By buying the naming rights to the arena formerly known as Staples Center, Crypto.com shone a national spotlight on the niche field of cryptocurrencies. Here is a guide to the world of Bitcoin, digital wallets, smart contracts and other key pieces of the crypto puzzle.
Cryptocurrencies are not like shares of corporate stock, whose value is at least nominally tied to something concrete . Nor are they like commodities whose supply and demand can be forecast.
Instead, they’re more like a collectible item, such as stamps, whose value is driven in large part by their scarcity. There are no analyses or quarterly reports, production forecasts or fundamental measures such as earnings per share to guide investors. Instead, they have to rely more on any evidence they can find about which cryptocurrencies have momentum in the market.
According to Kayal and Rohilla’s paper, researchers have noted a number of factors that appear to be correlated with Bitcoin values. One is geopolitical risks around the globe — Bitcoin prices become more volatile as an index of those risks goes up. Interest rates after inflation and tax burdens, meanwhile, are “significant in determining Bitcoin prices,” they wrote.
One last factor that suggests cryptocurrency trading is an insider’s game: Studies show substantial evidence of price manipulation in Bitcoin values. For example,of doomed Japanese Bitcoin trading site Mt. Gox found that “Bitcoin prices rose on approximately 80% of the days on which suspicious trading activity was recorded, while it rose on a comparatively lesser number of days, 55%, in which no such suspicious activity was observed,” Kayal and Rohilla wrote.
That’s called a “custodial” wallet, which means it’s stored in the cloud and maintained by a third party that can help you recover your password. One downside is that it relies on centralized servers that can be attacked by hackers, as the BitMart exchange was this month, resulting in
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