Cryptocurrency is the new-age virtual currency. With the discovery of newer technologies almost every day, cryptocurrency is all set to revolutionize the traditional financial system. Cryptocurrency first rose to popularity during the global financial crisis in 2008. The reason for its popularity was that the people could effectively control their assets without the interference of banks and the government. As cryptocurrency is a decentralized system, there is no single entity controlling the money and can be accessed from anywhere. This proved to be extremely beneficial for individuals and institutions as they could skip the procedural hassles and operation costs of the banks in the traditional financial system.
Initially, people were skeptical about investing in cryptocurrency because the concept was fairly new and the market for the same is extremely volatile in nature. However, over the past decade, countries like Switzerland, Australia, and Japan have made the process of investing in cryptocurrency extremely convenient. Proper regulations have been put in place to smooth the process and as a result, big corporations like Facebook have introduced their own cryptocurrency.
Why are people shifting to Cryptocurrency?
- Some people are investing in cryptocurrency for a cause, that is, to increase the popularity of the cryptocurrency system all across the globe. Such people want this system to be successful as it is more eco-friendly than the traditional financial system. Most such people come from an advanced academic background and have a career in white-collar work.
- In places where the rate of inflation is too high, the value of cryptocurrency is considered as same as gold or real estate. For example, during the Covid-19 pandemic, the United States faced an increase in inflation and as a result, a growth of about 250% was observed in the value of bitcoins. Anticipation of an increase in inflation is a driving factor for investments in cryptocurrency.
- In some places, cryptocurrency acts as a protection against existing political and economic instabilities in the country. For example, in Nigeria and Colombia, the rates of trading in bitcoins are the highest. The value of cryptocurrency is free from the control of the government or national banks. That is why people shift to cryptocurrency to protect their assets from the fluctuations of the traditional financial system that is controlled by the sovereign government. Moreover, people can access their assets from anywhere in the world.
- The cult-like appeal of cryptocurrency is also a driving factor behind the growing popularity of cryptocurrencies like bitcoins. Some people consider this system “cool” and new-age and want to view themselves as radicals by opting for the cryptocurrency system instead of traditional financial systems.
- Some people are adopting cryptocurrencies after being influenced by social media and celebrities. When fans see celebrities like Jamie Foxx and Paris Hilton invest in cryptocurrency and even promote it on social media, they are greatly influenced to use and invest in cryptocurrency as well.
- Strange as it may sound, some people invest in cryptocurrency for the sheer thrill of the volatility of the market. It feels like gambling in Vegas to them. Many people, especially young people, feel the same adrenaline rush by investing in cryptocurrency as they would by playing video games. Such people are also known to indulge in trading in high-risk industries such as the oil industry. Visit the Official Website to know more about oil trading.
- Some people anticipate huge returns on investing in cryptocurrency. They invest in bitcoins and other types of cryptocurrency in the hope that their value will increase in the foreseeable future. This is often influenced by gathering from the experiences of those who have actually made millions by investing in cryptocurrency.
Elon Musk, currently the richest man on Earth, is an ardent supporter of Bitcoins and other forms of cryptocurrency. As a result, people anticipate that the system of cryptocurrencies is eventually going to replace the financial system that we know today. Whether this anticipation will turn true or the bubble will soon pop is yet to be seen.