Is now the time to start investing in cryptocurrencies?
Don’t know much about cryptocurrencies? Find yourself confused about why it has become a buzzword? Learn more about why you should invest in them now!
Think that now is the perfect time to invest in cryptocurrency? You’re right!
What’s more is that you need to strike the iron while it is still hot.
Here are 12 reasons why now is the time to start investing in cryptocurrencies:
High rate of returns
When Bitcoin (a popular cryptocurrency) was first brought into circulation, it costed around $1. More than 10 years later and each Bitcoin in the market is currently valued at more than $51, 000. While it is true that the cryptocurrency market is susceptible to daily fluctuations, it would not be surprising to witness Bitcoin to be valued at ten times its current value in a few years from now. Companies such as Tesla and business owners such as the co-founder of BlockTower also believe in the exceptionally high and positive (almost six-figure) returns of Bitcoin as this decade moves forward. The net trend for most cryptocurrencies (where market value is plotted against time) is overall positive and increasing as time progresses, so it is not too late to start investing in cryptocurrencies.
If the most sought cryptocurrencies are too expensive as investments, then consider dabbling with relatively new stable tokens that are set to take off sometime soon!
Bitcoin price fluctuations and overall trend against time.
Simple and straightforward transaction system
While there are several different cryptocurrencies in circulation, they all share similarities in the kind of utility that they offer consumers. When you are using cryptocurrency to pay for goods and services, you do not have to worry about involving any third party individual or middle man to successfully complete the transaction. For example, if you take a flight to the other end of the world, you can use cryptocurrencies to pay for transport and accommodation arrangements for when you land. You don’t need to have the local currency on you, know the native language, or hire a private company to settle in because the latest financial application of cryptocurrency allows you to make simple transactions to care of all such travelling needs.
The peer-to-peer networking structure keeps transactions simple and 100% transparent because there is no paperwork, legal fees, or commissions involved when you are availing of goods and services through tokens such as Bitcoin or Ethereum. The cryptocurrency sphere has effectively established business clarity and accountability because you can keep track of audit trails without getting roped up in the hassle of figuring out who to pay and when to pay them. The bottom line is that maintaining your stash of cryptocurrency is much simpler than holding onto physical money. You get to utilize your cryptocurrency’s liquidity to avail of goods and services while also keeping it as a time-sensitive investment.
Trust and cryptocurrency ownership
With most investments, it is required that you put your trust into third party individuals or organizations such as banking systems or legal representatives. With the traditional banking system, you need to trust the bank to invest your money in new projects and reward you with a fixed percentage rate of interest that accumulates over time. However, it is not uncommon to experience banking failures where poor loans, funding issues, or liability mismatches result in a situation where the bank can no longer pay afford to pay back depositors. With cryptocurrency, you do not need to worry about trusting another institution because you are the sole owner of your cryptocurrency stash. It is tied to your identity and address.
Cryptocurrencies are going global
If you want to hop onto the cryptocurrency bandwagon, then now might be the perfect time. The 2019 – 2021 pandemic has allowed all participants of the economic landscape to understand the importance of cashless currency, especially with smart lockdowns and social distancing measures in place. We saw how innovative cryptocurrency-centric approaches have skyrocketed the popularity of cryptocurrencies in general. For example, international brands such as Starbucks and Tesla now allow customers to make payments through cryptocurrency and it will not be long before others join in. There are some applications exclusively accept cryptocurrency as a means of payment. Cryptocurrencies are going global as the world begins to recognize and embrace their true potential, so consider investing now before it is too late.
Proven adaptability over time
What is unique about cryptocurrency is that it has managed to continuously evolve and adapt itself to new financial challenges. When Bitcoin and Ethereum became cryptocurrency giants, it was anticipated that they would hold monopoly over the market. However, we saw how innovative altcoins have been created, each of which severe a unique purpose. Ripple, Dash, Litecoin, Monero, and NEM are a few altcoins that have emerged over the years and managed to establish themselves as reputable currencies in the cryptocurrency landscape. Some of these are referred to as second and third generation cryptocurrencies because of how they improve upon the shortcomings of Bitcoin.
Pro-tip: If you are considering investing in cryptocurrency, then you need to choose the most adaptable ones that have the highest chance of surviving fluctuating market conditions!
Secure investment choice
Cryptocurrencies are considered to be a secure investment choice because the blockchain technology backing them is difficult to hack as data is stored in a network of computers instead of a central server. These computers are constantly verifying existing records to ensure that they are accurate, so any attempt at hacking needs to simultaneously target several computer systems. Even if you wish to access your cryptocurrency wallet, you will find that most have a two-factor authentication system in place. While there is potential for security breach with any cryptocurrency network, the chances are fairly low and much smaller compared to any traditional banking system.
