According to many experts, cryptocurrencies are the biggest invention since the internet. Digital currencies had a huge success in 2017. Personally, I don’t know many people who wouldn’t have heard about bitcoin yet.
If I ask about their opinion, the attitude is mostly neutral. Of course, there are critics without basic technical knowledge as well. I often hear questions like what’s the right time to buy bitcoin or should I invest in bitcoin at all. That is the reason behind why I have prepared the 7 reasons why to invest in cryptocurrencies.
Reason n.1 – early cryptocurrency critic – the symbol of something big
Even though the critic might not seem like a good reason why to invest, the majority of new concepts and technologies are taken lightly. This is the very foundation of every scientific progress indeed. At first, there is this unfriendly, mocking critic, then the phase of gradual acceptance followed by the phase of actual usage and lastly appreciation.
Not even inventions like the internet, the car, the radio, and the television did not get massive acceptance at early stages. The human mind of regular people is set to accept new things from distance. In the 18th century, the experts thought that the train moving faster than 35 km/h could make passengers disoriented. They even though that the passenger would lose the ability to perceive time and space.
With the arrival of first telephones, there was a hoax about how the electricity can kill the caller through the handset. People were also afraid to use microwaves, because of their supposedly deadly rays. I could go on and on, but you already have the picture.
Because of these reasons, I consider the early critic as a completely natural phenomenon and symbol of something really big. We live in a digital age, and yet we still pay with the metal coins in some stores, even though the first coin appeared 4500 years ago. Also, cryptocurrencies don’t serve for the transaction purpose only. There is a layer of dozens of other functionalities as well.
It’s fair to say that this new technology has a few issues and technical imperfections too, but we have to realize that the cryptocurrencies are still in development. The very first computer looked very different from the current computers as well.
You can see the evolution of the usage of technology like color television, computers, phones and internet in the picture above. Diffusion of innovations explains how, when, why and at what speed are the inventions and technologies spread. Everett Rogers, the founder of the theory of innovation diffusion, sorts users of new technologies to:
- Early users
- An early majority
- The late majority
Which group do you belong to? Let me know in the comments below.
Reason n.2 – institutional money is not in a game yet
At the horizon of a few years, cryptocurrencies expect a wave of new investors, which would cause a massive increase in deposits of billions of dollars. Exchange Traded Funds (ETF) are believed to be responsible for the future entry of new institutions.
ETF simply mean an option to quickly buy dozens of stocks, where the responsibility for the portfolio is carried by some big-name company – issuer. The advantage is that you could easily diversify the risk of investment because you would be buying a package of several cryptocurrencies at once. So, if one your cryptocurrencies is not having a good day, you don’t have to be worried, because your portfolio is diversified enough.
Bitcoin ETF would be the easiest possible way of getting into cryptocurrencies for the big-name companies. They wouldn‘t have to worry about where to buy, what to buy and where to store. The would only find a responsible middleman, who would be taking care of their portfolio.
The bad news is that none of bitcoin ETF proposals have been accepted yet. The reason is the lack of cryptocurrency regulations in general. In this case, I don’t consider regulations in terms of verifying the identity of the customers as something wrong, but I see it as a way to the wave of new customers and a protection for current customers.
Reason n.3 – peer-to-peer rules the world
Shared economy is currently becoming a huge trend. Technologies like Uber and Airbnb have become number ones practically overnight. The main feature of p2p is to offer a product, service or an asset without the middleman (with a help of p2p platform).
The world crisis and substantial evolution and development of mobile devices help to boost p2p services even more. In the UK, the good example of an established p2p project is Zopa. Zopa uses a p2p platform to issue loans without the middleman (bank) so when you get a loan, it is from a real person.
The technology behind cryptocurrencies – blockchain – is revolutionary and is spreading very fast. Cryptocurrency ripple was released to change the current banking model across the globe. Most banks do realize the potential of ripple and are getting more and more involved in this cryptocurrency. Together they help to make the new, transparent financial system.
Reason n.4 – bitcoin helps when governments fail
Cryptocurrency bitcoin was released in 2008 in times of the big economic crisis. Bitcoin is sort of a disagreement and distrust expression against the governments (which tend to help to cause increased inflation). Increased inflation is a result of an economic unbalance and it’s caused by printing new money, which leads to a decrease in their value.
In countries like Venezuela, where the inflation is really high, the bitcoin payment option is more than welcomed almost everywhere. These kinds of situations are a great opportunity for cryptocurrencies to get more adoption.
Reason n.5 – the global economy is about to crash again
There is no endless exponential growth. We have learned our lesson hard with cryptocurrencies in January 2018. The real estate market is overheated, and stock markets haven’t seen a bigger correction for a long time. Many experts have said they are expecting an economic crisis much worse than in 2009.
Currently, the world economy experiences good times, when it has recovered after almost 10 years. We are experiencing economic growth, what is mirrored in historically the lowest level of unemployment.
Economic cycles are alternating, and the crisis has actually a good impact on economic. The economic public has learned a lesson from the last crisis.
Based on previous mistakes, banks are more careful and are undergoing stress tests that could prepare institutions for upcoming difficult times.
In these kinds of situations, many investors tend to a safer option and buy gold. Bitcoin is, in fact, a digital gold and in its nature, it has a premise for growth in difficult economic times (see Venezuela).
Reason n.6 – small market capitalization of cryptocurrencies
Cryptocurrencies are still just a drop in the ocean of the financial world.
The market capitalization of all the cryptocurrencies is just over 207 billion dollars. That is approximately the value of Coca-Cola. So basically, all the cryptocurrencies are on a level of one big-name company.
If you’re thinking about investing in cryptocurrencies, from my point of view and from my previous experience, take is as a long-time investment. I consider 2-3 years as a long-time cryptocurrency investment.
Reason n.7 – privacy protection and control over your money
If you are not sure to trust your government, banks and monopolistic corporations, you will sure find cryptocurrencies appealing. Bitcoin network is not controlled by any individual organization and therefore it is not in power of any authority to manipulate this currency. You have the full control over your resources. No one can take it from you if you protect it good enough.