Why are Cryptocurrencies Popular? (Are Cryptocurrencies Legal?)

08/15/2023 10:36 • Metaverse Matters • 56 views

Why are cryptocurrencies popular? Editor’s note: This article is from Odaily Star, authorized for reproduction.

What is the reason for cryptocurrencies? Why are they so important? Cryptocurrencies like Bitcoin and Ethereum are early use cases of blockchain technology. Their emergence has brought new choices and new applications to people. With more and more investors paying attention to the development prospects of blockchain technology, this trend is also growing.

In the past few years, many people have found that digital assets have become an attractive emerging market because they believe it will bring value to the entire industry. For example, the recent surge in the price of Bitcoin has allowed some companies to obtain investment returns. However, for those who hope to gain these profits, it is a very exciting thing because it can hedge against volatility. Therefore, when you have a more powerful tool than gold, it may be widely adopted.

Due to the predictability and non-forgery characteristics of Bitcoin and other tokens, there have been many innovative applications related to Bitcoin in the Bitcoin network. However, to make more people get in touch with this ecosystem and introduce it, an alternative solution must be found.

To achieve the above goals, a series of research needs to be conducted, and the Bitcoin (BTC) and the technology behind it need to be examined from the top three aspects. First, we need to analyze what cryptocurrency is. Although there are some newer cryptocurrencies on the market, there are actually not so many other forms of tokens. In fact, “cryptocurrencies” are not specific to Bitcoin or any fiat-based cryptocurrency. Instead, it consists of different types of “cryptocurrencies” such as ERC-20, ERC-721/1155, Ethereum, TRON, privacy coins, NFTs, DAO, etc., which often fluctuate with the price of the US dollar. Cryptocurrencies are classified into four categories:

1. Non-fungible tokens;

2. Utility tokens;

3. Virtual assets;

4. Financial instruments. These tokens belong to the category of “intangible” ownership, such as various asset categories such as real estate, securities, insurance, mortgage loans, stocks, etc.

If these tokens are called “virtual assets”, they represent “virtual commodities.” Virtual property is a special investment method, just like buying a car, and this asset can be bought or sold without intermediaries. By providing a way to trade without the restrictions of third parties, this may lead to instability.

Are cryptocurrencies legal?

According to a report released by the U.S. Senate Banking Committee on Thursday, cryptocurrencies are not covered by the Financial Instruments and Exchange Act (FEMA), and may not be subject to legal constraints. However, to some extent, cryptocurrency assets are not legal currencies, but can be classified as commodities or services. The study also believes that despite these definitions, many people consider cryptocurrency tokens as “speculative investments” and argue that they cannot be considered as cash equivalents.

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Why are Cryptocurrencies Popular? (Are Cryptocurrencies Legal?)

Are cryptocurrencies legal?

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