During all three crypto booms and the 2020-22 crypto bubble, cryptocurrencies have always emerged as a great investment opportunity. We’re all used to seeing gains in three-digit and even four-digit percentages, and it can be very lucrative for many.
But it’s also true that there is a lack of regulation and price volatility. These factors, along with a few others, have made many lose a huge amount of their wealth in the last few years.
So, where do we stand now? Is cryptocurrency still a wise investment in 2023? In this article, we’re going to try our best to weigh the pros and cons to come to a conclusion—But we must remind you that there is no definite answer to the question and it largely depends on where you are and which projects you choose to invest in.
Also, keep in mind that none of the information presented in this article is to be construed as financial advice. We’ve done our research and have a lot of expertise in alternative investments or the advantages of decentralized finance, but we don’t claim to know it all or predict what will happen in the future.
Before We Begin
Before we begin, we must clarify that when we talk about cryptocurrencies in this article, unless otherwise mentioned, we’re only talking about large projects with multiple developers, teams, or backers behind them. This typically includes coins like Bitcoin, Ethereum, Cardano, Solana, Ripple, Binance Coin, Polygon, Litecoin, etc.
A lot of information mentioned here can stand true for good projects that are smaller, like Algorand, Tron, Bitcoin Cash, Avalanche, Stellar, Monero, Cosmos, etc.
We are strictly not talking about stablecoins (USDT and USDC, for example), memecoins (DOGE and SHIB, for example), and gaming/NFT coins (AXS and SAND, for example). The values of these assets depend on wildly different things.
These are broad categories of cryptocurrency and it doesn’t make sense to invest in some, while it makes more sense to trade in others. Falling into two main categories, coins and tokens, digital assets are challenging to sort out for beginners. For this reason, it’s essential to consult expert cryptocurrency help for more information, exploring the mechanisms and market capitalizations behind each asset.
With that out of the way, let’s get right into it.
High Returns are Still True in 2023
Major cryptocurrency projects have a thriving community and strong organization infrastructure (developers, node operators, miners, feedback loops, etc.). They are progressing on their agenda gradually like clockwork. No major cryptocurrency has “failed” on a key point or fallen prey to a major hack.
Given all goes well (and the virtually impossible probability of a 51% attack on a major blockchain), you are going to get higher returns than many other traditional assets.
Cryptocurrencies, as an alternative asset class, will almost always give higher returns on long-term investments compared to gold, real estate, and the S&P 500, for example.
Every year, you’re bound to find news of how cryptocurrencies (or, at least, Bitcoin) have outperformed traditional investment assets. For 2023 so far, Forbes reported how BTC outperformed gold, real estate, the Nasdaq 100, and the S&P 500 by a long shot.
Decentralization & Penetration
People are slowly waking up to the advantages of decentralized finance (DeFi) and the power of decentralization in other sectors. Blockchains are built on decentralized networks by design and offer all of these advantages by default.
Centralized finance, for example, requires you to trust an intermediary. Blockchain asset movement is, on the other hand, trustless and verifiable.
Instead of just changing numbers (in the case of bank account transfers, for example), the actual value is being moved when you transfer cryptocurrencies from one wallet to another (note that we’re not counting the wallets you have on centralized exchanges like Binance).
In 2023, people are more ready than ever to embrace decentralization and it makes cryptocurrencies the only financial tool that can be used to adopt such a future, thus adding value to them.
With that, the awareness and adoption rates are also improving steadily. More Bitcoin ATMs are cropping up and more online stores are accepting cryptocurrencies than ever.
Volatility, Regulation, and Hacks
If you lose your seed phrase or are scammed with a social engineering or phishing email, you can’t go to anyone for help, as cryptocurrencies are not regulated, licensed, or managed by a central authority.
The prices fluctuate more than the ups and downs of the stock market even during the time of war, which is bad even by the most generous applications of the term “volatile.”
And then you have hacks, scams, rug pulls, etc., which mainly happen because people aren’t careful, technically savvy, or attentive enough with their cryptocurrencies, accounts, and wallets.
All of these are legit concerns and if these are alarming for you, then you should not invest in cryptocurrencies in 2023 or ever.
Ultimately, depending on your knowledge, region, experience, and the projects you choose to back, the results can differ from person to person. Overall, if you’re careful and make decisions based on a lot of research, you can’t go wrong.
There are pros and cons to weigh, naturally. It’s true for any kind and size of investment. If you prefer a more stable market, then know that even the stock market is less volatile than cryptocurrencies. Similarly, if you’re open to more risks, cryptocurrencies can be an ideal way to go forward.
It depends on your preferences and circumstances and there is no definitive answer to the question of cryptocurrencies.