Cryptocurrency is simply an electronic currency that exists entirely online. It is typically found in a blockchain on a server but not all cryptocurrencies exist on a blockchain. Cryptocurrency transactions are highly encrypted to secure transactions on the blockchain. It hasn’t reached the stage of global acceptance as a legal tender but it has made a lot of progress over the decade. If you’re thinking of diving into the cryptocurrency industry, here are some advantages you should consider.
Advantages of Investing in Cryptocurrency Assets
High Return on Investment
The most viral argument that supports cryptocurrency as a means of investment is its potential for high returns. According to Bloomberg EFG calculations as of January 2021, the growth rate of the United States equities annually was 14.5% (in US dollars). Comparing this to the growth of Bitcoin over five years, Bitcoin has an annual growth rate of 131.5%. This obvious high rate of potential returns is appealing for prospective investors. However, it is not without risks.
The huge increase in the prices of cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH) has promoted adoption. However, another advantage is transparency. To ensure transparency in cryptocurrency investments and trading. The Digital Currency Index (DCI) was developed by Roger Bryan. It is available publicly and it allows individuals and investors to track the prices of several cryptocurrencies.
It also makes it possible to identify possible trends in crypto marketing. The DCI tracks a cryptocurrency’s current price, expected return, rise and fall in prices, and the degree of volatility. It is also worthy to note that every transaction made with cryptocurrency is made available and recorded in a public ledger called the blockchain.
Another major advantage of investing in cryptocurrency is accessibility. An investor can make a transaction whenever and wherever they choose. The only requirements are a sound internet connection and a password to a private wallet. The individual who wants to invest can even perform transactions, or follow up on previous transactions, on a mobile phone. Analysts are predicting that Bitcoin could become a global legal tender that would be acceptable all around the world.
There is Absolute Control on the Investment
Investors of cryptocurrency have absolute control over their investments and funds. This makes trading cryptocurrencies relatively safe and anonymous. Confidential information of the trading and investments are kept private i.e no vital transaction details are made public. This serves to prevent fraud and cases of identity theft. Investors do not have to depend on banks, financial institutions, or investment experts to make transactions or invest in cryptocurrencies.
Reduced Transaction Fees
Transactions in cryptocurrency are free of intermediaries, thus eliminating hefty transaction charges and service fees that come with using intermediaries. However, blockchains may charge a fee for transactions within the ledger. Transactions involving the use of cryptocurrency do not require individuals to open a bank account. As such, all extra service fees related to traditional banking systems are avoided.
Some other key benefits of cryptocurrencies include potential diversification, protection from inflation, and decentralization. For more information about cryptocurrencies and how to manage your cryptocurrency portfolio, visit OSOM Finance.