Cryptocurrency has boomed in popularity over the past few years, to the point that this “digital investment class” is quickly becoming more mainstream. While Bitcoin was the first and still remains as the “King” of cryptocurrency, there are approximately over “15 000” other cryptos that have entered the scene.
Part of the reason for the hype around Cryptos is the tremendous returns that have been earned by some investors. Bitcoin, for example, was the best-performing asset from March 2011 to March 2021, with a staggering 230% annualized return. The next best-performing asset in a different category over that very same time period was the Nasdaq-100 ETF, with “only” a 20% annualized return. But have you ever wondered if the same would possibly happen across the other “15 000” cryptocurrencies?? If you’re as curious as we are about this rapidly growing cryptocurrency economy, then all we can say is that, we hope you fasten your seatbelts as its going to be a rollercoaster ride! “Rollercoaster” is just a euphemism we use as the cryptocurrency market has an element of unpredictability which comes with a feeling of excitement.
Without any further ado let’s look at what the top 10 advantages of using cryptocurrency in 2022 are!
1. Easy Transactions
Crypto transactions are simple, low cost, and more private than most other online payment transactions. Using a simple smartphone app, hardware wallet, or an exchange wallet, anyone can send and receive numerous types of cryptocurrencies.
Some of the types of cryptocurrencies which you can transact with, include Bitcoin, Litecoin, and Ethereum, and can be bought with cash at a Bitcoin ATM or digitally on an exchange using South African Rands (ZAR), United States Dollar (USD) or any other local currency. A bank account isn’t always required to use crypto. Someone could buy bitcoin at an ATM using cash then send those coins to their phone. For people who lack access to the traditional financial system such as a bank account, this may be one of the biggest advantages of cryptocurrency!
2. Incredible Security
Because they’re based on cryptography and blockchain security, decentralized cryptocurrencies tend to be a more secure form of payment. This is one of the greatest benefits of cryptocurrency overall.
Crypto security is determined in large part by hash rate. The higher the hash rate, the more computing power it would take to compromise the network (basically the amount of power it would require to hack the network). Bitcoin is the most secure cryptocurrency of them all, having the highest hash rate of any network by far. This is why miners play an important role in the cryptocurrency eco-system.
Using a crypto exchange is only as secure as the exchange itself, however in most incidents of crypto being hacked involve exchanges being hacked or individuals making mistakes where their mobile phones are vulnerable or just negligent of not storing their seed codes or having 2FA activated. We have an entire section around “How to secure your cryptocurrency?” on our free beginner’s crypto guide.
3. Exponential Industry Growth
The cryptocurrency industry is one of the fastest-growing markets that most of us have seen in our lifetimes. Yes lifetime. It’s growing faster than the time the internet was first established. So being involved now might reasonably be compared to being involved with companies on the leading edge of the internet back in the 1990s and early 2000s where mass adoption was yet to take place.
The total market cap of the cryptocurrency market in 2013 was about $1.6 billion and as things stand today, the cryptos market cap has risen to over $2.3 trillion! Now that’s Crazy if you ask me.
There’s also been significant strides in the scalability of blockchain technology as well as smart contracts etc.
Ethereum is one great example.
Founded by Programmer Vitalik Buterin, Ethereum is the second-largest cryptocurrency, and its gains have been outpacing Bitcoin’s. If current trajectories continue, some Ethereum enthusiasts say that it “may” overtake Bitcoin as the most valuable cryptocurrency sometime in 2022. Key word “may”. This might make Ethereum an interesting choice if you are an investor looking to diversify your crypto portfolio away from just simply owning Bitcoin.
4. Great Returns
It’s no secret that Bitcoin has been the best-performing asset of the last 12 years. When it began in 2009, Bitcoin basically had no value. In the following years it would rise to a fraction of a penny and then eventually to tens of thousands of dollars which translates to hundreds of thousands of rands. This represents millions of percentage points worth of gains.
Some “altcoins” have outperformed Bitcoin by wider margins at times, although some of these altcoin prices have drastically collapsed. Gains like these might be among the most well-known benefits of owning cryptocurrency. (The losses, on the other hand, may be among the most well-known drawbacks.) Volatility has characterized prices in the crypto space, which is one of the key benefits of cryptocurrency if you are a day trader or simply speculating the market.
