Now that more and more people are beginning to pay attention to cryptocurrencies, many people are wondering if they serve as a means of saving or as a haven of value.
Haven of value, gold; Cryptocurrencies are quite another thing.
Gold is a haven of value, because it is characterized by its great stability and the high level of appreciation it has in the world market. Gold is, and always will be, the quintessential safe haven of value. Cryptocurrencies are quite another thing.
Because refuge of value and means of savings, are two concepts that at the moment are very far from what cryptocurrencies are today. Be careful, I am not saying that they cannot be a means of refuge or a means of saving in the future, but pretending to say that cryptocurrencies already are currently is a brutal error of judgment.
Because the most important and most dominant cryptocurrency in the market is currently Bitcoin, right? and said crypto is characterized by being extremely volatile and having a highly erratic price, right?. So, as a means of refuge or savings, I can't consider it, not matter how much as I want to.
So just saving in crypto currently is just crazy in my point of view, unless you have a lot of liquidity in your pocket and a very long-term focus or vision; in which case you would no longer be using it as a safe haven of value or savings, but rather as a way of investing, and assuming the risks that such a practice may entail.
Saving in crypto is currently not feasible or sensible, investing and trading it is
As I was saying, investing in cryptocurrencies, with a long-term vision, is something that is truly possible; although it is not without risk (as no investment is).
But what I think is more sensible from every point of view when we talk about taking advantage of the existence and boom of cryptocurrencies is to buy them and keep them in constant movement. What I mean by this is that we can talk about investment in the short term, what we know as trading, or a game of buying and selling in the short term, taking advantage of the fluctuations that occur in the price of cryptos.
In any case, many people will argue that investing is one thing and trading is quite another, and I couldn't agree more with that statement. But what is it that differentiates trading from investing in essence?... That trading is focused on obtaining profits in relatively short periods of time, and investing is focused on obtaining profits in the long term, that is, in years.
Basically, trading and investing are ways of managing ourselves in the world of cryptocurrencies, but trading keeps us active and allows us to keep money moving. In the long run, investment may or may not be more profitable than trading, it is not an exact science, but everything will also depend on which of two activities you feel or think is better in your case.
What I have just mentioned is the theory, what is usually accepted, but from my point of view, I think that trading is more sensible and better than investing, because in the long run, it has a greater profit potential than investing if we apply interest composed in our operations. In addition, trading is better than investments, because since the latter are focused on the long term (years, decades, etc.), they are subject to too many, too many variables that we cannot even be imagined; because they are so far away in time.
In trading, the variables are also unpredictable, but being focused on the short or medium term, they give us a chance to prepare and react in one direction or another in the market. That's the big difference among both activities if you ask me.
And what do you think is the better thing we can do regarding crypto: Saving or trading and investments?
Posted Using LeoFinance Beta