Cryptocurrency: Both a Payment Method and an Investment Vehicle

  • Cryptocurrency Analysis

Despite the ongoing crypto winter, the potential of cryptocurrencies is unquestionable. Cryptos are both attractive investment vehicles and revolutionary payment methods. Many investors view the recent period of market cooling as an opportunity, and digital tokens are still in many ways considered the future of money. 

Cryptocurrency Lending

Cryptocurrency lending has taken the financial industry by storm and has been one of the most popular DeFi services. It provides an alternative means for us to leverage our crypto portfolio into cash. 

Backed by the crypto holdings of borrowers, cryptocurrency loans allow borrowers to maintain ownership of their digital assets used as collateral but restrict their access to those assets. Lenders receive regular interest in return.

The volatility of cryptocurrencies makes it riskier to use digital coins as loan collateral. While borrowers are safe when the value of their crypto assets increase, they could end up in a difficult situation if crypto prices plummet during the lifespan of their loans.

Although crypto loans are less reliable than securities-backed loans such as home equity lines of credit, their speed, accessibility, flexibility and favourable interest rates (to both lenders and borrowers) enable crypto lending to gain success in the DeFi scene.

The volatile nature of cryptos has also attracted many traders. Cryptocurrencies are now some of the most sought after trading instruments and are accessible through the world’s leading brokers. Global multi-asset broker Exness, for example, offers an expanding range of crypto products that includes the much talked about Decentraland, Chainlink and Compound.

A New Way to Pay

Other than being an enticing investment asset, cryptocurrencies are redefining the concept of money. Digital currencies have been establishing an increasingly prominent presence among mainstream payment platforms. 

For instance, PayPal (NASDAQ: PYPL ) now allows the buying, selling and holding of four crypto variants, including Bitcoin , Bitcoin Cash , Bitcoin and Ether. Visa (NYSE: V ) has made transactions with stablecoins on the Ethereum blockchain available on its platform. The payment giant also has more than 65 crypto wallet partners.

Although cryptocurrencies are nowhere near an equivalent of fiat currencies, they represent the beginning of a radical change to how we can invest, save and spend money in the not-so-distant future. When the value of cryptocurrencies stabilises after widespread adoption and regulation, digital coins will become a mainstream form of currency and investment.

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