The Future of Cryptocurrency Still Shines
You might be anxious if you are holding bitcoin and other cryptocurrencies nowadays. The crypto market continues to drip red while most news reports sound the death knell of the digital asset. As a result, numerous small investors have left the crypto space.
Looking beyond the doom and gloom, numerous individuals and companies continue their cryptocurrency investments. Are they blindly hoping for the market to bounce back, or do they have another reason? Let us see the current status of the crypto world!
First, let us overview what is happening with these digital assets. After that, we will discuss why cryptocurrency investors tighten their grip on their portfolios. More importantly, we will see if you should enter the market and how you may do so.
Everyone asks, “What is the future of cryptocurrency?”
We begin with the overhanging question in everyone’s minds. Cryptocurrency skeptics raise their voices higher as king BTC drastically declines.
On November 10, 2021, Bitcoin reached its all-time high of $68,789.63. People felt delighted to see how much the largest cryptocurrency rose in value.
In response, regular people became investors overnight. Thanks to investment apps like Robinhood, they quickly built portfolios with cryptocurrency.
Everything changed when we headed into 2022. Bitcoin avalanched from $68,789.63 to around $21,000. It was a devastating blow to many people who recently started investing.
What caused this sudden and drastic downfall? We could point to several reasons, but the Luna disaster sparked the recent crash. People learned about cryptocurrencies, so they saw other options besides bitcoin.
One of the cryptos that caught their attention was Terra (UST). It purported to be a stable coin or stablecoin, a unique cryptocurrency that retained its value, unlike similar assets.
Most stablecoins anchored their value to other assets to limit their volatility. For example, Tether (USDT) stablecoin is the largest one in terms of market cap, and it uses the US dollar as its peg.
Terra gained popularity due to the decentralized finance (DeFi) platform Anchor Protocol. It promised 20% returns for people who deposited UST coins into it.
The average investor saw this as a golden opportunity, but crypto experts saw it as an irresponsible marketing stunt. They taught the platform could not possibly sustain the massive yields.
Unfortunately, it turned out to be true. Investors saw that they could not earn the promised returns, so they sold more of the UST stablecoin.
It was an algorithmic stablecoin, so computer code adjusts its value based on market conditions. As a result, UST significantly declined, and investor confidence soared.
The crypto space is more than digital currency.
More factors worsened the market conditions, such as the Celsius Network, government regulation, interest rate hikes, and the equity market.
We could elaborate on all these factors, but you are probably tired of hearing bad news. Many investors had a similar sentiment, so they started to let go of their cryptocurrency portfolios.
Most people would think that this is the end of the crypto world. If you dig deeper into the market, you will see that people and companies continue to invest in cryptocurrency.
We must admit that some people simply wait for the market’s bull moment to gain an ROI. However, most of these types of people have sold off their portfolios.
Those who stayed believed that cryptocurrency is more than a replacement for institutional money. Its blockchain technology has more benefits for everyday users:
You may have heard of bitcoin touted as “digital gold.” Many people scoff at the idea, but others believe this to be true. We must know how assets have value to understand why people coined this term.
Search assets on Google, and you will find examples like fiat currency and stocks. They all work on the law of supply and demand. Increase the amount of an asset available, and its demand decreases.
As a result, the asset’s price goes down. Nowadays, people are seeing this problem with fiat money worldwide. Countries have printed more than a billion dollars to combat the COVID pandemic.
Unfortunately, this action increased the money supply of various countries. Consequently, their value declined significantly, and commodity prices skyrocketed.
Experts know this phenomenon as inflation. People do not know what the future holds for their money, so many internet users become first-time investors.
Some people invested in well-known safe bond markets, but others chose to build crypto portfolios. Most of them choose bitcoin because it has a fixed supply.
Other digital assets may hedge against inflation. However, some cryptos mint new coins, so they face problems that fiat has. Investors should research all they can before building their portfolios.
Store of value
Most people know bitcoin and other cryptocurrencies due to their high volatility. In other words, they know that crypto prices drastically shift almost every minute.
Some investors prefer stable coins, and some companies have adopted them. For example, the Samsung Galaxy S22 contains a crypto wallet.
The Korean tech firm also offers a digital wallet called Samsung Blockchain. It even lets you explore and install decentralized apps or dapps.
Believe it or not, the well-known financial institution Visa now offers rewards from the crypto ecosystem. Its latest credit cards let you earn buyback rewards like bitcoin and other cryptos.
Bitcoin is the first cryptocurrency, and its creator intended it to be a replacement for the current global financial system. Satoshi Nakamoto saw that institutions had too much control.
They hold so much information that they could use against users. Also, they had the liberty of charging exorbitant fees for their services. Nakamoto wanted to cut out the middleman with bitcoin.
Instead of going through banks or the government, people may directly trade with each other. Nowadays, cryptocurrency technology progressed and provides decentralized banking.
We now have smart contracts that automate many functions requiring middlemen. They activate when certain conditions push through, and nobody can manipulate them.
