7 reasons why you should invest in Cryptocurrency

Bitcoin — the first cryptocurrency, was initially designed to work as a decentralized digital payment network. Since its inception, it has experienced significant growth in value and offered crazy returns to its early investors. Along with other cryptocurrencies, Bitcoin has transformed into a new investment asset class. It is consistently outperforming stocks, bonds, funds, and even real estate!

Cryptocurrencies are a very good example. Blockchain lies at the core of cryptocurrency payment network. Hence, investing in cryptocurrency could be a good decision to put your money into the technology of the future. Any emerging technology with a large number of applications is bound to grow. This growth may unlock the potential for high returns in the long run.

Cryptocurrency as a Mode of Payment

The primary function of any cryptocurrency is to enable borderless transactions between people without the need for any third party and to maintain a high level of privacy. These properties create a good chance for cryptocurrencies to be used for daily transactions, just like other current forms of digital payment.

Hence, we can expect that cryptocurrencies will become a global form of digital payment in the near future. It’s highly likely that we will be able to use cryptocurrency for petty transactions. And at the same time, it would be abundantly accepted and available across banks, vendors and ATMs. All of these factors will add further impetus to cryptocurrency adoption and will cause its value to grow.

The Best Performing Asset Class

In the last two years, cryptocurrency Bitcoin has gained more than 450% return. Within the same period of time, it has outperformed the returns on investment in other major financial assets. In comparison, the gains for the S&P 500 and gold were 19.9% and 1.3% respectively. In 2019, cryptocurrency is also outperforming traditional stock market and commodities including oil and gold. Therefore, Bitcoin has offered to its investors much higher returns than any other asset class.

Many analysts believe that Bitcoin is about to set a new parabolic growth cycle for the next five years. Moreover, it is capable of increasing in value by as much as 50 times and taking its market capitalization to a higher level. Such an increase would bring Bitcoin into the same value class as assets like gold. Depending on time, cryptocurrency investment can lead to comfortable high returns in the future.

Increase in Value

When it comes to financial assets, nothing has ever risen as fast and as much as cryptocurrency Bitcoin. Its meteoric rise in value to $20,000 in December 2017 generated insane profits for early investors in the crypto assets. Being the new technology, Bitcoin appreciated to 30,000,000% of its value in a matter of nine years.

That rise is the greatest and fastest rise ever witnessed in any asset type. The reason behind Bitcoin’s ability to rise further and faster than any other monetary asset is ‘halving’. This is a specific design aspect built into Bitcoin’s code which adjusts the mining difficulty and inflation rate at regular intervals. In simple words, the rate at which Bitcoins are released into circulation decreases by half every four years.

In 2020, Bitcoin is going to experience the third halving in its history. Thus, new bitcoins issuance to the market will decline by 50%. Furthermore, the inflation rate of the most popular digital asset is going to fall from 3.81% to 1.8%. For the first time, Bitcoin is going to have a smaller inflation rate than the target imposed by central banks in developed countries. And this is something that could play a very important role in Bitcoin’s future price increase.

Undervalued Asset

As pointed out by many analysts, the value of cryptocurrencies is currently underestimated. Today the overall trading volume stands at around $230 billion. In comparison to other assets like gold which has a market capitalization of $7 trillion or stocks over $30 trillion, there is a tremendous room for growth of cryptocurrencies.

It is predicted that the cryptocurrency market has the potential to reach $5 trillion marks by the 2024 year. Without any doubt, cryptocurrencies are going to increase in value in the future and provide an excellent investment opportunity to yield high returns.

Support by Financial Giants and Government Agencies

Despite Bitcoin’s price dip in 2018, many financial institutions expressed their interest in Bitcoin and the cryptocurrency market. They are getting involved with crypto space as they see a tremendous gain opportunity. From the beginning of 2019 big names in the finance sector such as Fidelity, Goldman Sachs, JP Morgan and others have entered the crypto market.

Recently the sixth-biggest fund manager in the world, Fidelity started to offer digital trading services to large institutional investors. JP Morgan has already developed a permissioned blockchain. Names like Bakkt, Goldman Sachs and The New York Stock Exchange started offering Bitcoin products and futures market. Growing demand for Bitcoin from institutional investors, ‘institutional-grade custody’ services, large trading volumes will lead to increase in price.

However, it is not only financial institutions that are entering cryptocurrencies. Government agencies are also trying to adopt cryptocurrencies and implement blockchain technology. One example is that China government has allowed blockchain transactions to be used as proof in a court of law. Another example is Japan who has adopted cryptocurrencies as a legal mode of digital payment.

