People usually perceive the concept of cryptocurrencies as something complex and sophisticated. Investors considered crypto market a highly volatile domain and cryptocurrency investments were never among low-risk ones. However now may be the time for these perceptions to change. In fact, payment platforms and gateways that do not yet support cryptocurrencies as a payment type should seriously consider adding this feature. Yes, in spite of high risk and gas fees. And here are some major reasons why.
Time to Invest in Cryptocurrencies
Are cryptocurrencies better than other investments?
Having survived the pandemic waves, world economies must now recover from several mighty blows. Some countries are injecting money into their economies in the form of rescue packages. Others are reducing interest rates to minimum. These steps might provide remedies for economy, but not for investors.
Investors are used to going for low-risk instruments. Government bonds, savings accounts, CD accounts, and money markets are among them. However, under the circumstances, all these investment vehicles will provide very small annual yield. With 8% inflation looming in the background, a saving account bringing 4% of annual yield (or a similar investment option) is simply unprofitable.
In this situation cryptocurrency market might become a more attractive investment environment, particularly, in terms of yields.
Can cryptocurrencies become a low-risk investment?
Indeed, how can an investor deal with the risks and rate fluctuations? Well, some cryptocurrencies are pegged to conventional currency rates. USDC and BUSD, for example, are pegged to US dollar. Such currencies are called stablecoins. They are featured in worldcoinindex, alongside Bitcoin and Ether. However, in contrast to these more famous coins, they do not suffer from major rate fluctuations because of the peg.
Presently, some companies are offering saving accounts, denominated in stablecoins. These investments can bring up to 16% of annual yield. So, it makes sense to save your investments in stablecoins rather than in conventional currencies. Moreover, if you are able to make payments using your cryptocurrency account, it becomes similar to a regular checking account.
How to invest in stablecoins and decentralized finance
Nexo, Celsius, and other similar businesses allow their customers to open investment accounts in stablecoins with them. Another option is to invest into decentralized finance (DeFi) projects and platforms. AAVE and PancakeSwap are among the most well-known examples. Moreover, existing (Etherium) and newly emerging (Binance Smart Chain) blockchains are trying to reduce the cost of transactions (i.e. gas fees). So, low-ticket cryptocurrency payment processing is not as far in the future as it may seem.
As cryptocurrencies become a viable, affordable, and low-risk investment and payment vehicle, payment platforms and gateways should be able to support cryptocurrency payments. Stablecoins are not subject to fluctuations, they might become a profitable low-risk investment and payment means. So, gateways and platforms should make support for stablecoins their top priority.