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You may shy away from joining speculators on the ups and downs of the cryptocurrency markets. However, there are a few strong cases for investment.
Bitcoin is beginning to seem like a viable currency, especially since reaching the $2,000 mark. Major setbacks, such as the loss of $480 mln due to Mt. Gox’s neglectful management of Bitcoins, have caused the cryptocurrency to plummet in the past. Slowly but surely, the first-ever Blockchain currency has climbed back.
Presently, Bitcoin is performing better than it ever has. Early in 2017, Bitcoin price hit historic highs, surpassing the value of gold. Nearly a decade after Bitcoin’s quiet release, dozens of copycat currencies have arisen. Utilizing Blockchain, a public database or ledger that records transactions involving encrypted keys, developers are vying to improve the original digital currency.
A few, namely Ripple and Ethereum, have proved to be exceptional competitors. Indeed, the Ethereum Enterprise Alliance was formed by “Fortune 500 enterprises, startups, academics, and technology vendors” to establish standard practices for the use of the platform/currency hybrid “at the speed of business.”
Here are three reasons to consider investing in cryptocurrency:
1. Bitcoin is experiencing massive growth
By far the most popular digital currency is the progenitor of Blockchain technology. Bitcoin owns the lion’s share of the emerging market. Its trading volume is much larger than any other competing currency and its valuation is many times more than the second cryptocurrency of choice, Ethereum. Wider adoption and regular mainstream coverage have elevated Bitcoin from an intriguing security experiment to a possible real-world asset.
Additionally, Bitcoin’s exponential growth may portend good things for Blockchain currency in general. After a few major cases of theft for both Bitcoin and Ethereum, trust in the currency seems to be rebounding.
Some believe the cryptocurrency is a bubble about to burst, but contentious political and economic conditions could push the price up even further.
2. Ethereum is gaining traction
Ethereum is the silver to Bitcoin’s gold.
Although it currently sits at under $100 a unit, it’s the most viable alternative to the dominant cryptocurrency. In fact, the competing form of cash was crafted by one of Bitcoin’s co-founders.
Ethereum is both a platform that allows for the creation of decentralized applications and a currency. The currency, Ether, fuels the platform. Its incorporation of smart contracts, which allow for anonymous agreements on the Blockchain, spawned the DAO (decentralized autonomous organization).
The currency is more flexible for developers and has attracted major tech players, such as Intel and Microsoft.
3. It may see friendly regulation
The anonymity and lack of oversight concomitant with decentralized currency create opportunities for abuse. Certain alternative cryptocurrencies (altcoins), ones that enforce private transactions and anonymous transfers, such as Zcash and Monero, have been used extensively by criminal organizations. Although altcoins like Monero have increased in value due to acceptance from darknet users, this illicit usage of cryptocurrency has dealt damage to overall adoption rates.
Thankfully, we may see tighter regulations. Ethereum famously experienced a massive theft of $53 mln in Ether due to an exploit in a smart contract. Theoretically, the Ethereum Blockchain is immutable. The community voted to override this “immutability” in order to return stolen funds.
Further, in 2013, a representative for the Bitcoin Foundation told US regulators that they would be open to transparent rulemaking. According to MarketWatch, digital currency advocates are pushing for more regulation.
With recent interests from Japan and Russia to legitimize Bitcoin, these rules and regulations could help further cryptocurrency as a legitimate finance asset.
Blockchain technology has the capability to change everything. The currencies running on the distributed ledger model could revolutionize how we interact with all forms of liquidity. While it is unlikely that fiat currency will be subsumed or overtaken by the digital mint, it’s quite possible that these currencies will see greater integration with our current systems.
At the very least, cryptocurrency is seeing a meteoric rise in the short-term. What the future holds for digital currency is uncertain. Currently, there is a cautious sort of endorsement for Bitcoin and Ethereum. Some speculators are pouring their cash into speedier alternatives, such as Litecoin and Dash. Still, most remain hesitant about moving their assets into an unbacked, unregulated currency.
Although the Bitcoin ETF was recently shot down by the SEC, there is still plenty of reason to diversify your portfolio with a small investment in decentralized digital currency. As time has worn on, cryptocurrency has steadily risen in price and has experienced wider adoption.
To be sure, there has also been a great deal of volatility concomitant with Bitcoin’s rise. Valuation specialists continue to have trouble pinpointing the exact value of the currency itself and sentiment can vary wildly. Still, market capitalizations continue to grow.
If you are able to steel yourself against booms and busts, you may profit from cautious investment. Continue to do your due diligence. If you remain uncertain, consider consulting a financial analyst. Remember to monitor updates, vigilantly investigating changes in sentiment.
As always, be prepared to lose any amount you put into a speculative investment. Dedicating yourself to mindful investing will undoubtedly lead to the best result - especially in a market as volatile as the cryptocurrency market.
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