Have you ever wondered if trading cryptocurrency is a good investment? Lately, this type of currency has been growing in popularity and more and more traders have found themselves adding it to their portfolio. There are several reasons why traders invest in cryptocurrency, from predictions about the future to privacy concerns. It is important for new investors, or even intermediate traders that have never invested in this type of asset to understand the reasons why investing is worthwhile.
Cryptocurrency is the Future
At least, many traders believe so. There are some obvious issues with the world’s financial system and many traders think that cryptocurrency can solve those problems by providing us with a more efficient solution. However, there are currently more than 2,000 different cryptocurrencies available. The common idea is that many of these providers will fade over time and we will be left with a few of the most popular options in the end. Bitcoin and Ethereum are worthy competitors that will likely stand the test of time. One should also consider that each provider isn’t working with the same goals in mind. This could help to keep some of those smaller providers afloat.
Privacy is one of the main draws of using cryptocurrency. Where banks require personal information, cryptocurrency allows one to make transactions anonymously. Previously, it was discovered that Bitcoin was being used for illicit transactions, such as buying drugs or illegal online services. Although we wouldn’t recommend taking part is this type of activity, this follows the idea that people should be able to spend their money how they want to. Many people want privacy and don’t want banks to be able to track where or how they spend their money, regardless of how vanilla their practices might be.
Avoiding National Banks
Many Americans do not find central banks trustworthy, especially those that lived through the great depression. Banks can manipulate currency, charge insane overdraft fees, or various other fees and interest rates. Intermediary fees are often charged on transactions that need to be sent overseas as well, which cost many traders a lot of money in the long run.
The 2008 crash inspired Bitcoin as an alternative method for those that distrust the banking system. Of course, there are some that prefer to stick with the tried and true method of traditional banking because they know how it works. Many older people would rather not bother with learning how to use a whole new type of currency. However, as time moves forward, the older generation will be made up of those of us that understand the way this currency works, and it will likely grow in popularity.
Cryptocurrency is more volatile than other markets, which provides traders with more opportunities to enter and exit the market. There’s money to be made thanks to the large rises in value, but one should remember that the value can also drop significantly as well. Some events will influence these prices, so investors need to stay on top of the news and keep anything that might affect any cryptocurrency’s value in mind.
The Bottom Line
Bitcoin very well might be the way of the future, as more traders move away from traditional banking methods in favor of a more efficient, private way to make transactions online. Volatility in this market can also provide traders with more chances to enter or exit trades, and there is a chance to make large gains thanks to cryptocurrency’s occasional high rises in value. Of course, nobody should feel pushed to embrace cryptocurrency. It isn’t an entirely perfect system and it can fall victim to scammers. Volatility can also cause losses rather than gains because trading this type of currency is risky. In the long-run, we do believe that cryptocurrency will continue to rise in popularity and value, so traders should seriously consider investing with good education and a wealth of trading knowledge behind them.