Why It Is a Good Idea to Keep Buying Cryptocurrency

Cryptocurrency. If you haven’t heard of it, you might have been caught under a rock in recent years. For a long time, those who have been eager to have more privacy or who have been mistrustful of the banks and their disconcerting lack of cyberprotection have longed for an alternative to traditional currency. Enter cryptocurrency. A digital currency that uses encryption techniques to regulate the transfer of its funds, it operates entirely independently of centralized banking.

As can happen with any kind of currency, Bitcoin—the first kind of cryptocurrency—had a pretty ominous crash at the end of 2017. Many people have wondered since then whether this is going to be a thing of the past or if they should still think about investing. What many of these people might not realize is that Bitcoin isn’t the only cryptocurrency out there. In fact, since the crash, a number of “altcoins” have shot to the top in popularity and investment worth. It’s safe to say this isn’t going anywhere any time soon and could very well be a part of the future of business, and we explore why it could be a good idea to keep buying cryptocurrency below.

It’s an Investment

Of course, this is never going to be the least volatile investment, but without risk comes no reward. To boot, a diverse portfolio is a healthy one, and mainstream investors and entrepreneurs alike have looked at Bitcoin and other altcoins as a legitimate commodity. As this Fortune.com article notes, “In 2017 alone, famous names like Andreessen Horowitz and Sequoia Capital have bet on hedge funds that are investing hundreds of millions of dollars into digital currency funds.” In fact, in March of last year, the Commodity Future Trading Commission gave the approval to allow firms to sell digital currency options and other derivatives. While many people were fascinated by crypto in more of a passing fancy kind of way, many are now considering cryptocurrency as an investment plan.

Demand Will Always Be High

Because only 21 million Bitcoins will reportedly ever be produced and 80 percent have already been mined (meaning the end comes in 2040), scarcity will always drive up the value of this type of cryptocurrency. What’s also interesting to note is that due to the rise in these crypto altcoins as of late, many central banks are getting in on the game. However, Bitcoin and altcoin purists refuse to call it cryptocurrency. As investment manager of Trevi Digital Assets Fund Jacob Eliosoff says via CNBC.com, “You have one institution that controls it, and they can change the rules when they want … It’s not that that’s bad, but that’s not a cryptocurrency. That’s just a currency that happens to run on a computer.”

Bitcoin is Gold

Okay, that might be a bit of a stretch, but many are saying it is like gold. If you’ve been interested in investments and the stock market at all, you know that gold and other precious metals have been extremely hot for a while now. And, much like cryptocurrency, its appeal to investors is that it is considered to be an asset whose value is outside the control of governments. If the U.S. loses its proverbial shirt due to war (which, these days, doesn’t seem all that far off), the national currency will obviously suffer but gold will not. Experts say that Bitcoin and another altcoins are appealing in much the same way, as they exist as part of a decentralized network. The Federal Reserve can’t devalue it, making it all the more appealing to buy and use for investments.

Some Think Cryptocurrency Will Replace Traditional Currency

Now this one is a bit out there, as a lot of people don’t agree with this, but others aren’t so sure. And if cryptocurrency does replace traditional currency, early investors will hugely benefit. It will raise the demand and, ultimately, the price. It’s a risk, yes, but if this ever were to happen and you’re invested in it, you’ll get a huge payoff.

Is it a good idea to keep investing in cryptocurrency? The bottom line is you won’t find many people who will give you a definitive answer either way. As with other investments, you need to do your homework, read blog posts on Bitcoin, study the market and the coins, themselves, and in the end, follow your gut.

 

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