For most investors, the primary reason for investing in cryptocurrencies may be the prospect of huge profits. In the cryptocurrency world, it is not at all uncommon to see double-digit daily profits or triple-digit annual profits. Bitcoin, for example, has averaged annual gains of close to 200% since its inception. However, Bitcoin, or cryptocurrencies as such, offer much more than just the „appearance of profit“. Here are just a few reasons to invest in cryptocurrencies.
Inflation insurance
Probably the most mentioned reason why someone would get into cryptocurrencies (besides seeing a big profit) is to hedge against inflation. Since the total number of bitcoins is known in advance and non-negotiable, everyone can see how many coins are mined, how many will be mined in the next few hours or days, or when the next halving will occur, which will cut the reward for miners in half.
Moreover, the total number of bitcoins does not change. On the contrary, a maximum of 21 million bitcoins can be mined, apart from the price per bitcoin. That is why there are many investors who see investing in Bitcoin in the same way as investing in gold. They thus use this type of investment as a tool against unprecedented and unpredictable monetary policies which, as we can see, are leading to rising inflation.
Buying cryptocurrencies
It will come as no surprise that there are several other options for investors to buy cryptocurrencies. Several of them are even designed to preserve the anonymity of either the buyer or the seller. These options thus largely offer increased security and privacy for both parties. As mentioned above, options to purchase cryptocurrencies through centralized exchanges or traditional applications need KYC (Know-Your-Customer) verifications. However, this is not the case for decentralized exchanges or Bitcoin ATMs.It will come as no surprise that there are several other options for investors to buy cryptocurrencies. Several of them are even designed to preserve the anonymity of either the buyer or the seller. These options thus largely offer increased security and privacy for both parties. As mentioned above, options to purchase cryptocurrencies through centralized exchanges or traditional applications need KYC (Know-Your-Customer) verifications. However, this is not the case for decentralized exchanges or Bitcoin ATMs.
Decentralised exchanges (DEXes)
So-called decentralised exchanges, also known as DEX, offer a number of modern advances built mainly on decentralisation. Uniswap, Sushiswap, 1inch or Pancakeswap are among the best known decentralised exchanges. From a technological point of view, these are rather complicated solutions and platforms, which we will go into more detail in the future. However, what needs to be known now is the fact that these solutions can provide complete anonymity for sellers and buyers, as the vast majority of them do not require any KYC verifications or proof of identity.
While these DEX exchanges can provide interesting options for almost anyone who values their privacy, they are relatively new solutions that have a few shortcomings. For example, they often have a rather complex or not very intuitive interface. They also often have problems with hacks or liquidity. We will definitely hear more about DEX exchanges in the future. But for now, it is enough for investors to know what options they offer and what shortcomings they will have to work on.
Top crypto companies
If an investor wants to buy cryptocurrencies at the best possible price, he should turn his attention to cryptocurrency exchanges. Coinbase, Gemini, Kraken, primexbt, fidelity crypto, Binance or Bitfinex are among those that provide buying, selling, holding or withdrawing cryptocurrencies. Most of them have a much larger portfolio of products and services, but we will cover that in future articles.
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