It isn’t every day that investors have the opportunity to get in on the ground floor of a hot investment. And even when they do get that opportunity, few investors are willing to take that risk. But cryptocurrencies offer investors a whole new world of investing, the ability to invest in an entirely new class of assets that is still only in its infancy.
The first cryptocurrency, Bitcoin, was released to the public in the aftermath of the 2008 financial crisis. At first it was treated skeptically, seen at best as a mild curiosity, and at worst as a tool to empower malevolent actors on the dark web, terrorists, and money launderers. But within a decade, Bitcoin established itself not just as a viable payment medium, but also as an investment asset.
By now most people have heard of Bitcoin, even if they may not know how it works. They may also have heard of other cryptocurrencies, such as Litecoin, Ethereum, XRP (Ripple), or Dash. So why should you invest in cryptocurrency?
No one bets on a horse they know is going to lose; however, investments like cryptocurrency represent the future of investing, and a whole new asset class. As Bitcoin and other cryptocurrencies have garnered more mainstream interest and support, their value has increased. Every new merchant that accepts cryptocurrency as payment, every new exchange that supports cryptocurrency trading, and every new financial services firms that offers cryptocurrency products enhances the long-term viability and popularity of cryptocurrencies and adds to the network effect that will allow cryptocurrencies to flourish.
As cryptocurrencies continue their adoption by the mainstream, demand for them will increase. And because many cryptocurrencies such as Bitcoin have a fixed supply, those increases in demand will also mean an increase in price, benefiting those who invested in cryptocurrencies early on.
Investment choices don’t always have to do with the potential to make investment gains. Sometimes investors choose an asset because it offers the ability to diversify an investment portfolio, to protect against risk in a particular sector.
Many investors think that just by investing in a mix of stocks and bonds, their portfolios are diversified. But that isn’t true. Investors need a wide range of assets, across multiple different asset classes, before they can claim a truly diversified portfolio. Sticking just to stocks and bonds puts 100% of your portfolio at risk in the event of a major financial crisis.
Gold and silver have traditionally been the investments of choice when diversifying an investment portfolio and protecting against financial risk. But cryptocurrencies are increasingly becoming the new digital gold and silver, playing the same role in protecting investments against market crashes. Many investors are choosing cryptocurrencies as their investment hedge when stocks look set for a downturn.
Cryptocurrency allows both users and investors the ability to convert funds into digital currency and hold them securely, without having to rely on the banking system. The very reason behind the development of Bitcoin was to bypass the traditional banking system and create a currency that couldn’t be devalued by central banks and that wasn’t subject to fees for storage, transfers, etc.
With numerous options available to store their digital assets, investors can choose the type of digital wallet with which they are most comfortable, allowing them to have peace of mind that their assets remain safe and sound.
Electronic payments are the way of the future, and it’s only a matter of time before most transactions will take place electronically. Whether through contactless payment systems, transfers over mobile phones or other methods, cryptocurrencies are uniquely adaptable to various methods of payment and transfer, and offer numerous advantages over cash and payment cards. Their ability to adapt to the changing needs of consumers and investors will ensure that cryptocurrencies will only continue to gain in popularity in the coming years.
If you are interested in learning more about investing in cryptocurrency, contact Coin IRA today to get more information.