Regardless of what everybody says about them, cryptocurrencies are much like any other investment. It’s not a get-rich-quick scheme, and no one can guarantee a return on your investment. But there is the potential for large returns, lots of new business models, and some very interesting opportunities in the world of cryptocurrencies. If you’re looking to invest your time into an idea with a lot of potential for growth, cryptocurrencies might be worth considering to trust.
Unregulated by governments and central banks, cryptocurrencies exist only online and rely on encryption techniques to operate in what’s called “blockchain technology“. While this means that they are theoretically anonymous (and untraceable), it also means that they can be used to make cyberattacks or allow illicit transactions without consequences. So, what is really behind that huge trust?
The Main reasons why people trust cryptocurrencies
The main reason people trust cryptocurrencies is that they give an alternative to their national currency. Although cryptocurrency transactions have no national borders, many don’t have the privilege of having their money supported by their government. As the current economic system is proving to be not sustainable, it’s reasonable to believe that there might be an increased need for alternatives in the future.
Cryptocurrencies also offer anonymity and decentralization, which are often seen as two of the most important values in today’s society. On top of this, decentralized currencies are issued and managed without government involvement or even outside inspection. As a result, they provide a certain degree of anonymity and financial privacy, which is often valued by the general public.
Finally, cryptocurrencies have the potential to give to power back to the people. Because there is no third party involved in their operation, cryptocurrency transactions are much cheaper than those made with fiat money. As a result, people can do more with cryptocurrencies than they can with fiat money and they don’t have to rely on an inefficient and corrupt government apparatus.
Reasons why you may have worries about cryptocurrencies
However, there are many reasons you may have worries about cryptocurrencies. While their lack of regulation makes them easier to use and invest, as stated before, this also means that they are very vulnerable to cyberattacks, backdoors and more. Because cryptocurrencies are decentralized, governments can’t regulate them the same way they do regular money. There is a real risk of them leading to financial instability, increased crime and corruption, restrictions on free speech. These give rise to censorship, and the erosion of privacy across the board.
Despite these concerns, there are some people who have found ways to use cryptocurrencies to do legitimate business. However, the sector is still very young. And it’s still unclear how many new businesses will be possible with cryptocurrency in the future.
Should you trust cryptocurrencies despite being unregulated?
Without a doubt, cryptocurrencies should be considered as an “alternative investment”. But your decision should also take into account their potential risks. The number of cyber attacks on cryptocurrencies is increasing. And, the risk that ill-minded people could use them for illegal purposes remains real and tangible. Still, we can’t ignore the possibilities that this new technology poses to our economy and society.
Advantages of Cryptocurrency
- Cryptocurrencies give power back to the people.
- Cryptocurrencies can help avoid financial censorship and restrictions on free speech.
- Also, cryptocurrencies can help people achieve financial and private autonomy.
- Cryptocurrencies are cheaper than the national currencies they replace.
- Cryptocurrencies have the potential to become a new form of currency, especially in unstable and corrupt countries.
Limitations of Cryptocurrency
- Cryptocurrencies are extremely vulnerable to cyber attacks.
- Cryptocurrencies are unregulated, and therefore, might not always be good for you to trust on.
- Further, cryptocurrencies could lead to financial instability, capital flight, and economic crises.
Some interesting points about cryptocurrencies
- The lack of government oversight makes cryptocurrencies safer than regular money.
- Corrupt governments are less likely to create bans on cryptocurrency trading or the use of technology. This is because it’s very difficult for them to regulate something that basically doesn’t exist.
- Many people don’t want governments and central banks involved in their private lives, leading them to use cryptocurrencies instead.
- The blockchain technology on which cryptocurrencies are based on has the potential to become an important part of our future economy.
- A lot of people have invested a lot of time in cryptocurrencies because they believe in their long-term success.
- In an era where the economic system is proving to be not sustainable, cryptocurrencies represent a real alternative to government-supported currencies.
- The cryptocurrency market is slowly growing and new businesses are being created in this sector.
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We can’t give you any decisive advice on whether or not you should trust cryptocurrencies despite being unregulated. All we can do is help you consider the risks and advantages of cryptocurrency investing, and why other people trust cryptocurrencies.
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A lot of people are convinced that cryptocurrencies will be the future of money, especially in unstable and corrupted countries. If these claims prove to be true, there could be an increased demand for cryptocurrencies in the future. Of course, don’t forget that cryptocurrencies are unregulated, and that might mean “risk”.
If you decide to invest in this sector, try to reduce your exposure to the volatility of the market by diversifying your crypto portfolio. The main benefit of cryptocurrencies has been and will be their ability to help people achieve financial and private autonomy. However, it’s also important not to forget that they can allow people to do a lot of damage if they want to! If you are someone annoyed with the long-existing, primitive concept of national borders and decentralized governments, it’s not only good, it’s just for you.
Also Read: How are other cryptocurrencies different than Bitcoin?