It is difficult to ignore a revolutionary investment system. Everywhere you turn, there’s an ad or talk of NFT, cryptocurrencies, or blockchain. These items offer many promises. Promises which seem to address the improvement areas of traditional money systems. For example, many believe cryptocurrencies will solve the following problems of fiat money:
- Higher security
- Decentralized system
- More transparency
- Easy traceability
While NFTs (Non-fungible tokens) enable you to own items that are one of a kind that no one can replicate.
These blockchain-powered assets are the rage. Newbie investors have high expectations. They may gravitate to them for this reason and more. We share five reasons new investors jump into the revolutionary investment system below.
#1. Rumors of an increase in value
Investors, both new and old, focus on asset performance. Old and seasoned investor understands the market. And this enables them to analyze an asset before making investment decisions. This is not the case for a newbie. The surge in bitcoin and other altcoins in 2021 was more than enough to lure a newcomer. No doubt, many benefitted from this market turn then. News of further price increases continued 24-7, attracting more people into this market. The same was the case for NFTs when they became very popular around the same time. An inexperienced investor may base their decision solely on an asset’s current performance. But older investors know enough to analyze the trends. They will consider other market elements before jumping in.
#2 – Investing in an innovative technology
Many believe blockchain technology is a groundbreaking one for sectors, such as:
- Health care
- Supply chain
This technology makes bitcoin and other altcoins possible. It provides a decentralized platform free from government censorship and go-betweens. The distributed ledger renders intermediaries redundant and will promote enriching and transparent economic activities.
This fact makes it a considerable investment attraction for many. Especially among those who believe digital currencies are the future. People with this belief fall for crypto investment because of two things:
- The idea that they are investing in a future technology
- The expectation of high earnings
#3 – Popularity
Hype is one of the reasons neophytes fall for a revolutionary investment system. Social media plays a massive role in contributing to influencing newbies. These systems become hard to ignore when people find their favorite celebrities talking to them. Also, the media and government continuously spread the word too. Whether they speak in its favor or against it, constantly being in the news rouses curiosity. NFTs, for instance, have celebrities or public figures selling and buying them. Social media users and communities often talk about it and make posts. As its popularity grows, new investors may feel drawn to this asset category.
#4 – The hope for wealth
The excitement around bitcoin and altcoins is mostly based on one belief. New investors especially believe such an asset is an opportunity to generate wealth. Before bitcoin and altcoin, people without wealth had limited access to wealth-generating assets. But in 2020 and 2021, many people made millions from the bitcoin price surge. Many people flocked to cryptocurrency with the hope of partaking in its opportunities. Some still had the chance and gained from the market’s bear run. Unfortunately, investment requires more than hope. Bitcoin took a tumble, causing many to lose their investment.
#5 – Easy access to the market
As the world grows more digitalized, non-traditional investment systems are increasingly popular. New investors can quickly enter the market by signing up with an online broker. Online crypto exchanges are rampant. Setting up a brokerage account has never been easier and faster. It is easy to start buying or speculating on any cryptocurrency you desire. These exchanges also allow you to buy and sell NFTs using cryptocurrencies. Tokenized financial assets are easily transferrable. All you need is a device and an internet connection. People feel a pull toward the system since it is possible to make it big overnight.
Why is blockchain so popular?
Blockchain is a relatively new technology, mainly for digital currencies. It is a distributed ledger that records all the transactions for a cryptocurrency. Everyone in the network gets a copy of this ledger and can see its content. This makes it a more secure and transparent currency system than traditional monetary ones. Apart from this, here are more reasons why for its exponential fame:
Easy and affordable cross-border payments
International money transfers require banks’ involvement (intermediaries), conversions, and distance barriers. This results in a slow process and higher costs. Blockchain-based digital currencies are cheaper and faster alternatives. The only real challenge to be encountered is government regulations on cryptocurrencies. The cross-border transfer is fast and much cheaper using blockchain technology. But it has to be accepted in the country.
Useful for securely storing personal data
Blockchain is helpful for many other purposes apart from secure and fast payment. One of its uses is storing digital data, such as personal information. This also makes it useful for identity management. The same verification process used to authenticate transactions helps verify identity. Columbia, Argentina, and Spain have already adopted this technology for some civil processes.
The supply chain sector can also benefit significantly from this technology. It will help lessen and perhaps eradicate human mistakes in a complex process. Blockchain’s potential usefulness is still being explored. But it has more significant potential beyond cryptocurrencies. Many believe its popularity will surpass bitcoin and altcoins in the future.
These and many other reasons make blockchain highly attractive. New investors who know its great potential may latch onto crypto or NFT investments. It is essential to understand that blockchain is different from these financial items. Self-education on specific assets is crucial to identify opportunities and threats. One must weigh both elements thoroughly. They should adopt a sound investment approach before they enter such markets. Many newbies fail because of high hopes and rushing in head first.
1. What is blockchain?
Blockchain is a distributed database that enables secure, transparent, and tamper-proof record-keeping of digital transactions.
2. How does blockchain work?
Transactions are recorded chronologically and publicly in a digital ledger called a “blockchain”. Each transaction is verified by consensus of the network participants and then committed to the chain. The immutable nature of the data ensures that transactions cannot be tampered with retroactively, making the system highly secure.
3. What are the benefits of blockchain?
The main benefits of blockchain technology are security, transparency, and immutability. By design, blockchain is resistant to fraud and tampering, providing users with high confidence in the data. The transparent nature of the ledger also enables all parties to view the history of a transaction, further enhancing trust. Lastly, the immutable nature of blockchain data means that once a transaction is recorded, it cannot be changed or deleted.
4. What are the applications of blockchain?
Beyond cryptocurrency, potential applications of blockchain technology include supply chain management, provenance tracking, identity management, asset management, and much more.
5. How can I get started with blockchain?
If you’re interested in exploring blockchain technology, there are many ways to get started. Numerous online resources can introduce you to the basics of blockchain and guide how to develop applications using the technology. Alternatively, if you’re looking to invest in blockchain-based assets such as cryptocurrency, you can do so through various online exchanges.