Investing in Crypto Assets
Cryptocurrency, a newer term, is defined by Wikipedia as “a digital currency that uses a public-key infrastructure (PKI)”. A decentralized, distributed, ledger-based form of money, cryptosystems may include various forms of digital currency software, including Openpgp/jabber servers, PHP, Cold Storage Area Networks (SCANs), LAMP servers, and Java servers. A cryptocoin, is a currency with no known centralized issuer, but instead uses its value to trade on peer-to-peer (P2P) marketplaces. Thus, there are no physical money centers or physical money flows.
There has been much confusion about what the future of money will look like, with many people forecasting a shift towards “post-scarcity” where there will be less need for money due to computers and other new technologies which facilitate money transfers. As such, many people are scrambling to find solutions. One group of thinkers identified two major types of currencies as being the foundations for a better financial system: Cryptocurrency and Fiat. Fiat, they argue, must be replaced with Cryptocurrency if a more secure system of exchange is going to be developed, since digital currencies do not have any inherent security issues.
However, many cryptosporters are concerned that digital currencies will not be able to withstand the pressure of a fiat monetary system – specifically a fiat monetary system that will be either national or international in scale. Those who support the idea of using cryptosporters as intermediaries between buyers and sellers, often counter that it is the decentralized nature of the Internet that provides the basis for widespread internet security – with regular online payment schemes such as PayPal providing the backbone for digital currency usage. Additionally, there is little incentive for any central government to introduce laws that would regulate the transfer of money. This leaves the door wide open to abuse, as any entity that has the power to mint money, whether a central authority or a private company, can engage in fraudulent activity in order to benefit from its sale.
In addition to the above, it should be noted that even if the use of Cryptocurrencies was limited to intermediates between anonymous buyers and sellers, this would not eliminate the need for a fiat currency. After all, any government would need to keep control of its domestic economy, and in particular the supply, circulation, distribution and regulation of currency. In light of this, it is unlikely that any government would be willing to enact laws that would limit the ability of its citizenry to use their own money for purchasing goods or services.
With all this in mind, those who want to use Cryptocurrencies as an alternative should realise that they are not acting in the best interest of their fellow citizens – nor of the wider global community. Rather, by limiting their exposure toICO providers through intermediaries such as the Blockchains, investors who participate in the transfer ofICO tokens will be able to better track their progress in theICO environment. By doing so, they can avoid the risk thatICO tokens may be “arrived” at a price which is unreasonably high. For those who already haveICO tokens, the ability to track their progression after their purchase with aICO tokens at a certain price level will allow them greater confidence in their investment portfolio overall.
Unfortunately,ICO companies are not obliged by law to follow regulation standards, which may inhibit them from operating according to certain requirements. This problem has been addressed by the formation ofICO Platforms, such as the Counterparty Research Platform and the Open Ledger Project. These protocols ensure thatICO companies are subject to regulation rather than the hidden dangers ofICO offerings from private parties. Moreover, investors who prefer to interact withICO assets through the use of private transaction networks will be able to trade anonymously by using proper Counterparty protocols. Therefore, whilstICO tokens may represent a potentially lucrative new venture, investors should exercise due diligence and caution when dealing withICO currencies, tokens or otherICO assets.