Interest in cryptocurrencies continues to skyrocket. In fact, more than 100 million individuals currently invest in cryptocurrencies, along with major corporations like PayPal and Tesla. What benefits come with investing in digital currencies?
Excellent Return on Investment
Thanks to the rapid growth of cryptocurrencies, investors have the opportunity to make a good return on their investments. Cryptocurrencies have been a top-performing asset in recent years. Bitcoin grew by roughly 1000 percent over a five-year period, while Ethereum grew by 500 percent during the same time frame.
The Nifty 50 stock market index only grew by 65 percent during that same period. Nevertheless, investing in cryptocurrencies comes with risks similar to those seen with investing in stocks. To learn more about the potential for high returns, click here.
Immune to Inflation
Paper currency has decreased in value because of inflation. As governments continue to print money, the value of paper money will decline. Certain cryptos remain immune to inflation. These digital currencies have a limited supply, unlike paper currency, which means they are less likely to decrease in value.
Accessibility of the Cryptocurrencies
Many financial institutions, including the stock markets, only remain open during normal business hours. A person cannot access their funds outside of these hours in many cases. That is never an issue with cryptocurrencies, as a person can access their money at any time, regardless of where they are. In addition, the funds can be transferred to another party outside of normal business hours.
Only the investor and those they have authorized to do so may access their data. Cryptography ensures other individuals cannot gain access to the funds. The blockchain technology used with digital cryptocurrencies significantly reduces the risk of fraudulent transactions. If someone tries to conduct a fraudulent transaction, the entire blockchain network will see this happening, so it can be prevented. Furthermore, every transaction is recorded, and the record cannot be edited.
While blockchain transactions are conducted in public, the user’s data remains private. A public address, which is a 26 to 35 character long alphanumeric text, is shared among investors and can be used to transfer cryptos. The private address, in contrast, is only known to the investor, and they use this address to access their digital currencies.
To access a digital wallet, the user must use two keys. The crypto exchange holds the public key. The user must then enter their private key or password for the digital wallet. When they do so, they can access their digital currencies. If one key is missing, the funds cannot be accessed. This provides the user with more control over their assets.
Cryptocurrencies come with many benefits other than those mentioned above. However, this does not mean investing in digital currencies is right for every person. The currencies are volatile, and some people might find they aren’t willing to take on this level of risk. Every investor should research the cryptocurrencies they are interested in to determine if adding them to their investment portfolio is the right move.