Cryptocurrencies: what they are and what risks they take
New technologies, favored by advances in cryptography – or by the application of methods that are used to make a message understandable / intelligible only to people authorized to read it – and by the evolution of the internet, are causing a radical change in the global economy, with particular reference to the financial sector, from the point of view of the methods of exchange of goods, services and all financial activities.
Among the most significant applications of digital technology to the financial sector, the birth and diffusion of “cryptocurrencies” stands out, the best known of which is bitcoin.
The difference between the three cases lies in the possibility or not of being able to exchange the cryptocurrency with legal tender (or ‘official’ or ‘fiat’ currency, according to other common denominations) and in the type of goods / services that can be purchased.
Do currency and cryptocurrency have the same functions?
We know that legal tender coins are usually recognized as functions of unit of account, commonly accepted means of payment and deposit of value. Can a cryptocurrency perform the same functions? The high volatility of cryptocurrencies certainly does not allow the correct execution of the ‘unit of account’ function: the prices of the main cryptocurrencies are subject to very large fluctuations, even within the same days. So it is highly inefficient, if not impossible, to price goods and services in cryptocurrency units. Take help of bitcoin era for more profit.
As regards the function of value reserve, it must be considered that, as they have been designed, the more they will be used for the payment of goods and services, the more they will increase in value. This is because the number of cryptocurrency units that can be produced is limited; it follows that the more transactions are settled in cryptocurrencies, the greater their value. Finally, they are not a commodity currency, that is, they also do not have a function of use, such as gold. Instead, in the near future, they could increasingly fulfill an exchange function.
Who is best trader?
We do not hide, however, that the best traders, if really such, would not have great motivations to follow this type of speech. In addition to the personal gratification of having become big players on international markets and of having done good for your country, other satisfactions, more material, will be needed to convince the best to participate in the project. Excellence is right to be rewarded, so what we propose is the total tax exemption for the subjects involved, meaning by this not only the gains in cryptocurrency of the activity but also, in case they were converted into fiat currency, exemption from all income tax, as well as from VAT and excise duties of all money spent on the national territory.
It is necessary to rebuild a new category of valid individuals, rightly privileged, who will be able to effectively enjoy the fruits of their talent, with no more feelings of guilt or need for hidden life. Also because the work in question will be extremely exhausting, with the possibility of numerous and painful failures, with consequent repercussions on the mental and physical health of the subjects. It is therefore right to recognize a reward equal not only to results but also to risks.
But the opportunities are even more varied. It is right these days that the news that Bulgaria, following an anti-crime operation carried out last spring, has seized 213,519 bitcoins, at the time equal to 500 million dollars but now worth 3.6 billion. At this point we imagine the embarrassment of the authorities, uncertain whether to sell or keep the unexpected treasure. But, we suggest, instead of selling or keeping, wouldn’t it be better to manage?
The selection of this special staff must take place according to strictly meritocratic criteria, through a trial period, a public competition in which it will be necessary to demonstrate its operation superior to other competitors. The work shifts will be three months, at the end of which 10% of the subjects, those with the worst performances will be dismissed, replaced by the winners of the following competition.
Andreas Townsend Author
I am a technical writer, author and blogger since 2005. An industry watcher that stays on top of the latest features, extremely passionate about finance news and everything related to crypto.