5 reasons why cryptocurrencies might be a good investment

10/04/2021, 03:38 PM

5 reasons why cryptocurrencies might be a good investment
5 reasons why cryptocurrencies might be a good investment

Cryptocurrencies have changed the way people think about money management and they opened up new financial opportunities that traditional finance can’t keep up with.

Cryptocurrencies have flourished in recent years, both in value and in general acceptance. Every time Bitcoin grows in value, altcoins follow its lead. If we compare cryptocurrency value vs. stock value (over the last 10 years), cryptocurrencies are a great investment.

If you had invested $1,000 ten years ago in a great cryptocurrency project (like Bitcoin), you would have hundreds of millions of dollars.

The rapid growth of the cryptocurrency market could not go unnoticed for long. Many investors have realized the potential of the technology and noticed high ROI possibilities. But cryptocurrencies as an investment should not be viewed solely as the opportunity for high profits, especially if you are a beginner who is just learning about this area.

Investing in cryptocurrencies without any knowledge can only be a shortcut to losing money.

Behind many cryptocurrencies are projects that will shape the financial world in the coming years. Also, with the further development of technology, new projects and companies with revolutionary solutions will appear.

With the development of blockchain technology, new teams and companies will improve the existing system. This is where the advantage is for the entire market and for the investors. The stable growth of technology is one of the important indicators that it is not too late to invest in cryptocurrencies.

Below we bring you five reasons why cryptocurrencies are a good investment and why you can still get involved, under the condition that you are familiar with cryptocurrency investing.

1. Investing has never been easier

For many years, investing has been an abstract concept for most people. Many considered that investing in stocks, real estate or other forms of property was complicated and reserved for people with larger capital.

Let's go back briefly to the beginnings of Bitcoin. The process of buying Bitcoin was complex enough to turn people down in the first steps. Not to mention how slow computers were and how hard it was to deal with digital blockchain wallets.

The animated vector GIF with illustrated character pointing the board with charts and Bitcoin.

Today, in a few clicks, you can buy your first stock or cryptocurrency via your smartphone. New technology and the mass emergence of fintech startups that offer revolutionary solutions give all users the opportunity to invest.

Instead of spending the small amount of money you saved on new clothes, sneakers, or other stuff, you can invest it in cryptocurrencies as a form of savings. The cryptocurrency buying process has become as simple as ordering things from the comfort of your couch. In just a few steps, you can have cryptocurrency in your portfolio available anytime, anywhere.

More importantly, everyone can find relevant literature and sources through which they can learn about blockchain technology and the way cryptocurrencies work.

A few years ago, the cryptocurrency and blockchain industry was something like an "underground" scene. There was not enough learning material that will bring the new technology closer to the people.

Today, if you want to learn more about investing in cryptocurrencies you have unlimited access when choosing verified sources. The industry has changed and progressed so much that it has become part of programs in many schools and prestigious colleges.

Having basic knowledge of cryptocurrencies and technology, in general, will be of great help to you once you decide to invest in cryptocurrencies and will help you immediately separate the good from the bad crypto projects.

Where can I learn about cryptocurrency and blockchain?

Vector illustration of the teacher explaining Bitcoin to his two students.

Before you think about investing in cryptocurrencies, you need to go back to the basics and understand how blockchain technology works and how it powers cryptocurrencies. You can find an unlimited amount of information on the internet, but it is necessary to filter the sources so you don’t end up wasting your time reading long irrelevant articles.

It is recommended that you choose sources of information that will explain the basics of blockchain and cryptocurrencies in simple language.

You can browse through many webinar websites such as Udemy or Skillshare which have free courses. Crypto news portals and specialized blogs can also help you as they keep up to date with all the news related to the blockchain industry.

A place where you can learn about cryptocurrencies step by step and where you can easily buy your first cryptocurrency is the Bitcoin Store. The articles on the Bitcoin Store blog are divided into multiple groups so that a reader can find something useful for themselves, depending on whether they are a beginner or an experienced cryptocurrency user.

It is important to dedicate a large amount of time to learning about blockchain innovations and projects. Learning may be a slow process but it will help you understand what blockchain and cryptocurrencies are all about.

Furthermore, you will have a strong background that will help you identify the good crypto projects among many bad ones. Knowledge is the key that will prevent all scam attempts.

2. The cryptocurrency and blockchain industries are still at an early stage

One of the reasons people are reluctant to invest in cryptocurrencies is because they think they are too late. The fact is that from 2017 to 2021, the entire industry developed rapidly. In addition to cryptocurrencies, DeFi and current NFT projects have emerged. Within this period, many managed to make a good profit by making smart investments.

Many new investors now feel that they have missed their opportunity when investing in cryptocurrencies.

Although the market has undergone a complete transformation and is moving towards balance, many forget it is still a young industry. Cryptocurrencies and investing in cryptocurrencies, in general, are only in their initial stage.

The timeline shows the evolution of money from coins and cash all the way to Bitcoin.

