The Future of Money: Is Investing in Crypto a No-Brainer?

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Cryptocurrency is experiencing a promising surge in adoption as citizens not only seek refuge from inflationary pressures and unstable monetary policies, but also look to invest in a burgeoning asset class with lots of potential.

Capturing this growing trend, a recent report from data analytics company GWI found that cryptocurrencies are continuing to garner attention as an attractive alternative for individuals looking to gain financial independence around the world.

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Bitcoin token smashing through U.S. dollar.

The rise of cryptocurrency adoption

In the survey, GWI measured the number of internet users aged 16 to 64 who said they owned some form of cryptocurrency in 2021 compared to 2022. Globally, GWI found that the international average of holders increased from 10% to just under 12%. Despite only growing 2 percentage points, this is impressive considering that the crypto industry was in a brutal bear market for most of 2022.

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However, arguably the most interesting finding from the survey came from which countries had the highest rates of crypto adoption. Topping the list were Turkey (27.1%) and Argentina (23.5%). 

At first glance, it may seem difficult to explain why they are leading the world in crypto adoption, but when we take a look at the economic conditions in these countries, a common theme appears: inflation. 

In the last year, both of these nations recorded some of the highest levels of inflation in the world. Argentina’s latest inflation reading came in at an astounding 98.8%, the fourth highest, and Turkey’s came in at 55.1%, making it the eighth highest.

With the traditional fiat currencies in each country losing value at an alarming rate, it seems citizens are turning to cryptocurrencies, which offer decentralization, security, and immunity from government malpractice. 

More interestingly, though, the survey also suggests that the broader trend of greater crypto adoption wasn’t limited to inflation-prone countries. Some of the largest economies in the world — such as Brazil (20.6%), the Netherlands (17.6%), Indonesia (20.1%), and India (16.8%) — boasted the highest rates of adoption and largest increases from 2021. Other notable nations to make the list included Thailand (21.9%), Singapore (11.9%), United Arab Emirates (19.6%), Malaysia (15.6%), South Africa (19%), and the Philippines (23.4%).

The money pouring in suggests optimism about both crypto’s present value and its future potential.

Making a game plan

Although only time will tell if the pace of adoption will continue, this prompts the question: Which cryptocurrencies should investors prioritize so they can benefit from growing adoption? 

Despite the cryptocurrency asset class containing a near-infinite number of options for investors, the reality is that most cryptocurrencies in circulation won’t survive. To minimize this risk and eliminate the guessing game, investors should consider Bitcoin and Ethereum, the world’s two most valuable cryptocurrencies. 

Based on its market cap alone — now making up more than 45% of all value in the sector —  Bitcoin stands as the most established and recognized cryptocurrency. As inflationary pressures and government policies continue to erode the purchasing power of traditional currencies, Bitcoin’s decentralized nature and limited supply make it an appealing store of value. Although less glamorous than some of the newer cryptocurrencies, the oldest cryptocurrency has rewarded investors for more than a decade and could maintain that streak for a long time to come.

Although Bitcoin holds a dominant position in the crypto market, Ethereum has emerged as a prominent player, particularly in the realm of decentralized finance (DeFi). The growth of DeFi applications on the Ethereum network has transformed the financial landscape by offering users access to a wide range of traditional financial services (lending, borrowing, derivatives, currency exchanges) through the power of blockchain technology. It’s a burgeoning ecosystem and one with serious potential. As DeFi continues to gain traction, Ethereum’s value proposition over the long term makes it an easy choice for investors looking to gain exposure to crypto.

It should be noted that investing in cryptocurrencies comes with inherent risks and volatility. It is crucial for investors to approach the market with caution because the crypto industry is still relatively young, and as previously mentioned, not all cryptocurrencies will stand the test of time. Investors nearing retirement or those with low risk tolerances should consider other investments. However, for those with a long-term horizon and an appetite for some risk, an investment today could provide considerable returns as cryptocurrencies continue to prove their value as alternatives to traditional fiat currencies.


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RJ Fulton has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.

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