There are no investment opportunities that will surely increase in number in the world...
It is not that there is a sharp increase in consultations at the National Consumer Affairs Center, so cryptocurrencies are highly dangerous.
As the general awareness of cryptocurrencies rises, many operators have emerged aiming to make money from them, and parts of their activities have probably come to the surface.
To begin with, in the world, there is hardly any financial asset with zero risk.
Short-term government bonds in advanced countries are considered relatively low risk, but they are not zero risk.
Even real-world money is issued by central banks under the credit of the nation, and if the country goes bankrupt, it would become worthless paper.
In such a situation, when considering whether to obtain money not only through wages from labor but also through other means, people convert cash into some form of asset such as land, buildings, stocks, or other currencies, knowingly taking on risk.
From the point at which money from the real world is transformed into a different form, its value relative to cash fluctuates, so one must decide what range of fluctuation can be tolerated.
Is it better to prefer something that can almost surely be converted back into cash in the future, even if there is little to no return, or to aim for a short-term doubling, tripling, or more?
That becomes one’s investment stance.
◯ One option for cryptocurrency investment
When looking at cryptocurrencies from this perspective...
There have been reports of enormous returns, such as Bitcoin rising to a price that could buy a house in four years, or 5,000 Bitcoins becoming worth tens of millions of yen in four years,
but those investments were in assets whose value could become zero, and were high-risk, low-return, akin to winning the lottery with an extremely small probability.
Nowadays, Bitcoin has gained wider recognition and many companies have entered the market, so its market capitalization has surpassed 10 million dollars, making it unlikely that its value will vanish quickly.
Therefore, at this point, purchasing Bitcoin is vastly different in terms of risk and return compared to the early days.
Then, if one wishes to engage in cryptocurrencies with the risk of zero but with price increases of twofold, fivefold, tenfold, how should one proceed?
One option is cryptocurrency pre-sale.
Pre-sale, presale, pre-sale, cloud sale, ICO (Initial Coin Offering) ...
and other terms are used.
Presale means selling a cryptocurrency before the system is fully built, for circulation within the system.
Sometimes it aims to raise funds for development.
Something similar to a presale is an Initial Public Offering (IPO).
During a certain period before listing on the stock market, a company can sell its shares at a preset price.
After listing and public offering, if the stock price rises significantly, assets increase.
However, what differs between cryptocurrency presales and IPOs is that IPOs are audited by independent audit firms and stock exchanges, and only companies that clear certain standards can proceed, so it is unlikely that purchased stock becomes worthless immediately.
In cryptocurrency presales, the market size is unknown and it is unclear whether the system will really be built.
Furthermore, there is no market regulator like a securities exchange, so
judgments can only be made based on the track record of the people who built the system and what they are aiming to achieve.
◯ Cautions to know before getting involved in cryptocurrencies
When engaging in cryptocurrencies, the points to be careful about include,
・Risks of exchanges and trading platforms
・Risks of storage
are mentioned.
If you deepen your understanding of how cryptocurrencies work and decide how you personally will hold them...
You will obtain cryptocurrencies by
・buying in presales or ICOs
・buying at exchanges or trading platforms
in such a manner.
・Purchasing in presales or ICOs
In many cases, until the official launch, trading is not possible, so you must create a designated wallet and store the purchased cryptocurrency there, or after the official launch the purchased cryptocurrency will be sent.
If it is not launched, it becomes worthless, and you cannot recover your invested money.
For cryptocurrencies that are already launched and traded, you purchase them on exchanges or trading platforms.
In Japan and abroad, there are various exchanges, and when listing the exchanges used in the "Five Hundred Million Yen Life Club" are...
bitFlyer, coincheck, Kraken, Bity, BitMEX, Bitstamp, Poloniex...
such are the places.
There are exchanges that allow you to deposit real money to buy cryptocurrencies, and exchanges that only deal with cryptocurrencies, so you must check this before creating an account, and
also, markets with higher trading volumes are more likely to offer favorable buying and selling conditions, so you need to verify this in advance.
◯ Cryptocurrency bills passed by the House of Councillors
On May 25, 2016, the cryptocurrency bill was passed by the House of Councillors plenary session and will come into effect within one year of promulgation.
Key points regarding cryptocurrency exchanges in the bill include:
・Registration system
・Accounting and auditing required
・Possible activity as a Certified Settlement Service Provider
Registration documents must be submitted to the Cabinet Office, and cryptocurrency exchange business masters must be registered and publicly disclosed.
Accounting and auditing will require annual reports, preventing fraudulent reporting.
If the Cabinet Office determines problems, it may issue improvement orders.
Furthermore, while previously only prepaid payment instrument issuers and money transfer businesses were admitted, the door opens for Certified Settlement Service Providers to protect users and provide information related to cryptocurrency.
However, the bill does not obligate trust-based preservation (trust custody).
Also called trusted separation management, where, for example, FX brokers separate their own assets from their clients’ assets by signing a trust agreement with a trust bank and managing client assets in a trust account.
The costs for this are borne indirectly by customers.
If exchanges were subjected to a trust preservation obligation, fees would likely rise.
From this point, investing in cryptocurrencies is considered riskier than investing in stocks or bonds.
◯ Where should you store cryptocurrencies?
There are four main ways to store cryptocurrencies after purchase.
・Exchange
・PC wallet
・Mobile wallet
・Paper wallet
There is a distinction between hot wallets and cold wallets, where
hot means stored in a state connected to the internet.
cold means stored in a state not connected to the internet.
This is what it means.
Hot wallet
ー Exchange
ー PC wallet
ー Mobile wallet
Cold wallet
ー Paper wallet
Thus it is.
If connected to the internet, various attacks can occur, funds can be stolen, and may never come back to you.
Therefore, some exchanges keep more than 97% of client assets in physically isolated cold wallets for asset protection.
As a precautionary note, keeping funds in exchanges or wallets does not guarantee safety.
In fact, there have been many cases where cryptocurrencies were stolen because two-factor authentication was not set on exchange or wallet accounts.
Unlike the bank or brokerage accounts we have used so far, everything in cryptocurrencies happens online, so you must have careful measures to protect your assets.
Paper wallets print out the crypto keys on paper for storage, but they are inconvenient to use, and if the paper is lost, it may be stolen.
Therefore, more people use exchanges and PC/mobile wallets than paper wallets in practice.
Examples of wallets in use include
bredwallet (iPhone app)
Blockchain (iPhone app)
MyEtherWallet (PC)
Among those who want to store Bitcoin in a cold wallet and hold Bitcoin, some purchase a device called “Trezor” and store it independently.
This, too, should be decided in consultation with your own stance and how you intend to store it.
(Please rewrite this part for publication to the purchaser)
