Understanding the Undeniable Benefits of Investing in Cryptocurrency

The investing world is full of FOMO. If you don’t invest in a particular asset at the right time, you could miss out on some serious gains.

Investing in cryptocurrency is no different. In fact, FOMO is probably more prevalent in crypto than anything else. Returns of more than 100% are actually common, in just a few months, or even just a few days at times.

But is crypto all hype, or is there more to the story? This asset class is full of rags to riches stories in the few short years it’s been around. And it’s proven itself as an investment class that’s going to be around for a long time.

If you have yet to start investing in crypto, it’s time to strongly consider starting. Had you started one year ago, three years ago, or five years ago, you’d be doing very well today.

FOMO aside, keep reading below to learn the undeniable benefits of cryptocurrency that will take you from skeptic to evangelist in no time.

Is Crypto Safe?

First off, let’s address the elephant in the room. People are hesitant to invest in cryptocurrency because they think it’s akin to gambling.

They aren’t convinced that crypto is safe, and they think the crypto space is full of scammers, hackers, and get-rich-quick Ponzi schemes.

While there is a bit of all of that involved with cryptocurrency, it’s no more riddled with complexities than the stock market or your current bank.

The fintech industry is evolving. Security is getting better every single day. And current crypto exchanges are regulated by the same governing institutions that banks and stock exchanges are.

Crypto has been around since 2009, but in its short history, it has amassed millions of investors from around the globe. Bitcoin, the largest cryptocurrency by market cap, has a daily trading volume of over $30 billion. And that’s just one of the thousands of currently traded cryptocurrencies.

This industry is still new, but it’s not going anywhere. There isn’t a government that can take it away, because cryptocurrencies are decentralized. The government can’t ban crypto unless they ban the internet.

While increased regulation is likely to come, the only way you are going to lose when it comes to cryptocurrency is not investing at all.

The Benefits of Investing in Cryptocurrency

So why should someone take their hard-earned money and invest it in a new, hard-to-understand asset class, when they can play it safe by investing in stocks and bonds? Here are just a few benefits of doing so.

Massive Gains

The biggest benefit of investing in cryptocurrencies is the potential for massive gains. Everyone wants their investment portfolio to grow. But when you invest in the stock market, you’re lucky to get 7% a year.

With cryptocurrency, the sky is the limit. For example, Bitcoin started out as worthless. People were giving it away for free when it was first mined into existence.

Eventually, a price was put on it, and it started trading for fractions of a cent, then a few cents per Bitcoin, then a few dollars per Bitcoin. 12 years later, in October 2021, the price of Bitcoin peaked at $67,000.

No one saw that coming from 12 years away. But early adopters became millionaires and even billionaires if they held onto their coins.

Or consider the fact that at the beginning of 2021, Bitcoin was trading between $27,000 and $29,000. By October 31, 2021, it was trading between $60,000 and $63,000. That’s a pretty short time to double your initial investment.

And the best part? It’s not too late to get in on the action. Bitcoin is expected to rise well past $100K and can go much higher than that over the next decade.

And big gains aren’t limited to Bitcoin. There are hundreds of other coins seeing equally impressive gains.

Solana, currently one of the top 10 cryptocurrencies, saw huge gains in 2021 alone. Investing $1,000 in Solana at the start of 2021 would be worth more than $80,000 10 months later. Not bad at all.

Portfolio Diversification

Investing in cryptocurrency allows you to diversify your portfolio even more. Traditional diversification meant mixing safer bonds with higher risk, higher reward stocks.

Today, those stocks are considered the low risk, low yield investment while crypto serves as the higher risk, higher reward class. Much higher rewards.

You should continue investing in the assets you are comfortable with. But you should definitely add crypto to the mix. Even if you are unsure of how to invest in the current crypto market, the best option is to dollar cost average (DCA) into some of the more reputable coins, and not look at it for a year or two.

Fluctuation is much higher with crypto than any other asset class. But in general, good coins trend upwards, even after huge falls. Ignore the falls and wait for the coin to soar once again.

Inflation Hedge

Anything that is likely to go up in value over time has the potential to protect your money from inflation. Inflation is out of control lately, thanks to governments around the world printing money like crazy.

The more money printed by governments, the less their currency is worth. While most nations set goals of annual inflation between 1% and 3% per year, many are seeing rates over 5%, which is rapidly reducing purchasing power.

Sudan has inflation over 70%, Zimbabwe’s inflation is around 500%, and Venezuela is falling victim to inflation of almost 10,000%.

In countries with high inflation, your goal should be to get rid of fiat currency as fast as possible, since it is losing value by the minute.

Cryptocurrencies, particularly large-cap coins like Bitcoin, Ethereum, and others, provide a solid inflation hedge as they are trending upwards on a regular basis.

Some cryptocurrencies are actually deflationary. Not only is the amount of the currency limited to a finite number of coins, but a certain amount is burned, or destroyed every year.

So the number of coins goes down, making the coin scarcer and thus, more valuable.

By investing as much money as possible into crypto, you can see your wealth grow over time instead of diminishing in a bank account.

