5 Frequently Asked Questions When Investing in Cryptocurrencies (Crypto)
Are cryptocurrencies safe?
There are certain risks in the cryptocurrency market, similar to traditional financial markets. For example stocks and bonds. Cryptocurrency exchanges are vulnerable to hackers. This attack resulted in huge losses for investors. Scams and scams are rampant in the cryptocurrency industry. Scammers promised investors huge returns but failed to deliver on that promise. Investors who believe and believe in hype can suffer heavy losses when projects fail.
Storing cryptocurrencies is not as easy as storing stocks or bonds. While existing exchanges can facilitate the buying and selling of crypto assets, they can still face exchanges or hacks. Cold storage makes your assets more secure. However, cold storage comes with its own set of challenges, including the risk of losing your private key, preventing you from accessing your cryptocurrency.
Finally, it is important to understand that cryptocurrencies and blockchain in general are advanced technologies. While that makes it attractive, it also increases risk for investors. Many of these technologies are still under development and have yet to prove themselves in real life situations. Buying cryptocurrency is an early stage investment, and investors should expect similar returns to venture capital.
Are cryptocurrencies legal?
Cryptocurrencies like Bitcoin are now legal in the US, Japan, UK and many other countries. However, in emerging markets, the legal situation for Bitcoin is still very different. For example, in Vietnam, our country does not prohibit bitcoin, only uses bitcoin as a means of payment, not cash. At the same time, it is also not cheap, which means that if you have a problem related to fraud, land collapse, it will definitely not be solved. Overall, it is necessary to take into account the state of Bitcoin in each country.
While bitcoin is legal, most of the laws that apply to other assets also apply to bitcoin. Tax law is an area where most people struggle. For tax reasons, bitcoin is generally considered more of an asset than a currency. Since Bitcoin is still new, its legal framework is not yet fully developed.
Is cryptocurrency a good long term investment?
Will Crypto Assets Work? This question is determined by the wide acceptance of the population.
For example, Bitcoin is viewed by many as an asset like gold. Unlike fiat currencies like the US dollar and Japanese yen. They can print as much as they want, as the politicians want. Meanwhile, Bitcoin has a peak supply of just 21 million units. As a result, many investors view bitcoin as a difficult asset to appreciate when fiat currencies depreciate. Others believe Bitcoin can be used as digital money on a large scale. Moreover, some even say it has the potential to be the first truly global currency.
Meanwhile, Ethereum aims to serve as a global computing platform. It serves as a launching pad for decentralized applications or “dApps”. It is open source and not controlled by any organization. Ethereum allows the use of smart contracts, whose conditions are written directly in code and can be executed automatically. This technology could revolutionize major industries such as real estate and banking, potentially creating entirely new markets.
If Bitcoin and Ethereum can achieve this goal, investors who buy these coins now are likely to be heavily rewarded for years to come. But there are many other projects competing with these crypto leaders and their success is by no means guaranteed.
How is the COVID-19 pandemic affecting cryptocurrencies?
The COVID-19 pandemic is a tragedy we all wish we never experienced. But we’ll get past this. In this era, people’s need for technology is getting higher. A common example is the demand for cryptocurrencies.
Governments and central banks around the world spend billions of dollars to support and stimulate economies. The United States alone has pledged more than $6 trillion in economic aid to people, loans, and aid to businesses. The ongoing massive stimulus measures also mean that the government is printing a lot of money lately. This has not been a problem for the US dollar, as it is in high demand worldwide. However, in the long run, this can lead to inflation and currency devaluation.
It doesn’t stop there, keep in mind that bitcoin availability is limited. No council or politician can earn more bitcoins. This will become more important in the future.
Which cryptocurrency should I invest in?
Investment choices depend on individual tastes. Each part has its own unique benefits. Collectively the most opinions from industry experts. 2021 will be a brilliant year of cryptocurrency development. Above is the position of Bitcoin, which is expected to be digital gold. Under Bitcoin there are more than 10,000 other cryptocurrencies. But one thing you should know is that the other 10,000 cryptocurrencies are from some higher tier platforms. In other words, it was another 10,000 parts built from the original foundation. Therefore, we recommend investing only in platform cryptocurrencies, from which all other cryptocurrencies come from. And since it’s 2021, some of the big platforms right now are:
- Binance Coin (Binance Smart Chain)
- Casper’s Lab
We think this is a platform that will continue to grow and most of the other potential projects in 2017 appear to have lost their growth momentum. So forget the past of 2017 and keep learning what’s new in the cryptocurrency market. Lots of luck.
WARNING: Investing in financial products involves many risks which may not be suitable for some investors. Therefore, please think carefully and check yourself before making any decisions regarding the content referenced here. CryptoViet.com.