Every day a new project appears with solutions that seek to solve the problems of previous blockchain projects. Each new solution provides an even simpler approach to using cryptocurrencies.

The emergence of new cryptocurrencies is also a good investment opportunity. If, as a user who knows the industry well, you understand what the new project is trying to improve and what its long-term goal is, you can be one of the early investors. Over time, if the project really proves successful you will have the opportunity to get a good return on your initial investment.

It should be made clear that many of the projects we know about today, and many of the projects that are yet to emerge, will probably disappear. Probably because they don’t have a good product or the product has no application in real life.

Again, that is why education is important in order to better understand the ultimate goal of new cryptocurrencies and to distinguish between good and bad projects. The last thing you want is to invest in a cryptocurrency driven by the emotions or advice of another person.

Ultimately, most cryptocurrencies and DeFi projects will be successful. The reason is that they offer quality solutions that can improve the way modern finance works. An indicator that the development of cryptocurrencies is going in the right direction is that the world's financial institutions are already researching technology and investing in cryptocurrencies on their own.

3. A reliable tool for long-term preservation of value

There are several ways to invest in cryptocurrencies. One of the most popular ways to invest in cryptocurrencies is the long-term storage of cryptocurrencies for preserving value.

The reason people choose this type of cryptocurrency investment is that they don’t want to get involved in day-to-day cryptocurrency trading.

This makes sense since cryptocurrencies are still highly volatile assets, and trading requires a lot of time. Instead of facing daily price changes, investors buy a cryptocurrency and they don’t sell it even when the market is experiencing big changes.

But how is that making cryptocurrencies a reliable means of preserving value?

Digital assets like cryptocurrencies are an attractive form of preserving value in the event of inflation or a crisis such as the collapse of banks in the 2008 global financial crisis.

Unlike traditional fiat currencies, cryptocurrencies have a limited number that can be in circulation. For example, the total number of Bitcoins that can ever exist is 21 million. No one can change this definitive number of Bitcoins in circulation. Such ability of cryptocurrency makes it resistant to inflation, unlike traditional fiat currencies.

Also, cryptocurrencies are not owned by banks and governments. If you once bought a cryptocurrency and stored it in your digital wallet, no one can take it away from you.

4. Investing in cryptocurrencies has higher ROI than investing in stocks

The fact is that people are increasingly investing in cryptocurrencies in search of profit. Money drives this world and that is why everyone is trying to find a way to make money, be it by investing in stocks or investing in cryptocurrencies.

Cryptocurrencies have a high percentage of ROI and this is something that attracts the investors the most. the most are high returns. Many cryptocurrencies can go up by 20-40% in just one day, which is a return that can only be dreamed of.

However, the reason for the big jump is the high volatility of cryptocurrencies. Just as the value can rise by 20-40% in one day, so it can easily fall.

As already mentioned, investing in cryptocurrencies requires a lot of learning and patience. Otherwise, you are just making a  blind investment which can only lead to financial losses.

5. More freedom with your own money

What cryptocurrencies allow you to do is engage in trading at any time and for an amount of money that suits you. Investing in cryptocurrencies is not reserved exclusively for wealthy individuals.

You can invest in cryptocurrencies by saving aside a monthly amount that you don't need and that you will have left after you cover all your major expenses.

The best part about investing in cryptocurrencies is that as an individual you don’t need brokerage or other third-party services, which is common when you invest in stocks.

Thanks to new responsive solutions, you can buy cryptocurrencies in a few clicks on any crypto exchange or crypto exchange.

Every transaction is instant when you are buying or selling cryptocurrencies. Also, you can trade cryptocurrencies at any time of the day as blockchain networks operate 24/7 non-stop.

What you need to know before investing in cryptocurrencies

Every time you invest money whether it is a fund offered to you by an institution like a bank or in stocks, there are certain risks. The same thing is true when you invest in cryptocurrencies.

As mentioned, cryptocurrencies are highly volatile digital assets that are often unpredictable. Investing in cryptocurrencies based on some “tip” or “feeling” that a project you’ve learned about could fetch a big price someday is a path to losing money.

If we look at the situation in general, to start investing in cryptocurrencies you will need two things - knowledge and well-balanced personal finances.

Basic knowledge of blockchain technology and cryptocurrencies is not enough. You will also need to understand the basics of investing. Assuming you want to invest in cryptocurrencies in the near future, you need to learn the terminology associated with trading and cryptocurrencies.

If you can put a checkmark on all the above-mentioned skills, you must also search for important events and news from the crypto world.

You may have heard this probably hundreds of times but it’s important to remember that you need to invest only the money that you’re willing to lose and that won’t significantly affect your quality of life.

Importnat notice:

Bitcoin Store is not a consulting firm and as such is not authorized to provide financial and investment advice. Our opinions, analysis and other content on the website are for informational purposes only and can't be considered a basis for investment.

Cryptocurrency trading is speculative. Prices can change quickly, which can lead to a loss of investment. Before you start investing in cryptocurrencies, seek independent advice and be well informed about the potential risks associated with this type of financial instrument.