Everyone who invests in cryptocurrencies does so for their own reasons, whether they want to do it quickly and carefully or gradually over time. When compared to the day traders who buy and sell assets during stock market hours, investing in cryptocurrencies could appear like a no-brainer (since there is no time limit on when you can earn a profit in the decentralized finance sector). Crypto may even appear inevitable for our social media-driven future to younger customers.
In a late 2021 interview with CoinDesk, Randi Hipper, an 18-year-old influencer known as Miss Teen Crypto, claimed that “a lot of people felt at initially dogecoin was a literal joke.” “But then it got serious when people like [Elon Musk, CEO of Tesla] started tweeting. After then, [businessman] Mark Cuban entered the picture and began accepting DOGE as payment for the [Dallas Mavericks professional basketball club]. DOGE is now serious.
But the majority of cryptocurrency investors aren’t just interested in meme currencies like dogecoin. In fact, cryptocurrencies, Web 3, and the metaverse are beginning to be seen by everyone, from casual traders to institutional investors like JPMorgan Chase, as an opportunity-rich trifecta.
We’ll go through a few typical motives people adopt cryptocurrency, but more importantly, why they stick with it.
Stakeholder Investment
Speculating on the price in the belief that the asset will increase in value in the future is likely the most popular rationale for investing in cryptocurrencies.
Everyone has predicted when bitcoin will reach $100,000, from Twitter thought leaders to institutional asset managers. One typical method of acquiring exposure to risky but possibly valuable assets while safeguarding the rest of your money is to add a speculative sprinkling of cryptocurrency to one’s portfolio, typically between 1 and 10 percent.
Bitcoin and ether, the native cryptocurrency of the Ethereum blockchain, among many others, have seen their value soar dramatically during the previous ten years. Many investors remain optimistic about the expanding role of cryptocurrencies in our world, even though the rates of return may not equal the expansion that has taken place over the last few years.
Making wise speculative investments is a way to invest your money in the future you want to see if, in other words, you believe in the crypto sector.
Just be sure to adopt a global perspective: According to Michelle Brownstein, executive vice president of the Private Client Group of Personal Capital and a licensed financial planner, “if you require 90% of your assets to live a decent retirement, we handle 90% and you take 10%.” Brownstein frequently advises her clients to safeguard the majority of their retirement assets. In order to prevent clients from making rash decisions out of emotion and from taking on too much risk, the majority of qualified fiduciaries would offer a similar advice.
She explains, “That’s trying to find that happy medium.”
Cryptocurrency investment as an inflation hedge
Because of its inherent scarcity, bitcoin in particular has long been referred to as “digital gold” and has been used as an inflation hedge. Once the hard cap of 21 million coins has been reached, bitcoin currency production will cease. The value of bitcoin is anticipated to rise as demand rises as a result of its quick popular acceptance.
Since there can be no further inflation, it serves as a hedge against it, Gemini’s Dave Abner told CoinDesk in December. “I honestly believe that the attitude surrounding inflation fears and portfolio diversification is probably what is driving prices the most. It’s not about it becoming a medium of exchange that people will use on a regular basis.
But not all cryptocurrencies receive the same treatment. While other coins are inflationary, meaning there is never going to be a maximum quantity generated, bitcoin has scarcity built into its algorithm. For instance, Dogecoin fits under this category: 10,000 fresh doge tokens are released into circulation every minute and will do so indefinitely (unless developers step in to cap the supply.)
Invest in cryptocurrencies as a store of value
While unstable cryptocurrencies like bitcoin aren’t the ideal holders of stable value, stablecoins are a form of coin made specifically for that purpose.
Stablecoins are digital assets linked to traditional currencies or other assets. With the aid of digital DeFi wallets and cryptocurrency rewards cards, they are beginning to be used as cash more frequently. In a virtual environment like Splinterlands or Skyweaver, users from all around the world can send money instantaneously to friends, family members, or even other players.
Despite this, all cryptocurrencies have value, although uncertain value. You can store your cryptocurrency in a hot wallet or a cold storage device until you’re ready to use it after you purchase, sell, or trade it to someone on an exchange. Even if it’s offline, the market will determine whether its value rises or declines.
