A fundamental concept when making financial investments is liquidity. Liquidity is nothing more than the ability to convert an investment into hard cash. Having the money in a checking account is very liquid, go to the cashier or use a debit card to dispose of the money. Having a real estate investment is not as liquid, since making a sale usually takes months (find a buyer, get a mortgage, sign in the notary).
Now, many users of cryptocurrencies realise that the liquidity of their Bitcoin and similar investments is quite low. Moreover, the worst thing is that they are accomplishing just when they sell when the moment to find out should be when assessing whether the investment is made or not since the potential for revaluation is not the only thing that matters in investments.
The Exchange, unregulated pseudo-banks
The liquidity problem of Bitcoin and other cryptocurrencies has two aspects. On the one hand, there has to be a buyer so that a seller can recover the money. This is not very problematic in the case of Bitcoin, but it can be in some smaller cryptocurrencies.
However, the other problem comes from where to make the transaction. So far the place to buy and sell Bitcoin are the Exchange. In these sites, you can make purchases of cryptocurrencies and also act as a “bank” of Bitcoin, since they carry out the custody of the portfolios to facilitate their use. For knowing more in it you need to visit https://www.amarkets.com/
Without going into details about whether this function of “banks” is useful, it seems that its security is not as high as that of a real bank and hacks them every other day, the truth is that their functions are not regulated. Moreover, therefore there are no guarantees that they will provide the liquidity that the client needs.
I want to sell my Bitcoin now
The problem is that many Exchange put a daily limit on the amount of Bitcoin we can trade. Moreover, this is a nuisance when it comes to undoing the investment. Some restrictions are low, such as Bittrex, with 0.4 Bitcoin per day.
However, why do they do this?
The reasons given by the Exchange for these limitations are security. They want to avoid theft, money laundering, tax evasion that’s why some of these Exchange raise the limits for verified accounts, in which they have information about the person behind the report.
The funny thing about all this is that there are no alternatives. Everything about Bitcoin is unregulated, and just as a bank can not limit, for example, the withdrawal of capital from an investment fund and the terms are apparent in the law, in the matter of cryptocurrencies it is like the Wild West.
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