Are Cryptocurrency Investments Worth It?
Recently, the talk of cryptocurrencies has taken center stage among investors. Many people have invested in cryptos. Some have made a fortune, and some have lost the money they put into this venture. The development of more coins and the stability of older ones, such as Bitcoins and Ethereum, have caused a surge in investment. You may invest in a particular coin, then it shoots to the moon, and you make profits, or it never picks, and you’re left with coins that you can’t even sell.
So, making a fortune or losing some of your investments are the two possible outcomes of investing in cryptocurrencies. It all depends on how you invest and what measures you take to try and minimize losses like you would in any other investment.
Another challenge facing crypto is tax compliance, as people aren’t aware of regulations surrounding filing gains returns. You can check https://blakeharrislaw.com/cryptocurrency/tax-compliance for more information about tax compliance in cryptocurrency.
What Makes Crypto Worth Investing In
With all the uncertainties surrounding the use of this digital money, the question among investors is whether crypto is worth investing in it. This article will look at some of the reasons why you should hold part of your crypto investment. But remember only to invest part of your finances and not the whole of it.
Here are some of the reasons that make crypto worth investing:
- It’s Novel and Has Potential
Even though investors in cryptocurrencies keep increasing daily, it’s still relatively new compared to other traditional investments, such as precious metals or real estate. This means that when you invest in the crypto mow, you’ll be joining the platform before many other people, and you stand a chance to benefit in case the prices of cryptos shoot.
For example, when you look at the price chart of Bitcoin, it has had an overall upward trend since its inception to date. So, those who bought it when it was starting have made immense profits. Cryptocurrencies being a new concept, has the potential to go to the moon, and therefore, investing in it could be a wise decision.
- A Good Way to Diversify Portfolio
Investing in crypto is an excellent way to diversify and maintain a healthy portfolio. If you want to invest in different assets, you can get some in crypto as well. There’s no relationship between the movement of crypto and fiat currencies because they are demand-based, and therefore can hold value even when other investments crash. This makes it an excellent investment.
- It’s a Stable Store of Value
Most cryptocurrencies have a limited supply of coins which means that they can’t be subjected to inflation risks. This is different from fiat currencies produced and controlled by regulatory bodies. In case of high circulation in the market, the purchasing value of the fiat currency falls to reduce circulation. For cryptos, the release is usually halved to ensure the supply is controlled and the value is stable.
However, not all cryptocurrencies are capped, meaning there are some whose supply isn’t limited. This type of cryptos can be used for pump and dump reasons, and they’re prone to hype marketing. So, as an investor, you should be keen on what coin you’re investing in. Capped coins are stable and suitable for long-term investment.
- Blockchain Technology is Transformational
Blockchain uses a unique technology where chunks of data are added on a chain of blocks where they can’t be erased or altered again. The transaction becomes available for everyone on the network to help prevent duplication. This helps to increase the security of transactions. This is the same technology used to build cryptocurrencies, such as Bitcoin and Ethereum.
While cryptocurrencies are arguably the most significant result of blockchain technology, more organizations adopt their use in storing and protecting data in companies. The transformational nature of blockchain technology will make more people embrace its usage. As a result, cryptocurrencies will also be embraced, which makes it a wise decision, investment-wise.
- Its Volatility Can Be Profitable
Cryptocurrencies are so volatile, with prices changing each time. For risk-averse investors, this can be a cause for alarm. However, for speculators, it’s a chance to trade on the crypto market and make huge profits. So, while people are always advised to buy and HODL the coins until there’s a bullish trend before selling, you can make more profits trading cryptocurrencies.
In cases of a bear trend, trading in the crypto market will protect you against losses as you can make profits in the prevailing market price.
Despite the many uncertainties and doubts in crypto, such as legalities, tax compliance, and how long cryptos will survive in the market, it offers many benefits worth investing in. As people embrace technology such as blockchain, it can be predicted that the need for digital currency that cuts transactional costs and increases the security of transactions will be needed. That’s what cryptocurrencies are made for, which makes it a good investment.