By Dan Miller, payments officer in the Australian banking sector and contributor to Bizzmark Blog, a business journalism website.
During the last 100 years, it became more than evident that occasional market crashes seem to be something that happens fairly regularly in a system controlled by central banks. Because of this, more and more economists speculate that the future of the global economics may be in something completely new – the notion of cryptocurrencies. Still, the future of the global market is not a constant concern of regular people and new entrepreneurs. What they mostly want to know is – are cryptocurrencies worth investing in at the moment? Let’s find out!
1. The new gold standard
A lot of economists like to describe Bitcoin (the flagship of cryptocurrencies) as a gold standard in a digital environment. In other words, it is considered to be the economic safe haven of the 21stt century and its worth increases with a growing uncertainty. For instance, after the Brexit vote, the worth of Bitcoin rose by 15 per cent, while after Donald Trump was elected, it jumped by about 4.5 percent of its previous value. This being said, whenever there is a major uncertainty, more and more people turn towards cryptocurrencies and even looking for other ways how to make money online. Unfortunately, the world we live in is full of these uncertainties and geopolitical instabilities, making this kind of investment more and more appealing by the hour.
2. Most cryptocurrencies are inflation-resistant
Another thing you need to keep in mind is the fact that the inflation is one of the greatest problems when it comes to saving huge amounts of money for safekeeping. Even with the interest, $10 in 2000 is equal to $14.35 in 2017. With this in mind, it is more than clear that you stand to lose much more than you stand to gain. As for the digital currencies, most of them have top caps, which don’t allow the creation (mining) of new coins once the cap is met. For instance, with Bitcoin, this cap is at about 21 million coins, which means that if the price of Bitcoin is going anywhere, it is definitely up.
3. They are not deflationary
Unfortunately, this last part has come under a scrutiny, due to the myth that Bitcoin is somehow deflationary. According to them, due to the fact that there is a limit to a number of coins in existence at one time, people would be reluctant to sell what they already have but stockpile them and wait for their value to skyrocket. The major fallacy in this claim is the fact that the rise in value isn’t the same thing as deflation. Furthermore, while not spending Bitcoin seems as a valid point on paper, in reality, such a thing is nearly impossible. All one needs to do in order to debunk this last point is going to any cryptocurrency trading hub and see the rates at which these exchanges happen.
4. Bitcoin is not the only name in the game
Finally, one of the things that can dissuade a lot of people from dealing with cryptocurrencies is the overall lack of knowledge on the topic. Of course, newcomers are always most comfortable to buy ethereum or bitcoin, seeing how it is usually the only digital currency they have heard of. On the other hand, a myriad of people currently sell dash for a living or trade in some other cryptocurrency like litecoin, ripple or monero. Each of these cryptocurrencies has its own set of advantages and disadvantages. For instance, dash is a much more secretive version of Bitcoin, which means that it offers more anonymity. Ripple, on the other hand, is great for international payments, seeing how it offers incredibly low fees for such transactions.
As you can see, aside from providing you with a value that is more resilient to major geopolitical turmoil (in fact, it even benefits from them) and has anti-inflation properties in its core, cryptocurrencies have other winning traits, as well. Different options provide you with various benefits, depending on your current needs. As we already discussed in the previous segment, some of these currencies can become invaluable in your future international deals, while others may feel like paying in cash (due to the impossibility of them being traced). To cut the long story short, investing in cryptocurrencies is probably not a decision you will ever come to regret