block containing your transaction, it is thoroughly settled, and the funds are available.
Wrapping Up
Proponents of cryptocurrency may argue that blockchain technology has limitless potential and that cryptocurrency can help you create wealth. However, the opposing party may argue that it is new and quite volatile.
In any case, there are some undeniable facts. First, the truth is that cryptocurrency has limitless potential; a person in Africa can buy Bitcoin for the same price as someone in Europe, and this can happen in seconds.
Cryptocurrencies, of course, are not subject to traditional rules and regulations. This could lead to unintended consequences, which is why investors should exercise caution when trading cryptocurrencies.
Note: All facts and figures are correct as of January 06, 2023. None of the information provided here should be interpreted as investment advice. When investing in unregulated assets such as cryptocurrency, exercise extreme caution.
