Choosing whether to go all-in on cryptocurrency is a challenge. Some people would tell you to jump right in, while others would never even consider adopting. Since neither group is likely to understand how a blockchain works, we put together a roundup with the top 5 pros you need to consider before deciding for yourself.
No Central Authority
Early adopters of cryptocurrency love that no central bank is fooling around with the money supply like with fiat currencies. Central banks tend to devalue currencies over time by building inflation into their plans. Most crypto avoids this with a maximum coin amount.
May Help Communities Underserved By Traditional Banking
Hispanic, Black, and Asian communities have adopted cryptocurrency at a disproportionately higher rate than the white community. Some people see this as a sign that cryptocurrency may help communities historically denied home loans to secure funds. They can get a Decentralized Finance (DeFi) product that loans them currency without any screening or credit check.
Blockchain Technology Has Many Applications
The blockchain technology that cryptocurrency relies on is a decentralized recording and processing system. It can be more secure than other ways to store data since it is almost impossible to alter fraudulently. This security means societies can use blockchain to safeguard voting, supply chains, digital royalties, medical information, real estate transactions, etc.
The Value of Crypto Has Exploded
While some people like cryptocurrencies for buying and selling goods, others just want a hot investment. From January 2018 to January 2022, cryptocurrency's market cap ballooned from $750 billion to $2.36 trillion. High volatility may not appeal to everyone, but you can't ignore the stellar success enjoyed by many early adopters of crypto as an investment.
New Cryptocurrencies Offer Staking for Passive Income
"Crypto staking" provides an additional way to invest that may be less stressful. Although the technology is complicated, the principle is not. You "stake" a portion of your cryptocurrency, and the blockchain puts it to work in its consensus mechanism. As a result, many people have earned over 10% interest per year.
Business Takeaways
- For best results, follow the basic, time-tested principles of high-risk investing.
- You can mitigate the environmental impact of crypto by adopting green energy sources and focusing on cryptocurrencies that use a "proof-of-stake" mechanism. As a result, they require less than 1% of the electricity consumed by Bitcoin and other "proof-of-work" coins.
- Adopting cryptocurrency may support social equity. This is because cryptocurrency cannot exert bias as a payment or as an investment. Therefore, adopters can increase the stability of equitable financial products.
