Alexander Borodich | Dec 01, 2018 07:08AM ET

People are still investing their money in Cryptocurrencies. Should they?

The 2018th was marked by a noticeable decline in the rate of and other cryptocurrencies, following the period of their rapid growth at the end of last year. Meanwhile, many cryptomarket experts and analysts are confident that cryptocurrency is still a promising area for investment. We will consider the 6 most objective arguments in favor of this statement.

1. Market regulation will protect the interests of investors

Now cryptocurrency transactions are regulated in one way or another by the legislation of almost all developed countries of the world – from the USA to Belarus. Legalization of this field entailed certain restrictions and forced market participants to pay taxes from mining, trading, and exchange of cryptocurrencies for fiat currencies and vice versa. However, it also established more comprehensible “rules of the game” and made cryptocurrency more secure and attractive for investors especially for those who had not dealt with this industry before.

Regulation of the cryptocurrency market reduces anonymity, reveals identity of the creators of ICO and other crypto-projects which significantly reduces the risk of fraud because you have to pass the full range of KYC personal identification measures and anti-money laundering legislation at all stages of the project’s life from registering a legal entity to entering a crypto-exchange. Bitcoin and other currencies are already recognized as official means of payment in a number of countries which activates their turnover, makes them more popular for institutional investors.

2. “Bear” market – a great time to enter the cryptocurrency market

Since the fall of 2017, Bitcoin experienced periods of turbulent rises and rapid falls. Bloomberg analysts believe that the Bitcoin collapse this month is only the beginning of a global correction of the speculative market. Analysts predict that its price may drop to $1,500 which would mean a fall of more than 70 percent from current levels. Experts are concerned about the accumulation of products in the warehouses of Nvidia and the consequences of the “hard fork”. This situation creates certain prospects for further growth which is another argument in favor of why investing in cryptocurrency is still profitable. Now is a great time to enter the market, after it collapsed after last December’s boom, and then “felt the bottom” for a year and calmed down.

The fall and the subsequent stabilization of the major cryptocurrency rates became a real gift for those who are considering medium and long-term investments in cryptocurrencies. As is known, investing in any asset is best in the “bear” market, but preferably after its “bottom” is fixed in time. It is this situation that has emerged in the crypto-industry today – by investing here now, at a consistently low price, you will acquire an asset with a great growth prospect and will be able to make good money on it over time.

3. Cryptocurrency will help stop hyperinflation

Cryptocurrency is becoming increasingly popular both as a field of investment, and also as a means of payment. Moreover, digital currencies may soon become a real rescue for countries with a backward economy and hyperinflation. Their active distribution will help reduce the circulation of cash and, thereby, reduce the rate of economic inflation. In early November 2018, Venezuela announced the introduction of the national cryptocurrency El Petro. The country had experienced a tremendous devaluation of its fiat currency for several years.

As for El Petro, it is provided with an impressive tangible asset of 5 billion barrels of oil, so its sales reached $735 million already on the launch day. Other countries are also developing their own national cryptocurrencies planned to be used in domestic circulation and international trade. In particular, such projects exist in Japan, China, Thailand, Great Britain, Estonia, Belarus, Hungary and Russia – the issue of their virtual coins will be monopolized by the state, and the national cryptocurrency itself will have the same capabilities and quotes as the “fiat” currencies of these countries.

4. Cryptocurrency is a vast market with many investment opportunities

Today, almost 2,100 different currencies are represented in the crypto-market, their total capitalization exceeds 140 billion US dollars. Interest in the major cryptocurrencies has fallen markedly, however, new promising coins appear on the market every day, and their price often rises several or even dozens of times literally in the first months of their existence.

A significant selection of new cryptocurrencies and their low rate at the ICO stage makes this area extremely attractive for venture funds and investors. After all, nothing will prevent you from “laying eggs in different baskets” – investing in several fresh projects with “to the Moon” prospect. As is known, diversification of assets is the basis and the most important factor for successful investment, and cryptocurrency provides the most of opportunities for this.

5. Traditional investments also come laden with risks

Many skeptics consider investing in cryptocurrency to be too risky, and instead they give examples of traditional areas of investment: stocks and other securities, real estate, precious metals, and bank deposits. However, the actual profitability of all these areas, even in the long term (not to mention the short and medium term) is rather modest.

Financial crises regularly occur in the stock markets of even the most developed countries, and inflation and currency fluctuations nullify the bank deposit profitability. Investments in real estate or precious metals require a very substantial investment portfolio, and such deposits can pay back only after a long time (from several years to several decades). As for investments in cryptocurrencies, they provide profits yet in the short term, and in a number of countries, crypto-investors receive the same rights and protection of the state as their “fiat” counterparts.

6. Exchanges and banks work at certain hours, and the cryptomarket is active 24/7

As is known, the traditional stock market and banking institutions operate only at certain hours and days of the week. Moreover, many world exchanges have different opening hours – the New York Stock Exchange operates from 17.30 to 00.00, London from 11.00 to 19.30. Banks are also available no more than 8-10 hours on weekdays and are closed on weekends or holidays.

All this creates significant inconvenience for traders and investors, especially for those who make short-term deposits that may be needed at any time. Cryptocurrency exchanges and the market as a whole are devoid of these restrictions, they allow you to trade, invest and exchange coins from anywhere in the world 24/7, having only a computer or smartphone with Internet access at hand. This gives participants a greater earning potential, allowing them to quickly invest and withdraw their assets when needed.

Sources: Financial Times, Entrepreneur.com, Barclays (LON: ) Research, CNBC.com, Bloomberg.com