Since its arrival over a decade ago, bitcoin has taken over the financial markets. While stocks, forex, and other traditional assets and stores of value remain the kings of the financial and business markets, cryptocurrencies are undeniably the new must-get asset for everybody.
In this article, we’ll talk about why cryptocurrencies are so popular. More importantly, you’ll learn the benefits you can get when using or investing in cryptocurrencies. Read on!
Traditional transactions involve middlemen and representatives that complicate the process. You have to manage paperwork, commissions, and brokerage fees.
By contrast, cryptocurrencies work on the peer-to-peer transaction model, meaning there’s no middleman in the equation.
This leads to:
- Simpler processes
- Clearer transaction histories
- Less confusion in terms of roles and responsibilities
- Greater accountability
Using cash or credit opens up your records to banks and credit agencies. Your identity is exposed, along with your account balances.
Meanwhile, cryptocurrency transactions — whether for business or trading — have a high level of confidentiality. Your identity is anonymous, and you only have to transmit information on a need-to basis. Cryptocurrencies are decentralized, meaning no one monitors your transactions.
As an asset, cryptocurrencies provide a wide range of benefits, which include high rewards, high liquidity, and more. However, it stands out in its use of technology. It runs on a revolutionary tech called blockchain, a decentralized, digital public ledger.
On top of that, innovations and breakthroughs happen all the time, such as gold cryptocurrency assets — an innovation that marries the stability of the safe-haven precious metal with cryptocurrencies’ potential for price appreciation.
Variety and Adaptability
The result of innovation is adaptability and further innovation. In this context, cryptocurrencies spearhead various breakthroughs in financial technology. At present, more than 6,500 unique cryptocurrencies and altcoins exist, each of them boasting a wide range of use cases.
For instance, Ethereum is most popular for its Smart Contracts and decentralized apps. Smart contracts run independently as long as specific conditions are met, ensuring the flawless execution of agreements.
Cheaper Fees (If any)
Cryptocurrency users don’t have to worry about maker and taker fees or the occasional fees for withdrawals and deposits. They also don’t usually have account maintenance fees, minimum balance requirements, or overdraft charges. A good example is bitcoin: this asset isn’t associated with traditional banking fees associated with fiat currencies.
That’s also true for international transfers. Since cryptocurrencies don’t require any intermediary governments or institutions, the cost of global transactions is generally lower than traditional bank transfers.
Greater User Autonomy
Fiat currencies are issued by nations’ banks and financial institutions. Thus, they’re tied to a bunch of policies and requirements. They’re also vulnerable to the ups and downs of the economic cycle.
By contrast, the prices of cryptocurrencies are not directly linked to specific government policies (unless the asset is banned or outlawed in your country). That means you have more control over your money, and you can do whatever you want with it: invest, trade, buy more, or sell.
Easier Access to Credit
As time goes on, it becomes easier and easier for people to access credit through the internet. And we have cryptocurrencies partly to thank for that. The cryptocurrency networks nowadays provide convenient access to exchanges, peer-to-peer networking groups, and third-party digital wallet providers.
In other words, there’s a low barrier to entry, and anyone — even the “unbanked” — can join the network and enjoy the benefits of cryptocurrencies. Once the necessary digital and regulatory infrastructures are in place, the market can be expected to grow more vastly in the coming years.