Decentralization

Cryptocurrency works as an inflation hedge because it’s decentralized. That is, there is no government, banking system, or central authority that can devalue cryptocurrency.

Instead, it’s governed by the blockchain, smart contracts, and the community of people holding the currency.

The US dollar, on the other hand, is governed by the central banking system and the government, both of which are steadily falling out of favor with the public.

The US dollar only has value because the government says it has value. And the government is free to devalue this currency as much as it wants thanks to rampant money printing and deficit spending.

Your dollars can be locked up or blocked at any time since your bank that is holding it under custody is free to do what it wants with your money.

But with a decentralized currency like crypto, you own it and control it. Banks can’t censor your transactions, or prevent you from using your crypto.

And crypto itself can’t be banned by any of these authorities, as mentioned earlier. Just look at China. They’ve banned cryptocurrency more than a dozen times in the last few years. But unless you ban the internet, you can’t fully ban cryptocurrency.

Staking for to Earn Interest

When investing in stocks, you’re lucky to see gains of 7% per year. You’re also very lucky if you earn dividends on top of that. These dividends might reach up to 4% or 5%.

But with cryptocurrency, not only can you enjoy the benefit of appreciation, but you can stake many coins and earn interest, similar to dividends. But your payout can be much higher.

Staking is the process of holding your coins in a particular account or wallet. Sometimes it means locking them up for a period of time. These staked funds are then used to help validate transactions on the blockchain, which is a key process in the world of crypto.

You are participating in the greater crypto ecosystem, and you earn rewards for doing so. Staking can take place on a variety of platforms, and with a variety of coins. Interest rates will vary depending on the platform and coin.

In general, you can expect rates between 9% and 15% for cryptocurrencies and less for stable coins.

Making passive income while your investment appreciates in value? Sounds like a win-win to me.

Pay With Crypto

More and more brick and mortar, along with online retailers, are accepting crypto as a method of payment. This means that your investment can double as a form of payment when needed.

Purchasing with crypto can be beneficial since you don’t need to utilize a traditional bank account, debit card, or credit card to make a purchase. Rather, your purchase is safe, powered by the blockchain, and censor-proof.

Access to Defi

By investing in cryptocurrency, you’ll also have access to the newest sector of crypto; decentralized finance (Defi).

Defi is the financial ecosystem that is built on the blockchain, powered by various cryptocurrencies, to allow for financial transactions to take place away from banks and regulatory structures.

This includes borrowing money, lending money and earning interest, and other types of financial services. While the world of defi is too big to fully cover here, it currently holds hundreds of billions of dollars in value and is totally powered by smart contracts and technology, as opposed to rich bankers.

With defi, you get to become your own banker. And earning interest rates over 30% is quite common.

How to Invest in Cryptocurrency

Are you sold on the financial benefits of investing in cryptocurrency? Consider the fact that big-name players are getting into the game in droves.

For example, billionaire Elon Musk, and his company Tesla, have invested heavily in Bitcoin. And wealth managers who manage millions, and even billions of dollars, are finding ways to provide their clients access to cryptocurrency, and the incredible gains that they provide.

So if you’re now convinced that crypto is the asset class of the future and considered to be smart investing, it’s time to get some for yourself. Here’s how you can add crypto to your portfolio today.

Choose an Exchange

First off, you need to choose an exchange from which to buy crypto. Online exchanges are similar to the stock exchange.

You’ll choose a broker who will facilitate your buying transaction with a seller. They’ll charge a small fee, usually between 0.05% and 0.5%.

Crypto exchanges are easy to use, and the popular ones in the US have millions of daily users. These include companies like Coinbase, Binance, Kraken, and Gemini, among many others.

Alternatively, you can visit a crypto ATM. Using an online cryptocurrency ATM locator, you can find the best Bitcoin ATM near you and buy crypto fast using a debit card or cash.

These ATMs are perfect for those who receive lots of cash on a regular basis and want to invest it right away with the fewest amount of steps. It’s also helpful for those times when you need to access cash in a pinch, such as visiting your favorite underground restaurant that is still cash only, for some weird reason.

ATMs connect with online cryptocurrency exchanges, and you’ll still need to create an account to use one.

Create Account

You’ll have to create an account on the exchange of your choice. Doing so requires you to complete KYC (Know Your Customer), which is the process of verifying your identity.

Deposit Funds

Once your account is open, you can deposit your initial funds to start investing. You can link your bank account for a direct transfer, or fund using a wire transfer or debit and credit card payments, though these methods usually incur fees.

With your money ready to go, you can load up on some coins. Do your research to decide which coins to invest in. Coins in the top 20 by market cap are the safest bets, while anything in the top 100 should be a consideration as well.

Store in a Wallet

The best way to keep your investment safe is to move coins off of the exchange after purchase. You can set up a free software wallet, which stores your coins offline.

For maximum security, you can purchase a hardware wallet, which no one will be able to hack their way into.

Building Your Portfolio

Once you get started investing in cryptocurrency, it won’t’ take long for it to be your most exciting investment. Even with so much fluctuation, the gains will be much higher and much faster than stocks and real estate.

No need to replace your current investments, however, as crypto is a great way to diversify your current portfolio.

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