My honest thoughts on crypto
I often stick to talking about topics which I feel pretty confident about, however crypto isn’t one of those areas.
With Bitcoin repeatedly approaching the $60,000 mark and continually hitting new all-time-highs, I felt it was important to give you my thoughts on the whole crypto space.
I am not going to pretend that I am a crypto expert. I do not, and probably won’t ever, fully understand how blockchain works and how cryptocurrencies differ massively from one coin to another. Yet, I am constantly trying to understand this more and more.
If I don’t understand crypto, why am I now putting £100s into different cryptocurrencies?
It’s quite simple really;
Inflation - 22% of all US dollars in existence were printed in 2020. Inflation is the decrease in the value of your money over time, and generally when supply of cash increases, so does inflation.
I would like to hold assets which should out-perform inflation.
Hedge against cash - Linking to inflation, if cash begins to decrease in value, I believe that more people will turn to alternative currencies. The only real competitor to cash is cryptocurrency.
Why would you want to be paid in cash if £100 could be worth £90 in 1 year, whereas Bitcoin could be worth more than the £100 you received in the same time frame.
Mainstream adoption - Recently, a lot of large companies have begun putting percentages of their cash reserves into Bitcoin and other cryptocurrencies.
Tesla, one of the world’s largest companies, purchased $1.5 billion of Bitcoin back in February 2021 and are now accepting it as payment for their vehicles.
I believe that, as this becomes more mainstream, more people will buy into cryptocurrencies either as an investment or as a cash alternative. This will only drive the prices up.
High risk, high reward - It’s undeniable that cryptocurrency is risky. From getting your crypto wallets hacked and losing your coins to Bitcoin crashing back down to $5,000, it is possible that you could lose a large percentage of your investment.
However, I am young (21) and have a large risk appetite so am more than happy to take these risks. I have mitigated these risks by building my crypto portfolio up with free crypto so my investment can be lower.
Of course, I am not an expert and would love to hear your opinions and positions on crypto. If I have misunderstood anything regarding the crypto space please let me know by dropping us an email.
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