The crypto market has witnessed a meltdown this year after the collapse of Terra Luna in May. Prices of crypto assets turned on the red indexes for weeks while the whole crypto industry was shaken.
Many crypto firms had their staff laid off while miners were selling off their hardware. This led many to question the authenticity of crypto assets. Many argued that this would be the end of Bitcoin and other coins alike.
Despite all the occurrences, cryptocurrency continued to grow while investors and averse risk-takers still invest & trade crypto assets.
In this post, we’ll see why people still are still involved in cryptocurrency despite the crash. For the sake of beginners, let’s know about cryptocurrency.
What is Cryptocurrency?
Cryptocurrency is a digitally encrypted, decentralized currency that is not linked to or regulated by any government or central bank.
It is based on blockchain technology, which is a distributed ledger framework. Bitcoin is the first cryptocurrency created which has led to the creation of others alike known as altcoins. It was created by an individual with the pseudonym Satoshi Nakamoto as a solution to the global financial crisis of 2008/9.
Cryptos are categorized as virtual or digital currencies. They were originally developed to provide an alternative mode of payment for online transactions.
Why People are Involved in Cryptocurrency
The past couple of year has witnessed the rise of cryptocurrency. Many projects have been created, nations have adopted Bitcoin (El Salvador & Central African Republic), and several other assets have been used as a form of payment.
Listed below are the reasons many people are involved (invest, hold, or trade) in cryptocurrency today.
1. Distrust of the financial system– Bitcoin came to be after the global financial crisis of 2007/8. It was proffered as a solution to the reckless behavior of large financial institutions & the inability of the government to regulate them.
The advantages digital currency has over the traditional forms of money make it one to consider for the people, Money laundering, for example, is less common than cash currency.
People who saw the value of BTC jumped on it to make it one of the fastest-growing new technology in history. Bitcoin has enjoyed huge success despite its risky nature and has been an asset to trade for profit.
It has also been used as a model for other cryptocurrencies. Today, there are over 15,000 crypto assets according to CoinMarketCap listing.
2. Make quick money– Many people want to trade Bitcoin as it is seen as a way of making quick money. The unstable price of crypto assets has made many study its market in order to make a fortune.
Many who bought Bitcoin in the early days became a millionaire overnight. There are a lot of stories of ordinary people and early investors who made their fortune in BTC with relatively little initial investment. Even the early miners are not left out as they earned BTC with ease.
These stories of the early investors have captured people’s imaginations and made them look to BTC to get rich. Although there has been a bubble at some points for various reasons, people are still key to the possibilities in crypto.
In Africa where there are issues with the financial institution as well as poverty ravaging the land, people trade Bitcoin to gain financial freedom. The continent, for this reason, has the largest population of P2P users in the globe.
3. Hedge against inflation– In Nigeria for example, many people pitch their tents with cryptocurrency to hedge against inflation. The high dollar in the exchange market has contributed to the ‘crippling’ economy, Many, therefore take to Bitcoin trading as a solution.
Nigerians are listed top among the users of the leading crypto exchanges such as Binance, Coinbase, Kraken, etc. Many people buy & sell Bitcoin and several other alternative coins for this reason.
4. Decentralization of crypto– Many crypto assets are decentralized. This means that no company, government, or organization has complete control over the currency. Some people really care about decentralization which helps to send/receive money without the notice of banks & other financial institutions.
Although some governing banks like the Central Bank of Nigeria have banned activities involving crypto in financial institutions, peer-to-peer platforms which are decentralized have been an option. One of the best P2P platforms in Nigeria today is Prestmit.
5. New financial plans– People now focus on Bitcoin and other crypto assets because of its new uses of financial alternatives. These programs are called Defi (decentralized finance).
Some of the top Defi programs offer innovative approaches to peer lending. In other decentralized systems, users can lend any amount, without putting these funds under control. This is done automatically via smart contracts in blockchain.
Why People Invest in Crypto Despite the Crash
The digital asset economy continues to gain momentum despite the scandals and crashes of late.
If you wonder why people are still involved in crypto after the prices fall, hacks of crypto firms, controversies surrounding crypto mining, and so on, then here are some reasons people do.
1. Demand as a means of payment
Crypto assets such as Bitcoin, Ethereum, USDT, and Dogecoin are fueling demand as a means of payment in the real world.
Major corporations such as Meta (Facebook) and Amazon, have responded by starting to build the infrastructure necessary to handle crypto payments. Tesla is one of the top firms in the world that accept crypto for some of its products. This has made many to still invest and use crypto no matter what.
2. Nature of Online Market
Another driving force is the 24/7 nature of Online markets. This also contributes to the influx of Defi companies offering crypto to fiat gateways. The goal is to enable crypto investors worldwide to make their digital assets viable in their daily lives.
People make crypto transactions any time of the day not leaving out weekends and holidays when banks and other financial institutions are closed.
3. Low Cost of Transaction
People also make deals with crypto as they provide lower transaction costs for businesses and consumers. This is because of the lack of intermediaries in the process.
The ease of making payments for crypto transactions has made many stick with crypto despite its irregularities and issues.
4. Hope as future of money
Experts have advised that this is the best time to invest in crypto. Many have bought the dip with the hope that the price of crypto assets will come up again as it has been before.
Averse risk takers have taken this time to buy as they see a future with crypto. Bitcoin especially has real value and has attracted investors. It has had success as it has become a legal tender in a few nations of the world (El Salvador & Central African Republic).
Conclusion
People have seen reasons to invest in cryptocurrency despite its crash. Its online nature, ease of transaction, hope as future currency, and demand as payment for transactions are the major reasons crypto is still attracting investors.
Related– Will Bitcoin Survive the Crypto Meltdown?
If you ever find yourself in a position to sell crypto in Nigeria or Ghana, Visit Prestmit, it’s the best platform for you. Bitcoin, Dogecoin, Litecoin, and USDT are also available at good rates. Payment options here include the Nigerian Naira, Ghanaian Cedis, and USDT.
