While investing in cryptocurrencies is not without risk, crypto trading has many advantages. Diversification of the portfolio, high staking returns, use as a means of payment are all elements to consider. Focus today on 8 advantages of getting into digital currency trading!
1 – Diversify Your Portfolio
In the world of investing, portfolio diversification should be a top priority. Thus, to an investment in real estate, it may be interesting to add shares or even cryptocurrencies. As part of an investment strategy, cryptocurrencies are often presented as a complementary investment.
Indeed, the extremely volatile nature of this type of investment would make it dangerous to own it in majority within a portfolio. It is often considered that crypto investment can represent 5 to 10% of total wealth. Similarly, if diversification must be considered across the entire portfolio, it is interesting to diversify your crypto investments. Many wallets today give pride of place to Bitcoin and Ethereum.
2 – Benefit From Innovative Technology
Investing in Bitcoin is above all investing in a new idea and philosophy. Today, blockchains like Ethereum, Solana or even Binance Smart Chain are particularly involved in the world of decentralized finance. A universe in which the hunt for intermediaries is now launched.
On layer 1 blockchains, a number of projects are also being developed. If we choose to isolate the example of LuckyBlock on the Binance Smart Chain, we see that the crypto universe is totally adapted to the launch and financing of new entrepreneurial projects. For the French cryptosphere, we can cite the Yes or No (YON), Winkyverse (WKN) or Poken (PKN) projects.
3 – Get Yield Through Staking
Most crypto projects include staking possibilities. This means that you can be paid in tokens if you agree to keep the token for a given period. The longer this period, the longer the reward will be. The yields offered sometimes exceed 100% annually.
The LuckyBlock blockchain lottery project also offers an opportunity to win by keeping the token. Hence the slogan around the project:
We pay you to play and we pay you not to play.
On LuckyBlock, keeping the token in your wallet allows you to recover money each time a jackpot is won. For each jackpot paid, LuckyBlock pays 10% of it to the holders of the token. Reported over the year, this would be equivalent to an APY (Annual Percentage Yield) of approximately 25%.
4 – Use Crypto As A Means Of Payment
Formerly confined to the role of purely speculative assets, crypto currencies are increasingly developing as a credible means of payment. For most blockchains, the transaction processing capacity per second is much higher than on the Visa or Mastercard network. Moreover, the online payment giants are not mistaken and all give great credit to the use of cryptocurrency as a reliable means of payment. Paypal already offers some crypto payment features while Visa has recently teamed up with dozens of platforms to offer digital currency payment cards.
As part of LuckyBlock, the LBLOCK token, at the heart of the project, allows you to buy lottery tickets. Many projects use their tokens as a means of payment to buy goods or services on their ecosystems.
5 – Cryptos Allow Investing In Deflationary Projects
Unlike fiat money which is controlled by central banks and impacted by different monetary policies, most crypto projects offer a maximum cap. That is to say that the protocols provide for a maximum number of tokens in circulation. If we take the case of Bitcoin, the creation protocol provides for a number of 21 million Bitcoins put on the market. And not one more.
For Ethereum, the EIP 1559 helped make the protocol deflationary. This means that there are fewer and fewer Ethereum tokens in circulation. This creates scarcity. If we correlate these deflationary crypto projects with the upcoming increase in demand, the overall trend in the market should go towards an increase in the overall marketcap. However, this does not mean that all projects will fly away. In the coming years, competition on crypto projects should be in full swing.
6 – Benefit From A Right Of Inspection Over Company Decisions
If holding shares makes it possible to vote on certain company decisions at a general meeting, more and more crypto projects are implementing what they call governance tokens. It is neither more nor less than the same principle. Thus, holders of governance tokens will be able to express their views on what guides the company's strategy. Whether short, medium or longer term.
The LuckyBlock platform also allows holders of LBLOCK tokens to make these kinds of decisions. Thus, for each jackpot won, the company donates 10% to charities. Token holders can then decide which projects they want to see rewarded. Governance tokens are therefore vectors of greater involvement.
7 – Cryptocurrency Does Not Depend On Any State
We return here to the decentralized nature that we touched on the second advantage. Unlike the dollar or the euro which are directly minted by the central banks (FED and ECB), cryptocurrency does not depend on any higher authority. In the context of Bitcoin, it is the miners who allow the number of Bitcoin in circulation to grow day by day. Until reaching this floor threshold of 21 million BTC.
On the other hand, not depending on any state does not mean that there is no regulation. And on this point, the crypto market could be turned upside down as early as 2022. Opportunity for some, major risk for others, everyone will form their own opinion.
8 – Crypto: A Safe Haven?
The question of safe haven is increasingly debated among crypto specialists. While this argument was widely put forward during the first weeks of the health crisis thanks to several examples, it would seem that it needs to be qualified. In recent months, we have especially noticed that the crypto market is rather linked to the stock market. A particularly visible element since the announcement of the Fed's monetary policy tightening.
Nevertheless, if we go back to the Bitcoin protocol which provides for a maximum number of tokens, BTC seems closer to gold than to a currency like the dollar.