For those who are still on the fence about investing in digital assets, here are four brief reasons (among many) as to how cryptocurrencies can help you improve your portfolio and financial situation. Boasting many unique properties, crypto can help you diversify your investments and may reap impressive returns. Here are the four primary benefits of investing in cryptocurrencies.

1. Diversifying your portfolio

Quite possibly the most resounding investment advice out there: diversify your portfolio. Experts and seasoned investors are huge proponents of making sure that your money is not sitting all in one basket (or in this case, one industry) and always advise that you spread your investments across different areas. A Yale study recently recommended that every portfolio be at least 6% crypto. This percentage can go as high as the investor wants depending on their appetite for risk, but the 6% is the recommended minimum for reaping the benefits of digital assets and their growth rates.

This focus on diversifying investments was exemplified throughout the COVID-19 pandemic wherein many investors found themselves seeking assets that were a hedge against inflation. As traditional stocks struggled to rake in profits and the dollar was under heavy inflationary pressures, cryptocurrencies were thriving. At times when the S&P 500 declined, Bitcoin’s price tended to rally.

2. Potential for High Returns on Investments

Alongside their reputation as a volatile and unstable asset, cryptocurrencies tend to bring in high returns in comparison to traditional assets and stocks. For example, between December 2015 and December 2020, the S&P 500 index of large cap US equities managed to compound an annualized growth rate of 14.5%, while Bitcoin on the other hand compounded an impressive 131.5%. Given these astronomical growth rates, cryptocurrencies are attractive for those who have an appetite for risk and are looking for high returns as opposed to safer investments. As a rule of thumb and due to its volatile nature, investors are advised to only invest what they can afford and are willing to risk.

3. Growing Acceptance and Utility

The years 2020 and 2021 have been the most monumental for cryptocurrencies’ acceptance and widespread adoption as of yet. Global banks and some of the world’s most traditional financial institutions have taken leaps not only towards the adoption of Bitcoin and other cryptocurrencies, but also towards offering them as products. Most recently, Wall Street institution JP Morgan announced plans to roll out a Bitcoin fund to select wealthy clients — set to launch as early as this coming summer 2021.

Also noteworthy on the adoption front is the seemingly speedy adoption of crypto from payment processing giants. Mastercard, Visa, PayPal, and Venmo have all announced that they will begin allowing clients and users to buy, sell, and hold cryptocurrencies by using their products or directly on their platforms.

This growing adoption means that the coin’s utility (the practical usage of any given cryptocurrency) is bound to multiply as we have already seen. You can now book flights with crypto, purchase art, or even buy a Tesla!

4. Transparency and Privacy Features

Unlike traditional banking operations, cryptocurrencies are stored using a technology called the blockchain, a record-keeping system that is tamper-proof and cannot be altered without the knowledge of all those involved, and one that is clear of human error. Since cryptocurrencies use cryptography as a method of writing on the blockchain, they also offer a sturdy security system that is nearly impossible to hack. The decentralized network that they are built on, coupled with the “military grade” cryptography makes them a very secure asset. Additionally, and in part due to the role that encryption plays, cryptocurrencies allow those making transactions to remain anonymous. This results in an asset that is free of scrutiny from a government or a regulatory authority, void of hidden fees and third-party commissions, and enabled for instant and anonymous transactions.

So whether it is to make sure that your portfolio and your investments are diverse and varied, or if it is to leverage their secure and transparent nature, cryptocurrencies can be a wonderful addition to portfolios. Despite the fact that their market is volatile, widespread acceptance of most coins has been increasingly growing and engulfs even the most traditional of financial institutions and banks. It appears as though the future is bright for Bitcoin and other cryptocurrencies, and it is always better to get in early!