When most people think of cryptocurrency today, many often imagine the stories about young, tech-savvy investors making huge sums of money in a matter of days. It’s this kind of misconception that creates a false fantasy of how cryptocurrency can be a “magic bullet” that can solve a person’s financial woes. However, for the more critical, this does beg the question of how decent cryptocurrency as an investment really is.
It does still stand that some of the top alt coins such as Monero coin do eventually increase in value if left to grow safely in a secure Monero wallet over time. However, that alone is not enough reason to believe that cryptocurrency is a good enough investment to pursue, especially if one expects to earn instantaneous profits over a short period of time. As with many misconceptions, the truth is actually somewhere in the middle.
For the more tempered investors, here are some of the reasons why cryptocurrency does actually make for a good investment.
The Returns Come in Long-term
Anyone looking seriously into cryptocurrency as their next investment should already have a good idea of their financial goals. They know what they are investing for and how far they are planning into the future. With this in mind, there is a good reason to consider crypto as a medium to long term investment.
Although it has been described as a volatile market, many digital coins do rise in value significantly after around a decade. This can be attributed to major advancements in the blockchain, hard forks in coin protocols, and overall trends in financial technology. By keeping the timeline in mind, investors must be sure to place money that they are prepared not to touch for several years.
It’s Good for the Portfolio
One of the golden rules of investing is to diversify one’s investment portfolio as much as possible. Betting everything on one type of asset is too much of a gamble, but that does not mean investing in many random assets. It is important to make sure that these markets do not affect each other since the growth in one asset often serves as a cushion for losses in another.
Having said this, potential investors will be glad to know that the behavior of the crypto market has shown negligible change in relation to most other markets. Even the most prominent cryptocurrencies do not appear to be affected by the stock market, much less any of the other markets. This makes it a safe and promising addition to one’s portfolio.
Crypto Is Technically Immune to Inflation
It is commonly known by now that the crypto market is incredibly volatile, and the values of each coin can jump and fall in seconds. However, these changes are actually unafflicted by the phenomena of inflation and deflation which plague real world currencies. Because of regulation, the government has some control over how much of their country’s legal tender is in circulation.
In contrast, the amount of coins available for any given cryptocurrency is actually capped by the limitations of cryptographical technology. No matter what the value of a cryptocurrency is, the maximum number of coins in circulation virtually never changes. This is great for investors who may be worried about dilution scenarios concerning their investment in the future.
Financial Institutions Are Slowly Adopting It
Perhaps the most significant reason why crypto is becoming a much better investment nowadays is because of adoption at an institutional level. A promising development in finance today is that some of the biggest FinTech companies are beginning to take on cryptocurrency services on their platforms. As a result, crypto is set to grow rapidly as the market becomes more accessible to average people.
Furthermore, this has put more pressure on banks to prepare their own platforms to support cryptocurrency coin management. This does not necessarily mean that crypto will soon be centralized or regulated, but it does mean that it is gradually becoming a truly legitimate, globally standardized digital currency. The value will inevitably rise due to growing usage in more common expenditures anywhere.
It Is Still the Future of Finance
This is not so much a reason on its own but a consequence of all the other reasons. No matter what many have said for or against cryptocurrency, it cannot be denied that the market has grown in prominence and viability since its conception. More credible and established institutions in the financial sector are gradually accepting and processing cryptocurrency transactions.
While the technology itself is admittedly still young, it really is setting itself up to become a global currency. Crypto transactions and exchanges are far more efficient than most banks around the world, and blockchain technology is improving the security and anonymity of users’ digital finances with frequent updates and innovations. There is still more yet to come in the long run.
Overall, what really makes cryptocurrency a good investment is what it holds for the future of finance. It is the idea of innovating in ways that improve the financial aspect of the average person’s life, while returning finance itself to the people rather than having it centralized or regulated by any authoritative body.
From an investor’s standpoint, the prospect of such an asset should be very promising, especially in terms of potential returns. In the same way that revolutionary innovations of the past are now part of everyday life, cryptocurrency is set to become a standard for people around the world.
Monica Mendoza is a writer by profession who has written extensively on the subjects of Cryptocurrency, Finance, and Technology. Her work has been published across many respected, and well-known websites and publications. In her free time, she enjoys hiking, surfing, and traveling across the contiguous US states. She dreams of retiring in Montpellier in France someday.