Current Market Scenario

On December 17, 2017, the price of Bitcoin reached its all-time high of $19,783. However, in early January 2018, the ‘Bubble” burst and the bear trend of Bitcoin began. The largest cryptocurrency remained in a bear market for a period of 15 months and lost around 82% of its value. In December 2018, the cryptocurrency market has reached its bottom and Bitcoin price decline came to an end. Over the last three months, Bitcoin has turned to the upside swing and is entering the next bull market phase. According to past history, every time the bear market is over Bitcoin prices have significant growth potential for the next four years.

Therefore, now is the right time to adopt a long-term strategy for investing in Bitcoin and ‘buy in dip’ during the period when the market is low. Today the cryptocurrency market is offering an attractive opportunity to buy cryptocurrencies at cheap prices. Long term investors should capitalize on these low values and expect large returns in the future.

Store of Value

Gold has been considered as the best store of value for many years. Despite thousands of years of its history, this precious metal has always maintained its intrinsic value without depreciating. During financial crises, traditional currency can sometimes come under attack as a store of value when hyperinflation occurs. And since gold is better at holding its purchasing power, people have always naturally selected it over a long period of time to protect their wealth. Gold has proved its consistency over time due to effective qualities such as limited supply, scarcity, durability, and stability.

However, as we are entering the era of new technological innovations and digital economy, there is a need for a digital version of a store of value. Due to its advanced concept, Bitcoin is often being referred to as ‘digital gold’. It has all the chances to replace physical gold as a store of value in the future. According to the latest research, it has outperformed gold in terms of price growth in the last five years.

In comparison to gold, Bitcoin has more unique properties that make the leading digital currency better than gold. Bitcoin serves the purpose of being a store of value and global currency at the same time. Furthermore, it has a perfectly regulated supply and can be globally transferred within a few minutes. Many analysts predict that Bitcoin has the potential to grow up to 40 times its current value and overtake gold in the long term.

Technological Improvements & finite supply

Many experts suggest that cryptocurrencies will gain global mainstream adoption within the next decade. At present, the biggest hurdle remaining for Bitcoin is its scalability before we can use it as universal medium of exchange. Thus, there has been a huge demand for improvement of the existing Bitcoin payment network. It is expected that the most recent development of Lightning Network technology will be a major step towards Bitcoin’s mainstream adoption.

The Lightning Network solution would increase the speed of Bitcoin transactions within 500 to 5,000 transactions per second. Hence, Bitcoin will be able to handle transaction volumes similar to traditional payment systems like Visa and PayPal. This could be a deciding factor for the enhanced adoption of Bitcoin and cryptocurrencies. The total supply of Bitcoin is limited and capped at 21 million. Hence, the growing demand for the digital currency will only increase Bitcoin’s value with time.

Rise of Alternative Currencies

Bitcoin introduced blockchain technology to the world and sparked the creation of alternative cryptocurrencies. Over time, an endless supply of new cryptocurrencies and blockchain-based projects has evolved into the cryptocurrency market worth billions of dollars. Although it is an emerging market, it has the potential to grow and become the best performing digital asset class.

Today the cryptocurrency market includes over 2,100 digital assets. They all have different characteristics and are designed to improve the world economy and the financial industry. Some cryptocurrencies perform and grow in value better than others, hence can offer higher returns to their investors.

Therefore, this is a great opportunity for investors to step away from traditional risk stock or commodity markets and include few alternative cryptocurrencies in their portfolios. Building a diversified cryptocurrency portfolio could be better in terms of return on investment and quite profitable over time.

Bottom line

In this article, I have outlined ten valid reasons why you should consider investing in Bitcoin and cryptocurrencies. Cryptocurrencies are promising blockchain-based payment networks of the future. They are absolutely transparent and decentralized digital technologies that have the potential to disrupt the world for better. No wonder why they increased in value over time and rewarded a number of people with high returns.

Investing in Bitcoin and other cryptocurrencies can provide an exciting opportunity to invest in an emerging digital asset class. If you are thinking about investing in cryptocurrencies, now is a better time than ever. However, it is important that you learn how to invest in cryptocurrency and understand that high returns come with high risk.

Have you found this article interesting and want to learn more about Bitcoin and how to invest in cryptocurrency? Please leave your comments below and tell me why you want to start with Bitcoin?