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Why 2022 Is The Best Year To Invest In Crypto

02/01/2022

Cryptocurrency has been a never-ending topic among investors. The past few years have seen many people make the decision to not just learn the trade but also invest their money in this sphere. Perhaps the main reason the crypto world is attracting new investors every day is because of the returns it promises to give.

However, 2021 was a wild ride for all crypto traders. The industry saw the highest prices and devastating lows within the same year. With this uncertainty, many prospective investors were left wondering whether it’s still a good idea to risk their money in this field.

If you’re one of those who are still unsure whether crypto is their best bet to potential future wealth, this guide is for you. In this post, you’ll find the main reasons 2022 is the best year to invest in cryptocurrency. But first, here are some important basics to keep in mind before making that move:

What is cryptocurrency?

Despite being a popular subject, many people still have no idea what cryptocurrency is. So what does it mean? It’s basically a form of virtual currency invented in 2008 and was first used one year later. Cryptocurrency operates without any central authority. Decentralization means all important tasks like recording transactions are distributed broadly across all crypto users. (1)

The most famous cryptocurrency today is Bitcoin (BTC). It’s also the oldest in the market and is considered the first cryptocurrency by many investors. Ethereum (ETH), Litecoin (LTC), Stellar (XLM), and Binance Coin (BNB) are other popular crypto coins.

How does it work?

Before joining other traders, it’s imperative that you understand how to buy cryptocurrency and how the technology works to avoid any unnecessary issues with your money. First, it’s worth mentioning that many stores accept crypto today, especially Bitcoin, as a mode of payment. Therefore, gaining this knowledge, even if you’re not a prospective investor, might come in handy in the near future.

This digital money runs on a distributed public ledger popularly known as a blockchain. This is simply a database shared among several computer network nodes. The information here is stored in digital format and can be accessed by all nodes. Any changes made can be seen by all users within the network, which guarantees the security and fidelity of the data records. (2)

What is crypto mining? It is the process of creating new units of cryptocurrency. For instance, to generate one Bitcoin, the developer will need to solve several complicated mathematical problems. This task is very time-consuming and requires a lot of technical skills, and that’s why it’s difficult for any user to create their own coin.

So how will you join the rest of the investors in this industry? As a user, you can buy these currencies and store them in crypto wallets. In a real sense, you’re not actually buying the coins but rather a key that will allow you to move a crypto unit to other users without the need of a third party.

To get started, you’ll need to identify and create an account with a reputable exchange. Your best is a well-known company. This is important because the crypto world is currently filled with an ocean of scammers. It’s quite easy to lose your money even before you start investing.

The next step will be to fund your account with fiat money (US dollars, Euros, Pounds, etc.). This is the money you’ll use to purchase your Bitcoins, Ethereum, or any other cryptocurrency. After you decide on which digital coin to buy, place your order and store the coins in your crypto wallet.

Again, it’s important that you do your due diligence before selecting the crypto exchange to invest with. Also, make sure you understand their terms before signing any deal to avoid regrets.

What to consider before investing in crypto

Now that you’ve made the decision to invest your money in this ever-expanding industry, it’s important you arm yourself with the knowledge to avoid any unnecessary mistakes along the way. Here are some things you should consider as an investor:

Learn the basics first

The very first thing you should consider doing before going any further in your crypto investment career is learning the basics. Joining the crypto trading community blindly is risky. Make sure you know when is the right time to buy cryptocurrency, where to buy the coins, how to close a trade, and how to withdraw your money. Also, be sure to research on every available exchange before deciding on which exchange to work with.

The best way to gain all this information is through online reviews and by going through various expert write-ups. Websites like Investor Junkie have all you need to get started—from financial magazines to articles that highlight everything crypto.

Start small

There is always the urge to make more money within a short period simply because you’ve read many success stories. However, this can work against you, and it’s the easiest way to lose money even before you start learning the trade.

To avoid pressure and stress, financial experts recommend that you clear all your bills and top up your savings account before allocating any excess cash to crypto. This way, you’ll be risking what you can afford to lose, saving you from frustrations.

Not every day is a winning day

Another important fact to keep in mind is that the crypto market can be favorable, but it can also be very hostile to investors. You should always remember that there are times that you’ll make profits, while other seasons might not work in your favor. Doing so will help you avoid over-investing in a bid to recover your losses. This move will only plunge you further into the red, which can be a rough experience for any investor.

With that out of the way, here are five reasons cryptocurrency investment should be on top of your to-do list in 2022:

Crypto has gained more real-world utility

The main reason crypto was invented was to put the power of currencies in the hands of the users. The biggest issue, however, had always been the fact that their prices were based on speculation. As such, even after learning everything, there is about trading, it’s still impossible to tell the currencies’ performance with enough certainty.

