A cryptocurrency is a digital currency designed to work through a computer network that is not reliant on any central authority or bank to uphold or maintain it.
Individual coin ownership records are stored in a digital wallet, which is a computerized database using strong cryptography to secure transaction records, control the creation of additional coins, and verify the transfer of coin ownership.
Another common reason to invest in cryptocurrency is the desire for a reliable, long-term store of value. Unlike fiat money, most cryptocurrencies have a limited supply, capped by mathematical algorithms.
This makes it impossible for any political body or government agency to dilute their value through inflation.
Here are three reasons why you should hold cryptocurrencies:
Transaction Speed of Cryptocurrencies
If you want to send someone money in the United States, there are few ways to move money or assets from one account to another faster than you can with cryptocurrency. Most transactions at U.S. financial institutions settle in three to five days. A wire transfer usually takes at least 24 hours. Stock trades settle in three days.
But one of the advantages of cryptocurrency transactions is that they can be completed in a matter of minutes. Once the block with your transaction in it is confirmed by the network, it’s fully settled and the funds are available to use.
Avoiding Emotional Decision-Making
The cryptocurrency market is volatile, with prices often experiencing significant swings within short periods. This volatility can lead to emotional decision-making, causing investors to panic sell during market dips or buy impulsively during price surges.
By adopting a hold strategy, you won’t make hasty decisions based on short-term market movements. Instead, you will concentrate more on the long-term viability of your investments, reducing the risk of losses due to emotional trading.
Security
Unless someone gains access to the private key for your crypto wallet, they cannot sign transactions or access your funds. However, if you lose your private key, there’s also no way to recover your funds.
Furthermore, transactions are secured by the nature of the blockchain system and the distributed network of computers verifying transactions. As more computing power is added to the network, it becomes even more secure.
Any attack on the network and attempt to modify the blockchain would require enough computing power to confirm multiple blocks before the rest of the network can verify the ledger’s accuracy.
Instances of hacked cryptocurrency accounts are usually tied to poor security at a centralized exchange. If you keep your crypto assets in your own wallet, it’s far more secure.