Can Cryptocurrency be a Profitable Long-term Investment?

4 mins, 51 secs Read
Updated On December 22, 2023

Emerging technologies, such as blockchain and cryptocurrencies, disrupt these relationships. Cryptocurrencies are one of the latest developments in these technologies that promise to change how we engage with the world economy. There are many top-class benefits to an exchange platform. The below-listed portion will explore the potential impact of cryptocurrencies on the future and how they may affect investment portfolios. 

Not a Replacement for Fiat Currency

The first thing to understand is that cryptocurrency will not replace fiat currency. Fiat currencies are on a global scale, are relatively stable, and can be utilized by virtually everyone in the world. Cryptocurrencies are volatile, and their use case is limited. It makes no sense that cryptocurrencies could replace fiat currencies, so anyone looking to invest in them should bear this in mind. Cryptocurrencies will complement or act as an alternative to fiat currencies.

Also Read: What Makes Cryptocurrency a Security

Potential for Increased Efficiency of Global Financial Markets

However, cryptocurrencies can significantly impact the ability of individuals, businesses, and organizations to trade with each other across borders efficiently. The blockchain is touted to reduce the cost of transferring money and other assets across borders. 

For example, emerging markets are often hampered by the inability to receive international payments quickly or cheaply. For example, the transaction costs of sending money from an account in New York to an account in Mumbai, India, can be prohibitively expensive if you use the older wire transfer system. Cryptocurrencies can potentially allow that transaction to be completed faster and cheaper using the blockchain.

Another significant advantage cryptocurrencies have over fiat currency is anonymity and security. Fiat currency transactions are all tracked by central banks, which means there is always a record of what you have purchased or transferred with it. Central banks around the world are researching blockchain technology as a way to issue digital money, which would allow them to track all transactions. 

However, a central bank-controlled digital currency would still be subject to inflation. Central banks around the world are researching blockchain technology as a way to issue digital money, which would allow them to track all transactions. However, a central bank-controlled digital currency would still be subject to inflation.

Financial institutions can also use systems like bitcoin wallets and blockchain technology to track payments across borders and maintain records of transactions they control. Cryptocurrencies do not require a central bank or financial institution to complete a transaction.

Why are Cryptocurrencies a Profitable Long-term Investment?

Cryptocurrency is a new investment tool; the emergence of cryptocurrency is the most profitable investment. Crypto traders and investors agree that cryptocurrencies can be profitable long-term investments because of their volatility. Let’s discuss why cryptocurrencies are profitable in the long term. 

Scarcity of Cryptocurrencies like Bitcoin:

People interested in crypto will surely know about a very scarce and valuable cryptocurrency, bitcoin. Satoshi Nakamoto invented it, and it is the first decentralized cryptocurrency. Bitcoin is still the main currency of bitcoin, so it is considered a good investment. People can trade cryptocurrencies in other currencies or commodities, so it is necessary to know their value in real money.

Adoption of Cryptocurrencies:

The Crypto market is growing; more and more people are interested in investing in crypto. Famous companies like Facebook, Google, and IBM have already started accepting digital currencies for their services and payment. As you can see, there are a lot of merchants who accept bitcoin as payment. In addition, big world investors have also begun to invest in cryptos.

The Development of Cryptocurrency:

The market is developing very fast; more and more companies are integrating blockchain technology into their operations. As a result, numerous start-ups have been launched, and the number keeps growing. All this means that the banking industry is transforming, and digital currencies will be a part of our everyday life in the future.

Potential Price Increase:

Cryptocurrencies are volatile, so there is an opportunity to earn money from their price growth. There is a well-founded opinion that digital currency’s price will continue to grow. Many fundamental factors can affect the price of fiat money, and such factors do not influence the growth trend of cryptocurrency. 

Rebound from Cryptocurrency:

Cryptocurrencies may fall in price, but they always rebound after hitting the bottom. Those who understand this principle will always be able to earn money on an investment in cryptos. The volatility of fiat money is also an opportunity to earn, but it requires knowledge, experience, and skills in trading. People who know how to trade crypto efficiently will surely succeed in this business because the prices of these digital currencies are good enough for earning a lot of money by trading and are a suitable option for the long term. 

What should You Understand Before Investing in Cryptocurrencies?

The volatility of digital currencies is being explored by experts widely nowadays. Therefore, it is a mandate to acknowledge your aim regarding a particular virtual investment asset. The investment asset or cryptocurrency you pick as a long-term asset must match your risk tolerance. 

  For many, it is a coin toss between bitcoin and other cryptocurrencies. No doubt, several experts have poured in their two cents about which one is better for investment. But amid all this uncertainty, knowing why you invest in cryptocurrencies is essential.

Adapt HODL Strategy

It is a popular strategy of holding your investment for the long term and is named after the initial letters of HOLD-ON FOR DEAR LIFE. The simplest way to follow this strategy is by buying coins and then forgetting about them while you sit back and watch them grow.

It may sound appealing, but it is also essential to know that you cannot be ignorant of what is going on now and in the future. Therefore, if there are certain developments or issues, sell your crypto coins before they plummet in value or stake the coins on the issue to outperform others with a high growth rate.

If you want to invest in crypto coins, here are some tips to help you choose a reliable cryptocurrency. 

Know Your Willingness:

Knowing the time and effort you are willing to put into this investment is essential. If you have an idea of where to start, it might be a good idea to investigate a bit further details like what the currency is, who created it, and what will happen in the future.

Understand the Performance:

Investment return is essential when deciding on the correct currency. While you are in your research phase, check for the market cap and volume of the currency. A currency with a high cap will not be as volatile as a relatively low cap. In addition, a currency with a high volume implies that there are many buyers and sellers from around the globe, which assures you of liquidity if you want to sell it later.

Technical Evaluation:

Monero has seen an impressive growth rate in volume on a day-to-day basis as well as in price. Monero is currently listed under the top 10 cryptocurrency list, which is no easy feat for any cryptocurrency. The reason is that Monero has evolved massively in terms of technical aspects. Keep an eye on the technical evolution of the cryptocurrency that exhilarates you with its return on investment. 

Author: Joseph Williams