Cryptocurrencies have become a hotly debated topic across the world. In fact, you yourself may have had an interesting crypto debate with family or friends.
Truth be told, the world of crypto is quite complex and nobody knows everything about it. This makes it all the more challenging to start investing in cryptocurrency or have rational conversations about it.
That said, some cryptocurrencies like Bitcoin and Dogecoin have gained mainstream credibility due to mass adoption, especially by juggernauts like Microsoft, PayPal, Starbucks, and more.
Other digital currencies like Ethereum and Cardano have generated lucrative returns. That’s why we’re going to focus on the top 5 factors that make it worthwhile to invest in crypto with this blog. You can consult a Cube Wealth coach or download a Cube Wealth App.
#1. Earn Potentially Lucrative Returns
The word potential can be used in two different ways when it comes to crypto. Firstly, crypto has a lot of potential because it’s a relatively new concept. This opens up the door to endless future possibilities.
For example, if the technology associated with a cryptocurrency is adopted in the mainstream by a top non-crypto brand, the chances of Ether (ETH) coin gaining a lot of value increases.
This may give early investors the chance to earn potentially high returns because of the future scope. Bitcoin is the best example of how mainstream adoption can help the price of a cryptocurrency skyrocket.
#2. Protect Your Wealth From Inflation
Inflation dilutes the value of fiat currencies over time but doesn’t have the same effect on cryptocurrencies in a conventional sense. Why? Because cryptocurrencies are decentralized and have a cap on supply.
A government or bank can’t manipulate crypto at will. More importantly, this means that cryptocurrencies have the potential to earn more returns than the rate at which a fiat currency loses value over time.
This does not, however, mean that cryptocurrencies are free from inflation. If more cryptocurrencies are mined, their value will go down theoretically but there are measures in place to tackle this.
The best example is Bitcoin. The rate of Bitcoin mining is reduced by half every 4 years. This is known to have two broad implications. One, the scarcity remains intact and two, the inflation rate becomes negligible.
#3. Have Total Control Over Your Investment
All roads lead back to decentralization again. As we discussed before, governments or federal agencies can’t manipulate the value of cryptocurrencies as they have no control over them.
Only the crypto holder has the necessary means to access their investment with something known as a private key, which grants total control over the buying, sending, and receiving of cryptocurrencies.
That said, crypto can effectively be outlawed with the stroke of a pen should any government choose to do so as China did. But free-market economies have decided to not go down this path.
Countries like the USA, UK, and India are looking to understand and regulate cryptocurrencies to introduce fail-safes that made it reasonably safe to invest in equity securities in the decades prior.
#4. Add Diversification To Your Portfolio
The jury is still out on whether crypto is an asset class on its own. But the truth is, crypto is known to be inflation resistant and has the potential to generate lucrative returns.
In fact, crypto is known to be relatively uncorrelated with assets like stocks and bonds while the United States Dollar has a negative correlation with Bitcoin.
These factors may make cryptocurrencies a worthy addition to an investor’s portfolio if they have an above-average risk appetite. At this point, we’d normally urge you to consult a financial advisor.
No such thing exists for crypto. That may change in the future with Cube’s Tikka Token giving you access to top-notch crypto advisors, but for now, you must exercise caution when investing in crypto. You can consult a Cube Wealth coach or download a Cube Wealth App.
#5. Enable & Benefit From Innovation
Your investment in a cryptocurrency may be a “shut it and forget it” exercise for you, but it benefits the project in two ways. Firstly, it signals social proof, which is trust and confidence in the project’s vision.
Secondly, it gives the project the means to innovate and expand its range of services, products, and partnerships, which can only mean good things for its investors.
FAQs
1. Why is Binance Coin (BNB) included in the top 5 list?
Ans. Binance Coin (BNB) is the native cryptocurrency of the Binance exchange, one of the largest cryptocurrency exchanges globally. It is used for various purposes within the Binance ecosystem, including trading fee discounts, token sales, and DeFi projects.
2. What sets Cardano (ADA) apart as an investment option?
Ans. Cardano (ADA) is often considered due to its focus on scalability, sustainability, and a peer-reviewed approach to development. It has gained attention for its potential to provide secure and scalable blockchain solutions.
3. Why is Solana (SOL) included in the top 5 list?
Ans. Solana (SOL) has attracted investors with its high throughput and low transaction costs, making it a popular choice for decentralized applications and the NFT (non-fungible token) space. Its rapid growth and vibrant ecosystem have contributed to its recognition.
4. Are these cryptocurrencies suitable for long-term investment?
Ans. While the top 5 cryptocurrencies listed are considered for long-term investment by many, it's crucial to conduct thorough research, assess your financial goals, and monitor market conditions. Long-term investments should align with your risk tolerance and investment strategy.
Conclusion
Pro-crypto folks may argue that blockchain technology has limitless possibilities and crypto can help you create wealth. The other side might counter and say that it’s new and quite volatile.
Either way, there are certain undeniable truths. The fact is that crypto does have limitless potential - a person in Africa can access Bitcoin for the same price as someone in Europe that too in mere seconds.
Of course, cryptocurrencies aren’t subject to traditional rules and regulations. This may open the door to unwanted incidents, which is why investors must be cautious when trading cryptocurrencies. You can consult a Cube Wealth coach or download a Cube Wealth App.
Note: Facts & figures are true as of 21-12-2021. None of the information shared here is to be construed as investment advice. Exercise caution when investing in unregulated assets like cryptocurrency.
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