5 compelling reasons why you should invest in cryptocurrency
The last 18 months or so should make anyone realise that the world is changing, and this change is accelerating. Perhaps you want the world to go back to the way it was before, but no matter what resistance you put up you will be fighting against the tide. If we are realistic and look at the bigger picture the future ahead is going to be somewhat different. As frightening as this might sound to some people you should see it as a massive opportunity because the choices and decisions that you make today will be undoubtedly go a long way to shape what your life will look like in the years ahead. One of the areas which will form an integral part of our future is blockchain technology and cryptocurrencies. I believe that everyone owns it to themselves and their families to at least look at this area and in this article I will give you 5 compelling reasons why you should invest in cryptocurrency.
Reason #1 - Technology is a one way street
No one can predict the future of technology with complete accuracy, because no one has a crystal ball to see into the future. However, there are reasonable arguments that can be made, based on the advances and trends of technology in the past. For instance, it is reasonable to predict that computers will continue to become more powerful, increase in number, and get cheaper.
There are many areas with massive potential which is just beginning to be exploited today, like biotechnology, nanotechnology, and other emerging technologies, will continue to bear fruit.
So would it not be unreasonable to suggest that unless the world is hit by a meteorite or there is some other catastrophic event the pursuit of man to advance technology simply isn't going to stop.
Now, the areas that I have touched on whilst interesting in their own right don't really present any meaningful opportunity for the average person; they simply wont be able to capitalise on those growth areas apart from having the technology directly impact them as part of their daily life. Like with many other new found technologies and areas of venture capital it is the elite and those with money who get to benefit from it.
Cryptocurrency and blockchain technology is inherently different, this is because by its very nature it presents a genuine opportunity for literally anyone from any demographic, if they so choose to look at it.
Bitcoin and other cryptocurrencies are decentralised, immutable, trustless systems - that is, they’re not directly tied to any nation-state, government, or body and they cannot be changed, modified or meddled with by bad actors.
Given the rampant money printing and inflationary environment that the world has been enduring one could argue that cryptocurrency is in fact superior to traditional physical currencies because it is not dependent on, for instance, the U.S. federal government.
Reason #2 - A legacy financial system that is screwing the masses
I am not an economist however what I see is a legacy financial system that is both struggling to stay alive as well as hurting the average person, which certainly doesn't bode well for anyone who is trying to get ahead in life.
As the U.S. is the largest economy and the Dollar is still the global reserve currency what happens there tends to impact the wider global economy at large.
Regardless of the $29 trillion debt that the U.S. has, 2020 saw the US Federal Reserve print about 40% of US dollars in existence, which effectively dilutes the value of the money that people hold.
Most people can't comprehend how big 1 trillion Dollars is, so let me put this into context; if you spent $1 million a day since Jesus was born, you would have not spent $1 trillion by now!
Then consider the extra 'infrastructure' spending that the Biden administration has proposed, a further $3 trillion, at a time when inflation is taking a hold around the world and causing the cost of living to soar.
Interest rates are at an all time low, which makes for saving money a pointless exercise as the cash you hold is actually losing its value due to the rampant inflation. In fact I found it very funny when I received an email from my bank recently saying that the rates in a high interest account that that they offer were being adjusted to 0.02%! How is someone expected to get excited by that?
Reason #3 - DeFi
With the back drop of COVID-19, we have witnessed traditional institutions struggling to adjust to the new way of life and as such many people have started to have their eyes opened to the possibilities in the digital world especially in terms of hedge their bets, or using it as a mechanism to store their wealth, along with exploring other innovative investment opportunities.
One such area that has started to garner a lot of attention has been decentralized finance, or DeFi. DeFi effectively offers anyone with access to many of the same services and products as traditional financial institutions offer but without a middleman being involved.
Although on the face of it it might seem simple, DeFi offering banking products and services without a middleman but instead utilising smart contracts and blockchain technology is actually quite revolutionary.
It means that some of the fees that are associated with the 'services' provided by middlemen are cut out, which benefits users along with reducing barriers to entry.
Furthermore, it means that the likelihood for human error is reduced and users can maintain a higher level of privacy. DeFi platforms that offer rewards for staking tend to offer considerably higher interest rates than traditional banks and when loans are made on DeFi platforms, lower interest rates can be obtained.
