Unless you’ve been living under a rock, there’s a good chance you’ve heard something about digital assets within the last few years. For the unfamiliar, a digital asset is essentially any kind of digital material that fits the following criteria:
- It is owned by an individual or company
- It has some kind of value
- It is uniquely identifiable.
As you can probably imagine, in our increasingly digital world there are many different kinds of digital assets out there, from spreadsheets to emails to websites to online videos. However, there is one type of digital asset that has been especially popular with investors as of late: cryptocurrency.
If you’ve been thinking about investing in digital assets like cryptocurrency in the new year, then you’re likely making a good decision. Here are the 5 reasons why you should invest in digital assets in 2022.
1) An Unreliable Market
Thanks at least in part to COVID-19, global economies have been all over the place these last few years. Investors have been finding that their more traditional investment opportunities haven’t necessarily been panning out, so they’ve been looking at new ones like cryptocurrency. It may be unregulated and volatile at times, but some people have been seeing significant returns on their crypto investments during the pandemic.
2) The Rise of NFTs
Similar to cryptocurrency, though they’re technically more of a good than a currency, NFTs have been getting a lot of attention lately. NFTs or nonfungible tokens, are verifiable, trackable blockchain assets with unique identifiers. You may have heard about Jack Dorsey, the co-founder of Twitter, selling his first tweet as an NFT for a staggering $2.9 million this year. NFTs seem to only be increasing in popularity, so you may want to look into this kind of digital asset investment in 2022.
3) Portfolio Diversification
It’s risky to put all your assets into one type of investment, no matter how confident you are in your choice. The economy has been a little on the unpredictable side lately, so it’s not a great time to take a chance on one investment and risk losing everything.
You can always go the more traditional route of diversifying your portfolio by investing in bonds, stocks, and commodities, but if you’re looking to try something a little different then you may consider investing in digital assets like cryptocurrency.
4) Protection Against Inflation
If you’re concerned about rising inflation rates, then you may be looking for an inflation hedge. Cryptocurrencies can be an effective way to protect against inflation because there is only a finite amount, so it’s similar to investing in something like gold. Its rarity increases demand, which drives up prices. In time, this will increase the demand for cryptocurrency even more, ultimately influencing its durability.
5) Bitcoin’s Increasing Adoption
The cryptocurrency Bitcoin has been having a great year. It has already been accepted as a payment method by some major companies such as Microsoft and PayPal, and some whole countries are even getting in on the action. In fact, in September 2021, El Salvador became the first country to officially recognize Bitcoin as legal tender.
Digital assets like cryptocurrency don’t seem to be going anywhere for a while, so it’s a good time to invest in 2022.