9 Cryptocurrencies To Buy As Inflation Protection
Buy these Crypto assets to defend against inflation.
Inflation is an economic issue that hit us all from time to time. It is an issue government, businesses, and individuals have to tackle together in different ways.
Inflation generally refers to the decline of purchasing power of a given currency over time. Though it is primarily used to describe the condition of a specific currency, it is normally a reflection of an economic situation. There are three major types of inflation – Demand-Pull inflation, Cost-Push-inflation, and Built-In inflation.
Regardless of the type of inflation in play, individuals are expected to play their parts in limiting its effects within their households.
After several months of hard work to control economic factors and stay ahead, the United States has been hit by inflation. The Federal Reserve had earlier raised its inflation forecast (the personal consumption expenditures price index) from 2.4% to 3.4%. The consumer price index had already gained 5% in May, which is the highest jump it has recorded since 2008. This will also affect people outside the United States.
Regardless of your economic situation, there are a few things you can do to cushion the effects of inflation. Have you considered shaking up your cryptocurrency portfolio?
Can Cryptocurrencies Protect Against Inflation?
Depending on how proactive you are about your financial wellbeing, you might have considered buying cryptocurrencies as inflation protection. But will it work?
The truth is that cryptocurrencies, like other investment vehicles, can protect against inflation. They hold value and can gain value, irrespective of the situation of the economy. Even as fiat currencies falter, cryptocurrencies can perform really well for informed investors.
If you are planning to buy cryptocurrencies as inflation protection, you need to be careful where you put your money. Digital coins can perform well during inflation, but you have to identify the ones that are most likely to help. That is why we are here – to help you figure out the crypto coins to consider buying.
Top 9 Cryptocurrencies To Buy To Protect Against Inflation Right Now
There are so many digital currencies you can buy at the moment to improve your investment portfolio. But which coins can actually protect you from the current inflation and improve your chances of staying afloat if things continue to go south?
Investors who worry that inflation could affect your money should consider these nine cryptocurrencies that could outperorm in an inflationary environment, according to experts.
- Bitcoin (BTC)
- Ethereum (ETH)
- Ripple (XRP)
- EOS (EOS)
- Binance Coin (BNB)
- Dogecoin (DOGE)
- NEM (XEM)
- Stellar (XLM)
- Cardano (ADA)
1. Bitcoin (BTC)
If you search the web for Bitcoin often, you must have noticed a good number of articles that claim that Bitcoin is not a hedge against inflations. The writers often use convincing points to discourage people from buying BTC for inflation protection. But detractors of Bitcoin have been proven wrong time and time again.
Without mincing words, we can say that Bitcoin is to the digital world what Gold is to the pre-blockchain world. It has always been called the “Digital Gold”, but has fully metamorphosed to that in recent years. BTC is undeniably a “store of value” and can protect your portfolio from the devastating effects of inflation.
Like other cryptocurrencies we will consider here, Bitcoin has seen several good days and bad days. It is a volatile digital asset, but it can perform brilliantly even during an economic meltdown. You can confidently invest in Bitcoin today and expect a profit in the near future, but you should have the stomach for the risks involved in the cryptocurrency universe.
2. Ethereum (ETH)
Ethereum was launched just like another altcoin, but it has since created a niche for itself and become one of the most important items in the cryptocurrency universe. The Ethereum platform provides an avenue for developers to launch innovative projects that solve problems in the cryptocurrency scene, as well as in real-world situations.
Ethereum (ETH) has become one of the most valuable cryptocurrencies in the world. It is currently the second-largest cryptocurrency by market capitalization and has been sitting comfortably in the position for several years. It is already the king of smart contracts and has the potentials to gain more value in the future.
There are several reasons why Ether will continue to be a dominant coin in the cryptocurrency scene. The parent platform hosts hundreds of other digital coins on its blockchain, and ETH can be traded with them and other coins. ETH will continue to be a revered digital coin, regardless of the nature of inflation we are currently facing.
3. Ripple (XRP)
Ripple is one of the first cryptocurrency entities to have agreements with large financial institutions. It is helping businesses and individuals to work together without third-party financial institutions like banks, insurance companies, and more. It uses its native currency (XRP) to move value within the cryptocurrency universe and beyond.
