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Investing in cryptocurrency offers several potential benefits — along with some unique risks. Some of the key benefits include diversification, a potential for high returns, and 24/7 trading access.

Diversification

Diversification is the concept of spreading out your investments across different asset classes — this reduces risk. Most investment experts agree that maintaining a diversified portfolio is key to long-term investing success.

To diversify a portfolio, investors should choose assets that move independently of one another. Having a mix of stocks, bonds, crypto, real estate, etc., can be beneficial.

Historically, cryptocurrency prices have moved fairly independently of the prices of other asset classes. Adding a small percentage of cryptocurrency to your overall portfolio can help you balance out long-term investing strategies.

Inflation protection

Many crypto experts argue that cryptocurrencies like Bitcoin and Ethereum may serve as a hedge against inflation.

The idea here is that there are a limited number of Bitcoins and Ether tokens in existence. As inflation increases, the value of a dollar decreases — making the price of one BTC or one ETH rise in dollar terms.

This is more theoretical than proven, however. Cryptocurrency has too short of a recorded history to really gauge whether or not it can be used as a long-term inflation hedge.

Potential for outsized returns

Cryptocurrency has delivered phenomenal returns in recent years. Whether this trend continues is difficult to predict, however.

The graph below shows the 5-year performance of Bitcoin (BTC) compared to the performance of the S&P 500 index fund (which is a collection of the 500 largest companies in America).

Over the last five years, Bitcoin has returned a massive 1,416%, compared to 67% for the S&P 500 index. That’s approximately 21x higher returns for BTC compared to the broad US stock market. And if you zoom out even further, the results are even more impressive for Bitcoin.

In other words, crypto has been a better investment than stocks over the past five years — although time will tell if this trend continues.

But cryptocurrency is also a highly volatile asset, and any potential returns will vary on market fluctuations, transaction costs, taxes, and other factors.

24/7 liquidity

Cryptocurrencies are highly liquid, which means that they are easy to exchange for dollars or other cryptocurrencies. In fact, crypto markets operate 24/7/365. Liquidity gives investors options and helps them make trades when and how they want to.

Other assets tend to be less liquid. Stocks, for example, only trade five days a week during normal trading hours. Assets like real estate are far less liquid, and could take weeks or even months to sell.

Is cryptocurrency a good investment?

Like any investment, the answer to this question depends on an individual’s plans, goals, and risk tolerance.

Looking at recent history, it’s very clear that some cryptocurrency tokens have been excellent investments at times. However, past returns do not predict future performance.

Ultimately, it’s up to each individual investor to decide whether cryptocurrency makes sense for their portfolio. If you have a small appetite for risk, you should keep crypto assets to a small percentage of your overall investment portfolio .

In other words, don’t just invest in crypto — invest in a variety of stocks, bonds, real estate, and maybe some cryptocurrency as well.

Machines have become a lot smarter in the last 50 years. Artificial intelligence (AI), once a radical concept among computer scientists in the 1950s, now has more practical applications in our day-to-day lives than some people realize. AI powered technologies now play a vital role in marketing, finance, data analysis, healthcare, and much more. 

AI systems predict what you’re typing into a search engine. They serve up personalized ads based on your purchase and browsing history. They recommend new albums and playlists curated from your favorite songs. Advanced AI systems can even help doctors more quickly diagnose and treat illnesses in patients.

Innovations in the AI space have yielded benefits across many industries. Processes are more efficient, forecasts are more accurate, and convenient technologies are more widely available than ever. In the first part of our series on the benefits and disadvantages of AI, we’ll explore a few of the advantages that artificial intelligence systems present and how they make our lives easier. 

1. Increased Efficiency

One of the greatest advantages of AI systems is that they enable humans to be more efficient. AI can be leveraged to perform small, repetitive tasks faster, or it can be used to complete much larger, more complex tasks. Regardless of its application, AI systems are unbound by human limitations and will never get tired.

And despite what you’ve seen in the movies, AI isn’t always glamorous. In fact, it’s often used to perform mundane, monotonous, time-consuming tasks that humans wouldn’t find particularly enjoyable. For instance, insurance companies use AI to process claims faster and at a higher volume than a human could, freeing up time for humans to focus on more important matters. Programs can also read and mimic a user’s keystrokes to automate dull work like data entry. Conversely, when operating alongside other technologies, AI can also process large amounts of complicated data and deliver actionable insights efficiently and accurately.

2. Improved Workflows

While AI is frequently leveraged to automate entire tasks, it also has many practical applications for improving human workflows. Deep learning technologies like natural language processing (NLP) and automated speech recognition (ASR) have transformed the way people work in professions like education, media and entertainment, and law enforcement. By converting the spoken word to text, ASR technology can automatically produce transcripts of any audio and video. 

Speech recognition systems like Rev are already shockingly accurate, and you can expect that to continue as the science improves and the algorithms are trained further. ASR allows lawyers to get transcripts of a three-hour deposition almost instantly. Filmmakers and video producers leverage automated transcripts to manage their media assets and edit their content faster. Police officers can quickly find key evidence from body camera footage thanks to automated transcription. These are just a few of the ways AI can streamline workflows.

3. Lower Human Error Rates

As we’ve already mentioned, AI systems don’t have to deal with fatigue. Humans, on the other hand, get tired. The human brain can only focus on one task for so long before that focus starts to slip. When people get tired, they’re more likely to make poor decisions and become vulnerable to mistakes. Repetitive jobs can be particularly prone to human error — when a task is repetitive, it’s easier for humans to lose concentration. But AI systems don’t have to focus — they’re programmed for their function. And for those assigned tasks, AI systems eliminate the risk of human error, producing a more accurate result. 

4. Deeper Data Analysis

Modern businesses are swimming in data, but are they getting the most out of it? While manual data analysis is a time consuming enterprise, AI systems can process and analyze massive amounts of data at remarkable speed. AI systems can quickly find relevant information, identify trends, make decisions, and offer recommendations based on your historical data. For instance, algorithms can quickly analyze the effectiveness of marketing materials, identify customer preferences, and offer actionable insights based on those customer behaviors. 

5. More Informed Decision Making

This bandwidth for deeper data analysis allows business leaders to make better, more informed decisions to benefit their operations. Take classification models, for instance. These machine learning algorithms attempt to draw a conclusion based on historical training data. After processing that training data, the model will then categorize, or “label,” new data. 

Businesses leverage classification models when analyzing customer attrition, assessing anticipated churn rate. These models can generate a list of customers at risk of churning, enabling a business to proactively take preventative actions. Classification models also help marketers with lead scoring, examining a customer’s compatibility with a given product or service.

6. 24 / 7 Availability

According to the Bureau of Labor Statistics, Americans work an average of 8.8 hours a day. Whether we’re productive that whole time is an entirely different story. But machines don’t take breaks for coffee. They don’t step away from their desks to catch up with colleagues. And they definitely don’t pack up and go home at 5 p.m. Digital assistance solutions like chatbots are available to take customer inquiries no matter the time of day.