Bitcoin has been all over international headlines over the last few years. As a result, even those who are completely unaware of how bitcoin actually works know that investing in cryptocurrency can bring big profits, if it’s done right. Before we go further and uncover the reasons why you should consider investing in cryptocurrency, let’s revise briefly what a bitcoin actually is, and what’s the difference between a bitcoin and an altcoin.
Investing in cryptocurrency: which one?
Bitcoin was the world’s first cryptocurrency that rose to fame in 2008. In a nutshell, it’s a completely secure virtual currency that makes international transactions possible within seconds - with no fees or tax deductions. Bitcoin cannot be forged or duplicated as it contains thoroughly protected encrypted data. For many years, investing in cryptocurrency and investing in bitcoin meant the same for the majority of people.
The number of bitcoins that can be issued is strictly limited to 21 million. This is a crucial fact that distinguishes bitcoin from fiat currencies (like £ and $) - state banks can issue as much money as it takes to cover all government debts, devaluing national currency as a result. No government can issue more bitcoins or altcoins - meaning that cryptocurrencies are safe from devaluation. This feature played a major part in bitcoin’s rapid growth and international publicity.
Despite bitcoin being the most famous, investing in cryptocurrencies is not about bitcoin alone. There are hundreds of others, which are known as altcoins (alternative coins). Lots of these still haven’t reached the first cryptocurrency’s market cap, but boast great investment opportunities instead. Many people think that it’s already too late to earn much return from bitcoin, but there are hundreds of altcoins which are equally secure and ready for you to explore and gain profit from.
All in all, whether you’re a libertarian or an anarchist, an investor or an outlaw, a tech guru or a technophobe, you shouldn’t ignore cryptocurrencies. There are many reasons why it might be beneficial to invest in cryptocurrency. For the prospect of buying crypto to appeal to you, it isn’t necessary to desire everything that bitcoin and other decentralized currencies have to offer – a single compelling reason is enough. Pick whichever one appeals to you the most from the seven we’re about to outline.
Investing in cryptocurrency: 7 reasons why
Reason 1: Diversify your investment portfolio
Investing in cryptocurrency provides a means to diversify your investment portfolio, providing an alternative to stocks, bonds and commodities. Just as it would be foolish to place all of your wealth into real estate or gold, as the collapse of either market would have serious consequences, the same is true of cryptocurrency. It may be wise to invest a small amount though. Fred Wilson, the CEO of Union Square Ventures, for example has suggested that investors should consider allocating 5% of their net worth to bitcoin.
Different people have different risk profiles, so it is difficult to place an exact figure on how much you should consider investing in cryptocurrency. But as the maxim goes, with any investment opportunity, you shouldn’t put in more than you can afford to lose. That adage can be accompanied by advice to build your portfolio around BTC, as the benchmark and most trusted cryptocurrency, with perhaps a smaller selection of other cryptos. Again, it’s for you to decide the degree of risk and reward you’re willing to take on, but be aware that smaller market cap coins typically come with greater volatility.
Reason 2: A Digital Savings Account
Millennials are experiencing something of a savings crisis. A recent survey found that most millennials between the ages of 18 and 34 have less than $1,000 in savings. While the reasons behind this are many, they include the low interest rates offered by banks that provide little incentive for people to put something away for a rainy day. Because investing in cryptocurrency tend to be less easily accessible than investing in fiat currency, there’s less incentive to spend crypto once it’s locked away in a hardware wallet. Cryptocurrency can still be liquidated in the event of an emergency, but is less susceptible to being dipped into at times when you should really be saving. Not only does investing in cryptocurrency provides a sanctuary for your savings, but it has the potential to pay interest should these assets appreciate in fiat terms.
Reason 3: Sending & receiving money cheaply
Cryptocurrency is cheap and fast to send, particularly compared to traditional means of sending funds overseas. Bank wiring and Western Union are slow and characterized by high fees, while payment protocols such as PayPal impose hefty currency conversion fees. While remittance may not be the primary reason for most people to invest in cryptocurrency, for those rely on it for this purpose, it is uniquely valuable – especially so for the estimated 1.7 billion adults who lack a bank account.
Reason 4: Trading for profit
After investing in cryptocurrency, many people will keep a portion of it on an exchange site for the purpose of trading. This is of course done in the hope of generating profit. It’s common practice for traders to start by purchasing BTC or ETH and then, through buying and selling other coins, to grow the value of their cryptocurrency stack. Trading calls for a degree of experience, while derivatives trading should be reserved for experts only, as it carries additional risks. For investors willing to do their research and master their craft, cryptocurrency trading can provide a secondary income.
Reason 5: Privacy
In an era of data breaches, hacks and unprecedented surveillance, privacy is becoming a scarce commodity. Traditional payment systems are particularly vulnerable to website hacks that can expose customer details including names, addresses and credit card numbers. Investing in cryptocurrency provides a greater degree of privacy and leak less sensitive information as to the identity of buyer and seller. When purchasing items of a personal nature, it can be particularly beneficial to complete the transaction using cryptocurrency.
Reason 6: Emergencies
Everyone has experienced occasions when they’ve been unable to access their money. Perhaps your credit card has been lost or stolen. Perhaps your bank have frozen your account after detecting ‘suspicious activity’ triggered by you attempting to withdraw cash abroad. Or perhaps PayPal have suspended your withdrawal for 10 days while they make ‘additional security checks’. Being cut off from your finances, particularly when away from home, is an inconvenience at best and a major headache at worst. Having cryptocurrency that you can access in the event of an emergency, be it to spend, cash out or send to a friend in exchange for a short-term loan, can be a godsend when you have trouble with your everyday money services.
Reason 7: Your money, your rules
One of the best things about bitcoin is that, as sound money that you and you alone control, it is your prerogative to use it as you see fit. Provided you store your cryptocurrency on a wallet to which you control the private key, no one can seize or freeze your funds. Whether you choose to lock your bitcoin away on a hardware wallet for the next decade or gift it to friends and family is your decision. When you invest in cryptocurrency, financial freedom and freedom of choice come as standard.
So, there are just seven of the many reasons why it's a good idea for you to start investing in bitcoin and other cryptocurrencies. Be it as a store of value, medium of exchange or a combination thereof, investing in cryptocurrency provide a plethora of functions and opportunities that are set to grow as crypto adoption takes off. The number of uses for cryptocurrencies, and the ease with with which they can be spent and stored, is steadily increasing.
We’re here to help you kick off your journey into crypto - so take advantage and click here to try out GetEx now!