Crypto is a digital asset that uses cryptography for security. The main advantage of crypto is its decentralization and not being subject to government or financial institution control. Bitcoin emerged in 2009 as a peer-to-peer electronic cash system.
Since then, numerous other cryptocurrencies have sprouted. Each coin runs on its blockchain, a system that stores transaction data securely and transparently. While the underlying technology of all cryptocurrencies is blockchain, each has unique features and functions. For instance, Ethereum is a popular cryptocurrency that allows for smart contracts and decentralized applications.
What makes cryptocurrency such a lucrative investment? Can you get a livelihood by investing in cryptocurrency? What are the odds of success?
Here are a few reasons why cryptocurrency investment is the best opportunity for 2022.
- Decentralization
Cryptocurrencies developed as a response to the 2008 global financial crisis. The main aim was to create an alternative to the centralized banking system. With crypto, there is no governance by a single entity or institution. Instead, the coins reside on a decentralized network of computers, also known as nodes.
This advantage makes it difficult for any government or financial institution to control or manipulate the prices of cryptocurrencies. Furthermore, it makes crypto less susceptible to inflation and economic downturns. As such, you have more control over the assets you own than investing in managed portfolios. Use Ethereum Price Prediction when you want to buy and sell to avoid losses in your investment.
- Limited Supply
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Most cryptocurrencies have a limited supply. For instance, there can only ever be 21 million Bitcoin in existence. As demand for the coin grows, so does its price. The law of supply and demand is one of the most basic economic principles. That is unlike fiat. When banks have limited cash, they can print more money. This quantitative easing results in inflation and the loss of purchasing power.
Investing in crypto now can guarantee higher returns for long-term investments. All you need is patience and to hold on to your coins as the market matures. Also, Ensure you diversify your investment. That way, you can make significant returns as one coin can grow faster than the other. For instance, in 2017, Bitcoin grew by over 1,800%. Ethereum, on the other hand, surged by 10,000%.
- High Volatility
Cryptocurrency prices are highly volatile. While this might seem a disadvantage, it presents an opportunity for investors. The key is to buy when the prices are low and sell when they rise. And that is how every investor makes money in any business.
In crypto, the prices can rise and fall by double digits within a day. So, you can make a lot of money if you buy at the right time and sell when they spike. Depending on your schedule and availability, you can make money trading digital coins daily.
- It Creates a Passive Income
Cryptocurrency has made it possible to create a passive income. You can make money from digital assets without putting in too much work. DeFi has opened up numerous opportunities for yield farming. That is where you deposit your crypto in a liquidity pool and earn rewards in return.
With staking, you can earn interest on your digital assets by holding them in a wallet for a specific period. The longer you stake, the more money you make. These stakes also allow you to participate in the governance of some digital assets and protocols. So, you can help make decisions that will shape the future of a project.
- Stable Value Storage
Keeping your money in the bank is not as safe as it used to be. Inflation erodes the value of fiat money, and there is always the risk of banks collapsing. You will likely lose all your money. Even when you have insurance, it cannot cover everything.
Cryptocurrencies provide an alternative to storing your money in fiat. They have a fixed supply, and their value is not subject to inflation. Also, since no authorities regulate their uses, abundance, or prices, cryptocurrencies are not as susceptible to economic downturns.
Although the value of digital assets keeps fluctuating, it has seen a steady increase over the years. For instance, Bitcoin was worth less than $1 in 2009. Today, each coin is worth more than $20,000. If you had stored your $1k in BTC in 2009, it would be worth hundreds of millions today.
- Enhanced Privacy and Security
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Nobody wants people to poke their noses into their financial affairs. With cryptocurrencies, you can transact without revealing your identity. The pseudo-anonymous nature of digital assets protects your privacy. But that does not mean that anyone anonymous can steal your assets.
Cryptocurrencies use cutting-edge security features to protect user funds. For instance, Bitcoin uses a public and private key system. The public key is your wallet address, while the private key is your password. That way, only you can access your funds. Also, you will not need insurance premiums, lawyers, or notaries to secure your investment.
Summary
Cryptocurrency has slowly but surely become a force to reckon with in the financial world. Its popularity will grow in the coming years as more people and institutions adopt it. Investing in digital assets is a great way to secure your financial future. It protects your privacy, offers growth potential, and provides enhanced security for your investments.
