Purchasing cryptocurrencies involves some risks. Investors have shied away from these digital assets due to their volatility, lack of regulation, and several successful hacking instances.
For instance, according to a research from Chainalysis, cross-chain bridge attacks have cost US$2 billion in losses this year, or 69% of all cryptocurrency stolen. There have been 13 cross-chain bridge hacks since 2022’s launch.
Define cross-chain bridges now. These blockchain bridges essentially make it possible to transfer cryptocurrency between blockchain networks. Blockchain networks are like silos in that they don’t interact with one another.
Users can now deposit their Ethereum (CRYPTO:ETH) (or any other token) to a cross-chain bridge thanks to the development of cross-chain bridges. Users are then issued the equivalent of another token, such as Polygon, to utilise the Polygon Bridge, and the ETH token is locked by a contract.
These bridges are targeted by hackers because they serve as a central location for storing cryptocurrency. Several bitcoin exchanges have been hacked in the last ten years. Such cyber-attacks have, however, decreased as a result of improved security measures.
In addition to security concerns, the macroeconomic environment is still very difficult, causing the ongoing sell-off to accelerate. Capital has been directed toward low-risk asset types like bonds as a result of the increase in interest rates. Further, consumer spending has decreased over the past year due to inflation and the possibility of a worldwide recession.
However, the drop in value of these digital assets offers investors a chance to buy the dip if they have a high risk tolerance. What should you do with your $1,000 now?
A great long-term investment is Ethereum
With a $228 billion market cap, Ethereum is the second-largest cryptocurrency in the world. ETH has returned 460% to investors over the past five years, despite being down more than 60% from all-time highs.
Due to a forthcoming event called “The Merge,” ETH prices have increased 40% in the past month. The proof-of-stake (PoS) validating mechanism is replacing the proof-of-work (PoW) validating mechanism on the Ethereum blockchain, which will dramatically cut transaction fees and increase scalability.
The Goerli testnet merge, the last testnet practise before the ETH 2.0 merge, was successfully completed by Ethereum network developers. By September 19, the Ethereum Foundation anticipates making the switch to the PoS method, which will significantly influence short-term ETH price movements.
Bitcoin still has the first-mover benefit
Bitcoin is a further excellent long-term investment for cryptocurrency investors (CRYPTO:BTC). The first cryptocurrency to be introduced was bitcoin, which is now the most widely used digital asset worldwide. Bitcoin, which has a market capitalization of $451 billion, is held on the balance sheets of several publicly traded corporations.
As a worldwide network of computers “mines” BTC tokens to confirm transactions, bitcoin is also referred to as “digital gold.” Global gold reserves are currently $9.2 trillion, and in my opinion, Bitcoin might eventually replace gold, offering investors tremendous upside potential.
The digital gold might make up more of your cryptocurrency portfolio if you believe that Bitcoin could be a reliable store of value and inflation hedge, similar to gold.