Science and sentiments behind investments in Cryptocurrencies
Till a few months back, there was a debate going on all over the world among financial experts and investors, and the debate was about cryptocurrency. There were several sub-topics that were roaming around this topic, like is crypto sustainable? Will crypto replace national currencies? Should you invest in crypto or not? No clear answer to any of these questions is still available, but let us try to understand the science and sentiments behind investments in cryptocurrencies.
The science behind crypto investments -
Forget about debates; one thing you can't ignore is that money was flowing in the crypto market, and the prices of different currencies were skyrocketing. Blockchain technology based cryptocurrencies were predicted to disrupt different markets, especially the banking sector. The most significant scientific reason behind investing in crypto is a decentralised economy, where the government will not be able to control all your money. Many people were confident that crypto would be a game changer to revolutionise the economic system. Many companies also started accepting different cryptocurrencies for their products.
There were speculations that Bitcoin could become the gold of the 21st century. The cryptocurrencies can be used for long term storage of values, and the special thing is that nobody can manipulate them like the fiat currencies. Government can increase inflation by printing more money, but that's not going to happen with crypto. Because crypto is also scarce, and nobody can mine it as much as they want to. Cryptocurrencies were also safe from bank failures and any kind of wars or disasters as they had no connection with the government.
Transparency of the cryptocurrencies also played a significant role in that. On the widely used blockchain ledger, all cryptocurrency transactions took place. Anyone can search for transaction information using necessary tools, including the where and when, and quantity of cryptocurrency sent from a wallet address.
The sentiment behind crypto investments -
Some of the most influential people on the planet, like Bill Gates, Warren Buffett, Charlie Munger or Jamie Dimon, have often warned against crypto. But even after such negative sentiments, people invested in cryptocurrencies. One of the big reasons behind that is social media. That can be celebrities who were investing in crypto or different social media communities building around crypto investments. People started having a FOMO regarding investing in cryptocurrencies as they saw people investing and making money from crypto markets faster than they can make from bonds, stocks, or gold.
Another thing that influenced people into investing in crypto is the news of different people earning lucrative returns investing in the crypto market. Different crypto coins gave unimaginable returns in just a few days.
Accessibility also played an essential role in bringing investments to the crypto market. People can access or invest in crypto much faster than investing in a stock or other financial assets. People also invested in cryptocurrencies to diversify their investment portfolio from stocks, bonds, and gold or silver.
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