Hi everyone, thank you for coming back to my blog. I hope you found my last blog interesting and useful, where I covered ‘3 Reasons Why You Should Invest In Index Funds’.
In today’s blog, I am going to show you reasons as to why you should also consider investing in cryptocurrency and make these a part of your investment portfolio too.
Cryptocurrency (a.k.a “crypto”) is a digital currency that is tracked on a ledger. It is decentralised and encrypted, and is based on blockchain technology, which is a chain of digital information that is not controlled by a centralised institution. Therefore, both blockchain and cryptocurrency are not a part of any centralised banking system.
Although investing is one use of cryptocurrency, there are other reasons to buy the asset:
You can own and use it anonymouslyYou can use it to buy goods and servicesCrypto payments may avoid fees and transaction costsCrypto transactions are fast
These are the reasons why you should consider investing in cryptocurrency:
1. Cryptocurrency is a simple way to diversify
Even if you are not a crypto enthusiast, investing in crypto is a great option in order to diversify your portfolio.
Because crypto usually doesn’t move with assets (shares and bonds), investing in crypto is a clever way to establish yourself as a successful trader in today’s dynamic and constantly changing world of finance.
2. Cryptocurrency is marked by high liquidity
The world of cryptocurrency trading is marked by high liquidity, meaning, that it’s easy to buy and sell different cryptos.
When it comes to Bitcoin (‘The King’ of all cryptos), for instance, there is always a high demand. Crypto wallets in 2020 have increased to more than 54 million, and it’s not only ambitious investors and big businesses that are ready to buy and sell crypto. Crypto trading today is highly accessible because, at the end of the day, it is not rocket science or a mysterious venture reserved for the industry ‘Big Boys’. You can also become a part of the world of crypto by easily investing in it today.
3. Cryptocurrency can lead to potential high returns
Perhaps the main motivator for people to invest in crypto is the possibility to make a profit. Like it or not, money makes our world spin and is one of the main reasons to invest in crypto.
Though crypto trading is relatively new, cryptos can lead to higher returns compared to other assets, such as stocks. Cryptocurrencies are highly volatile, which means that one can potentially achieve high returns from a single trade.
At the same time, let’s not forget that volatility also means that traders can lose it all in a second. So always consider potential risks! As crypto investing can be highly demanding, one of the first steps to success is to devise an effective risk management strategy to limit losses.
As mentioned above, cryptocurrencies are highly volatile due to their speculative nature, and the risks of investing in crypto are distinct from investing in conventional assets (shares). For example, the currency is typically stored in a digital wallet, and that means it potentially can be stolen by savvy hackers, so be very careful in how you choose to store your crypto if you decide to invest in it. The best and most secure digital wallets out there at the moment are the Ledger Nano S and Ledger Nano X, so it’s worth taking a look at these to store your crypto.
And as always, you should only invest once you have done your research first!
Until next time, thank you and stay safe.
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3 Reasons Why You Should Invest In Cryptocurrency was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.