Now and then, something revolutionary comes along that changes not just our lives as individuals, but also entire societies. And in some extraordinary cases; the global way of human endeavors. With Facebook's Libra coming soon, China's Central Bank's Sovereign Digital Currency program by the People's Bank of China is gaining traction (PBoC), as well as the European Central Bank (ECB), International Monetary Fund (IMF), and World Bank paying very close attention to stablecoins and their impact on monetary policy; it appears that the race for global digital currency has finally arrived.
In this third part of our look into cryptocurrencies; we consider some of the key points in decision-making regarding the NFTs known as cryptocurrencies.
How do I buy Cryptocurrency?
Some cryptocurrencies, including Bitcoin, can be purchased with US dollars; others must be purchased with Bitcoins or another cryptocurrency, such as Ethereum.
However, to purchase cryptocurrencies, you will need what is known as a “wallet,” which is an online app that can hold your currency. Usually, you need to create an account for an exchange, afterwards, you can transfer real money to buy cryptocurrencies such as Bitcoin or Ethereum.
Are Cryptocurrencies Legal?
There’s no question that there are people who are concerned about the legality of cryptocurrencies and rightly so. In the United States, for example, trading in cryptocurrencies is legal; whereas in China, there has been a ban on their use. Thus, the legality or otherwise of the use of cryptocurrencies ultimately depends on each country. But you have to also know how to protect yourself from fraudsters who see cryptocurrencies as an opportunity to defraud investors; thus requiring that buyers beware always.
How do I protect myself?
As is necessary for all kinds of transactions or businesses to which you wish to commit your resources; buying cryptocurrency in an ICO, requires you to take time out to read the terms and conditions in the company’s prospectus for the following information:
- Know who owns the company. Having an identifiable and well-known owner is a positive sign about the legality and viability of such cryptocurrency.
- Do other major investors want to invest in it? It is often a good indication of crypto if other well-known investors want to invest in the currency.
- Another piece of information you should be interested in is whether you will be able to own a stake in the company or just currency or tokens. This distinction is important because owning a stake guarantees that you get to participate in its earnings, while purchasing tokens simply means you're entitled to use them, like chips in a casino, which you may have but never really own.
- Another very important factor to consider is, whether the currency is already developed, or if the company is simply looking to raise money to develop it. The further along the cryptocurrency is, the less risky it is.
Understanding crypto can take a lot of work and time to carefully comb through a prospectus; the more information it has, the better the chances that it is legitimate. However, even the legitimacy of a cryptocurrency doesn’t mean the currency will succeed. That part of the cryptocurrency business is an entirely separate question, and that requires a lot of market wisdom.
Aside from those concerns, it's important to remember that simply owning cryptocurrency puts you at risk of theft as hackers try to break into the computer networks that store your financial assets. In one case, a well-known exchange declared bankruptcy in 2014 after hackers stole hundreds of millions of dollars in Bitcoins.
Should you buy Cryptocurrency?
Because of the volatile nature of cryptocurrency, it appears to be a highly speculative and unstable investment when compared to stock trading of well-known companies, which is generally less risky than buying cryptocurrencies like Bitcoin.
What Online Brokers Offer Cryptocurrencies?
There are several online brokerages and cryptocurrency exchanges that offer cryptocurrencies for sales or purchases. They include Binance.US, Coinbase, Gemini, Robinhood, eToro, SoFi Active Investing, Trade Station, and Webull. These online crypto brokerages have capacities for a varying amount of cryptocurrencies that they can offer to buy or sell.
What promise do cryptocurrencies hold for the future? Only time will be able to tell. For now; I guess it has to be a case of fortune favoring the brave.
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