Cryptocurrency has been in the spotlight since its inception in 2009 with the creation of the Bitcoin blockchain. The term cryptocurrency has become a global phenomenon and it is also gaining popularity in India, with India ranking second in terms of cryptocurrency adoption according to the Global Crypto Adoption Index 2021. In addition, India has about 15-20 million crypto investors with a total capital of about 400 billion rupees ($ 5.37 billion). Now there must be some positive behind these incredible numbers. Let’s look at some of the main benefits of investing in cryptocurrency:
The transaction costs of cryptocurrencies are too low compared to various financial services. Cryptocurrency transactions are cheaper. In fact, bank transfers to banks can be much more expensive than the cost of a cryptocurrency transaction. However, this is accompanied by the caveat that blockchain demand may increase the cost of the transaction.
Transparency and security
Cryptocurrencies are mainly based on cryptography and blockchain security, as well as on a distributed network of computers that verify transactions, which improves security. This way, until someone gets access to your crypto wallet’s private key, they won’t be able to sign transactions or access funds. Most hacking incidents involve stock market hacking, as well as individual errors.
Ease of transactions
One of the main advantages of cryptocurrency is the ease of transactions, which has also led to high demand. With a simple smartphone app, hardware wallet or exchange wallet, everyone can send and receive a variety of cryptocurrencies. In fact, some types of cryptocurrencies, including bitcoin, lightcoin, and etherium, can be purchased for cash at a bitcoin ATM.
Risk diversification / Portfolio diversification
Diversification is necessary when it comes to asset creation, and cryptocurrency is one such asset class that offers investors diversification from traditional financial assets. However, investing in cryptocurrency is also accompanied by risks, given the volatility of this asset class. We have seen that investors with the ideal combination of these two asset classes should receive a regular income.
Over the past few years, there has been an increase in cryptocurrencies, as well as the level of perception of investors. The main usefulness / value of these cryptocurrencies is one of the main investment criteria. For example, NFT or fixed tokens that are protected by the Ethereum network have recently become popular. These utilities attract investors and act as an offer to buy. However, not all cryptocurrencies are the same, as some cryptocurrencies do not offer any benefit and are only related to the culture of Internet memes.
Cryptocurrencies also have additional benefits / advantages. There are also obvious and noticeable disadvantages – especially volatility, and therefore investors should research carefully before investing. If you invest wisely, you will definitely be able to create a very strong portfolio.
(Siddhart Jaiswal is the founder of Sportzchain, a blockchain-based platform).
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Published: Sunday, May 8, 2022, 7:00 AM IST