Saving Crypto Vs. Spending It

Cryptocurrency is disruptive and, as we have seen once again over the past month, it can be highly volatile. This volatility is beneficial when saving because it can lead to substantial gains, albeit with the risk of equally substantial losses. But, an overnight 10% drop in price can leave the crypto user with a significantly smaller balance than they had the day before.

Whether you’ve been given crypto, received it as payment, or believe in its future utility and have bought it yourself, you do need to decide whether to spend it or save it.

Spending It

Although it isn’t as easy as spending Dollars, Euros, or Pounds, it is certainly possible to spend Bitcoin, Ether, and other cryptocurrencies. Crypto is accepted by thousands of businesses, can be used to buy goods, and can be used for leisure spending at crypto casino online websites and other venues. For example, Bitcoin poker sites allow users to enjoy a wide range of poker games with different stake limits, but with the benefits of using crypto such as fast, anonymous transactions and higher spending limits (or sometimes no limits).

The Benefits Of Spending Your Crypto

There are benefits to spending crypto, rather than saving it in a secure cryptocurrency wallet.

Less Exposure To Volatility

Love it or hate it, cryptocurrency is volatile. In the past two weeks, Bitcoin’s value has increased by more than 20%. And, while this means you would have gained 25% had you held on to Bitcoin during this period, it is at its all-time high and approaching $100,000, which is likely to pose significant psychological resistance. Although many analysts are pointing to Bitcoin eventually overcoming that price hurdle before going on to reach $150,000 or more, there are still those who believe its price will sink. Spending cryptocurrency means you won’t have to face this uncertain volatility.  

Secure, Private Payments

Compared to fiat currency, cryptocurrency payments are more secure. They’re also faster and transactions can cost less money. These benefits are the reasons that many people are paying cryptocurrency more attention, and they make it possible to spend crypto at merchants across the world at a fraction of the cost with payments completed in a fraction of the time.

No Need For Long-Term Storage

Spending your crypto also means you don’t have to worry about choosing a crypto storage or saving method. At the very least, saving crypto requires the use of a crypto wallet, rather than keeping it on a centralized exchange. While these can be very secure, you do need to update them with the latest versions and manage your holdings. When spending, you don’t have these same concerns.

Buy And Pay For More Things

Generally, we all have bills that need paying and essentials that need buying. Using cryptocurrency to buy essentials means you can use the likes of Bitcoins for the purpose they were created – as a transfer of value. Bitcoin is accepted by an increasingly large number of companies. It can be difficult to pay your electricity bill or monthly rental payments, but even some major companies have started to accept these payments. In certain sectors, like gaming and iGaming, it is very popular, and it is likely only a matter of time before its reach spreads even further.

Invest

It is generally recommended that we save or invest 20% of our monthly salary. Some of this can be saved towards pensions, or it can be put to one side for any major purchases we’re planning. Cryptocurrency offers a viable alternative, or addition, to traditional investments. While Bitcoin was originally devised as a means of transferring value between users, it has become a popular investment tool.

Benefits

There are certain benefits to investing, or holding crypto, rather than spending your coins as soon as you receive them.

Volatility Can Be Good

The volatility in cryptocurrency is what has made it such a popular investment vehicle. Dogecoin has trebled in price since the start of the month. There are few, if any, other investment opportunities that offer this kind of potential return in such a short space of time. It does take a lot of research and a need to ensure you invest in the right opportunity, but it can lead to big profits.

Secure Storage Solutions

It can be stored securely away from bank accounts. For smaller investments, you can use a hardware or cold wallet. Hardware wallets are relatively inexpensive but offer good security. Cold wallets do not connect to the Internet except when making transactions, so they have limited exposure to potential threats. If you have a larger investment, custodial services can also be used. A custodial service looks after the private keys for you and manages everything so you don’t have to worry about security updates and other maintenance.

Invest In Foreign Currencies

You don’t have to face the volatility of cryptocurrency. Stablecoins are tied to the value of fiat currencies, so they don’t fluctuate as wildly, but you can invest in foreign currencies this way. Use your GBP to buy USDT, for example, and benefit when the dollar rises. It’s cheaper and has lower barriers to entry than using a traditional foreign exchange broker. Stablecoins tied to many other currencies and securities also exist.

Stake And Earn

You can also stake cryptocurrencies, which means committing an amount of a chosen cryptocurrency for a set time and receiving rewards over that period. This is similar to buying bonds and the rewards can be very generous, although it is worth noting that the crypto will continue to increase or decrease during the time it is staked.

Lend And Earn

Decentralized lending platforms exist. This enables crypto holders to lend cryptocurrency to other parties. Smart contracts are used to help ensure some level of security for the lender, although there are risks of the borrower defaulting.

Trade NFTs

You can even buy NFTs, which are digital files that are tokenized and minted on the blockchain. This is akin to buying art or fine wine and storing it, before selling it on when the market value increases. NFTs saw a considerable boom a couple of years ago and while the clamber to buy them has died down a little, new NFTs are still being released, and existing ones are being traded on open marketplaces.

Invest In Different Sectors

There are lots of categories of cryptocurrencies to invest in. Meme coins have proven very popular in the past few years, and Dogecoin has shown how much upside potential they can have when they get the backing of an active community and the world’s richest man. There are AI coins, opening up investment opportunities in one of the most disruptive technology sectors outside cryptocurrency. Some coins are used in healthcare, fintech, and real estate, or those that are used primarily in blockchain. This variety allows you to invest in any of a host of different industries and categories.

Diversify Your Investments

The wide variety of investment opportunities available in cryptocurrency enables you to diversify your portfolio, and crypto generally can be used as an effective means of diversifying your investments. Put some in foreign exchange stablecoins, some in technology coins, and some in NFTs to create a diverse collection.