Money has huge importance in the daily lives of people since the financial system demands it so. The existing system is largely based on monetary measures and without money, things can come to halt quickly.
The system has its multiple flaws too including inflation, taxes, interest rates, and more. Take inflation for example and you can see that it reduces the purchasing power of people and increases poverty.
Cryptocurrencies, on the other hand, offer a better alternative to fiat or traditional currency. The benefits offered by cryptocurrency highlight its need for the existing financial system and offer solutions to multiple challenges faced by people.
Let us find out the need for cryptocurrency in these changing times.
What is Cryptocurrency?
Launched in 2009, cryptocurrency was unpopular among communities. A few people were unaware of the concept of cryptocurrency because the majority were accustomed to fiat transactions.
But cryptocurrency has withstood the test of time and come a long way.
Cryptocurrency can be defined as a digital currency that exists on blockchain technology. It is protected by cryptography consists of complex mathematical problems which are hard to break and significantly reduce the chances of scams.
Bitcoin (BTC) has become the world’s largest cryptocurrency by market capitalization, thanks to its positive adoption and profitability. On the other hand, thousands of other cryptocurrencies are available in the market in which you can invest.
Cryptocurrency offers multiple benefits to its users which make them reliable for the future. You can easily make a crypto transaction and avoid the challenges that you can face while being part of the traditional financial system.
Carl Runefelt, alias, The Moon, is a global crypto leader who has invested in more than 350 crypto startups.
He says, “When Bitcoin or when the world is in some type of volatility some kind of uncertainty, I think that is generally something strong for Bitcoin because Bitcoin has zero third-party risk so no matter what happens, you never have any third-party risk against anything. So, Bitcoin is the safest place in the world to put your money or put your wealth.”
Benefits of Cryptocurrency
When it comes to investment, investors always look for an asset that offers better returns. In addition, they want to ensure that their investment is safe and protected from fraudsters.
Cryptocurrency is among the best investments that one can get on the markets at present. Listed below are some benefits of cryptocurrency to ensure the importance of this investment.
Easy Transactions
Sending or receiving money is an important task in everyone’s life. You might have faced challenges such as bank delays and higher fees when it comes to making a fiat transaction.
But cryptocurrency is designed in other ways as it ensures the best for its users. You can make quick cross-border transactions with cryptocurrency without any hassles. In addition, the transaction cost of cryptocurrency is less as compared to bank transactions.
Inflation Protection
Inflation is one of the gravest challenges of the existing financial system that is faced by everyone. It results in the rise in prices of commodities that make it difficult for others to afford.
Carl, on his YouTube channel, The Moon, says, “When it comes to Bitcoin price predictions, I love to have a longer price or longer time horizon because for me, Bitcoin even though it’s fun to trade it in the short term if you really zoom out, Bitcoin is an inflation hedge. Bitcoin is a new form of money. I would say Bitcoin is the best form of money that humans have ever seen before. It’s the scarcest asset in the universe.”
Cryptocurrency offers an inflation hedge because of its finite supply. For example, the protocols of BTC are designed in a way that only its limited number of coins can be transacted which reduces inflation.
Diversification
Diversification in any type of investment protects you from unwanted losses. But the chances for diversifying your investment might not be easily available.
Cryptocurrency can offer investors diversification which traditional financial assets such as stocks and bonds might not offer. You can invest in multiple cryptocurrencies to save your wealth and earn a lot of money.
Diversification in cryptocurrency helps you from losses when the market is bearish. In addition, it provides you with a wide range of currencies that you can use for different purposes.
Conclusion
2022 has not been a remarkable year for cryptocurrency but you should remember that cryptocurrencies have become the most popular assets to invest in.
There are thousands of digital currencies available in the crypto market from which you can make your choices. Now, it depends on you whether you want to put money into an asset that has a bright future or still want to stick to the existing financial system and face its multiple challenges.