Keeping bitcoin as an investment strategy – known as “hodling” by seasoned Bitcoin enthusiasts – can pay off. But just sitting on your cryptocurrency doesn’t unlock its full potential.
So, while some may be sitting on their BTC in hopes of it mooning or getting to 100K next week, others are taking advantage of its volatility to maximize their ROI.
Striking a balance between spending for your own gain (and to help stimulate the cryptocurrency economy) and maintaining a core savings position in bitcoin can be a great strategy. With that being said, we're going to show you how traders are cashing in while growing their portfolios.
Let’s start from square one. Cryptocurrency, with Bitcoin being the first, is important because it “democratizes” money. Cryptocurrency is democratic not in the sense of voting, but because it levels the financial and monetary playing field.
This has been written about at length, but here are a few key takeaways:
Cryptocurrency separates state from money. In a hypothetical future where government-issued currencies like dollars, euros and yen are no longer dominant, those close to the levers of power will be severely constrained in their ability to tax through inflation, wage wars and pay for corporate welfare.
Cryptocurrency cuts out financial gatekeepers. Have you ever found it a hassle to open up a bank account? How about opening one overseas? Although financial institutions will likely play a role in a crypto-centric world, they won’t have the same overarching influence; anyone with a smartphone can set up a cryptocurrency wallet and essentially “be their own bank”.
Cryptocurrency turns inflation on its head. For those that live in the wealthy (so-called) Western countries – Europe, the U.S. and Canada – inflation may seem like a non-problem. But around the world and even in those wealthy countries, inflation is doing more damage than you think. Countless countries suffer from out-of-control inflation and are unable to even save for the future without scavenging for foreign dollars. Cryptocurrency gives everyone another, more stable option.
Bitcoin Versus Other Cryptocurrencies
Bitcoin isn’t the newest or flashiest cryptocurrency, so why should we keep paying attention to it, especially while other networks are innovating, like Ethereum 2.0?
First off, Bitcoin is still the most dominant cryptocurrency in a crowded crypto marketplace. It’s the most widely used and traded, and its price fluctuations have ripple effects.
Sure, it’s not the leanest cryptocurrency. Proof-of-stake models may provide an attractive alternative. And even cryptocurrency users who are excited about building a world of genuinely decentralized finance tend to gripe about one thing: fees.
The fees involved in transferring do act as a barrier to Bitcoin’s advancement in the mainstream. Still, in these early days of Bitcoin, the fees are marginal compared to the payoff when you spend and hold wisely and are lower than most credit card fees.
Regardless, efforts are underway to make Bitcoin fees essentially a non-issue – like the Lightning Network – and are even being used to a limited degree in the wild.
To Spend or Hold?
People tend to make it an either/or proposition: Should I spend or should I hold? But these two strategies are not in opposition to each other; you can do both.
That’s because spending bitcoin is equivalent to taking a profit. A lot of traders forget about taking profit, especially during a bull run. If you fail to take gains at the top, you may be a little sour about it when the value falls again. When bitcoin is up, that’s when you have the most purchasing power. And when it’s down, you may want to hold.
In any case, by spending BTC and other crypto, you’re helping to stimulate the ecosystem and prove that cryptocurrency is, indeed, real money.
Crypto in the Real World
At Spendabit, we aim to bring the world of possibilities offered by Bitcoin— and cryptocurrency generally — to everyone. That’s why we do everything we can to encourage real-world use of crypto. Because it’s more than just numbers on a spreadsheet; it’s the future of the financial world.
When we heard that liv.rent was making it possible for renters to pay in Bitcoin, we wanted to hear from them. The start-up, based in Vancouver, Canada, is an industry leader in Bitcoin payment adoption, and we don’t think they’ll be the last.
“Since landlords don’t have to know or care about cryptocurrency for the transaction to work, the process really puts the power in the hands of the people,” says Fuad Arafa, director of R&D at liv.rent. “When tenants pay for their rent in bitcoin, it’s transferred and later deposited as Canadian dollars into their landlord’s bank account.”
And while the platform only supports Bitcoin for now, we think this is a big step in the right direction.
“With this new feature, we’re giving choices to the people and letting landlords appeal to a wider, even global, pool of tenants,” adds Arafa. In other words: It’s a major step on the road to proving that Bitcoin, and cryptocurrency as a whole, is real money.
On the road between here and a world where Bitcoin and cryptocurrencies reach their full potential, there’s still a lot of uncertainty. But amidst that uncertainty is opportunity, and it’s good to see organizations like liv.rent pushing the envelope in a positive direction.