You might have woken up this morning to the news of the economic crisis and wished you could fall back asleep!
After the first quarter of 2022, it was found that inflation was the number one concern for most Americans. So far, unfortunately, things seem just as bleak for 2023.
But one doesn’t have to be black-pilled about their financial future at all. The huge white pill that’ll bring hope is through cryptocurrencies. One of these that has become popular is AAVE crypto.
Let’s look a bit deeper at what is AAVE crypto:
What Is AAVE Crypto and Should I Use It?
AAVE crypto is a platform that lets you buy, trade, and sell cryptocurrencies. It’s based on the Ethereum blockchain and is a great way to receive interest on any crypto you loan out.
It’s still a new platform and is only slowly catching on. As a result, though it brings benefits, you want to determine whether it’s good for your needs.
As always, you want to consult a professional financial advisor before you make an investment in cryptocurrency. But if you succeed with it, AAVE crypto might be a great way for you to build a hedge against inflation.
Now, we must look deeper into Bitcoin and cryptocurrencies. This will help you decide how you wish to invest in virtual currencies to protect your financial future.
Why Bitcoin Became Popular
Of all the virtual currencies available, Bitcoin still reigns supreme. One must understand why this is so in order to determine one’s investment strategy.
Bitcoin entered the scene in the aftermath of the 2008 financial crisis. People all over the world were suffering from the global financial system and wanted a way out of it.
While we still live under the tyranny of the global financial system, Bitcoin has provided an alternative route. As it grows in popularity, over a decade later, many philosophers, economists, and investors alike, see Bitcoin as the future for financial stability.
If you wish to accumulate Bitcoin you can check out this page to buy it from an ATM.
Now let’s delve a bit deeper into what exactly is wrong with our current global financial system.
What’s the Problem?
We alluded to the tyranny of the global financial system in the previous section. But what exactly is the problem with the system? What’s so bad about it that a crazy invention like Bitcoin seems to be needed?
Right now, the world runs on a fiat standard with the US Dollar as the global reserve currency.
This means that countries are all dependent on the stability of the US Dollar for the stability of their economy. But the US Dollar hasn’t exactly been stable for a long time.
The Dollar became the global reserve currency in the aftermath of the Second World War. It was based on the gold standard, which meant that the number of dollars printed had to correspond with the country’s gold reserves.
This changed in 1971 when President Nixon moved the Dollar off the gold standard. This meant that the Federal Reserve could now print as many dollars as it wished. This is what has led to the inflation that we are still suffering from.
But we didn’t have much of a choice. While gold and silver have been used as hedges against inflation, they aren’t that easy to transport. Even a fractional amount of gold can be too expensive for the average person.
As a result, we are stuck using our fiat currencies which are losing their value each day. We have to work more and our savings don’t amount to anything. It may seem like we don’t have a choice, but those who advocate for Bitcoin will beg to differ.
Why Bitcoin Is Sound Money
So, what makes Bitcoin a better alternative to our fiat currencies?
The first difference is that fiat currencies aren’t finite whereas Bitcoin is. There’s no shortage of how many dollars the Federal Reserve can print and they show no signs of slowing down.
But Bitcoin only has a circulation of 21 million. Because of its programming, it’s impossible to create more Bitcoins once the maximum supply of 21 million has been reached.
This means that Bitcoin can’t lose its value as every fiat currency has. This alone has made Bitcoin a great hedge against inflation. For many, Bitcoin is the digital version of gold.
But this is just one of the many advantages of Bitcoin and only a minor reason why it’s a form of sound money. Another reason is that it’s not controlled by any one organization or government. Many see Bitcoin as a great alternative to the potential threat of CBDCs.
What are CBDCs you ask? That’s what we’ll discuss in the next section.
Central Bank Digital Currencies (CBDCs)
Already, your country’s central bank issues the national currency — all backed by the US Dollar. While we still use printed cash, there have been calls to make all money digital. Often, these calls are backed up by claims that this will be less harmful to the environment.
The proposal to create the digital version of a fiat currency is on the table and these currencies are known as Central Bank Digital Currencies or CBDCs.
These are being championed by governments and by citizens alike. After all, it’s likely that you already make digital transactions and prefer them over using cash.
It’s much easier to buy something online for $1,000 than it is to withdraw that amount from your local ATM. It’s much easier to pay with your credit card than to pay in cash and carry too much loose change.
Because of this, for many citizens, CBDCs seem like a welcome development. But there is also rising concern about what CBDCs mean for the future of our freedoms and civil liberties.
These CBDCs are to be tied to our digital profiles. They will have expiration dates so one has to spend rather than save their digital currency. They’re also controlled by governments and can get shut off by governments.
In short, if you’re not on the government’s good side you’ll not have any money to use!
Bitcoin is seen as the way to opt out of CBDCs. While it’s also a digital currency, it can’t get controlled by a government or organization. It’s a currency for everyone, rather than a select few.
Bitcoin vs Crypto
You’ll likely hear “Bitcoin” and “crypto” mentioned in the same breath as if they were the same. Bitcoin is often thought about as one of many cryptocurrencies available on the market. It’s likely this will remain the case in the near future.
But already, there’s a move to distinguish Bitcoin and crypto. This is done by Bitcoin maximalists — a group of people who advocate only owning and using Bitcoin as opposed to other digital currencies.
So, why would one consider only Bitcoin and not Bitcoin Cash, Ethereum, Ripple, etc.?
As mentioned earlier, Bitcoin isn’t controlled by a government or organization. This is what distinguishes it from CBDCs which will be controlled by governments and central banks. Cryptocurrencies are controlled by organizations.
Bitcoin Cash is run by a company. As is Ethereum, Ripple, Litecoin, Marscoin, and so on. The major concern for this is that you won’t have full control over your crypto. As a result, Bitcoin maximalists argue against investing in cryptocurrencies at all.
But, there are others who argue for investing in these “altcoins” — a term for all cryptocurrencies apart from Bitcoin. Many see these as great investment assets which you can sell for a fiat currency. There are places that accept Bitcoin Cash, for example, as a form of payment.
In most cases, you can also convert your altcoins to Bitcoin if you wish. Nevertheless, the recent controversies with FTX have warded some away from altcoins altogether. It’s up to you to do your own research to decide what’s best.
Let’s end our guide with a few best practices for when you decide to jump into Bitcoin, crypto, and/or jump into AAVE crypto.
Always invest what you’re willing to lose. The market is volatile when it comes to digital currency and you can expect to lose your investment overnight.
Only invest if you see a use case for digital currency. If you feel you can spend Bitcoin, then it’s worth your investment. If your local cafe takes Bitcoin Cash, then you can consider investing in it as well.
The final step is to always do your research and trust your judgment rather than the opinions of experts.
Build Your Wealth
Now you know what is AAVE crypto and how it can benefit you as well as why cryptocurrencies might be an important investment.
AAVE crypto is a great way to loan out your crypto assets and earn interest from them. You know that Bitcoin is a response to the financial crisis we find ourselves in.
You may or may not want to also invest in altcoins based on how they operate. Follow our best practices so you can make wise investment decisions.
You can find more articles about Bitcoin and cryptocurrencies on our website.