Cryptocurrencies: How to Avoid Wasting Money

A bet similar to a game at a roulette table. Red or black. Cryptocurrencies have become very popular even among do-it-yourself savers, and not just among institutional investors, despite the considerable controversy surrounding their use and associated risks. They're popular for one fundamental reason: they allow for significant profits in a short time. But they can also waste a lot of money, especially if you don't follow certain rules.

CRYPTOCURRENCIES

In recent decades, new technologies have made great strides, conquering every sector, including finance. Among technological innovations in the financial sector, cryptocurrencies have achieved the greatest success. In particular, Bitcoin, founded in 2009, and Ethereum.

An criptovaluta It is a digital currency that has no physical counterpart. It is a cryptocurrency, that is, money becomes usable or visible only if the requirements and suitable computer access keys are met.

La virtual currency It is currently used to exchange goods or make payments between individuals who on a voluntary basis they decide to accept itOtherwise, as CONSOB explains, Commissione Nazionale per le Società e la Borsa, they have no legal value all over the world.

Therefore, it is important to keep in mind that their volatility and the fact that they are not managed by a central government body could cause the currency's purchasing power to devalue or improve overnight.

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HOW CRYPTOCURRENCIES WORK

Virtual currency is nothing but a defined numerical series broken down into bit in what is known as Blockchain.  The encrypted numeric code is stored by the holders to make or receive cryptocurrency payments.

But the most interesting thing is the way Bitcoin, Ethereum, or Tether are created. In fact, the creation process is known as mining, that is, there are miners, as they are called in jargon, who contribute to the formation and therefore concatenation of codes for the creation of new money.

This is done by adding blocks of bits to the immutable sequence of transactions stored in the ledger. But there's a limit to everything. And cryptocurrencies do too.

The limit that can be reached in the minting of new money is set at a maximum ceiling. Minare Beyond the limit requires significant investments and increasingly expensive and energy-intensive infrastructure. But that's a topic we'll explore further later.

At the same time, today it is possible to start investing also through cryptocurrency bots, Namely cryptocurrency robot which with specific algorithms are able to predict and therefore provide trading changes in place of the prisoner.

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HOW NOT TO WASTE MONEY WITH CRYPTOCURRENCIES

Cryptocurrencies aren't strictly speaking a savings tool, but rather a gamble whose percentage fluctuations can be very large, even within a few days. For this reason, it's a good idea to take some precautions to reduce risks and maximize potential rewards.

• DestinedOnly a small portion of your savings should be invested in this risky form of investment. Don't expect miracles, and remember that you're taking a risky gamble.
• Give yourself a target of profit, once reached, you liquidate this instrument. With cryptocurrencies, the old stock market investing rule applies even more: "Sell and regret."
• Cryptocurrencies There are many. Don't chase trends, and focus only on the most well-known, recognized, and transparent ones. And make sure they're liquid in terms of trading.
• The best way To bet on cryptocurrencies, you need to use ETF instruments, listed on regulated markets.
• Study What are cryptocurrencies before you start betting? Analyze the market and find the best options without taking too many risks.
• Diversify your investments: Never bet everything on a single cryptocurrency. Virtual currencies come and go unpredictably; the more choices you have, the lower the chance of losing everything.
• Choose recognized platforms Because scams are always lurking. And in these cases, you're not protected by the law. If you have to blame anyone, you can only blame yourself.

CRYPTOCURRENCIES CONTROVERSY

Digital wallets, the digital wallet, are available on a number of platforms such as eToro e BinanceDemand is growing, although it's still far from troubling the financial market. Yet, cryptocurrency is also becoming a new way of managing money for some, even at the state level.

For example, there are states likeUruguay with the e-weight, and El Salvador which recognized Bitcoin as legal tender, who considered adopting the cryptocurrency as an alternative to that managed by a government institutional body.

These do not replace the national currency, but are positioned alongside the main currency, allowing its exclusive use for numerous activities not yet accepted in all other parts of the world.

There are also countries where crypto assets have been declared illegal and banned. Among the major proponents of the cryptocurrency ban is China together with Tunisia and Egypt.

On the other hand, in over 40 countries around the world, virtual currency, although not explicitly prohibited, is implicitly prohibited. In particular, cryptocurrencies are mostly banned in the geographical area between Africa e Middle East.

In Italy, cryptocurrency remains unrecognized as legal tender, but it can be freely exchanged and held. And since it has been incorporated into the country's foreign currency system, it carries with it tax obligations. Therefore, the taxation applied to foreign currencies currently also applies to virtual money.

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HOW MUCH ENERGY DO CRYPTOCURRENCIES CONSUME?

According to studies conducted from the University of Cambridge, Bitcoin, the most profitable and well-known cryptocurrency in the world, requires more than 120 TWh of electricity per year. More than the total energy used in a year in countries like Sweden.

Il Cambridge Bitcoin Electricity Consumption Index, Cbeci, thus confirming that one year of mining is equivalent to 0,59 percent of global electricity consumption.

This is also the reason why Elon Musk, owner of Tesla and Space X, backtracked, claiming that it is too much of a consumption for the planet.

Now it's up to blockchain to find solutions to save money and help the planet in an already very complex period.

TO KNOW MORE:

• How to trade online without the risk of falling into the hands of a manipulator
• How to choose a current account for trading
• Guide to saving on your current account fees