Cryptocurrencies have been around for a few years now, but their use is still quite limited, compared to other assets like stocks and real estate. However, this situation is about to change, as cryptocurrency is becoming more and more mainstream. And this is just the beginning!
The number of people investing in cryptocurrencies has been growing every year since 2013 (when Bitcoin was first launched). Today, it’s estimated that there are over 300 million active crypto investors worldwide↗ ! And this number is still growing rapidly.
So what are the reasons behind such an explosion in interest? What are the benefits of investing in cryptocurrencies? In this article we will try to answer these questions by explaining what cryptocurrencies are and why they offer great opportunities for investors!
There are many reasons to invest in cryptocurrencies. Here are some of the most common:
Low Barriers to entry
The fact that crypto has no entry barriers is one of the biggest reasons to invest in it. Anyone can start investing in crypto, regardless of their financial situation. Neither a minimum net worth nor an income threshold are required.
In addition to allowing more diversity among traders, low entry barriers for new investors also help reduce the risk of systemic collapse due to fraud or market manipulation. An entity such as an investment bank or hedge fund operator may have too much control over a particular asset class, which could lead to price movements that are influenced by their ability to influence price movements.
High liquidity
An asset's liquidity is how quickly it can be bought or sold in the market without affecting its price. Having the ability to convert holdings into cash at a moment's notice is an essential part of every market, but particularly for investors.
A cryptocurrency is a highly liquid investment that can be easily converted into cash on demand at any time. The majority of cryptocurrency exchanges allow investors to deposit and withdraw fiat money at any time without having to wait for long periods of time. In this sense, cryptocurrencies are a great solution for investors who want access to their money quickly or need ready cash for other purposes (such as home purchases).
Low transaction costs and fees
The transaction fees for cryptocurrency are much lower than those for traditional payment methods. Credit card transaction fees average around 2-3%↗ , while Bitcoin transaction fees are usually between 0.6% and 1.9%↗ .
Using cryptocurrency for cross-border payments is even more cost-effective than paying domestically, since banks and other institutions do not charge international money transfer fees. If you were to pay someone using PayPal or Western Union® in another country, they would have to pay a fee of about 4%. If they use Bitcoin instead, there's no extra cost involved since cryptocurrency is free to send across borders!
In general, micropayments (small amounts) have very low transaction costs. In comparison with normal debit card transactions, sending $2 worth of Bitcoin incurs only a fractional percentage charge.
Fixed supply and can’t be printed
Cryptocurrency supply is another important factor to consider. Unlike paper money, Bitcoin's supply cannot be printed by governments or central banks. As opposed to traditional fiat currencies such as the US dollar, cryptocurrencies cannot be printed by anyone at any time. As a result, crypto doesn't experience inflation. There are, however, some cryptocurrencies that have a maximum supply↗ , meaning that the number of coins will never exceed the stated amount.
Transparent transactions
Cryptocurrencies are very transparent, so anyone can see what you've bought, sold, or transferred. Due to blockchain technology, transactions are also immutable and irreversible. When you send a certain amount of cryptocurrency from your account to another user's account, it's gone!
However, that doesn't mean transactions can be traced. All transactions are recorded on the blockchain and in an online ledger known as "wallet software" at any time. Individuals cannot be tracked using their digital signatures (a set of numbers used everywhere you sign something). With this information, however, someone could potentially find out who owns how many coins and how much money each person has made from selling them off.
Variety of investment options
The first thing you need to know about investing in crypto is that it is a highly volatile asset class. This isn't the place for you if you're looking for steady returns. If you want to diversify your portfolio and make big gains from your investments, crypto is a great option.
In addition, there are so many types of cryptocurrencies that allow you to invest in the future of money and technology today.
Cryptocurrency is immutable and unhackable.
Understanding what immutability and unhackability mean is crucial. An immutable object is one that cannot be altered or corrupted. It includes information such as how much money you have in your wallet, how many shares you own, your age and gender (if they're stored on a blockchain), etc.
If your account is unhackable, no one can access any sensitive information without your permission. Even if someone were to hack into your account and steal all of your funds, they wouldn't be able to change anything inside it-such as how much money you have or who owns which shares.
Why is this important? In order to decide whether or not to invest in cryptocurrencies such as Bitcoin and Ethereum, we need to ensure that they are both genuinely safe investments first.
You can earn cryptocurrencies passively.
The ultimate way to earn money is through passive income. There's no need to worry about your job or how much you'll make each month because it comes in automatically! There are a number of ways to earn passive income, including:
- Earning interest on investments you haven't touched in years (like CDs and savings accounts)
- Profiting from a business venture without actively managing it (like investing in stocks)
- Buying or mining cryptocurrencies yourself; this is called mining
As opposed to mining some other metals or minerals, cryptocurrency mining is passive and can be earned by staking coins and earning interest.
Conclusion
We are going to see a lot more of the crypto market in the future. There is only a matter of time before cryptocurrency becomes mainstream and accepted by everyone. With so many benefits, it's no wonder people want to invest in this new technology. Increasingly, people have realized how lucrative the game can be if they play their cards correctly.
