Depending on your culture and background, the thought of inheritance may come to mind from time to time. What am I going to leave my children with? How can I help them set up their life so they don’t have to struggle? If you’re still young are rarely think about it, you might wish to consider the thought, as there are many new opportunities to build up a significant net worth over the long term, by simply investing in cryptocurrency.
Buy Bitcoin as a long term investment and eventual inheritance – it must be an idea for the die-hard Bitcoin maximalists and the irresponsible gamblers, right? Or is there more to it?
In this article, we take a look at Bitcoin’s projection over the next few years and discuss its possibility to be used as an inheritance for your progeny.
If you haven’t noticed yet, when it comes to investments, time is your best friend. It is through long term investments that we can experience exponential growth of value, and use our funds to earn even more.
With cryptocurrencies, this has proven to be the case as well. Many popular coins have experienced rapid growth since their inception, and one that outperforms most traditional investment options, like stocks and bonds. By simply holding onto your investment for a longer time, its value could grow beyond your expectations. Here’s why crypto makes this even more luring; since the market is still in its infancy, even a five-year timeframe is considered to be “long term”. Unlike the relatively low growth of stocks and nearly-zero growth of your savings in the bank, a small investment in crypto could double in a matter of months.
The same is true for all the different ways you can utilize your investment while you leave it dormant in your account. Many cryptocurrency companies, like BlockFi, Celsius Network, and Binance, allow their users to store their funds in locked wallets in order to earn interest on an annual basis. And that interest is more than 10 times higher than what you would receive from your typical interest-bearing savings account in the bank.
Are you worried about not having built up a significant net worth that you can leave to your family? No real estate or cash reserves? Don’t worry. Due to the rapid growth of the crypto industry and especially Bitcoin, even a small investment in the popular cryptocurrency right now could prove to be very rewarding in a span of several decades.
Let’s take Bitcoin for example and see why this happens:
- The supply of Bitcoin set, by design, to be capped at 21 million coins. This is a very small amount when considering the number of investors in the world. The more instability our economy faces the more popular Bitcoin becomes. The higher the demand for the coin, the more its value will increase.
- Every 4 years, the Bitcoin network automatically decreases miners’ rewards by 50%. This decrease in newly minted supply further increases the scarcity of the cryptocurrency and makes it more difficult (and expensive) to mine new coins. The so-called Bitcoin halving is always followed by a rapid increase in Bitcoin’s price.
- In the next few years, blockchain technology will become an important part of our restructured financial system. With cash becoming less relevant and digital payments seen as the primary type of transactions, crypto will eventually become more accessible and widely understood by the public.
As you can imagine, all these developments (which will likely take a decade at least to play out), will increase the importance of Bitcoin and, thus, its value. By the time you can pass your value down to your heirs, your small investment will most likely be very valuable.
Obviously, opportunities that come with high rewards carry high risk. Here are some of the risks you need to consider when investing in cryptocurrency:
- You may lose all your funds – No one holds or stores the coins for you, but you. The same is true for small-cap coins that lose their value overnight due to low liquidity. This is why you should only invest in cryptocurrencies with long-term growth potential, like Bitcoin or Ethereum.
- Government regulations – If cryptocurrencies become too valuable or too hard to keep an overview of, there is a high chance the governments will limit accessibility to exchange platforms and even ban cryptocurrencies. If Bitcoin becomes illegal, its value may decrease.
- Hacking – Like most new technologies, cryptocurrencies are prone to hacking. While this is not necessarily true for the actual blockchain, it is commonly observed with “hot” wallets, which essentially stands for online access points to specific blockchains.
Author : Judy Smith