Cryptocurrencies are becoming the new normal in finance at an unforeseen pace. The adoption of blockchain in global businesses and a steep rise of cryptocurrency as a viable investment are changing the way we think about our collective future. Stable modes of investments and traditional stock markets are taking a back seat in new age portfolios and cryptos are sneaking to share the major portion of these investments.
However, the market volatility is critical when investing in cryptocurrencies as it is already raising concerns with a prolonged dip in the market.
In a time when the youth can see the future in the blockchain, it’s obvious to wonder whether crypto can be trusted as an alternative to fiat. Is crypto as reliable as any other liquid asset that can support the investor in the long run? There are many such questions and in the article ahead we are going to discuss them while elaborating on the fact that cryptocurrency can support you.
Cryptocurrencies are virtual currencies built on the base layer of blockchain technology and encoded with cryptography. Cryptos are made for extreme privacy and decentralization of finances from centrally controlled institutions. Cryptocurrencies are independent, open, and cannot be regulated by the government unlike any other mode of investment, making them free from any external interference. The first and the most popular cryptocurrency is Bitcoin that has a present market capitalization of over 387 billion USD even during a mass recession.
Today, the world is seeing a future where cryptocurrency will share a sizable market of the global transaction mediums. The rise has been evident and tech-business leaders are already moving towards implementing blockchain technology to their core, making it more relevant to the masses than ever before. The rising popularity of cryptocurrencies can be estimated by the fact that there was a social media post every 3 three seconds about Bitcoin in 2021.
But apart from all the popularity and glamour that is included in the blockchain world, there is a clear lack of stable market situations. Unprecedented market swings and asset manipulation by some of the leading celebrities signal that a detailed strategy must be planned before investing in something as volatile as cryptocurrencies.
There could be multiple reasons why people are eager to invest in cryptocurrencies but some of the reasons are not good enough to stake real money into a project. As the new crypto projects are rising from all corners of the world, investing in the right cryptos is getting more complicated. However, here are some of the reasons why you can invest in cryptocurrencies.
One of the major highlights of cryptocurrencies has been their transparency in their mode of functioning. Each and every transaction of the cryptocurrencies is immutably recorded in a blockchain ledger which is open and free to access for everyone. This transparent nature of the currency incites trust and credibility within its community, making it stronger day by day.
Cryptocurrencies are also above the role of central decision-making and regulating authority which makes them perfect to develop as the currency of the internet.
All the cryptocurrencies are based on a blockchain network and that restricts the production of any more coins within the blockchain. Thus, cryptocurrencies can be categorized as deflationary assets which means that their value is only going to increase with time as the supply is limited and the demand increases with time.
The rarity of the tokens and an upper cap on its total volume will eventually create a mismatch in the demand and supply within the blockchain causing a surge in the prices of that particular cryptocurrency.
Most cryptocurrencies are providing value to their users and sustaining their working model while scaling their businesses. If you can find a cryptocurrency that is doing great and you believe in the project, you can implement the ‘Coffee Can’ investing strategy of invest and forget.
This will allow your money to grow slowly over a long period of time and that too without any active trading. However, these long-term investments do not include any lock-in periods and that is why can be redeemed at any point in time from the exchanges.
After reading about the advantages of investing in cryptocurrency, one might wonder about shifting its saving funds into digital assets but that can be a grave mistake. If someone is willing to invest in cryptocurrency, one should follow the right principles to utilize cryptos as a multi-bagger rather than falling for the wrong token. These are some of the ways through which you can create a support system for yourself while investing in cryptocurrencies.
If you are planning to invest in cryptocurrencies, it is wise to keep a scope of at least a couple of years to let your asset grow with a sizable interest. Most crypto investors are swayed away by the frequent market fluctuations facing consecutive losses and interrupting their investment strategy. Time is the only antidote to the market fluctuations and all you have to do is to invest regularly in potentially good crypto projects and let them stay there for some years.
This might seem like an odd point here but to create a support system for your crypto investments, you will have to invest in the projects that can potentially boom in the future. Even after having great connectivity and required technical know-how only 1.4% of the total population of India has invested in cryptocurrency to date.
This number is not only a statistic but a clear indication of the fact that India holds immense potential to grow as a new cryptocurrency market. And when India goes into something, we go all the way. That is why, if you can monitor where Indians are moving in terms of crypto investments, it will become easier for you to pick up the next booming token for your portfolio.
Even though you think that you have found the perfect cryptocurrency that will multiply in its current value, it is not wise to invest all of your assets in that single project. Diversification is the first rule of investing that mitigates the risks involved by distributing it to multiple projects.
Choosing 8-10 different but fundamentally strong crypto tokens will allow you to diversify your investments as per your risk appetite. The distribution amidst these buckets of tokens can be unequal but even then it will reduce the risk by a huge margin, enabling you to create the support system that you need.
We all aim to create a monetary mechanism that can support us in times of our need. When the news is flooded with stories of 100x returns and 500% of price hikes within months, cryptocurrencies appear to be a viable option to earn quick money. However, it is never as simple as this.
Creating well-structured mechanics in your crypto portfolio that fetch you a regular return is not easy but it is possible after enough market research and sufficient investment of time and money. Cryptocurrencies are not a viral bubble anymore and altering the world finance dynamics with an evident matrix, however, controlling this wild wave could be slightly tricky but equally rewarding.