Investing in cryptocurrency could be considered as an idea for those who want something other than equities. But before knowing the benefits of investing in cryptocurrency, let us know more about it.
What is Cryptocurrency?
So, cryptocurrency is a pseudo currency that is coded with some robust cryptography code. And the ownership of the coin is encapsulated in a ledger like structure known as a blockchain.
Cryptocurrency is a decentralized currency, i.e. as banks do not issue this currency; hence it is also not regularized by any governing body. And the information of coin holding, transferring is secured via electronic medium.
If someone wants to extend its portfolio, then this is the best option or alternate of equity. Investing in crypto is considered to be a right choice who wish to access it throughout the world as the encrypted currency code is scattered across the globe on different network-connected computers.
Now let us understand what are the advantages of investing in Cryptocurrencies?
Benefits of investing in cryptocurrency
This feature makes us use it throughout the world for transactions and payments. By virtue of its coded nature, it can be swiftly taken anywhere with the help of hardware like USBs. With the help of the Ledger Nano S technique, one can also store it in a pan-drive and transect it anywhere.
Unlike there is no worry Gold or physical currency. Cryptos are stored in a digital wallet. Be it whether any hardware or any software. And this online wallet can be accessed through the world via many mediums like a computer or even your credit cards. A company named TenX is developing the technique to access cryptocurrency with the help of smart cards like credit cards.
There are a number of benefits of a currency being decentralized. As a decentralized currency has no legal body to control its value in international markets, hence it is unaffected from inflation. It means when a commodity is exchanged with cryptocurrency, then the price of the commodity does not change even when it is devalued. Also, transactions in cryptos is a way cheaper than the standard fiat currency transactions as due to lake of the regulatory body there are not taxation fee charges on any transaction. The blockchain system itself governs the smoothness of transection within a fraction of seconds.
Although in trading markets it is considered that the more volatile a currency, the less it will be stable and subsequently it is more doubtful to gain something in investing in it however for some tech-friendly people can easily extract the most out of it.
There are some strategies, following which one can find beneficial to invest in cryptocurrency. Those are listed below: –
Practising this is considered best for an amateur trader as in this strategy fix investments are made after an interval of fix time. Hence the risk of volatility is compensated by investing a fraction of the amount in many alternative currencies that are siblings of bitcoin.
Holding Your coin for Dear Life mechanism or strategy is played widely across the world by most of cryptocurrency traders. In this technique, a trader buys a number of bitcoins and Altcoins that are just the same as bitcoins and hold the pseudo currency with them till the Altcoin gets the pace. It means a trader holds the money for the time till the other one reaches to the higher price. While performing this strategy, a trader must have the patience to gain profit.
This type of strategy is, however, performed mostly in share markets, but nowadays, it is performed by highly analytical minds to gain massive profit over a day. i.e. in this technique, the trader leverages himself with a lot of money (in our context it is cryptocurrency) and this liquefies the market, and as the prices of things go up with the rule of economics, the money or the profits is quickly grabbed before the closing of the market.
One should note here that the Margin trading strategy is very risky. Hence a trader can lose all of its money in a fraction of second. So all the analysis and proper backup should be prepared by the investor before investing in performing this technique of cryptocurrency trading.
Transparency is an inherent quality of cryptocurrency as due to its blockchain technology, the money which is transferred to another author from one is free from any regularization or taxes.
Strong encryption makes it the most reliable trading instrument in terms of security about money information. i.e. The blockchain technology entails a public key and the private key to the end-user. The public key is the address of the user, and this can only be accessed by digital wallets. And the private key is residing with the owner of the cryptocurrency. This key is having all the information of the currency denomination and its volume, which is coded inside of ledgers known as the blockchain. This financial data can`t be accessed by anyone except the owner itself encryption makes it beneficial in trading.
Resistance against inflation–
As the currency is transferred over a network and is out of the ambit of regulatory bodies, this does not suffer by market prices of commodities. Once the item is purchased using bitcoin, the cost of the commodity may inflate, but the value of transected cryptocurrency remains intact.
Less process fee or brokerage involved–
The best advantage of using cryptocurrency in trading is its nonphysical nature. i.e. it is transected through blockchain technology and with the help of a digital wallet. A digital wallet makes it not entirely immune to the brokerage fee. However, trading in cryptocurrency is not that much cheaper than you think as one has to pay a pre-decided blockchain fee and network fee along with broker fees.
Trading in cryptocurrency means you have to be super analytical to bring out an assured profit. However, many brokers provide their E-repository for gaining the winning tactics to hone over cryptocurrency trading. We recommend you to go with conventional methods of investing when you do not know about trading in cryptocurrency because cryptocurrency can fluctuate beyond your imagination and may incur you a loss that could never be covered, however, if you have sufficient leverages and some experience then you can surely try your luck.
Further, we hope you come to know almost all the positive aspects of cryptocurrencies. One must go through a full analysis of all the trading methods and techniques before practising crypto-trading.