(The organizers did not respond to a request for comment.)
All in all, its been a normal couple of weeks in the world of cryptocurrency.
Despite that volatility, investors are increasingly buying into the currencies.
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But what are the drawbacks?
The Markup interviewed behavioral economists, industry analysts, and investors.
Many cautioned that crypto markets increasingly resemble rigged casinos.
But lets start with the basics.
What Is Cryptocurrency?
Cryptocurrencies are byproducts of blockchain networks and vary widely in purpose and value.
Bitcoin, the most well-known digital currency, is illustrative of how the technology works.
Thats where the coins come in.
When a miners data pipe successfully solves a cryptographic puzzle, that miner is awarded a bitcoin.
About 18.8 million have been mined so far, with the last expected to be mined around 2140.
Why Does Their Value Fluctuate So Much?
There is no cash flow associated with cryptocurrency, he said.
It seems to be purely a behavioral phenomenon.
You buy thinking somebody else will value it more than you did, but you have no idea why.
If they buy or sell at the right time, speculative cryptocurrency traders can make significant profits.
Those runs can make or break fortunes.
What Does a Lack of Regulation Mean?
Heres where the real risks come in.
Other exchanges also went offline amid the panic.
Binance and similar exchanges are unregulated.
Binance did not respond to The Markups request for comment.
The unregulated exchanges also pose quieter, daily risks.
Many exchanges, for example, have started offering complicated derivatives like leveraged buys.
The exchange lends the additional $9,000, on which it will likely charge interest.
If Coin X increases in value, say by 50 percent, everything is great.
The account holder pays back the $9,000 they borrowed plus interest and a fee.
But there are several ways things can go wrong.
If Coin X dips, things get even worse.
People think they understand, when actually they dont.
Gaining access to 100 percent of the deals as a Black Dragon currently costs about $104,000.
So Whats the Safest Way to Invest in Crypto?
Nobody should be investing in things for excitement.
This article by Todd Feathers wasoriginally published on The Markupand was republished under theCreative Commons Attribution-NonCommercial-NoDerivativeslicense.
