Cryptocurrency has boomed in popularity over the last decade, with millions of dollars being sent or received daily across all the different tokens. It should come as no surprise then that cryptocurrency has had some effects on the overall economy. Here’s a quick look at just some of the ways crypto affects the market.
Diversification of Assets
As you may know, holding all of your eggs in one basket is a bad idea. Financial advisors commonly advise clients to diversify their assets across multiple markets: real estate, bonds, stocks, cash, precious metals, and now, crypto.
Many people use crypto to fund their transactions at different online marketplaces, sites, and online casinos. Zamsino’s crypto casino report showcases just some of these online casinos where cryptocurrencies are welcome.
While crypto is a volatile market with many risks, it is generally considered to be an asset with real value. Many people have turned to crypto as a way to diversify their investments, although they generally do not put a large majority of their wealth into cryptocurrencies.
Hedges Against Inflation
Certain cryptocurrencies have been considered to be hedges against inflation. Cryptocurrencies, like BTC, have a capped supply, and new coins will eventually stop being mined. That said, there are some cryptocurrencies that have an unlimited amount of coins and can be continually minted. Some currencies even have released more coins, devaluing the market.
With limited coins like BTC, some believe it to be a valuable investment since it can be a safe haven from inflation. With inflation on the rise globally, analysts may soon look back and be able to confirm this idea of BTC being a safe bet to invest in if you’re worried about inflation. The volatility and swings may influence people’s decisions to use cryptocurrency as a hedge against inflation.
The Downsides of Cryptocurrency
There are two main arguments against cryptocurrency. The first is that due to its decentralized and anonymous nature, many people believe that criminals will abuse it and fund illicit and illegal activities with it. There are even claims that the government of North Korea has used cryptocurrency to fund its regime.
The second main argument is that cryptocurrency is a massive cause of pollution. Large warehouses filled with mining rigs drawing thousands upon thousands of kilowatts of electricity are a serious discussion that many climate change and energy policy experts have brought up. This will be something that many will have to consider in the future of cryptocurrency.
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