Why cryptocurrencies are a viable investment?
2020 was a boom period for cryptocurrencies with investors snapping up Bitcoin, Ethereum, Ripple XRP, and Litecoin amongst others.
Having previously broken out of a period of extended stagnation, the outlook for cryptos with Bitcoin in particular is looking extremely bullish.
Additionally, we’ve also seen the entry of major institutional investors into the market along with payment platforms such as PayPal making the cryptocurrency available to a larger portion of the public.
What was previously viewed as a niche item favored by deep web surfers on the fringes of society has evolved into a fully-fledged investment asset.
Despite what the naysayers have claimed, Bitcoin and other cryptocurrencies have shown no signs of slowing down.
So if you’ve been thinking about trying your luck on the market, let’s now take a look at why now may be the right time to start investing.
1. High rates of return
In the past, some have worried about the veracity of cryptocurrencies – citing concerns that a decentralized asset such as this could be rendered worthless overnight.
Given Bitcoin’s recent performance and a successful halving, it is safe to say that mainstream cryptos such as Bitcoin and Ethereum are stable assets and unlikely to disappear overnight.
There’s no going around the fact that crypto investments are highly volatile and likely to fall or increase in value with little-to-no warning. This volatility however is what makes crypto investments an attractive proposition for many.
With rates of returns in the double or triple digits, it has become basically impossible to find investments with such phenomenal rates of return.
Of course, all this comes at a price and you’re just as likely to go broke as you would making it big when investing in cryptos. Investors need to take steps to diversify their portfolio and be prepared for the risk that comes along.
2. Rising acceptance of cryptos
To many the concept of an asset that only exists in the digital realm may seem impossible or downright insane.
On paper, cryptocurrencies technically should not have any intrinsic value – they are not backed by commodities or assets and do not exist in a physical form.
What cryptocurrencies do have however is utility. This utility comes in the form of freedom; the freedom to not be constrained by financial systems and the restrictions that they impose.
For example, Bitcoins allow users to seamlessly transfer vast quantities of funds from anywhere around the world nearly instantaneously at little to no cost without government intervention.
This has been the catalyst for an increasing number of companies to begin accepting crypto payments. The ease in which funds can be transferred coupled with easy availability make cryptocurrencies such as Bitcoin a viable international medium of exchange ala the U.S Dollar.
3. As a hedge against inflation
Since the outbreak of COVID-19 began governments have been scrambling to simultaneously check the spread of the virus and keep their economies afloat.
To the end, widespread pandemic lockdowns have been enacted along with the introduction of stimulus packages aimed at injecting liquidity into the economy. The rate in which cash has been pumped into the market has triggered fears of a sudden and uncontrolled rise of inflation on the long-term.
For those who are unaware, inflation occurs when a surplus of cash is chasing a limited supply of goods. Consequently leading to a situation where the buying power of a particular currency is eroded.
Investors want to avoid such a situation at all costs which is why most opt to purchase hard assets as a means of hedging. This is why we have seen a rise in the price of Bitcoin and other cryptocurrencies.
Being decentralized and of limited supply, these assets exhibit inflation proof characteristics that make them a useful investment during times like these.
From rising rates of acceptance to its inflation proof characteristics, it is safe to say that crypto assets are a worthwhile investment.
By carefully managing your risk and staying prudent, even the most amateur of investors will be able to ride out this storm. Making sure you choose a safe and trustworthy cryptocurrency wallet is fundamental. To know what is the best Bitcoin wallet to use click here.