In the constantly evolving financial landscape of the world, cryptocurrency has emerged as a dynamic investment avenue with the potential to reshape traditional trading customs. A cryptocurrency is a digital currency existing on decentralized networks using blockchain technology. It isn’t issued by any central authority, making them immune to government interference or manipulation.
Statistics show that the crypto market’s revenue grew from $18.52 billion in 2022 to $37.87 billion in 2023, and crypto investment is gaining more momentum. If you have been thinking about investing in cryptocurrency but have been hesitant, keep reading this article to learn about the four benefits of investing in cryptocurrency.
1. Inflation Protection
Though many currencies see a decline in their values due to inflation, cryptocurrency is well protected. Cryptocurrencies often have a fixed maximum amount. For example, Bitcoin’s supply is capped at 21 million coins. If the growth of the money supply overtakes the growth of Bitcoin, the price of 1 BTC to USD also increases, protecting your investment. In other words, when the value of a dollar decreases due to inflation, the cost of one Bitcoin increases in dollar terms.
Many other cryptocurrencies, like Ethereum, also use this mechanism of capping the supply to offer protection against inflation.
2. High Potential for Returns
One of cryptocurrency’s most significant benefits is its high growth and potential returns. Cryptocurrency has been a top-performing asset over the previous few years. For example, Bitcoin and Ethereum have grown 1000% and 500% respectively in the past five years, compared to a 67% increase in the stock market S&P 500 index fund.
However, even though crypto has been a better investment than stocks over the past five years, the crypto market is volatile and unpredictable, and it can be challenging to determine if this trend will continue. Still, this ever-changing nature and volatility offer high return potential to day traders.
3. Accessibility
Cryptocurrency is highly accessible. All you need is a smartphone or computer with an internet connection to use it. You also don’t need a credit or background check to open a cryptocurrency wallet; identity verification suffices. It is a much faster and easier way of accessing or transferring money than old institutions like banks, and it is also available 24/7, 365 days a year.
4. Safe and Secure
Cryptocurrency wallets are highly safe and secure. No one can access your funds without your crypto wallet’s private key. You must also be extremely careful and ensure that you never forget or lose your key, as you won’t be able to access your funds without it.
The blockchain system and the scattered network of computers verifying the transactions offer additional security. Blockchain secures cryptocurrency networks with cryptography, hence the name ‘cryptocurrency.’ This process codes information so that only the person you intend the message for can read it.
This system allows transactions to become anonymous, private, and trustless. Here, trustless means that the parties involved don’t need to know anything about the other party to complete the transaction or rely on a third-party intermediary, so your activity remains private and secure.
Endnote
The cryptocurrency market is growing astounding, and the number of crypto users is only increasing. Cryptocurrency investment offers many benefits. Not only are the transactions safe, private, and secure, but cryptocurrency is also highly accessible. It requires only a smartphone or a laptop with an internet connection and an identity check to start using crypto. It also has a high potential for returns and is well protected from a decline in value due to inflation.
