Cryptocurrency could either make or break a person’s investment portfolio in 2022. While investing in digital currency remains risky, many people find this investment to be very profitable. Fortunately, people find they have options if they want to branch out and put some of their investment funds in cryptocurrency. They may choose to buy directly or invest in stocks of businesses currently exposed to cryptocurrency. What should a person know before proceeding with a cryptocurrency purchase?
Digital Currency Popularity
While cryptocurrency comes with inherent risks, the blockchain continues to increase in popularity. Financial infrastructure remains a priority, and blockchain companies are building this infrastructure. Investors find they have more access to custody services of institutional-grade. These serve as only two tools investors benefit from today when putting their funds in digital currency. Coinbrary stands as an excellent place to buy this currency.
New crypto futures markets appear regularly, allowing more companies to gain direct access to this sector. Square and PayPal stand as two financial giants offering users the ability to buy and sell digital currency. Furthermore, Square and many other companies have invested in digital assets. Tesla serves as a good example of a company investing in cryptocurrency. As of February 2022, this company held approximately $2 billion worth of Bitcoin.
This industry continues to mature, as seen by the rapid adoption rate. Investors want direct exposure to digital currency, and they feel it is safe to invest significant sums of money in the industry.
Long-Term Investing
When Bitcoin and Ethereum launched, they did so with lofty objectives. Time is needed to achieve these goals, and investors who remain committed to seeing their investments through may be richly rewarded for their loyalty. Widespread adoption of digital currency is needed for this, and it appears to be here.
Bitcoin
Bitcoin serves as the most widely recognized cryptocurrency today. It reaps the benefits of the network effect, and countless investors see it as digital gold. In addition, they may use it as cash, albeit in digital form. The fixed supply increases the odds of bitcoin gaining in value over time. This isn’t the case with fiat currencies. People will never have access to more than 21 million bitcoins, but governments print fiat currencies at will. As these fiat currencies depreciate, cryptocurrencies will increase in value.
Ethereum
Ethereum differs from Bitcoin in that it is working on establishing a global computing platform capable of supporting many cryptocurrencies. In addition, this platform will create an extensive ecosystem of decentralized applications. The platform serves as the basis for many cryptocurrencies. This, along with the open-source nature of decentralized apps, allows Ethereum to receive the benefits of the network effect while establishing long-term value that can be sustained.
Ethereum users benefit from smart contracts. These contracts execute automatically when certain conditions are met. The network likewise benefits because it collects Ether from users every time a smart contract is executed. This technology may disrupt key industries while establishing new markets. As this network continues to expand, the tokens become more valuable and useful. This leads to more profit for investors.
Is Owning Cryptocurrency a Wise Move?
People should diversify their investment portfolios. Cryptocurrency serves as an excellent way to do so, as it lacks any price correlation with the stock market. Digital currency appears to be here to stay, so putting some investment funds in this vehicle makes sense. However, before doing so, secure an investment thesis to show why the currency is a wise move for the future.
Men and women who feel cryptocurrency remains too risky have other options. Consider buying stock in Paypal, Square, and other companies dealing in cryptocurrencies. Another option involves investing in an exchange that facilitates trading in crypto futures. However, recognize these opportunities lack the profitability seen when one invests in cryptocurrency directly. Each investor must decide which option best meets their needs based on the risk level they are comfortable with.
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