You might ask if it's worth investing in bitcoin, ether, and other prominent altcoins because they belong to such a volatile asset class. Here are some of the reasons why people do and stay. Everyone approaches crypto investment with their own goals in mind, whether they are to invest quickly and thoughtfully or gradually over time. When compared to the day-trading heavyweights who purchase and sell assets during stock market hours (by comparison, there is no time limit on when you can earn a profit in the decentralized finance world), investing in crypto may appear to be a no-brainer. Crypto may even appear inevitable for our social media-driven future to younger customers.
Most crypto investors, though, aren't just interested in popular meme coins like dogecoin. In reality, everyone from amateur traders to institutional investors like JPMorgan Chase is beginning to consider cryptocurrency, Web 3 technology, and the metaverse as a lucrative trifecta.
Speculating on the price in the belief that the asset will be worth more in the future is perhaps the most popular reason why individuals buy in cryptocurrencies. We've witnessed the value of coins like bitcoin and ether (the native cryptocurrency of the Ethereum blockchain), among others, skyrocket in the last decade. While the rates of return may not match the increase of the past few years, many investors remain optimistic about cryptocurrency's rising role in our world.
Using cryptocurrency as an inflation hedge. Bitcoin, dubbed "digital gold," has long been seen as an inflation hedge due to its inherent scarcity. When the total number of bitcoins in circulation exceeds the hard cap of 21 million, bitcoin mining will cease. Bitcoin's value is expected to rise as demand rises as a result of its rapid mainstream acceptance. It's a form of inflation protection because there can't be anymore.
However, not all cryptocurrencies are treated the same. While bitcoin's algorithm incorporates scarcity, other coins are inflationary, which means there will never be a maximum amount minted. Dogecoin, for example, fits into this category: Every minute, 10,000 new doge tokens enter circulation and will do so in perpetuity (unless developers step in to cap the supply.)
Invest in cryptocurrency as a store of value. While volatile cryptos like bitcoin aren't the best keepers of value, there is a sort of coin built specifically for that purpose: stablecoins.
Stablecoins are digital assets that are linked to fiat currency or other assets. With the help of crypto rewards cards and digital DeFi wallets, they are increasingly being utilized as currency. People all over the world can send money to friends, relatives, and even fellow players in real-time.
Participate in decentralized banking. The decentralized ethos of peer-to-peer, permissionless banking is a big reason why people love crypto. In theory, introducing a new generation of consumers to a digital economy based on algorithmic money eliminates the need for central banking institutions, as well as their fees and oversight.
Invest in cryptocurrency to generate passive income. Learning to buy and hold crypto in so-called DeFi positions can result in passive income yields.
Decentralized finance (DeFi) investors can earn interest for allowing their cryptocurrency to be part of the overall ecosystem by lending, staking, pooling, and trading. In order to earn periodic interest on your positions, you must typically "lock" it up for a set period of time, but DeFi strategies are popular among people who have the time and discretionary cash to participate.
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