Cryptocurrencies have seen a lot of growth over the past few years. Since their introduction a little over a decade ago, they’ve achieved notoriety like no other asset. While in the beginning, they were solely the domain of a few niche groups that were using them only to perform tech-based operations and actions, nowadays, crypto has numerous uses. Not only is the fuel behind decentralized finance and apps, but retailers have also begun to allow customers to pay using cyber money. While at the moment, the majority of vendors only offer this option for online payments, some brick-and-mortar locations have started to include it as well.
Moreover, researchers estimate that cyber coins are set to become a constant in the financial market. As such, it may not be long until crypto becomes the same as fiat currency and is used to perform daily transactions. Until that happens, however, it’s essential to do your research to figure out exactly why you should consider digital trading money. Is it all about the hype, or are there more important reasons that make it a vital holding to add to your portfolio? Let’s examine the facts.
Brand new technology
There are few things more exciting than new technologies. Over the last few decades, technology has only ever grown and expanded its uses to the point where today, you’d have a hard time imagining anything in its absence. From your job to the entertainment you choose, you’d be hard-pressed to find a single activity that hasn’t been made more efficient or enjoyable following the addition of technological solutions. But developments appear all the time, and technology is bound to become an even more substantial part of daily life in the next few years.
Blockchain technology, the system powering cryptocurrencies, has been continuously hailed as a very likely game-changer for numerous industries and, as such, the world itself. While the developments are still in their incipient stages, experts believe the decentralized ledger could be used to improve supply chains, banking and healthcare, among others, making life easier and safer and business processes more reliable. They might, however, not replace existing systems but offer another alternative to traditional business mediums. Actions taken via the blockchain remove intermediaries, thereby creating the possibility for new economic activities that weren’t feasible before.
This is one of the things that makes crypto such an attractive investment. After all, who isn’t drawn in by the promise of high returns, all while backing future developments?
Censorship resistance
An ever-growing number of people are concerned about their privacy and what they perceive as increasing surveillance within society. Cryptocurrency offers an answer to this problem since it acts as a stable store of value that’s resistant to censorship and external modifications. This is particularly the case when you trade in well-known, established coins such as Ethereum. Although you still have to check the Ethereum price USD before buying or selling ETH, you can be assured that a stronger currency will maintain its value over the years and make for a more substantial investment.
Unlike fiat money, crypto is based on mathematical algorithms. As a result, its value cannot be diluted through inflation, and no political or governmental body has any realized power over it. It’s also impossible for agencies to confiscate or tax cryptocurrency or tokens without the permission and cooperation of the owner. All these features make cyber money an attractive option for investors concerned about the volatile economic situation of the past few years. Hyperinflation events, bank failures and devaluation are some of the most common concerns, but their ubiquity makes them no more destructive for traders.
Huge potential
You can perform many activities on the blockchain, but the exchange and trading of digital coins remain the most prevalent. Nevertheless, there’s still a lot of speculation associated with crypto trading, and as many such detractors have warned about the possibility of a crypto bubble, with investors running the risk of coming to a potentially disastrous end due to their ventures.
However, cryptocurrencies are not unique in being subjected to speculative bursts and even some irrational trading. It’s quite commonplace anytime a certain asset gains popularity and becomes fashionable among investors. The same tendencies have been noted among precious metals, tech and even real estate stocks, and while, in many instances, the outcomes were less than favorable for many traders, others saw positive results and enjoyed significant revenue. This is true for most investing ventures. There’s always a certain degree of risk associated with them, no matter the market niche. For this reason, it’s important to remember that, no matter what you want to add to your portfolio, you should never invest more than you’re comfortable potentially losing.
Heightened interest in crypto is nothing out of the ordinary, particularly given its relative novelty. As a new investor, however, you should be careful in how you manage your interactions with herd instinct and FOMO. Even if you hear something about how a newly-appeared currency is all the rage at the moment, approach it with caution. Most of the newer coins record more extreme fluctuations, and it can be somewhat risky to become involved with them. You don’t want to see all your money go down the drain when you are under the impression you’re taking a calculated risk and expecting to see high returns.
As blockchain tech matures, you can expect to see an ever-growing number of people interested, and as such, all the more currencies popping up on the market. You’ll need to stay vigilant and trust your gut instinct rather than the hearsay of others.
The bottom line
While there are some reasons why you could be skeptical of the promise of cryptocurrencies, there are all the more reasons to try and give it a chance. There are still some safety risks associated with trading, but while most investors would probably think of hacker attacks when it comes to this, the truth is that just as many security concerns stem from the carelessness of traders, who habitually fail to keep their keys and passwords safe.
If you’re thinking about becoming involved in crypto trading, now’s the best time to start.
