It can now be said that cryptocurrencies have become the focus of attention of a certain group of investors. Especially because of the advantages it offers compared to traditional investment tools, people may prefer to invest in cryptocurrencies.
So, what are the logical reasons for cryptocurrencies, which are considered among the important investment tools especially when investing in the young age group, against traditional investment tools such as gold or dollars?
First, let’s get acquainted with cryptocurrencies and traditional tools.
First of all, it wouldn’t be wrong to describe traditional investment tools with these words: low risk, low return and long-term investment goals. For example, stocks and bonds usually offer regular returns, but their prices are not very volatile. On the other hand, gold and other commodities have been the safe haven for most people in times of crisis, but it can be said that they provide less return on long-term investments.
On the other hand, we can define cryptocurrencies with the following words: higher risk, higher return potential and higher volatility. In addition, the fact that cryptocurrencies markets are less regulated can also bring other risks. However, cryptocurrencies stand out for their low cost and fast transactions, secure payments, decentralized finance (DeFi) applications and technological innovations.
Let’s go into a little more detail: What aspects of cryptocurrencies stand out?
First of all, of course, high earning potential
We would not be wrong if we say that one of the main reasons why cryptocurrencies are gaining more and more popularity day by day is their high earning potential. Especially during the pandemic period, the fact that Bitcoin reached the level of $ 64 thousand and then the rise of other cryptocurrencies made cryptocurrencies attract the attention of everyone from 7 to 70.
The reasons for the sudden increase and decrease in cryptocurrencies are innumerable, but we can consider the supply-demand balance and speculations (for example, Elon Musk tweeting about Dogecoin out of the blue) as the main reasons for the excessive activity in this market.
One of the important details for an investor: Fast and easy trading
In traditional financial markets, brokerages are often needed for transactions. As such, it takes time to process and transaction fees can be high. On the cryptocurrency side, things don’t work that way. As trades can be transferred directly between individuals, intermediary institutions are eliminated and trade becomes easier.
In addition, the opening and closing times of the days we hear frequently in the stock market are not available in the crypto money sector, and the reason for this is quite simple: The crypto currency area has a market that is open 24/7.
We would not be wrong if we say that such advantages are the factors that make trading in cryptocurrencies much faster and easier than traditional tools.
Another missing feature in traditional investment instruments: Decentralization
One of the beauties of blockchain technology can be called decentralization. This concept is actually one of the most important words in the world of crypto money and allows it to separate from traditional investment tools.
For example, unlike stock markets, cryptocurrencies cannot be manipulated by any government or central authority. Therefore, they can be a safer investment tool for users. Moreover, it is very difficult for cryptocurrencies to be stolen and counterfeited thanks to the encrypted and decentralized system. Of course, it may be better if you rely on these features and do not click on every link on the internet that you do not know.
long story short
Although the values of cryptocurrencies, the shining investment tool of recent times, show more volatility compared to some traditional investment tools, they can provide significant gains in the long run. It can be said that the increase in the value of cryptocurrencies such as Bitcoin in recent years has attracted the attention of investors.
However, let us remind you again and again that investing without knowing about cryptocurrencies carries great risks. Since the prices of cryptocurrencies can change rapidly, making a wrong move can inflict huge losses on the investor. Therefore, it is not bad to do a good research and follow the markets before investing in cryptocurrencies.
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