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Five good reasons to invest in crypto

Still unsure if crypto is for you? Here are five good reasons to expand your portfolio and invest in crypto.

In recent weeks, bitcoin and crypto have seen a big recovery after confidence in several banks has declined. The fear that we may face another banking crisis is causing investors to flee to bitcoin and blockchain technology, where you "be your own bank". The world's largest crypto, bitcoin, is now up around 80% in the last three months.

Financial gain is probably the goal for many when investing in crypto. For us, it is the groundbreaking underlying blockchain technology that we believe has the potential to change the world and that makes us believe that crypto is a smart investment for the future. Here are five great reasons to invest in crypto.

1. Areas of use and adoption are still growing

Did you know that bitcoin is being adopted faster than the internet was in its day? Before the Internet was really accepted by the people, there was a lot of skepticism. Bill Gates, for example, had a bit of a challenge in 1995 to convince David Letterman to get a computer and get online.

“What about this internet banter? Do you know anything about it? What is it really?”, asks David. Bill Gates knew well what the Internet could do. He said, “It's crazy what's happening! That's the new thing!”. David is skeptical, rolls his eyes and laughs at Bill Gates himself. “Have you heard of radio? Have you heard of sound recorders?” he asks teasingly. Almost 30 years later, the Internet is such a big part of our lives that we don't think we need it. What is the norm today was previously seen as a fantasy that no one believed.

Anything else that sounds like fantasy? Money transfers without third parties, a bank that belongs to everyone, that everyone in the world has access to banking services, currency that belongs to everyone, lightning fast transfers across borders, digital wallets, virtual art, virtual property. In other words, blockchain technology, web3, decentralized economy and cryptocurrency.

The purpose of blockchain technology is to enable solutions that aim to change the world we live in for the better. It is impossible to manipulate a blockchain as it is decentralized, making it ideal for storing and sharing data. Examples of services that can be revolutionized by blockchain technology are secure sharing of health data, storage of legal documents, tracking of materials and assets, donations and much, much more.

We see that more and more people are choosing crypto as an investment vehicle. Crypto can be a smart investment for the future if you believe that there will be more areas of use and increased user adoption in the future. It is estimated that 420 million people worldwide use cryptocurrency already. In some countries, such as El Salvador and the Central African Republic, bitcoin is equated with their national currency and can be used both as a means of payment and to get paid in.

2. Crypto can be a good way to diversify your stock and investment portfolio

Cryptocurrency is an interesting alternative to stocks and funds. Different assets in one's portfolio often provide better risk diversification and thus greater security, so it may therefore be a good idea to include crypto in one's investment portfolio. In the technical language, it is said that diversification gives a higher risk-adjusted return. We have seen a good example of this in recent months, when crypto has gone up and the stock market down.

Since crypto is a new market and a new technology, there are of course some pitfalls to be aware of. For example, you can send money to the wrong wallet, be exposed to fraud attempts or make bad investment choices that result in you losing your money.

The latter also applies to investments in funds, shares, start-up companies or other. The bottom line is that you cannot achieve a return without taking risks. However, you can limit them by thinking long-term and thereby be less sensitive to the volatility that may arise.

We recommend that you either store crypto on a regulated crypto exchange with good security procedures and insurance against cybercrime, such as Firi, or in what is called a "cold wallet".

3. Bitcoin has given great returns over time

3. Bitcoin has given great returns over time

Bitcoin was the first currency that could be securely sent and received over the Internet without relying on a third party, such as a bank. In May 2010, bitcoin was used for the first time as a means of payment, for the first time - to buy 2 pizzas. Laszlo Hanyecz in Florida paid 10,000 bitcoins for two pizzas, which at the time corresponded to 200 Danish kroner.

Can you guess what the price is today?

If Laszlo were to buy these two pizzas for 10,000 bitcoin today, he would pay 1,975,053,189 Danish kroner for them. That is almost two billion kroner. This gives a good picture of how much bitcoin has risen in the past twelve years. Although the rise in the price of bitcoin has been a good enough reason to invest in crypto, there is good reason to believe that it will continue to rise due to the underlying technology that will help shape the financial infrastructure of the future, namely blockchain technology.

4. The technology behind crypto, blockchain technology, is powerful and has great potential

Perhaps more important than being able to buy pizza or invest crypto (think how many pizzas Laszlo could buy today if he had invested), bitcoin is also a protocol and payment network secured through cryptography. All transactions and data are stored in what is called a blockchain. And what is special about it? Yes, the special thing is that it cannot be manipulated by anyone. No actor, company, country or person can control the protocol or the network.

But who is it that ensures that everything works as it should? It's us. People, or indeed computers, all over the world working together.

A blockchain can be thought of as a digital accounting log that records information about transactions and who owns what on a digital network. This data is stored online through decentralization. Furthermore, you can build on this technology, as e.g. Ethereum has done.

Ethereum, the second largest cryptocurrency in the world, enables what are called decentralized applications and smart contracts. These apps, or dApps, "live" on the Ethereum blockchain and create an infrastructure for the new Internet, Web3, built on blockchain technology. This is, for example, what has made NFT, digital art, possible.

5. By investing in crypto, you are also motivated to understand and learn more about the economy of the future

You've worked hard for your money, so it's important that you understand what you're spending it on and what you're investing it in. Crypto is the financial building block of the future, and it involves so much more than just money. We recommend that you familiarize yourself with what this new technology will bring. A good place to start is here.