The Threat of Fraud Is Keeping Some Investors Out of Crypto. Here’s Why I’m Investing. #CriptoNews

Crypto markets remain volatile. But over the last year or so, the prices of most major cryptocurrencies like Bitcoin (BTC 0.79%) have skyrocketed. This has drawn unprecedented attention from investors and the wider world. Yet despite the huge price gains, many investors remain on the sidelines due to worries about crypto scams and fraud schemes. These fears are not unfounded. According to new research from The Motley Fool, “Investment scams are costing consumers millions, and cryptocurrency is a top payment method.”

While the threat of fraud is keeping many investors out of crypto, I’m still a big believer in cryptocurrencies. There are two main reasons I’m staying invested.

1. Bitcoin is the new gold

There’s an old saying in the finance world: Currency is the bubble that never pops. Well, not never. Throughout history, several currencies have imploded due to hyperinflation or governmental collapse. But in general, when they are in use, currencies have stood the test of time. Most global currencies today are considered fiat currencies. That means that they are backed by nothing but the social understanding that they are worth something. The U.S. dollar, for instance, do not have any direct value relation to gold or silver. You can’t trade it into the Federal Reserve for a certain commodity or tangible good. The U.S. dollar retains its value because we all agree that it has value.

Gold is very similar. Some of its value is derived from industrial use cases. But the majority of gold’s value stems from its status as a social good. Therefore, gold’s value largely fluctuates based on its perceived valuation. In this regard, Bitcoin is no different. No one controls Bitcoin’s value. Instead, it trades freely, with its value reflecting the global perception of its value. Like U.S. dollars, you can’t trade Bitcoins in for a tangible good — but that doesn’t mean they don’t have value.

Gold is often considered a store of value. That is, it’s an investment that you can convert your fiat currency into that is somewhat insulated from currency inflation and prevailing global events. Bitcoin is also considered by many to be a store of value, even though its price in fiat currency terms on any given day or year might fluctuate wildly, somewhat undercutting the argument. Nevertheless, Bitcoin allows you to diversify your risk away from traditional fiat currencies like the U.S. dollar.

What gives the U.S. dollar and gold their social value? There are many factors, but one of the biggest is that they have been reliable symbols of social value. They have a long history of having social value, and so — at least for the time being — they retain that value. Bitcoin is early in its historical journey, but every year, its place in the “store of value” conversation solidifies.

Right now, gold has a total market cap of around $19.4 trillion. Bitcoin, meanwhile, has a market cap of just $2 trillion. Despite the fraud across other sectors of the crypto market, Bitcoin is still a reliable way to get involved, with a long runway of potential growth ahead of it.

2. Cryptocurrencies are now much easier and safer to buy

Want to get started buying cryptocurrencies? In the past, the only way to do so was to buy Bitcoin directly. This involved large custody and security risks, not to mention a lot of technical know-how. Today, there are many reputable and regulated firms like Coinbase Global that allow you to buy Bitcoin directly in a much simpler, safer way. Plus, you can even buy a Bitcoin exchange-traded fund (ETF) that seeks to track the daily price movements of Bitcoin.

Much of the shady practices in the crypto realm involve off-market deals or altcoins. If you buy Bitcoin directly though regulated exchanges, or simply get exposure to Bitcoin through an ETF, you can get in on the action without worrying as much about frauds or scams.