Blockchain is a fast-growing technology. What’s growing even faster are cryptocurrencies. The cryptocurrencies are a means for investment for individuals who make frequent investments. After the introduction of Bitcoin in 2009, the cryptocurrency has become a rage among investors and traders. Crypto exchanges cropped up to facilitate easy investments and make quick money but many found themselves caught up in frauds.
While it is still challenging for many investors to gauge the authenticity of crypto exchanges, it is equally tough for entrepreneurs and crypto experts to open exchange due to government regulations. The growth of Bitcoin over the past years represents the value investments in cryptocurrencies can create. As of writing this article, the value of Bitcoin is $17,249.90. In addition to Bitcoin, Ethereum, EOS, and NEO have emerged as valuable and promising cryptocurrencies to invest in 2020.
Factors to consider when choosing to invest in cryptocurrency
During 2019, there was devaluation of cryptocurrencies. However, despite pandemic, a few cryptocurrencies still hold strong value and offer potential good return on investment in 2021. Don’t worry about the current value of cryptocurrencies. The valuation of their index is volatile and can change any minute.
Here are the factors you should consider while investing in cryptocurrencies.
1. Market Capitalization: This is the value of all the cryptocurrencies issued in the market. The more the market value, the greater number of coins are available in the market. This means more coins are available for active trading.
2. Liquidity: High liquidity means coins can be purchased and sold at high rate. Popular cryptocurrencies have high liquidity rate.
A way to gauge the liquidity rate of a cryptocurrency is to look at the trading activity on crypto exchanges. The activity indicates the number of transactions made over a certain time period. This will indicate the actual demand of a cryptocurrency among traders.
Blockchain and future of businesses
In addition to cryptocurrencies, blockchain technology has potential applications in other industry sectors. Finance sector being the most widely using sector. From cross –border payments to digital distributed ledger for cryptocurrencies, blockchain technology is becoming quintessential for the industry to thrive.
Cross-border payments present the promising application of blockchain technology. Similarly, retail, cyber security, supply chain management, political elections, and digital rights management are potential areas for blockchain technology to revolutionize.
Cross –border payments and blockchain technology
Cross-border transfer of money has always been slow and expensive. The challenge in cross –border payments arises due to involvement of multiple currencies and numerous banks. These banks are spread throughout the world and services that ensure cross –border payment are expensive.
Blockchain technology offers a faster and cost-effective alternative to cross-border payments. The technology can reduce transaction cost to a fraction of the current rate. Real –time processing speed comes additionally that makes cross-border payments convenient for those who need it.
Stable coins and cross-border payments
Stable coins are cryptocurrencies that are backed by real assets. Like the fiat currency, which is generally backed by gold. Stable coins are less volatile compared to other cryptocurrencies like Bitcoin.
Stable coins can be backed by real assets. The assets can be anything ranging from personal items like a luxury car or property.
Stable coins can make cross –border payments even more fast. You can sell anything across the world in a fraction of minutes. Imagine yourself sitting in the U.S and wanting to sell your property in Africa. The same goes for personal items like car, refrigerator, house, and high-value artwork. All items can be sold at a lighting fast speed.
In brief, blockchain technology and cryptocurrencies have the potential to revolutionize transactions in the ways we never imagined. With blockchain technology making way in almost all spheres of life and business, it will be a truly remarkable feat for a technology to achieve.