IS CRYPTOCURRENCY a valid long-term investment? It has a notorious reputation for being extremely volatile—facing major price swings at any given second. Recently, Bitcoin, the largest cryptocurrency by market capitalization, dropped 28% in value from a whopping $58,000 to $46,000 in just two days. People wonder if this is even worth investing if you could get liquidated just as fast as you put your money in.
As we transition towards a digital world, cryptocurrency should be deemed a long-term investment due to its promising technology and imminent acceptance. Ethereum, the second-largest cryptocurrency, for example, serves as a global computing platform. It allows for the use of smart contracts, whose terms are coded directly and executed automatically. In the future, this could disrupt how infrastructures work such as real estate, banking, or even make up new markets entirely.
Digital currency such as Bitcoin also combats inflation since banks cannot simply increase the total amount of cash in the system. There will only ever be 21,000,000 bitcoins in circulation—unlike paper money, we can’t just keep mining bitcoin. Bitcoin is limited, therefore it is a valuable and in-demand asset. However, Bitcoin aside, one can argue that cryptocurrencies are infinite, as they can be generated by anyone.
Throughout the years, cryptocurrency has been on a general uptrend. If one were to have invested in Bitcoin a year ago, they would have already seen a sixfold increase in value; and it is only just beginning.
Cryptocurrency, in general, is cutting-edge technology. While that makes it exciting, it also increases the risks for investors, as much of this technology is still being developed and is not yet proven in real-world scenarios. However, innovations such as fraud control, flexible transparency, and automation control are just around the corner. Cryptocurrencies are not going away, especially since we are transitioning more and more to the digital world; transactions are fast, secure, and worldwide.
Cryptocurrencies are secure because it allows the maintenance of records without the risk of piracy, thus minimizing fraud. Decentralized ledger technology, or blockchain, allows any transaction capable of being recorded to operate and it is impossible to change, hack, or cheat those transactions. Hence, its usefulness in enabling cryptocurrency to succeed, eliminating the middleman within transactions. No one is in charge of the transactions on the blockchain because it is run by the people who utilize it.With the adoption of cryptocurrency by big institutions like PayPal, Tesla, and Square Inc., we are clearly going in the right direction for worldwide acceptance and a more stable market environment. Market capitalization is continuously increasing, Bitcoin alone broke through the 1 trillion dollar mark as of late—with companies like Microsoft, Alphabet, and Apple having achieved this feat. There is so much potential in this technology to enable economic and communal growth by easing access to capital and financial services, so get it while it’s cheap.
