In recent years, cryptos have largely outperformed various other assets, delivering significantly higher returns. Cryptos have also become quite popular, thanks to their decentralized nature and various use cases. Want to know what they are? You’ve landed on the right page, but first, let’s get the basics out of the way.
What are cryptocurrencies?
Cryptocurrencies are digital currencies that use blockchain technology to function.
A crypto network doesn’t have a regulating or central issuing authority. Instead, it uses a decentralized system to record all transactions and cryptography secures them. Blockchain is the digital ledger that records all transactions linked to a range of assets. Access to the ledger is distributed among authorized users, and that’s what makes it decentralized.
Cryptocurrencies can be used as a medium of exchange or as a store of value.
Why are cryptos so popular?
Cryptocurrencies are popular due to various reasons, some of which are listed below.
Decentralization
Cryptos are decentralized, which means they do not need third parties to get involved. People who own crypto can perform peer-to-peer transactions, but the location of these transactions cannot be traced.
No banks are involved
Traditionally, money is transferred through a bank, which charges an intermediatory fee. But in the crypto world, there are no banks. Here, the members of the blockchain network collectively act as an intermediary in exchange for minimal compensation. All you need is an android phone.
Low fees
Banks have various fees, such as transfer fees, processing fees, etc. However, transactions in the crypto market are less expensive. For example, if a bank charges $20 for a money transfer, a crypto transaction may cost just a few cents.
Flexibility
Cryptos are not tied to any particular region or country like fiat currencies. That makes them more valuable and flexible to use. For example, a user living in the US can easily use Bitcoin to purchase anything from a Europe-based company without worrying about bank transfer fees or exchange rates. Besides, users have 24/7 accessibility, so trading can happen anytime and anywhere.
Control and security
Since transactions do not depend on any third party, such as governments, lawyers, and banks, there is no chance of losing money due to the fall of a government or a firm declaring bankruptcy. And you can use a secure crypto wallet to ensure that nobody can access your crypto or transaction data.
Potential of return
The main reason behind the popularity of crypto in India is the profit potential. Digital currencies use cryptography to protect their transactions and control the creation of new units, and that secures profit-making to some extent. Further, the lack of involvement of banks and governments means that cryptos can offer investors ways to make money outside the typical financial system.
Easy to acquire
There are many ways to acquire crypto. You can buy it with cash, a credit card, or through a bank transfer. Many exchange platforms allow you to buy one crypto using other cryptocurrencies or digital assets. All of this makes the investment process easy and encourages people to start using it.
Why should someone in India invest in crypto?
Fastest-growing asset for a long period of time
Cryptos have risen to the top of the list of fast-growing assets in India as evident from the examples discussed below.
Let’s take the example of Bitcoin (BTC). As per national statistics, in the last 10 years, the average annual return is 10% for real estate, 9.2% for stocks, and 134% for gold, with a high of ₹56,000 per 10 grams. BTC, on the other hand, delivered a 97.9% return on investment from January 2013 to January 2022, though it has since underperformed as of the time of writing.
Entry into the world of Web 3.0
Web 3.0 is an advanced iteration of the original web. It aims to confer power to creators and users using decentralized blockchain technology. It is facilitated by cryptos and decentralized blockchain networks. Investing in cryptocurrencies thus means entering the world of decentralized digital assets. It will give rise to new developments like more inclusive payment options and decentralized web infrastructure.
Chance to invest in futuristic technologies
There are more than 14,000 types of crypto in circulation now, and it is estimated that the crypto market will evolve and continue to grow in 2022 despite volatility. Businesses are already incorporating crypto into their payment infrastructure. Crypto offers you a chance to invest in revolutionary technologies of the future.
Alternative investment option
Bitcoin was the original alternative to traditional asset classes. And altcoins, such as Ripple, Dogecoin, and Ethereum, enhance the diversity further.
Despite the fluctuations and instability of the crypto market, crypto investments are seen as beneficial in the long term. They could act as a much-required financial buffer during a sudden economic crisis.