For example, smart contracts facilitate transfers because they do not need a person who will have to verify transactions manually. They could cut down the waiting time from days to mere minutes.
We have mentioned that cryptocurrency is beyond digital currency. It runs on a decentralized network called a blockchain. As the name suggests, it does not have a central hub or server that controls the network.
Instead, people volunteer to operate the network. They could use their computers to verify cryptocurrency transactions in exchange for more of that electronic currency.
Nowadays, crypto tech has progressed to the point where it has more use-cases. Non-fungible tokens (NFTs) are one of its most significant offerings.
It allows people to record the ownership of digital media on a blockchain. As a result, they retain the value of their asset despite numerous replicas.
Its most popular application is NFT gaming. Believe it or not, some video games let people win NFTs and cryptocurrencies that they can convert into fiat money.
Axie Infinity became a trending hit in Southeast Asia, specifically the Philippines. It is why many people in the country own non-fungible tokens nowadays.
On the other hand, NFTs can improve more significant aspects of society, such as national elections. A 12-year-old Filipino named Rien Lewis Pecson created an NFT blockchain voting platform.
Other ways to earn from cryptocurrencies
People view cryptocurrencies as a way to make money. Most of them stick to the old rule of thumb “buy low, sell high.” In other words, they purchase currency at a low price and then sell it once the price goes up.
Due to the current crypto climate, you might think twice before following this method due to the current crypto climate. Even the experts cannot specify when the bear market will end.
Yet, you have seen that large corporations and some individuals still grow their crypto investments. Fortunately, there are alternative ways to profit from cryptocurrencies:
- Mining – Do you remember how crypto networks function? People volunteer to confirm transactions to earn more of a specific cryptocurrency. This activity also goes by the name crypto mining.
- Dividends – Some cryptocurrencies let you earn more of that coin simply by holding on to it.
- Staking – You could deposit a few cryptos into a blockchain network to help its functions. In return, you earn more of that specific crypto.
- Airdrop – You can earn a different cryptocurrency by holding or staking another coin. For example, depositing Binance coins (BNB) in the BNB Vault lets you make more BNB and coins like Merit Circle (MC).
- Yield farming – You could leave cryptos in DeFi exchanges, so they can have a cryptocurrency supply to circulate. You could potentially make passive income from this measure, but it poses huge risks of losing money.
You have seen many ways you can make money from cryptocurrency. Believe it or not, this asset class can be a source of passive income even if you do not possess any!
You could apply for work at a cryptocurrency firm. If you are from the United States, the most well-known option is Coinbase since it is the largest crypto exchange in the country.
Otherwise, you may try getting a job from Binance. It is the largest cryptocurrency exchange in the world, and it is currently hiring people from several nations.
At the time of writing, Binance expressed its desire to operate in the Philippines. CEO Changpeng Zhao said he is “open for discussion” following calls to ban his company.
You can find numerous openings on the Binance website. If you land a position in his company, that can be your new way to make money from digital currencies.
You could invest in companies that work with cryptos. For example, Warren Buffett invested in a Latin American bank dealing with digital currencies.
Selecting the shares can be easy because most prominent tech firms invest in crypto tech. We already talked about Samsung as an example, but there are others like Google.
On the other hand, you could buy crypto stocks from companies that provide related services. For example, Riot Blockchain mines bitcoin for its clients.
An exchange-traded fund is a collection of assets you can trade like stocks. They contain various asset types like bonds and real estate. Nowadays, an ETF can include cryptocurrencies.
People call them bitcoin ETFs or crypto ETFs. Unfortunately, they contain cryptocurrency, so they tend to have the same volatility. In response, other folks get a bitcoin futures ETF.
ProShares recently released the first-ever bitcoin futures ETF. Unlike crypto ETFs, they contain derivatives for cryptos. Consequently, you do not have to hold any crypto.
You have seen that many people and companies still invest in cryptocurrencies. The ongoing downturn serves as an opportunity to purchase coins at low prices.
You have many options for building your first investment portfolio. If you are not keen on bitcoin, you can turn to other cryptos like Ethereum (ETH) or stable coins like Tether (USDT).
Note that the market still poses some risks, such as intense cryptocurrency regulation. Note that this article does not provide financial advice. Speak to a financial consultant for professional assistance.
Frequently asked questions
Is there a future in cryptocurrency?
Many people and companies continue to invest in cryptos and stable coins. As a result, the market is more likely to recover from the ongoing crash.
Is cryptocurrency a safe investment for the future?
It is up to you whether or not digital assets are a sound investment. Plan your portfolio carefully by learning everything about cryptos. Consult a financial advisor for expert help.
Will crypto survive the crash?
The market has a good chance of recovering from this significant downturn. However, nobody is sure about the ultimate fate of this asset type.
Why do people still invest in cryptocurrencies?
People have continued to build crypto portfolios over the past few years because they believe in its real-world potential. Of course, others simply want to turn a profit from this digital asset.
Should I start crypto investing?
Nowadays, you can start a crypto investment with a mobile app and an internet connection. Make sure to learn all you can about the asset before you continue.