There are so many reasons to trust Ripple (XRP) as one of the cryptocurrencies that can protect your portfolio from the effects of inflation. The coin has performed really well in the past, in spite of volatility which ravages the entire cryptocurrency universe. Earlier this year (2021), Ripple had moved to help central banks create private ledgers.
It is important to also note that Ripple has comfortably occupied the position of third-largest cryptocurrency by market capitalization. In spite of the economic situation, it has the potentials to reach new heights in the near future.
4. EOS (EOS)
To the average person, Blockchain development is super-complicated. Creating projects with blockchain technology takes time, energy, and a lot of technical knowledge. Many who dream of taking part in blockchain development face several barriers. EOS is the platform that is working hard to solve this problem.
EOS has taken several giant steps towards making the process of using blockchain technology as simple as possible. It employs a delegated proof-of-stake (dPoS) consensus mechanism, which gives users some power over how the ecosystem evolves. This is considered one of the reasons the platform is growing and its native currency is doing well.
Another reason you should consider the idea of investing in EOS as inflation protection is because the governance structure takes proactive measures against inflation. Last year (2020), EOS burned about $123 million worth of EOS tokens to curb inflation. This move defected supply by 0.8%.
5. Binance Coin (BNB)
Binance runs one of the largest cryptocurrency exchanges in the world. It has taken several important steps to advance the cause of blockchain development, including launching a blockchain of its own. The Binance Coin is the native currency of this blockchain and has achieved a lot in the crypto universe.
Binance Coin is a pretty valuable coin that is widely used in the Binance Exchange and elsewhere. The utility token is primarily used to provide traders with discounts when they transact on their platforms.
One of the major reasons to invest in Binance Coin for inflation protection is because people normally run to the Binance Exchange when there is a lot of volatility in the cryptocurrency market. Binance Smart Chain is also one of the major blockchains used for DeFi projects. You don’t need to be told that DeFi is fast becoming an incredible sub-sector with lots of potentials.
6. Dogecoin (DOGE)
Dogecoin is one of the most controversial cryptocurrencies out there. It was launched several years ago but remained in the background till recently. The Dogecoin community has grown significantly over the years, and the coin enjoys the highest form of loyalty from the community.
In addition to having a funny background, DOGE has strived on hypes for several years. In recent times, Elon Musk, the billionaire owner of Tesla, helped to improve the popularity of the coin. His tweets helped in many ways to improve the value of the coin, though it continues to be one of the most volatile digital coins out there.
DOGE may have a shaky background and a controversial past, but it is still making waves in the cryptocurrency universe. It is one of the coins from the early days that are still generating a lot of attention, and this will likely continue in the future. The value may not increase by much, but it can certainly serve as a hedge against inflation.
7. NEM (XEM)
NEM stands for new generation movement. The name is one of the best phrases that define what is happening in the cryptocurrency space. True to its name, NEM is helping to inspire people to embrace alternative ways of investing and making money. Buying NEM is like helping to preach about the importance of investing in cryptos, and there are benefits to get from that.
NEM is not a digital coin that only hypes the importance of embracing the evolving blockchain technology. It has brought some advancements to the industry, making data and asset management processes flawless and cost-effective. It has been described as having a bit of an uncertain future, but it is a decent buy at the moment.
The native currency of NEM, which is simply called XEM, has performed decently in recent times. It is a valuable token and has all the qualities to perform better in the future. Another major reason to consider XEM as a decent hedge against inflation is that NEM doesn't issue new tokens after the total supply of 8.99 billion XEM was distributed.
8. Stellar (XLM)
Stellar is very similar to one of the coins we have discussed here (Ripple). In fact, it was initiated by Ripple's co-founder, Jed McCaleb, who left after expressing disapproval with the direction Ripple was taking. His decision to leave has been vindicated by the success of Stellar and its native currency Lumens (XLM).
Stellar is one of the cryptocurrencies that focus on banking the unbanked. It is to the average person what Ripple is to banks and financial institutions. Therefore, it is one of the platforms you can trust when you need to make an investment that will protect you from a bad economic situation.
Stellar (XLM) is a good investment option for many reasons. It has also gotten into helping central banks create CBCDs (Central Bank Digital Currencies). It has also been predicted by most experts that XLM will gain value in the near future. It is also considered a great digital coin for long-term investors.
