The world of cryptocurrencies is packed and jammed up with multiple tokens and coins that are all showing extreme positivity and optimism toward expansion and taking up people’s funds by introducing Initial Coin Offerings (ICOs) and airdrops. The masses made millions of monies and investments in different tokens aka altcoins. Though some turned out to be huge successes and overnight hype extended to a week or a month-long to-the-moon frenzy, hitting rock bottom.
The salient features and events associated with the bullish market of 2021 made people invest their savings into every token that gained immense popularity. From Shiba Inu to Squid Game token, the investors were optimistic to be millionaires and billionaires overnight. But no one to this day ever raises a question regarding whether we should consider this to be an asset or a medium of exchange and label it as a currency.
According to some people, it serves the purposes of a currency and a digital asset. But this notion is wrong and needs a slight correction in terms of understanding and apprehension. We would dive deep into how before you put any of your savings or funds in crypto, you can determine whether it should be considered as a medium of exchange or just a store of value. Let us look at which one serves the purpose.
Untying the Knot- Asset or A Currency?
Now many people are pouring their money into any project that has created market fervor and zeal among its followers. It is important to unravel the identification for crypto from the base. Some salient features make cryptocurrency seem like a currency because of the suffix attached to the word crypto.
A cryptocurrency digital asset is more suitable to be called an asset than a medium of exchange. To extend our understanding further, for something to be termed a currency it should be in wide usage. Not only do we determine it on wide circulation element, but its level of certain predictability is also important. Fiat currency or paper money is controlled by several elements in foreplay. For example, the supply, demand, usage, interest, and how micro usages it entails. Fiat currencies are widely used for bills, trading, and settlements, and most importantly, it is backed up by a centralized authority.
As per wealth management.com in the raw format, a cryptocurrency is not a currency and not purely an asset. It can be termed as a digital asset, but with no real possession and tangibility. Unlike other assets, such as land, property, stocks, conventional derivatives, bonds, metals, and commodities, you cannot have a physicality with crypto.
Because of its wide use, and popularity, it is termed a cryptocurrency digital asset, you can take benefit out of its popularity by trading it in the spot market or in perpetual. The benefit is not promised or an ultimate profit as your digital asset can run on slump too. It is disruptive and built upon unruffled technology while you do not own it. You just take advantage or face losses based on daily movements and what the traders are willing to pay for it.
On the contrary, cash is generated by binding restrictions of law and order and is subject to legal implications. In case you hold it, you are settling your trade agreements with it in the final stages. It carries itself as a store of value and legality. Since all that we do ends up with us as paper money present in our hands or bank accounts. Cash is the ultimate currency and an absolute legal tender. Being a legal
tender, it holds the power to settle any agreement, whether of exchange of any kind, a service, or a mere product.
Is Crypto Bad for Investments?
Now the above information does negate the value of crypto as a currency. But we cannot deny the amazing technology of blockchain behind it. Being a system of consensus, agility, decentralization, and anonymity, it is not confined to the monetary side alone. Now as an investor or a day trader hurling up your struggles and technical knowledge related to crypto. You should not be deviating from your trading goals and making successful moves in the crypto trading zones.
Holding crypto does not make your portfolio risk averse. And that is why it is not considered a real asset. Since the financial market gurus do not neglect the importance and value of crypto as a digital asset. But what differentiates this from fiat is the technology and future use case that would build up its value and its importance.
Final Words
There is no final thought about which of the above you should use to gain the maximum value. Currency is the result of financial activity. Whether you are creating a real-life-real-asset, after selling it you realize it in cash. On a parallel side, having crypto in your digital wallets and learning the necessary trading skills, brings you foresight into the market curves, while increasing your trading aptitude with time. Since big corporations such as Tesla and some countries like El-Salvador have given it the status of gal tender, we as commoners can see h hope and potential to bypass the cash and its related needs one day.
Crypto is a revolution, brought at the start of the 21st century, that gave the world a new vision to see things from a different lens. As an investor and a day trader you can make money from this crypto frenzy, but for the future, learning about which crypto project has a long-term and sustainable plan to outshine other projects in the market can bring your portfolio turned green and golden.
