What are the benefits of cryptocurrency?
More and more people are investing their money in a cryptocurrency, such as Bitcoin or Ethereum. This is not without reason: cryptocurrencies have several interesting advantages compared to standard currencies such as the euro and the US dollar. In this article, I will describe the 14 most important benefits of cryptocurrencies.
Advantage 1: You don’t need a bank for a transaction
When you make a transaction with Bitcoins, Litecoins, or another cryptocurrency, no bank or other financial institution is involved. The government is also not involved in your transaction. This is because cryptocurrency is decentralized, which means that no third party is needed to perform a transaction.
Advantage 2: Cryptocurrencies are used globally
Not only do the Dutch pay with Bitcoin, Litecoin, or Ethereum, but people from other countries do this as well. Cryptocurrencies are globally accepted. This means that you can pay with your cryptocurrency virtually anywhere. Also good to know: because it is an international currency, the value is the same everywhere. When paying with cryptocurrency, you do not have to deal with exchange rates and other things that make your international transaction more expensive.
Interesting video about the blockchain and its possibilities
Advantage 3: Cryptocurrencies are anonymous
Many people think that cryptocurrencies like Bitcoin are one hundred percent anonymous. This is not the case. However, you always remain more anonymous with a Bitcoin transaction than with, for example, a transaction with euros. This is because no identity is linked to your wallet, or the wallet you use to pay with Bitcoins. If you pay someone with Bitcoins, he or she cannot see that it is you who is paying.
However, certain information about your Bitcoin wallet, such as the amount of Bitcoins in this wallet and the payments you have made, is publicly available. If you want to remain completely anonymous, you can pay with cryptocurrencies that are even more anonymous than Bitcoin, such as Monero, Verge, or PIVX. You can read more details about which cryptocurrencies are anonymous in this article.
Advantage 4: You can mine coins yourself
You can buy cryptocurrencies, but you can also choose to make them yourself. This is also called mining cryptocurrencies. Mining cryptocurrencies is done with your computer by downloading the right software. It takes some time to actually have cryptocurrencies in your possession through mining, but it is definitely possible to make your own digital coins.
If you make euros or dollars yourself, you are committing a crime. Mining Bitcoins, Litecoins, and other digital coins is completely legal. So you don’t have to worry about the police chasing you because you are making your own Bitcoins or other cryptocurrencies.
Unfortunately, it is becoming increasingly difficult for individuals to mine crypto themselves. Especially with large crypto like Bitcoin, you need professional and expensive equipment. You can still mine smaller cryptocurrencies, but it is always important to calculate whether this is profitable.
Advantage 5: Speculating in cryptocurrency
One other advantage of cryptocurrencies is the ability to speculate. Crypto is highly volatile, allowing you to speculate on rising and falling prices. To do this, you need an account with a reliable crypto exchange or broker. The list below shows which crypto brokers offer a free demo:
Advantage 6: there are many different cryptocurrencies
There are now thousands of different cryptocurrencies. Bitcoin is the most well-known, but you can also choose to research another digital currency. With the large number of different types of cryptocurrencies, you can always find one that suits you.
Advantage 7: easy transactions
Another advantage of crypto is that you can easily carry out transactions. You often only need an internet connection and a phone to send crypto to another user. In many cases, you also pay lower transaction fees than with your bank.
Advantage 8: crypto is encrypted
The word crypto already suggests it: it is very difficult to hack well-known cryptocurrencies because of cryptography. This is because you need a lot of computing power, which would simply be too expensive. Unfortunately, this does not mean that all companies that are active with crypto are safe: crypto exchanges are still hacked regularly.
Advantage 9: crypto is fast
You can send money to someone on the other side of the world in a matter of seconds. The crypto market never closes, and because you are not dependent on a bank, your transactions can be processed much faster.
Advantage 10: increasing adaptation
More and more companies see the value of blockchain and crypto. The crypto industry has grown enormously in recent years, and more and more parties are accepting payments in Bitcoin, for example. More and more banks are also researching the blockchain and launching crypto funds in which customers can invest.
Advantage 11: possibility of achieving a high return
Many cryptocurrencies are highly volatile. During a bull market, you can see a cryptocurrency increase significantly in value. Bitcoin was only worth a few thousand dollars at its lowest point in 2021, but stood at more than $60,000 just over a year later.
If you invest in crypto at the right time, you can achieve a high return. However, it is important to sell the crypto at the right time as well.
Advantage 12: diversification
The crypto exchange rate is not strongly correlated with, for example, stocks or bonds. By adding crypto to your investment portfolio, you can manage the risks of your investments.
Advantage 13: hedge against inflation
On paper, crypto can be a good hedge against inflation. For example, there will never be more than 21 million Bitcoins on the market. However, so far, crypto seems to be more closely linked to technology stocks. Whether crypto will work better as a hedge against inflation in the future remains to be seen.
In countries where the domestic currency has very high inflation, crypto can offer a solution. The volatility of the domestic currency is higher than that of, for example, Bitcoin, making switching to crypto a logical choice.
Advantage 14: specialization
Anyone can now launch a cryptocurrency. This allows crypto tokens to offer very specific functions.
What are the biggest advantages of crypto?
Cryptocurrencies have many advantages and can revolutionize the way we make payments. With crypto, you can send money safely, quickly, cheaply, and almost anonymously to someone on the other side of the world. Of course,