Powered by encryption algorithms, cryptocurrency has emerged as a popular financial concept of late.
While cryptocurrency has gained massive popularity in the last couple of years, it is here to revolutionize the finance sector. Even though the concept of investing in digital currencies has its grey areas, there are benefits to it too. Let us take a look at the pros of investing in cryptocurrency.
Easy, Quick, Hassle-Free Transactions
Cryptocurrency transactions can be done either by using a smartphone app or a digital wallet. Bitcoin, Litecoin, and Ethereum can be even bought in exchange for money at a Bitcoin ATM, without using your bank account. They can then be transferred to digital wallets. In the United States, conventional transactions take three to five days. If it’s a wired one, then the period comes down to 24 hours. In crypto, the whole process takes a few minutes.
Transactions involving Bitcoin and Ether cost from a few cents to several dollars, whereas, Litecoin, XRP has emerged as cheap options.
It’s Secure & Transparent
Losing a crypto wallet may harm you financially, but that should not stop you from investing in digital currencies as the whole ecosystem is based on cryptography and blockchain security. Decentralized crypto trades happen through secure channels.
The concept of crypto security is guided by hash rate. Selecting crypto coins with higher hash rates will ensure better security for your invested money. And yes, stay clear of phishing scams.
Opening crypto wallets don’t require steps like ID verification, KYC procedures, and credit checks, so people outside the conventional banking ambit can also set up their portfolios.
Bitcoin and Ethereum have set up strong security mechanisms, where launching a hacking attack would require expensive supercomputing devices.
Also, there are coins like Monero, Zcash, Decred, and Horizen, which are privacy-focused. Crypto trades happen on blockchain ledgers. There are in-built tools that let the users access data related to transactions, apart from checking their crypto wallet balance.
Growth Of The Crypto Industry
As per a report from Allied Market Research, the global crypto market, which was valued at USD 1.49 billion in 2020, will become a USD 4.94 billion one in 2030, growing at a rate of 12.8%.
Asia-Pacific dominated the sector in 2020 and will remain the leader in the coming years as well.
As per the general data, after Bitcoin’s debut in 2009, the total crypto market cap reached the USD 1.6 billion mark by 2013.
In September 2022, the same worth remained at USD 930 billion. In 2009, Bitcoin had a zero market value. Over the years, its worth became from a fraction of a penny to thousands of dollars. Altcoin, another digital currency, has even outperformed bitcoin in terms of profit margins.
While Bitcoin is the most traded cryptocurrency in the world, it has a market capitalization of about $1.2 trillion, along with a daily trading tally of over USD 30 billion. However, Altcoins such as Ethereum have a growth rate of nearly 500%. And also not to forget about the newly-launched Shiba Inu Coin, which has grown by 380,000% recently.
These positive volatilities will help if you have invested in the right digital currency and understand the market trends better.
Helps In Portfolio Diversification
Crypto stock prices don’t get determined by the same factors which control stocks and bonds.
Off late, it is becoming another medium of portfolio diversification among investors, who put money in stocks and bonds as well.
A Trality article explains the whole thing in a crisp manner. Armed with crypto, fintech companies are helping the concept of decentralized finance to grow further. With the emphasis on automation and blockchain technology, decentralized finance (DeFi) has emerged as a viable alternative now.
While some cryptos deal with payments, others are involved in supply chain-related activities. For example, Ethereum offers smart-contract capabilities for the development of digital applications, whereas Ripple (XRP) deals with money transfers.
So as per your investment goals, you can choose suitable digital coins. Even stablecoins like USD Coin (USDC) and Tether (USDT) reduce the crypto market’s volatility. The investors can even lend them out and make them operate as a high-yield savings account, which in turn, adds profits to the portfolios.
Easy Cross-Border Payments
Sitting in one country and sending money to friends in another nation can be a tough job, due to hefty transaction fees, country-wise regulations and long processing time.
For Crypto, such peer-to-peer transactions don’t face the above barriers.
‘On-ramp’ service providers deal with services such as issuing the customers crypto in exchange for an equivalent amount of fiat currencies.
The whole thing can be completed either by credit cards or bank transfers, followed by storing the crypto in a secured digital wallet.
After obtaining the wallet addresses of people requiring the crypto, the amount can be dispatched. The recipient, upon receiving the crypto, can convert it into a fiat currency.
Ensured Transactional Freedom
Crypto payments are done by independent third-party platforms that don’t charge any service or transaction fee. Stock markets remain closed on weekends, whereas crypto exchanges are open 24*7. One prominent example is ‘The Merge,’ where Ethereum got turned into a ‘Proof-Of-Stake Model’ from a ‘Proof-Of-Work’ one and ended crypto mining operations.