Cryptocurrency started with a lot of skepticism. The number of naysayers were quite many. Indeed, big names like Warren Buffet and Bill Gates were among them.
Warren Buffet likened Bitcoin to rat poison. His contention was that bitcoin was a speculative asset. It did not produce anything nor have inherent value. For him, non-productive assets are speculative and bank on excitement to get value.
For Bill Gates, it was about the amount of electricity every bitcoin transaction uses. Indeed, this is an ongoing concern when it comes to Bitcoin mining.
Paul Krugman is a Nobel economist and New York Times columnist. Like Bill Gates, his concern is on energy consumption. There is also a lack of government backing. Yet, that is what gives traditional money value.
But even with such negative reactions, we can't deny one fact. Cryptocurrency has made a profound impact on the financial sector. Indeed it may very well be the future of finance. We will explore five arguments in favor of why this might just be the case.
1. Potential of Massive Gains with Cryptocurrency
If you look at the Bitcoin price history of a time, there have been spikes and drops. The fluctuations or price instability can be a concern for digital currency investors.
But like most trading assets, that is not unique to cryptocurrency investing. Any asset class, whether shares, stocks, or commodities, will experience such fluctuations.
At the time of bitcoin's start, the value was less than a cent. But as of November 2022, at the time of writing this article, the bitcoin in euro price was €15981.40. Yet if you kept an eye on the bitcoin price live chart, the prices would change every other minute.
So, let's say you had invested in cryptocurrency as a long-term strategy in 2009 when it came out. The current gains would be quite significant.
Trading bitcoin has the potential for massive gains. The main contributors to pricing are coin supply and demand. However the players keep a close rein on how many bitcoin go into the market at any given time. There will always be demand for bitcoin, meaning chances of hefty returns are pretty high and we expect the trend to continue the same way for a long time.
2. Decentralized Finance (Defi) Is the Future
There are some criticisms about centralized financial systems. One of the most significant is the lack of financial freedom and transparency. Yet there is an increasing call amongst users for this.
That is one of the best features of cryptocurrency. Decentralized financing systems offer transparency and better security. There are no brokers, banks, or middle men. Everything is managed via smart contracts on blockchain. With the ongoing sentiments, they may very well soon replace conventional finance systems.
The rising popularity of cryptocurrency is changing the financial world. You will find digital currency in trading, investing, lending and borrowing. That is a clear sign that huge players are becoming more accepting of DeFi systems.
3. Increasing Acceptance of Cryptocurrency
The world is becoming more accepting of cryptocurrency. Bitcoin has gained a reputation for being a safe-haven asset. It does not succumb to inflation or market volatility.
That would explain why some companies are converting their cash into cryptocurrency. Big bitcoin portfolio holders include Tesla, Microstrategy, Coinbase, and Block Inc.
Major players are also accepting cryptocurrency as a mode of payment. These include MasterCard, Microsoft, Starbucks, Tesla, Visa, and Amazon.
The simple fact that huge corporate giants have so much faith in Bitcoin is a good sign. Indeed this goes against Warren buffet's initial assessment of Bitcoin lacking value. The currency has become a value store and is proving quite popular in the market.
The corporate endorsement will make bitcoin investing even more lucrative. The bitcoin graph and price chart will be worth keeping an eye on.
4. Diversified Cryptocurrency Value
True, Cryptocurrency may not have intrinsic value. But that is a narrow way of looking at value. There are so many benefits of digital currency, including:-
- Value storage that depends on how much of the cryptos are available in the market. As we said, the industry places a tight rein on mining. That ensures a proper balance of demand and supply. It also protects crypto holders from the effects of inflation.
- You can buy goods or services without needing the intervention of a third-party
- There is no restriction on ownership. This is unlike what you will find in a traditional financial system.
- You can attach the crypto to commodities like oil, gold, or other digital currencies.
- Easy accessibility to cryptocurrency. All you need to transact in crypto is internet connectivity and the right device. There are no restrictions like you would get with traditional financial systems.
- Round-the-clock trading of cryptocurrencies removes time restrictions like you find in other exchanges. You can buy, sell or trade day or night, 24/7.
5. Security for Your Financial Transactions
Blockchain technology offers the highest level of security and privacy. The transactions are immutable. No one can change them once they enter the public ledgers. The same applies to anyone trying to erase the records.
Blockchain technology also encrypts the identity of coin holders. Your financial transactions remain safe from fraud or even identity theft.
Beyond security is the total privacy of crypto transactions. Users have complete anonymity due to the different cryptographic techniques. That also provides a way to keep data safe from the wrong hands.
With blockchain technology, there is the decentralization of data across many computers. That is an excellent security feature. Even if a hacker manages to access one computer, it will be impossible to do the same for all the others in the chain.
Final Thoughts
Cryptocurrency may have had a tough beginning, thanks to the naysayers. But over the years, it has managed to hold its own as a viable currency. So much so that it could be the future of finance.
The noteworthy points in crypto’s favor are the need for more transparent financial transactions. The decentralized nature of cryptocurrency provides assurance of this.
There is security for financial transactions and tons of diversified value. Bitcoin trading also offers a high potential for good returns.
The best advice we can give is to teach yourself everything there is to learn about bitcoin trading. Learn to read the Bitcoin graph and keep up with the changing rates on the Bitcoin live price charts. It will be exciting to see what cryptocurrency offers in the future.