5. Portfolio Diversification
Cryptocurrency has become known as a “non-correlated asset class“. Crypto markets largely function independently of other markets, and their price action tends to be determined by factors other than those affecting stocks, bonds, and commodities such as gold and silver. Basically, cryptos has its own fundamentals that affect its volatility therefore making it a good opportunity to add to your portfolio, more so if you have investments in the aforementioned markets.
Any asset that has risen by millions of percentage points over just twelve years, just as a number of cryptocurrencies have, is an indication that it’s not correlated to the other asset classes. But it’s worth noting that during the last few years, cryptos have begun to sometimes trade in tandem with stocks on shorter time periods.
6. Inflation Hedge
Another important point to mention is that mineable cryptocurrencies that use the “proof of work” protocol have a limited supply cap. These cryptos such as Bitcoin, Litecoin, and Monero, to name a few, are thought to be good hedges against inflation. Because monetary inflation can occur when central banks and governments print more money, increasing the supply, things that are more scarce tend to appreciate.
With more and more new dollars and rands in circulation, the buying power of these currencies continue to devalue. For more information on how the monetary system works you should definitely check out our Free Crypto Beginners Course.
7. Cross-Border Payments
Cryptocurrencies have no regard for national borders. An individual in one country can send crypto to someone in a different country without any difficulty. With the current traditional financial system such as Banks that utilize Moneygram and Western Union etc., getting funds across international borders can take a long time and come with crazy high fees and an element of time and effort. In some cases, sending money to another country is not even possible due to certain country’s regulations, sanctions, or even tensions between specific countries.
8. A More Inclusive Financial System
Some of the benefits of cryptocurrency extend to people who don’t have access to bank accounts. Due to its decentralized and permission-less nature, one of the benefits of cryptocurrency is that anyone can join and be part of the crypto eco-system.
People don’t have to have permission from any financial authority or government to use cryptocurrencies. (Though it’s worth noting that Bitcoin mining is banned in China.) They also don’t necessarily need to have a bank account. There are billions of people today who are “unbanked,” meaning they have no access to the financial services system, including bank accounts. With crypto, all these people need is a smartphone, and they can essentially become their own bank!
9. Transactional Freedom
One of the great benefits of crypto is that it can be used to exchange value between two parties. This can be done independently without any third-party involved, making the transaction even more free and censorship resistant.
Banks or other payment processors can choose to cut off services to anyone for any reason. This can make things difficult for some journalists, political dissidents, or other individuals working in nations with oppressive government regimes. Because there is no central authority governing Bitcoin or most other cryptocurrencies, it’s very difficult to stop anyone from using them. Like we’ve seen in South Africa where local banks such as FNB and Absa have prevented users from purchasing crypto currencies on most if not all international exchanges.
10. 24/7 Markets
Stock markets are only open on weekdays during the regular business hours of 9:30 am to 4:30 pm Eastern Time, in the case of the New York Stock Exchange (NYSE). Whereas the same applies to the Johannesburg Stock Exchange (JSE) that only operates between 9am and 5pm Monday to Friday (GMT).
During nights, weekends, and on holidays, most traditional financial markets are not open for business.
Crypto markets on the other hand, trade 24 hours a day, seven days a week, without exception! Some of the only things that could interrupt a person’s ability to trade cryptocurrency would be a power outage, internet outage, or centralized exchange outage.
The above just mentions 10 advantages of using cryptocurrencies. Like any other asset class there are always pros and cons however in this case the advantages outweigh the disadvantages.
If you are interested in also being part of the cryptocurrency eco-system, it is important to get the right guidance from experts in the industry to avoid being scammed or making fatal mistakes. The Encryptoza family is here to support you on your cryptocurrency journey. There is a lot you can learn on the Encryptoza platform such as Bitcoin what Cryptocurrencies are, how they work, cryptocurrency investment strategies, bitcoin trading strategies you name it. All available on Encryptoza
Simply register, select a package and bam you’re part of the Encryptoza family. Good luck!