Cryptocurrencies have quickly become a hot investment topic, prompting many to question if cryptos are backed by any currency or are even valid investments at all. While that answer may be no, other factors can impact their value; such as being scammed into investing quickly by their creators who lie about what their offering. To prevent being scammed investors should do some research first before investing – including checking reviews online as well as for real contact details on websites with real currency listed as well as reading our warranty and liability disclaimer before investing.
Fiat currencies like the U.S. dollar are backed by governments and central banks; cryptocurrency does not. Instead, its value stems from complex math, blockchain technology and limited supply – factors that proponents believe make cryptocurrencies safe stores of value since their math can never be altered by anyone.
Cryptocurrencies also attract investors due to their promise of privacy. While credit cards and PayPal provide anonymous electronic payments, cryptocurrency offers the potential of being completely anonymous – although authorities still monitor cryptocurrency transactions due to a digital trail they leave. Moreover, most cryptocurrencies remain largely unknown as an accepted form of payment with high levels of volatility.
As governments tighten restrictions on cryptocurrency use, more people may abandon holding cryptocurrency assets. Still, cryptocurrency enthusiasts remain confident that digital currencies are poised to change the financial world; some believe they could replace fiat currency altogether in countries with stable inflation and exchange rates; other nations such as Bahamas and China have begun testing central bank-backed cryptocurrencies of their own.
A major threat to the cryptocurrency market lies in a lack of regulation and understanding on how to secure investments. This is particularly pertinent with online “wallets”, as these storage sites can often be easy to use but contain serious security flaws which hackers could exploit. Users should become acquainted with various wallet types – hardware, mobile and paper wallets – before practicing safe storage practices.
Asset-backed cryptocurrencies may not succeed as speculative investment vehicles, but they are ushering in a profound paradigm shift in finance. Solulab has been at the forefront of this transformation and we look forward to remaining so in its wake. For more on how traditional assets and digital currencies are altering our world read on!