The Bitcoin blockchain was created in 2009, launching a relatively new asset class. Despite not having a central authority, a payment processor, or a company owner, Bitcoin and most other cryptocurrencies based on blockchain technology are beneficial due to their decentralized nature.
Instead of being peer-to-peer, crypto networks enable people to transact directly with each other. Decentralization and peer-to-peer are two additional advantages of cryptocurrencies. This crypto guide will discuss some positive aspects of cryptocurrency.
1. Easy Transactions
There are a number of advantages to using cryptography for conducting transactions, including ease of use, low costs, and privacy. You can send and receive cryptocurrencies via smartphone apps, hardware wallets, and exchange wallets.
In some cases, Bitcoin ATMs allow users to buy cryptocurrencies with cash. It is not always necessary to have a bank account to buy cryptocurrencies. An ATM is a place where people can buy bitcoin and send them to their phones using cash. One of the biggest benefits of cryptocurrency may be its accessibility to people who do not have access to traditional financial systems.
2. Incredible Security
A decentralized cryptocurrency is generally regarded as a secure payment method based on cryptography and blockchain security. There is no doubt that cryptocurrency has this advantage.
Hash rates play a crucial role in cryptographic security. The process of compromising is more difficult when the hash rate is higher. The computational power required to compromise a hash rate with a higher hash rate is greater. Bitcoin has the highest hash rate among cryptocurrencies, making it the most secure.
However, a crypto exchange’s security is dependent on itself. It is mainly exchanged that are hacked or individuals who make mistakes that lead to crypto being hacked.
3. Short Settlement Times and Low Fees
Investing in crypto can be a good way to get price appreciation, and some use crypto as a medium of exchange. Transactions involving Bitcoin and Ether can cost several hundred dollars or even more. Cryptocurrencies such as Litecoin, XRP, and others are also available for pennies or less. The settlement of most cryptos takes seconds or minutes. Electronic funds transfers and bank wire transfers can differ significantly in price and settlement time.
4. Exponential Industry Growth
Most of us have never seen a market growing at such a fast pace in our lifetimes as the cryptocurrency market has. In the 1990s and early 2000s, companies on the cutting edge of the internet were comparable to those involved now. A total of $1.6 billion was invested in cryptocurrencies in 2013. It reached more than $1.4 trillion by June 2021.
5. Outsized Returns
The value of Bitcoin has increased significantly over the past 12 years. The value of Bitcoin was essentially zero when it started in 2009. In time, it would eventually reach tens of thousands of dollars. A million percentage points’ worth of gains is represented here. A comparison of the S&P 500 index’s annual return with the S&P 500 is available here.
Many of these altcoins later saw their prices collapse after outperforming Bitcoin by wide margins. There are a number of cryptocurrency benefits that are well known, such as these. For day traders and speculators in the crypto space, price volatility is one of the most notable benefits. (Losses, on the other hand, may be one of the most well-known drawbacks.)
6. More Private Transactions
Despite the fact that some people may think bitcoin is private, it isn’t. All transactions are recorded forever in a public ledger created by blockchains. It is possible to track transactions with this ledger, even though it shows only wallet addresses.
There are some ways to make crypto transactions more anonymous, although most are pseudonymous. Outside observers have difficulty picking apart transactions grouped by coin mixing services because they are hard to separate. A full node operator also makes their transactions more opaque since observers cannot always tell if the transactions via their node originated from the operator or from someone else.
Newcomers to cryptocurrency might find it difficult to use methods like these. In other words, while Bitcoin does not provide absolute privacy, payments with third parties are generally more private compared with fiat currency.
7. Portfolio Diversification
It has become well known that cryptocurrency is a noncorrelated asset class. Unlike stocks, bonds, and commodities, crypto markets generally follow a different price action than other markets.
The rise in the price of crypto coins over the past twelve years, which has been millions of percentage points, clearly shows that they aren’t correlated to anything else. Crypto have occasionally traded in tandem with stocks over the past few years, but for very short periods of time.
8. Inflation Hedge
Bitcoin, Litecoin, and Monero are considered good inflation hedges because of their limited supply caps. When central banks and governments print more money, they increase the supply, causing monetary inflation, which tends to elevate the value of things that are scarcer.
Dollar prices have a higher chance of increasing as more and more new dollars chase fewer and fewer coins. Bitcoin, for example, is also designed to maintain a limited supply regardless of monetary policy changes.
9. Cross-Border Payments
National borders do not matter when it comes to cryptocurrencies. Sending coins from one country to another is not difficult. There is no difficulty in sending coins between countries. Depending on the regulations, sanctions, or tensions between countries, this might not even be possible in some cases.
10. A More Inclusive Financial System
Those without access to traditional financial systems can benefit from cryptocurrency. A benefit of cryptocurrency is that it is decentralized and permissionless. No financial authority or government authority requires permission for people to use the crypto ecosystem. They also do not necessarily need a bank account (although bitcoin mining is banned in China). A billion people around the world today are “unbanked,” which means they don’t have access to financial services. Essentially, these people can become their own banks with just a smartphone and crypto.
11. Transactional Freedom
Cryptocurrencies offer the benefit of allowing value to be exchanged between parties. The transaction is freer and censorship-resistant since it can be done without a third party.
Anyone can be cut off from services by banks or other payment processors. In nations with oppressive government regimes, journalists, political dissidents, or other individuals may face difficulties because of this. Cryptocurrencies, such as Bitcoin, are difficult to regulate because they are not governed by a central authority.
12. 24/7 Markets
In the case of the New York Stock Exchange (NYSE), stock markets are open only during regular business hours on weekdays. Nights, weekends, and holidays are generally not business hours for most traditional financial markets. In contrast, cryptocurrency markets operate around-the-clock, seven days a week, without exception. Cryptocurrency trading can only be interrupted by power outages, internet outages, or centralized exchange outages.
Cryptocurrencies have many advantages, as listed above. Volatility is a major downside of the system, but there are also potential flaws. It is prudent to do your research before investing in the crypto market if you are interested in buying, selling, and trading crypto.
Is crypto something you’re interested in investing in? Enjoyapks provides cryptocurrency trading accounts for buying and selling Bitcoin, Ethereum, Litecoin, Dogecoin, and Cardano.