Have you been dreaming of owning a fortune but still staying independent from banking and non-banking financial institutions? If one is well acquainted with the cryptocurrency market, this could be an achievable goal. Trading with cryptocurrencies is carried out entirely online. However, the lack of regulations makes these operations high-risk ones, without guarantees of security for investors. The chair of the U.S. Securities and Exchange Commission Gary Gensler points out that the opportunities for fraud on this market are unlimited and it could now be compared to the Wild West. According to the expert, a reason for the uncertainty is the price variation. In an event of a sharp jump, fraud attempts are on the rise, too. As new types of cryptocurrencies constantly emerge, it becomes very difficult to make long-term forecasts about their price. Among the most common and preferred cryptocurrencies by traders remain Bitcoin and Etherium.

Many financial analysts, including Preslav Raykov, say the past 2021 was one of the best years for cryptocurrencies. Highly volatile, with great price fluctuations, they hid greater investment risk, but also lured traders with greater potential profits. One of the leading factors that has been making crypto markets more popular is the pandemic, which has dramatically accelerated digitalization in all areas of human life.

Is it possible to look for similarities between stock exchange trading and cryptocurrency trading? The short answer is no.

"Bitcoin and cryptocurrencies in general are an extremely new asset. In 2022 they start their 13th year of existence,” Preslav Raykov says in an interview with BNR. “This asset is still ‘training’ how to react to various market events. Last year, we saw China completely ban all cryptocurrency transactions, as well as the creation of new similar means of payment. Cryptocurrencies are influenced by a vast database of information, which includes the demand for them, their application, their regulation and the forecasts of thousands of people for their future."

When it comes to regulations they would be imposed at the request of investors and institutions that use cryptocurrencies. The reason is that this market needs a framework in which to develop. Raykov expects the strongest regulator in the world - the United States to be able to apply some of the basic principles of financial markets to this still insufficiently studied business area.

"It is important to know who is behind transactions of this type in order to prevent money laundering, as well as the possibility of financing terrorist organizations. It is also necessary for all operators who provide such services to be responsible in the event of hacker attacks or failure of their systems, which we haven’t seen so far."

The analyst recommends that the BNB and the commercial banks should gradually launch campaigns aimed at stakeholders and to explain what these assets are and how they can be used. The so-called blockchain technology, on the basis of which cryptocurrencies operate, helps facilitate and boost a number of processes that accompany commercial activity.

Compiled by: Yoan Kolev

English: Alexander Markov

Photos: EPA/BGNES