Cryptocurrency is a relatively new asset class. It all started with the creation of the Bitcoin blockchain in 2009. The benefits of cryptocurrency are many, but the main one is that the asset class is based on blockchain technology. Thus, the coins and tokens do not have any central authority, payment processor, or company owner.
Instead, the crypto networks are peer-to-peer. This means that people can easily transact directly with each other. Most of the other benefits of cryptocurrency arise from their decentralized and peer-to-peer nature.
Cryptos became a global sensation during the debate that they are preparing to replace fiat currencies in the future. Their adoption continues to understand momentum partially because of the world’s progression toward a cashless society.
Since some people lately transact through electronic money, analysts and experts in crypto think that cryptocurrencies might become consistent and dependable currencies in the long term. But, it will take some time before they find their way into the mainstream space, since they face massive opposition from regulators globally.
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With industrialization and technological involvement, digital currencies seem to gain a great position over others. Bitcoin is the biggest crypto. Most users are accustomed to this famous terminology. Through crypto, it is quite easy to transfer funds directly between two parties, without requiring a trusted third party like a bank or any other financial institution.
Benefits Of Cryptocurrency Ownership In 2022
1. Easy And Efficient Transactions
Crypto transactions can be executed easily, at low cost, and in a way that is more private than a majority of the other transactions. By using a simple smartphone app, exchange wallet, or hardware wallet, anybody can send and receive various types of cryptos.
Some types of cryptocurrencies, including Litecoin, Bitcoin, and Ethereum can be acquired using cash at a Bitcoin ATM. A bank account is not always needed to use crypto. Someone can purchase bitcoin at an ATM using cash and then send these coins to their phone.
For those individuals with no access to traditional financial networks, this might be one of the largest benefits of cryptocurrency.
2. Nearly Impenetrable Security
Since they are based on cryptography and blockchain security, decentralized cryptos seem to make for secure forms of payment. This might be a major benefit of cryptocurrency.
Cryptocurrency security is mainly determined by hash rate. The higher the hash rate, the more computing power would be needed to compromise the network. Bitcoin ranks as the most secure crypto, having the highest hash rate among all networks by far.
Nonetheless, using a crypto exchange is just as secure as the exchange itself. Most cases of cryptos being hacked involve the exchanges being hacked or people making mistakes.
3. Low Fees And Short Settlement Times
While some people just want to invest in crypto for price appreciation, others may find some benefit in the ability to use crypto as a medium of exchange.
Ether and Bitcoin transactions can cost anything between dimes and nickels to several dollars or more. Other cryptos like XRP, Litecoin, and others can be sent for pennies or less. Payments for a majority of cryptocurrencies settle in seconds or a few minutes. On the other hand, wire transfers at banks can cost considerably more and mostly take three to five business days to settle.
4. Exponential Industry Growth
The crypto space has been among the fastest-growing markets that most people have seen in their lifetimes. Being involved now might be compared to investing in firms on the leading edge of the internet market back in the 1990s and early 2000s.
The cumulative market capitalization of the crypto market in 2013 was around $1.6 billion. By June 2021, it surged to more than $1.4 trillion.
5. Massive Returns
It is already known that Bitcoin has been the best-performing asset of the last 12 years. When it was launched in 2009, Bitcoin had no fundamental value. In the years that followed, it would surge to a fraction of a penny and then to tens of thousands of dollars. This price movement represents millions of percentage points‘ worth of gains. Comparably, the S&P 500 index of stock returns an average of 8% annually.
Some altcoins have outperformed Bitcoin by huge margins at times. However, many of them later saw their prices collapse severely. Gains like these may be among the most popular benefits of cryptocurrency. On the other hand, losses are also the most severe drawbacks in any market.
Volatility has dominated prices in the crypto space, which has proven to be a major benefit of crypto for speculators and day traders.
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6. More Private Transactions
Privacy is another notable benefit of cryptocurrency. Nevertheless, crypto is not as private as some people might believe. Blockchains develop a public ledger that records all transactions forever. While the ledger just shows wallet addresses, in case an observer or investigator can link a user’s identity to a particular wallet, then tracking crypto transactions becomes easy.
Although most of the crypto transactions are pseudonymous, ways of executing more anonymous transactions also exist. Coin mixing services group transactions simultaneously in a manner that makes it complicated to pick them apart from each other. This strategy confuses external observers.
People who run a full node also make their transactions more opaque since observers cannot always tell whether the transactions running through the node were sent by the person running the node or by somebody else.
Such strategies are for the more experienced and advanced users and may prove to challenge for those that are new to crypto. Hence, while absolute privacy is not one of the major benefits of cryptocurrency, transactions are more private than using fiat currency with third-party payment processors.
7. Portfolio Diversification
Crypto is a renowned non-correlated asset class. Crypto markets majorly work independently of other markets. Their price action seems to be determined by factors other than those that affect bonds, stocks, and commodities.
Any asset that has risen by millions of percentage points in the past 12 years, as several crypto coins have, clearly is not correlated to anything else. But notably, in the past several years, cryptos have started to trade in tandem with stocks at times for short periods.
8. Inflation Hedge
Mineable cryptos with a limited supply cap, like Litecoin, Bitcoin, and Monero, are believed to be great hedges against inflation. Since monetary inflation can happen when governments and central banks print more money and increase the supply, scarce things seem to appreciate.
More and more new dollars are chasing fewer and fewer coins. Thus, the price of the fixed-supply coins as measured in dollars have a major chance of surging. Moreover, the Bitcoin protocol, for instance, is also designed to keep these tokens and coins scarce irrespective of what happens with monetary policy.
9. Cross-Border Payments
Cryptos do not have any regard for national borders. A person in one nation can send coins to somebody in another nation without any added challenges. With traditional financial services, sending money across international borders can take lots of time and attract huge fees.
In various cases, doing that may not even be possible because of regulations, tensions, and sanctions between particular nations.
10. A Highly Inclusive Financial System
Some of the benefits of cryptocurrency extend to individuals with no access to traditional financial systems. Since it is decentralized and permissionless, one of the notable benefits of cryptocurrency is that anybody can participate.
People do not need permission from any financial authority or government to use the crypto network. It is worth noting that Bitcoin mining is banned in China. Crypto users do not need to have any bank account. Today, billions of people are unbanked. Therefore, it means that they do not have any access to the financial system, which includes bank accounts.
With crypto, people only need a smartphone and they can fundamentally become their private banks.
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11. Transactional Freedom
One of the great benefits of cryptocurrency is that it can be used in exchanging value between two entities. It can be done independently of any third party, making the transaction free and censorship-resistant.
Banks and other payment processors can decide to cut off services to anybody for any reason. This makes things challenging for some political dissidents, journalists, and other people working in countries with oppressive government regimes. Since no centralized authority governs Bitcoin and most of the other cryptos, it is highly difficult to stop anybody from using them.
12. 24/7 Markets
The stock markets are open on weekdays within the normal business hours of 9:30 am to 4:30 pm Eastern Time, in the case of the NYSE. At night, on weekends, and on holidays, a majority of the traditional financial markets are closed for business.
On the other hand, crypto markets trade 24 hours daily, seven days a week, without any exceptions. A few things that could interrupt a person’s ability to trade crypto would be internet outage, power outage, and centralized exchange outage.
These benefits of cryptocurrency are what make the asset class a viable investment. There may be possible flaws too – with volatility being a major drawback. Those who want to buy, sell, and trade crypto are advised to research before getting involved in the crypto space.