Las criptomonedas son activos financieros

Are cryptocurrencies financial instruments?

Today cryptocurrencies have opened the doors of many countries and establishments that have already given the green light to accept them, but are cryptocurrencies financial instruments?

Because it represents a convenient way to transfer funds, cryptocurrency has become a substitute for traditional currency, as a modern electronic means of payment that could change the current financial system.

What is a financial instrument?

Simply put, a financial instrument is a tradable asset. That is, a good that can be exchanged for value; as is the case with cash, documents of ownership, precious metals and cryptographic assets. It has three characteristics.

1. Liquidity

It is the ability of the financial asset to be converted into cash as quickly as possible and without loss of value.

2. Risk

This is determined both by the assurances given by the seller to fulfill its payment obligation and the maturity of the contract. The longer the maturity, the greater the risk. And logically, the lesser the seller’s guarantees, the greater the risk for the buyer of the asset.

3. Profitability:

Every purchase of a financial asset involves risk. The return is the consideration for the risk assumed. Therefore, the higher the risk, the higher the investor will demand a higher return.

Some examples of financial instruments are bonds, CDTs, savings accounts, TES, stocks, stock funds, private equity funds, ETFs, currencies, derivative instruments.

Decentralization

Decentralized cryptocurrencies are created by the entire crypto-connectivity system collectively, at a rate that is determined by the system itself from the date of its creation and is public knowledge. In centralized banking and economic systems, corporate boards or governments control the supply of currency by printing units of paper money or aggregating digital bank records.

The legal regime of cryptocurrencies

The de facto and de jure shares that we know of have two values:

Par value—the value written on the share itself.
Issued value—the amount for which the shares are credited by the founders or by the persons subscribing to the shares when they are constituted by public ownership. The two values may coincide, but often differ.

For its part, the value of cryptocurrencies is a constant variable, and it can be said that they have a market value rather than a nominal value. Their value tends to change generally influenced by the supply and demand of the same. 

Are cryptocurrencies financial instruments?

Cryptocurrencies are digital financial assets designed to function as a medium of exchange, using the cryptographic method of securing transactions, to control the creation of additional monetary units. 

Some of the financial instruments offered by cryptocurrencies are:

Tokens

That can be qualified as a type of electronic bonds that serve to raise capital through the concept called “ICO” (Initial Coin Offering), that can be qualified as a type of electronic bonds that serve to raise capital through the concept called “ICO” (Initial Coin Offering). 

bitcoin ETP

ETPs are a type of derivative that is traded on stock exchanges in a manner similar to stocks. 

Cryptocurrency ETF

ETFs are similar in operation to a mutual fund in that they allow a trader to invest in a crypto asset without having to purchase and manage it directly. Users do not purchase bitcoins, but rather shares in a fund that owns and holds bitcoins.

Trading contract

This is a legal agreement between a buyer and issuer to settle a commercial transaction on a specific date.

Futures contracts

Every financial instrument traded on an exchange functions as a contract between two parties. In other words, when we buy bitcoin on an exchange, we are entering into a legal agreement between the seller, which is the company, and the buyer, which is the individual.

Cryptocurrencies have become a dynamic financial instrument, which meets the main characteristics that make them very different from banking analogues, as well as giving them incredible flexibility and speed in financial operations.

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