Cryptocurrencies and crypto assets are popular with retail investors even though they are a complex and speculative investment choice. This quiz will test your knowledge of crypto assets to give you a better understanding of how they are created, used, and traded.
Test Your Crypto Asset Knowledge.
Test Your Crypto Asset Knowledge.This quiz is designed to introduce you to the basics of crypto assets. It is not intended to provide investment or financial advice, and should not be relied upon as a substitute for such advice.
Blockchain is a type of digital ledger. A digital ledger records transaction information and then duplicates and distributes the information across the entire network of computer systems on that ledger. A cryptocurrency, on the other hand, is a digital asset that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend.
Cryptocurrency transactions can be traced. Though cryptocurrencies can be created, moved, and stored outside the purview of governments, regulators, and financial institutions, each transaction is recorded in a permanent fixed digital ledger. The ledger allows anyone who is plugged in to view the transaction history.
Many factors may make cryptocurrencies and crypto assets risky investments (e.g., cyberattacks and hacking, their speculative nature, liquidity, security, and volatility). Additionally, many crypto assets and online crypto trading platforms aren’t regulated in Canada. Securities regulators are working with operators of platforms to ensure they comply with applicable securities laws.
You can trade crypto assets in Canada using registered cryptocurrency platforms. Cryptocurrency trading is legal in Canada, and you should note that profits are taxable as capital gains, or as income if you are classified as a day trader. You can check a platform’s registration by visiting the Canadian Securities Administrators’ website or by contacting a Canadian securities regulator to inquire.
An NFT is a digital asset that often represents real-world objects like art, music, and videos. NFTs are bought and sold online, frequently with cryptocurrency, and they are generally encoded with the same underlying software as many cryptocurrencies. “Non-fungible” means that it’s unique and can’t be replaced with something else.
The term “crypto assets” is generally used to reference a broad range of digital assets with a variety of properties and/or uses. The term “cryptocurrencies" refers to a specific type of crypto asset, which is generally designed to be used as a medium of exchange, similar to the way we use fiat currencies (a.k.a. government-issued money) to purchase goods and services.
Not all crypto assets are securities or are subject to securities laws. That said, the regulatory treatment of a particular crypto asset will depend on whether it is a security or derivative. Despite the fact that a crypto asset may not be classified as a security or derivative, the way they are bought, sold and/or traded can be subject to securities laws.
You could lose some or all of the money you used to purchase any crypto asset or cryptocurrency, including Bitcoin. Like many investments or financial assets, there is no guarantee that crypto assets or cryptocurrencies will retain their value or rise in price.
Some cryptocurrencies can be used for payments; however, it can be difficult, expensive, and/or slow. Their price volatility may also be a factor in an individual or business accepting cryptocurrency as a form of payment.
As the popularity and price of cryptocurrencies rise, so do the scams associated with these digital assets. The volatile, online, and often unregulated nature of crypto assets makes it easy for people to fall victim to fraud in a number of ways. For example, fraudsters use the anonymity of the internet to attempt to avoid detection by regulators or law enforcement.
Nice work. You have a good understanding of crypto assets! Crypto assets are a constantly evolving type of investment, so there is always more to know. Visit InvestRight.org to learn more about crypto assets, investment fraud, and other important investor education information with these resources:
Good job. You understand the basics of crypto assets! Because crypto assets are an ever-changing type of investment, there is always more to know. Check out InvestRight’s crypto asset resources to learn more about these digital investments:
Taking this quiz is a good start in assessing your knowledge. There is much to learn about crypto assets. This quiz is only an introduction to the basics. To find out more about crypto assets, check out some of the following resources:
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