Why cryptocurrency is a viable investment in the MENA region
Though forex crypto has been regarded with suspicion by many central banks and financial institutions, there is a growing awareness of its potential as a store of value and an investment asset. It is especially true in the Mena region, where crypto assets offer many advantages over traditional fiat currencies.
What are cryptocurrencies?
Cryptocurrencies are an exciting way to use technology in your day-to-day life. You can buy things online, trade with friends or sell what you own using crypto. Unlike traditional currencies that rely heavily upon banks as intermediaries (and therefore have limited access), cryptocurrencies offer independence through blockchains that validate transactions without relying upon any third party such as those mentioned above.
At first glance, these sound very attractive, but there are also risks involved when dealing with cryptocurrency : everything depends entirely on computer code and protecting it.
Cryptocurrencies are often traded on decentralized exchanges and can also be used to purchase goods and services. However, they are not currently regarded as legal tender in any jurisdiction. It means that a government or financial institution does not back them, and there is no guarantee that they will retain their value.
Here is a list of why crypto is a viable investment:
Not subject to the same macroeconomic conditions
One of the most significant benefits of investing in cryptocurrency is that it is not subject to the same macroeconomic conditions as fiat currency. For example, the value of the US dollar has been declining in recent years due to quantitative easing by the US Federal Reserve. It has made USD-denominated assets less attractive to investors seeking to preserve their wealth.
Another advantage of cryptocurrency is that it is much more transparent than fiat currency. For example, when you make a transaction with fiat currency, there is no way to know where the money came from or where it went. However, with cryptocurrency, every transaction is recorded on a public ledger(blockchain), meaning anyone can see its origination and journey. This increased transparency makes it difficult for criminals to use cryptocurrency for illegal purposes.
Cryptocurrency is also politically neutral. It means that it is not subject to the same political risk as fiat currency. For example, the value of the US dollar has been known to fluctuate based on political events such as elections. By contrast, the value of cryptocurrency is not affected by political events.
Another advantage of cryptocurrency is that its supply is limited. For example, there will only ever be 21 million bitcoins in circulation. This finite supply means that the value of cryptocurrencies is likely to increase over time, making them a sound investment choice.
Cryptocurrency also has a global reach, meaning that you can use it to purchase goods and services worldwide. It contrasts with fiat currency, which you can only use in certain countries.
Faster and cheaper transactions
Cryptocurrency transactions are also much faster and cheaper than traditional fiat currency transactions. For example, a cryptocurrency transaction can be completed in minutes, whereas a fiat currency transaction can take days or even weeks.
Hedge against inflation
Cryptocurrency can also be used as a hedge against inflation. The supply of most cryptocurrencies is limited, meaning that their value is not subject to the same fluctuations as fiat currency.
Potential for high returns
Cryptocurrency offers the potential for high returns. Although Bitcoin has been available since 2009, it is considered to still be in its early stages, and there is considerable room for growth. For example, the price of bitcoin has increased by over 1,000% in 2017 alone.
Cryptocurrencies are decentralized, not subject to government or financial institution control. It makes them less vulnerable to manipulation and provides security against economic downturns.
While there are many advantages to investing in cryptocurrency, there are also some risks. For example, the value of cryptocurrencies can be highly volatile, and they are not currently recognized as legal tender in any jurisdiction. As a result, it is essential to do your research before investing in cryptocurrency.