Almost 15 years have passed since the advent of Bitcoin. During this time, cryptocurrencies have truly come a long way from a strange hobby of a handful of eccentrics to a full-fledged element of the global financial system. The ability to buy BTC to XMR greatly simplifies the life of crypto investors, but it is much more important that today it is already possible to buy very real goods and services for virtual money.
The history of the cryptocurrency market has already seen dizzying ups and no less impressive falls. It is quite natural that, in addition to enthusiastic fans of cryptocurrencies, there are also ardent cryptoskeptics who regularly predict the imminent end of the crypto market. And yet, despite strong price fluctuations and unsettled relationships with regulators, digital assets will remain relevant in the future.
Let’s consider the main arguments in favor of this optimistic conclusion.
Growing interest from institutional investors
Over the past few years, large institutional players in financial markets have become actively interested in digital assets. Banks, large corporations and funds have begun to include virtual assets in their portfolios. This is very significant and means that cryptocurrencies are recognized as a long-term asset that is suitable for diversifying investment risks.
Technological innovation
Blockchain capabilities are already being used to optimize business processes in a variety of areas. The first thing that comes to mind is the financial system, but the use of blockchain has already gone beyond just this area. Innovative solutions are being implemented in logistics, healthcare, production process management, etc. The adoption of blockchain solutions is expected to increase in the foreseeable future, which will further encourage the adoption of cryptocurrencies as a means of transferring and storing value.
Decentralization and censorship resistance
Typically, digital assets are not controlled by governments and other authorities. They are censorship resistant and therefore very attractive to many users. In the crypto world, it is quite possible to maintain greater financial independence and freedom of financial activity.
Improve usability and accessibility
Digital assets are becoming more accessible and easier to use. Traditional electronic payment systems release updates to support crypto payments, and crypto wallets are regularly released and improved. And it has been possible to exchange btc to eur on some classic online exchanges for several years now.
Global economic instability
The events of the last few years lead to sad thoughts about the upcoming difficult period for the global economy. Economic instability and rising inflation may well contribute to increased interest in cryptocurrencies as a means of protecting capital from inflation.
Should you invest in digital assets?
Still, you shouldn’t rush things too much and invest all your money in digital assets. Yes, cryptocurrencies are most likely here to stay, but they are still considered high-risk assets. The risks of owning them are divided into several groups and when making investment decisions you need to take them into account.
- Regulatory risk. There is still no consensus in the world as to what should be considered cryptocurrencies: money, goods or securities. The situation is complicated by the diversity of cryptocurrencies themselves, which often combine features of different asset classes. Therefore, the investor needs to monitor changes in the legislation of his country. This is important to ensure that exchanging BTC to EUR will not cause any problems.
- Technical risks. Since the technology is still objectively very young, vulnerabilities can be discovered in blockchains and failures can occur.
- Market risks. Low-liquidity coins are highly susceptible to manipulation by large players.
Any investment decision should be made with a cool head. No matter how optimistic you personally are, do not neglect the diversification of your investment portfolio.