Quote from: Cryptomultiplier on Today at 10:56:00 AM

* How do you distinguish and categorize any token and investment as either a security or a commodity before investing?

While it's important to understand the products and markets before investing, Mostly when it comes to investing in cryptocurrencies, one should be able to distinguish a security from a commodity properly before any investment.
I found out about the 'Howey test', of which consist of four criteria which much be considered before anyone should decide to make a very reasonable investment decision.
It would help a potential investor determine if an investment option, is a security or It is a commodity before one gets to make the final call on the investment of choice.
The criteria includes;
* If it involves an investment of money,
* If there's an expectation of profit,
* If there's a common enterprise, and
* If there's a reliance on the effort of others.

The disparity between 'securities' and 'commodities' is made clearly visible with the explanations given below;

(A).
'Securities' are investments such as stocks, mutual funds, bonds, debt, and other interests in the form of shares in companies, governments, or private businesses.
In a more general sense, the idea of 'Securities' is, financial abstraction, that is what one cannot see, just as stocks or bonds or debts that can't be seen in a physical sense, but it's there.

(B).
'Commodities' on the other hand, is a result of supply and demand in the real world market and basic goods such as wheat, gold, oil and cattle, that is, natural resources, agricultural products, are good examples of Commodities that a potential investor can invest in and make good profit from.
Commodities can help when we decide to liquidate or withdraw some or all of our Bitcoin or altcoins kept in a wallet, that is, when we want to diversify an existing investment portfolio and are considering investing in physical, tangible assets.
However, it is to note that not all commodities are physical, tangible assets.

* Do you also know that Bitcoin is a commodity?
Under the Commodity Exchange Act (CEA), all
Virtual currencies, such as Bitcoin, can be considered to be commodities.

Let's discuss!

Understanding everything that you are doing well even before you start doing it is something that should not be compromised.
When you talk about investment, without better understanding, is rubbish. So, before investing, you will have good knowledge of what investment is all about, the knowledge of the products you want to invest in, also the knowledge of how the market is. By so doing, I think even the risks that might be in the investment will reduce.

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