Digital cryptocurrencies are considered a safe medium of exchange and even, in some cases, great safe-haven assets. Actually, the crypto market is only about a decade old, and it’s even now deemed as serious competition to traditional financial markets. Of course, there are many other reasons why institutional, as well as individual investors, are looking to add cryptocurrencies to their portfolios. Below we will take a look at the main reasons why someone would want to invest in crypto.
Safe Payment Transactions
Crypto transactions utilize advanced cryptography to encrypt the transactions over the web and protect the sensitive data of the users. What’s more, virtual currencies like Bitcoin conceal the identity of the users on the blockchain network. Another advantage for businesses, for example, is that they don’t have extra costs for receiving crypto transactions. Plus, they inadvertently invest in crypto whilst communicating with another target audience of crypto users.
Proof of this trend are famous brands like PayPal, Venmo, Bloomberg, Overstock, and others that accept crypto transactions. Another example is gambling platforms such as Canadian online casino sites that accept crypto payments. Actually, online casinos are known for implementing top tech innovations in order to improve the casino experience on their platforms. So, this trend is prevalent in the gaming community because it offers many advantages for both parties, the gamers, and the businesses.
Enhanced Profitability
The main reason why there is an increased interest in cryptocurrencies is the enhanced profitability of certain crypto assets like Bitcoin. Cryptocurrencies are based on a decentralized blockchain network that is peer-to-peer based. This means that, unlike fiat currencies that are controlled by governments and financial institutions regarding their supply and demand, cryptocurrencies are not associated with a central governing body.
To top it off, the interaction of the supply and demand on the crypto market impacts the value of the cryptocurrencies, and this is why virtual currencies are associated with high volatility; because the market isn’t regulated as traditional financial markets, and the value of certain cryptocurrencies can quickly rise or decline suddenly.
But when it comes to mature cryptocurrencies on the market like Litecoin, Bitcoin, Ethereum, it is expected for them to rise continuously in the future even with the volatility of the market conditions. In fact, Bitcoin’s value has risen by over 100% in just a year and has topped $60,000 in 2021. This is a major factor that has enhanced the investments in crypto from both institutional and individual investors.
Lower Transaction Fees
Another reason why investors want to add cryptocurrencies to their portfolios is the lower transaction fees. As we stated earlier, the design of the blockchain network makes the processing time of crypto transactions fairly short, or even instant, in some cases.
In addition, as the senders and the receivers are directly communicating over the blockchain network, the transaction fees are fairly low compared to the fees of fiat currencies. This is another reason why a lot of investors are looking to invest in crypto, especially since the market is volatile.
Safe-Haven Assets
Although we cannot use this term with every cryptocurrency, due to the distributed blockchain network, a lot of cryptocurrencies are designed to operate independently of the financial and political factors that rule over the traditional crypto markets.
However, when it comes to cryptocurrencies like Bitcoin that have a strong market capitalization of over $1 trillion, they are deemed safe-haven assets thanks to this decentralized structure of the network.
In conclusion, crypto-assets for both businesses, individuals, and institutional investors represent important assets due to their money-making potential and the peer-to-peer-based and distributed blockchain system, which is associated with lower transaction fees, anonymity, and short processing times.
Disclaimer: This content does not necessarily represent the views of IWB.