Cryptocurrency is the future of money. This investment option has a plethora of benefits for those looking to invest into this type of currency. In this article we dive into the key 8 benefits of cryptocurrency and why investors should look into this type of investment.
What Is Cryptocurrency?
Cryptocurrency is a digital currency that does not have a financial intermediary. It can be utilized like fiat or traditional currency, where it can be used to purchase goods or services.
Many function through a technology called blockchain, which is a system that makes it extremely difficult for those to hack or infiltrate its information. Different companies can provide their own currencies, which can be interchangeable with “tokens,” that can be used for that specific company’s services.
8 Benefits of Cryptocurrency
Cryptocurrency provides a wide range of benefits spanning from it being decentralized to having huge growth potential. By explaining in depth what these benefits entails provides a better picture for those who are interested in investing into crypto.
Contrary to popular belief, having decentralized currency has been shown to be more stable and trustworthy. However, decentralization is a spectrum.
Some coins are fully decentralized and others have portions of assistance. But, since many cryptocurrencies utilize blockchain technology all users are essentially an equal participant within the system.
International Exchanges Made Easy
One of the largest issues with fiat currency is foreign exchange rate. Since cryptocurrency is not connected with any financial intermediary or country, it does not have to face an exchange rate.
This is a very attractive option for those who do make or do international exchanges frequently. In short, crypto can be converted into a fiat currency, like USD or EUR, depending on the investor’s preference for an international purchase.
Additional Method of Portfolio Diversification
Cryptocurrency is a highly lucrative investment. Additionally, diversifying your portfolio is a great way to reduce overall risk and minimize any portfolio loss.
By investing into cryptocurrency you are expanding your portfolio’s assets which has been shown to yield substantially higher returns and minimize more risk. Lastly, since cryptocurrency is not necessarily correlated with the stock market, it can still be a profitable investment even if the stock market is down.
Eliminating the Middle-Man
Since cryptocurrencies are decentralized, no financial institution or intermediary is overlooking the currency. This is a perk since it allows investors to be in more control of their money since cryptocurrency does not have to follow the regulations or rules often imposed by financial intermediaries.
Additionally, this is extremely beneficial when it comes to facing an economic crisis since it gives the investor more power over their funds.
Incredible Growth Potential
As stated prior, cryptocurrency is extremely attractive to investors due to its high potential return. For example, one Bitcoin was valued around $1 in 2011 and is now around $65,003 as of November 2021.
This trajectory has been happening to rising cryptocurrencies as well causing investors to look further into these currency options.
These types of contracts are a more secure way of managing agreements since they run through blockchain platforms. Smart contracts can be used for a plethora of things such as financial services, voting systems, and supply chain systems.
They can be accessed on platforms that also produce cryptocurrency, eliminating an intermediary in the formation of a contract. Some of the benefits of using smart contracts is the elimination of manipulation through third parties, safety, and the speed of completion.
Open Trading 24/7
As stated above, cryptocurrencies function on their own and are not attached to an intermediary. Due to this, they do not have to be traded within a specific time frame as other stock markets do.
This is a great perk for both diversification and potential growth.
Hedge on Inflation
Cryptocurrency is a great hedge against inflation. This is because when inflation begins to rise, the value of money (such as fiat currency) starts to depreciate. Some sources, such as JP Morgan, have stated that cryptocurrency may be a better option for an inflation hedge than gold.
This shows how crypto could protect the value of the investor’s funds.
Why You Should Invest in Crypto
Investing in cryptocurrency is a great opportunity for investors to not only potentially maximize their profits but to also provide some level of security. These 8 benefits, highlights why you should start investing in crypto.