9. Cardano (ADA)
Cardano is a well-revered third-generation cryptocurrency. One of its primary goals is to improve the scaling issues of Bitcoin. It is also playing a significant role in the smart contract deployment principles of Ethereum. It utilizes a two-layered blockchain that includes Cardano Settlement Layer and the Control Layer.
Cardano is great because of its infrastructure. It is also considered an incredible investment vehicle because of its performance in the past. It recorded some of the best performances in the industry in February and May this year (2021). So far this year, it has gained over 720%.
We also believe that Cardano (ADA) is one of the best coins to buy as inflation protection. The parent platform is doing so much to improve the cryptocurrency space, and the token is doing pretty well in the crypto market. The value will likely improve, in spite of inflation.
Are Cryptocurrencies Good Inflation Hedges?
Every serious investor understands the importance of taking key steps to beat inflation. You don’t play around when your investments are at stake. You need to be sure that any asset you are buying is inflation-proof.
Coming back to the question: are cryptocurrencies good inflation hedges? Well, it depends on who you ask. While some so-called financial experts will tell you there is nothing good about investing in digital coins, those who have been part of the system from the onset will advise you to buy cryptocurrencies, even when inflation is biting hard. Some believe that cryptos are not yet “stores of value” while some insist that they are.
Cryptocurrencies are digital assets that hold value. Though they are volatile, they don't always succumb to economic factors the way fiat currencies do. This single fact makes them decent investment vehicles for inflation protection.
Other investment vehicles like stocks, gold, and commodities are still great for inflation protection. It is important to note that they fail sometimes, too. There is no tangible reason to believe that Bitcoin and other cryptos cannot protect you from the damning effects of inflation. It is all about personal choices. If you feel they are good, invest by all means. If you don’t have the stomach for the risks involved, steer clear.
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Where Can You Buy Cryptocurrencies For Inflation Protection?
In addition to knowing the right digital coins to buy for inflation protection, you need to know where you can get them. You can buy cryptos from exchanges, brokerages, and regular apps that focus on online investments. These three sources have their advantages and disadvantages.
Most people buy cryptos from exchanges like Binance, eToro, and Coinbase. These platforms are great because they always have lots of available coins. However, they are not as safe as investment platforms should be. Some have invested heavily in security, but they are all targets of hackers. You may lose your coins to hackers if you leave them for too long in an exchange after making a purchase.
Many people are turning to brokerages for cryptocurrency investments. Progressive brokerages now allow their users to buy digital coins, among other investment vehicles. Brokerages are mostly secured. However, you need to choose reputable brokerages like eToro when you want to make a significant investment.
eToro is considered one of the best platforms to buy cryptocurrencies for many reasons. Ease of use is one of its biggest selling points. Regardless of your experience level, you will find cryptocurrency investment easier when you use eToro.
Regular apps that support cryptocurrency trading are not often safe. There are reputable ones out there, but it will be safer for you to buy and sell your digital assets through a reliable brokerage.
How to Store Your Cryptocurrencies For Inflation Protection
If you are buying cryptocurrencies for inflation protection, then you are definitely going to hold them for a while. As mentioned earlier, you should never leave a digital asset in exchanges. It is best to transfer your digital assets to a digital wallet.
Choosing a secure digital wallet is very important for anyone who wants to take to crypto investing. There are important factors to consider before choosing a wallet.
Another important benefit of buying cryptocurrencies from Etoro is that you will have access to a wonderful digital wallet. Yes, eToro offers users an easy-to-use, multi-crypto, secure digital wallet. This wallet can make your cryptocurrency investment portfolio a lot safer.
Inflation is an issue that affects every economic entity. From governments to large corporations to small businesses, and to breed winners of every household, everyone feels the impact of inflation in different ways. To curb the effects, you need to take critical steps.
We have established that cryptocurrencies can help you limit the effects of inflation. We’ve also stated that some coins are more suitable for inflation protection than others. To help you further, we have recommended 9 coins that can help you beat inflation this year.
We believe you understand the risks involved in cryptocurrency investing. We also believe that you know that it can also be rewarding when you make the right decisions. Are you going to improve your cryptocurrency portfolio with the coins discussed here? It is your call.
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Virtual currencies are highly volatile. Your capital is at risk.