Bitcoin is one of the most secure investment choices.
One of the most promising aspects of cryptocurrency as an investment choice, is its high liquidity. Most cryptocurrencies can easily be converted into money or other tokens, which guarantees tradability when market trends are not favorable. As an investment choice, high liquidity is desirable as it ensures the value transfer of your asset, which means that if you pay attention to market trends, it is unlikely that you will encounter a significant loss. If you want to pull out of your cryptocurrency investment, then you can sell them close to the market rate. Alternatively, if you want to purchase goods and services available through other blockchain networks, then you can trade your cryptocurrency for some other token.
Pro-tip: Most trading platforms offer trading tools and have mechanisms in place, such as limit orders (automated buying and selling at fixed price) along with algorithm-based trading.
Access market information
Few years ago, if you wanted to choose between investing into more bitcoin or pulling out, you would have to rely on the word of digital currency experts and your own intuition. Back then, the cryptocurrency realm was relatively more underground than it is now and getting your hands on market information was challenging, to say the least. However, with growing interest in the cryptocurrency landscape, things have transformed overnight. Websites such as Reddit are buzzing with useful tips for cryptocurrency investment, universities offer courses that teach you about the cryptocurrency market, and even celebrities use their social media to talk about how they made a fortune by investing in cryptocurrency. Budding investors such as yourself now have access to the latest market information on their fingertips!
Plus, the increased access to information about cryptocurrency has allowed individuals to avoid falling prey to scams and other malicious activity. Fraudulent activity related to cryptocurrency continues to be exposed as token holders become more informed to make better decisions. Additionally, several trading platforms provide helpful market insights to assist your investment choice. Companies have recognized that investing in cryptocurrency requires different due diligent practices along with a comprehensive understanding of market economics to make the best investment decision. Many of these organizations perform market research and share their knowledge with cryptocurrency investors. You can become a part of them!
You need to invest before it is too late
Most individuals believe that it is too late for them to invest in cryptocurrency because it is unlikely that the price of a stable token will skyrocket like it did for Bitcoin. However, making forecasts about the future of cryptocurrency is like looking through a fuzzy telescope. You need to know that investing in cryptocurrency in 2021 still makes you an early investor because it has not yet become a mainstream currency and it is still a long way from replacing traditional centralized banking systems as a whole. However, as more people realize the growth potential and utility of these alternate currencies, it is fair to speculate that their demand and value will rise. This suggestion does not mean that you will experience 50% profits every day, it just means that it might be too late if you wait too long to invest in cryptocurrency!
Diversify your overall investment portfolio
You can buy cryptocurrency to diversify your investment portfolio. If you have stocks, bonds, property, and other commodities in your possession, then spending a moderate fraction of your wealth on cryptocurrency can protect you from unexpected market crashes. The benefit of diversifying your investment portfolio is that if one investment has poor returns over time, you can still count on others for positive net gain. The current cryptocurrency market is considered to be risky but explosive, which means that cryptocurrency is a volatile investment but it has exceptional potential for the future. Plus, holding onto cryptocurrency gives you a chance to preserve your capital while you utilize the services available on cryptocurrency networks.
Diversify your targeted cryptocurrency portfolio
If you want to further diversify your investment portfolio, then consider diversifying your cryptocurrency holdings by buying both growth and defensive assets. Growth assets are investments that provide long-term capital gains but have a higher risk when compared to defensive assets. Meanwhile, defensive assets provide you with mental peace of mind knowing that if your growth assets yield poor returns, you still have your defensive assets to maintain your economic wellbeing. For example, Bitcoin is considered to be a defensive asset because it is the least volatile cryptocurrency, whereas emerging tokens are considered growth assets because they are risky investments with explosive returns.
Cryptocurrencies are protected against inflation
When the value of a currency depreciates or loses its purchasing power, the price of goods in the market increases by comparison and the economic enters the initial stages of inflation. If the central bank decides to print exponential magnitudes of money and release them into circulation, then it is incredibly likely that it will invite inflation. This phenomenon occurs because as the supply of money increases, more people will hold it, and local currency will start to lose its worth. However, there is a fixed number of cryptocurrency tokens in circulation. For example, the limit of Bitcoin is set at 21 million coins and no more can be mined, which helps it resist inflation. Paper money on the other hand, is at the mercy of policymakers.
Cryptocurrencies might end up replacing paper money.
It should be clear that the world of cryptocurrency holds much promise and excitement, but it comes with risks of its own.
That’s why they’re called investments and not blatant cash-grabs!
It is interesting to see how the future will pan out and whether the world will come around to embracing cryptocurrencies for the utility maximizing assets that they are!
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This article is for informational purposes only, it should not be considered Financial or Legal Advice. Consult a financial professional before making any financial decisions.