Top 10 Reasons to Invest in Cryptocurrencies in 2023
From the outside, it may seem like crypto is not doing so well in 2023. Initial euphoria evaporated, and there are more crypto skeptics than ever before. To be fair, this is partially because more people know about crypto than before.
So, does this mean that investing in crypto in 2023 is a bad idea? Not at all, but we don’t blame you for drawing that conclusion!
Every market, every stock, and every asset has its ups and downs, but we have many strong reasons to believe this is just a little setback. If this is the case, it would be wise to use an opportunity to buy before the market hits its next peak.
Remember, the crypto market is highly volatile, and no one can guarantee success. However, here are our ten reasons to believe that investing in cryptocurrencies is a great idea even in 2023.
A technology that solves a problem
How do you know which technologies will stick and which are just gimmicks, soon to be forgotten? Well, a technology that solves a problem usually sticks around; however, there’s an even stronger indicator. Technology that saves/makes money is bound to stick.
Cryptocurrency encapsulates both of these ideas. First, it allows for instant, anonymous, low-transfer fee transactions. The practical application of this is incredible.
Global collaboration is at an all-time high, and there’s an estimate that global remittances in 2022 were $794 billion. All of this implies that the value of crypto in tomorrow’s world might go even higher.
Potential for early adoption
While Bitcoin has already blown up, you cannot say the same for most cryptocurrencies. This means the “next Bitcoin” is still out there for you to discover.
The old rule of the investment world is that once a trend already blows up, it’s usually late to get rich off it. So, your best bet lies in identifying lucrative coins early on. Since this is a relatively new asset type, many people are still not in the game. This gives you a head start.
On Technopedia’s recommended cryptocurrencies list, you can find suggestions like AiDoge, Ecoterra, and DeeLance. However, you need to do your own research and determine which coin is the most lucrative.
Diversifying investments
Buying crypto might be a good idea even for those who wouldn’t necessarily characterize themselves as crypto investors. This is an easy way to lower your portfolio risks without going too much out of your way.
This is a great way to diversify your investments since cryptos have an opposite growth trend to regular assets. Since it’s a decentralized currency, the interest in crypto grows when trust in institutions and fiat currencies plummets. In other words, cryptocurrencies might, in the future, fill a similar role to commodities like precious metals.
You can even diversify your investments using exclusively cryptocurrencies. Different crypto performs well at different times. This will make it highly unlikely that all your assets will lose value simultaneously.
The rise of stablecoins
The biggest con of crypto investing is its volatility. This is why trends like stablecoins could make such a difference.
This virtual asset is tied to a reference asset, usually a fiat currency like USD or a commodity. This “anchors it down,” providing greater stability and making it a cash equivalent.
The purpose of stablecoins is to maintain a steady price; however, if they’re tied to a real-world asset, why would one invest in them rather than an original asset? We’re even mentioning stablecoins here because their rise will inevitably lead to increased trust in crypto as an asset type. As stablecoins like Tether gain prominence in the news and reports, people will dread crypto less. This will indirectly, lead to lower volatility.
There’s a limited supply
Another important thing to keep in mind is the fact that there’s usually a cap on cryptocurrencies. In theory, this is supposed to prevent inflation and protect the market. In practice, once a coin becomes too valuable, people just start trading in fractions of coins.
However, the fact that there’s a limited supply means that if the market increases, any assets you hold are bound to increase. The key challenge lies in identifying the right coin to invest in.
While many cryptocurrencies have a high potential, not all will reach their full potential. Coins tied to things people use/care about have the highest potential. We’re talking about coins like AiDoge, which relies on meme generation, or Ecoterra, which relies on the climate crisis solution. These two concepts are unlikely to be abandoned, so the only way is up.
The future is decentralized
A lot of people believe that a big problem with cryptocurrencies is trust. The problem is that this idea stems from a misconception that people trust official financial institutions. Sure, they’ve been around for a lot longer, but it’s naive to assume that people aren’t noticing all the speculations and machinations of financial elites.
People are already suspicious of the system, so they look forward to decentralizing the financial system. This way, trust and transparency will be much higher, and the system will be less biased by default.
Blockchain technology won’t allow people in charge to alter rules to suit their own needs and agendas, which will already make a world of difference.
Potential for high returns
The value of Bitcoin increased over 20 times in just one year. It’s not inconceivable that such a thing could happen again; however, it’s unlikely that it will happen with the same cryptocurrency.
You can make a huge profit by discovering a promising coin and making a moderate investment. The key thing is to master the art of risk management. The risk-to-reward ratio is not hard to understand, but many people willfully decide to ignore it.
Your profit won’t be much to write about unless you invest enough. However, exposing yourself to risk is not a smart idea either.
A higher degree of anonymity
A lot of people find anonymity to be the most appealing thing about crypto trading. Keeping assets that most people cannot track has merit of its own.
Governments can still track your finances, but this won’t be as easy for third-party investigators. This alone gives you a far higher degree of anonymity than any other asset on the market.
Currency of the future
Digital money is the way of the future, regardless of what happens with cryptocurrencies. However, cryptocurrencies seem to be better at being digital money than their fiat counterparts.
Even in digital format, fiat currencies seem to be bound by tradition. There’s no reason for such high transaction fees or why it takes so long to finish some basic financial procedures.
In other words, cryptocurrencies are more efficient, quicker, and less tied by outdated financial concepts. Sure, they’ll soon be more heavily regulated, but this will unlikely change these financial procedures.
- Entry barriers are substantially lower
The key to remember is that entry barriers are substantially lower since this is a new asset type. In other words, you need less capital to start investing in crypto. Sure, it’s not as low as in the pre-2017 world, but it’s still quite low compared to blue-chip stocks.
This allows more investors to join. Financial gatekeeping is a huge deal, and it’s one of the leading factors that prevent the world of the modern economy from becoming more egalitarian. Cryptocurrencies may just be this great equalizer.
Cryptocurrencies are still a lucrative investment opportunity
There’s no asset out there that has no ups and downs. The biggest problem with cryptocurrencies is that they’re young assets without long historical data. Naturally, people are skeptical about it. Still, with all these positive sides, it’s premature to write cryptocurrencies off. If anything, we expect a big comeback and, as some experts suggest, the potential growth in the future might be significant.