Reason #4 - Self-sovereignty
Sovereignty is defined as “supreme authority within a territory” and “a modern notion of political authority.” Kings, Queens and governments in free and democratic countries are sovereign, for example. People are sometimes referred to as sovereign in democracies because they are the source of all political power and the state’s authority ultimately comes from its populace.
Self-sovereignty takes this power and hands it back to individuals, leaving them free to choose their own path without needing to be under the influence of powerful central authorities or rulers.
The world can however be cruel, people find themselves part of socio-economic systems and structures which they have little or no control over, completely powerless and at the mercy of the leaders and faceless forces which rule their lives. They invariably have no self sovereignty or independence in their lives.
Whether people are aware of it or they have simply been indoctrinated by the system, states, powerful institutions and other controlling forces have always sought to limit people’s freedom, whether explicitly or not. However with the advent of cryptocurrency, we can see the beginnings of a new self-sovereign economy where power is distributed, not centralized. We can be self-sovereign and therefore free and independent.
Advocates of this new financial system don’t need to beat the banks or institutions – they can effectively become their own bank instead.
Furthermore, with the rise of cryptocurrencies it gives many people a new found belief in being able to alleviate the thought of being powerless. The world is evolving and genuine opportunities exist which allow for anyone to take control of their finances – and perhaps even their futures – with new forms of money that are cast free from the limitations of nation-bound, state-administered legacy currencies.
Reason #5 - The best appreciating asset class the world has ever seen
Over the past 30 years or so the boomers have been able to consistently capture and compound quite respective gains in the traditional equity markets. During that time it has been easy to achieve around 15% per year by just holding the S&P 500 index.
Based on Principal Amount of $1000, at an interest rate of 15%, over 30 year(s):
Total Value = $66211.77
Total Interest = $65211.77
With behemoths such as Tesla, Amazon, Apple and Google, etc. emerging during that time and have gone on to dominate their respective markets they are now valued in the hundreds of billions of dollars. Now I may be wrong, but it's difficult to see the same returns in the next 30 years, especially given the debt laden society that exists and the geo-political uncertainties around the world.
Over the past 18 months or so the equity markets have in fact been bearing the business impact of COVID19. The returns in these markets however are not at all comparable to the success shown by the crypto market in 2021 even in the midst of a global pandemic.
Given that the boomers have also been able to ride the real estate wave as well over the past 30 years, one might consider looking through the eyes of a millennial and ask yourself what investments might they being looking at given the current state of global economy.
Are they likely to make speculative investments in real estate?
Are they likely to be excited about putting big sums of money into the S&P 500?
Or as they have grown up in a digital world and have witnessed the callous nature of both governments and banks in the 2007/08 financial crisis are they more inclined to put money into an area such as cryptocurrency which not only allows them self-sovereignty over their assets but also has the potential to put them on a path to financial freedom?
2011, two years after Bitcoin was created, one coin cost $13.91.
$1,000 would have bought you 71.89 Bitcoin, which would be worth $4,565,015 at today's prices.
One might think that something like Bitcoin has seen most of its gains already, however you have to remember that this has the potential to replace sovereign state currencies and there will only ever be 21 million ever produced.
So where do you think the millennial's are more inclined to put their money?
A fiat currency that seems to be in the process of being printed to infinity or a digital asset with a fixed supply based on immutable code with no middle men involved?
So, based on this notion one could argue that it is just getting started and that doesn't even factor in the many other innovative projects, some of whom will go on to be the next generation of tech giants.
When it comes to crypto, remember that past performance is no guarantee of future returns, and investors should put no more money into cryptocurrencies than they are comfortable losing.
With that being said there is such energy and enthusiasm surrounding the cryptocurrency space right now one can't help but feel like something truly special is taking place.
Regular people who fall outside of the hierarchies within the traditional system and who would probably never be able to make any meaningful in roads into that world now have a genuine chance to stake a claim on some of that wealth by creating a decentralised system that is accessible to anyone.
In the years ahead there will be a massive transfer of wealth. Now, you can sit on the sidelines and just watch it happen, or you can at least spend some time to look at it; if you then don't think that it is for you, at least you gave it some thought. But mark my words, many people who have the belief and forethought today will be well rewarded in the years ahead.