Fortunately, major cryptocurrencies like Ethereum and Bitcoin are slowly gaining real-world utility. For instance, Bitcoin has been accepted by various stores as an alternative form of payment. Therefore, it’s definitely going to be easier for one to measure the performance of these coins and predict what might happen next rather than relying on pure speculations.

As a prospective investor, the risks you’ll face in 2022 when investing in crypto will drop significantly based on this fact alone. You’ll be aware of your chances of success instead of banking entirely on luck.

Crypto exchanges are evolving

Since its inception, cryptocurrency has been operating under a decentralized system. While decentralization has many benefits to the users and the entire market, it also comes with its fair share of drawbacks.

For someone who is not tech-savvy, the process of storing their coins in this system can be quite of a problem. For instance, many consider cold storage as the most secure way of storing crypto coins. However, it can be challenging for an ordinary person to transfer their digital money from online wallets to this offline wallet.

The fact that this blockchain system was used before by criminals as a secret transactional method has always been a deal-breaker for many. Since no central authority monitors the blockchain, criminals have taken advantage of this in the past until the FBI caught up with them a few years ago.

All these disadvantages inspired the rise of centralized exchanges that act as middlemen in the crypto-to-crypto or money-to-crypto transactions. For someone who has never bought crypto before, these centralized exchanges can be quite beneficial because they offer customer support and are user-friendly.

You could argue that centralized systems are susceptible to hacking, and that’s entirely true. However, some companies today are looking to merge both centralization and decentralization to give investors a chance to enjoy benefits from both sides. These trends are likely to attract more investors in 2022 and continue building the industry’s reputation.

Liquidity from stablecoins

You’re probably wondering what stablecoins are and why they’re part of the reasons to join the crypto market in 2022. First, it’s worth noting that traditional cryptocurrencies can be very volatile. This is one of the main factors that have discouraged many people from investing in this industry.

Bitcoin prices can fluctuate by up to 20% of the original prices, increasing the risk of you losing your money. At the height of the COVID-19 pandemic, for instance, the price of this cryptocurrency rose from US$50,000 to US$65,000 before taking a nosedive back to US$30,000. For someone who’s new to such drastic changes, it can be a quite stressful roller-coaster.

A stablecoin, however, attempts to stabilize this price fluctuation and make it favorable for investors. It’s a class of cryptocurrencies that derive its value from gold, the US dollar, and other external assets. As such, stablecoins are not susceptible to volatility and can hold value for a long time. (3)

Stablecoins have also made it easier for people to transfer their value to fiat currencies, allowing investors to invest the money elsewhere. For instance, you can quickly convert your money to dollars and withdraw the resulting value to your bank account where you can access it within minutes.

Therefore, if the withdrawal process and volatility of the coins were some of the deal-breakers in your investment strategy, you might be glad to hear solutions to those problems are currently underway. So don’t hesitate to join the rest of the crypto investors in 2022.

Major players are strengthening every day

Every currency has one or two drawbacks, and the likes of Bitcoin and Ethereum are no exception. Over the years, these two and other major players in the world of cryptocurrency have been criticized for their slow transaction speeds and their intensive usage of energy, posing a threat to the environment in return.

Given the fact that traditional forms of payment have excelled in these areas, you can understand why cryptocurrency has had difficulties in scaling. However, the likes of Ethereum and Cardano are working hard to make sure they solve these and any other issues that have been holding them back.

For instance, Ethereum is slowly transitioning to Ethereum 2.0, which is expected to reduce energy usage by over 99% and increase transaction speeds. Although the process won’t be 100% seamless, trading cryptocurrency in 2022 will be better than ever before, giving you even more reasons to move with the trend.

Clearer investment opportunities

As a crypto trader, choosing the right cryptocurrency to invest in can be challenging. Bitcoin is the most popular and lucrative, but it’s also very expensive to buy. Finding the best alternatives in the crypto space has always been a problem for beginners, and that’s why many people give up along the way.

In 2022, however, there are clearer leaders in the industry, giving any prospective investor a wide range of options. Bitcoin, Ethereum, Solana, and Cardano are the best bets for anyone looking to succeed in the world of crypto.

Keep in mind, though, that them being the most popular in the market doesn’t guarantee any success. Nevertheless, each of them has a set of unique characteristics that make them stronger and more competitive than their counterparts.

Conclusion

Cryptocurrency continues to gain popularity across the globe with more people looking to invest in Bitcoin, Ethereum, and other popular digital coins. This year and in the coming years promise to be better for investors—at least, a better one than 2021.

With these coins being accepted by more companies as an alternative form of payment, it seems cryptocurrencies are constantly gaining real-world utility. The exchanges are also evolving and becoming a combination of centralized and decentralized systems.

If those aren’t reasons enough for you to consider crypto in 2022, bigger players strengthening their forces should convince you. You also have a wide range of Bitcoin alternatives to choose from if you feel like Bitcoin or Ethereum are a bit more expensive than you can afford.