Paralla does not provide any investment services and does not provide any guarantees of any returns!
Paralla j.s.a. does not provide financial services regulated by Act no. 566/2001 Coll. on Securities and Investment Services and on Amendments to Certain Acts (Securities Act) as amended (hereinafter referred to as the “Securities Act”) or pursuant to Act No. 203/2011 Coll. on Collective Investment. Cryptocurrencies do not belong to financial instruments pursuant to Section 5 of the Securities Act.
Paralla is a technology platform – a tool for secure purchase, sale, management and access to digital and crypto asset valuation tools – VASP (Virtual Asset Service Provider) as defined by the international organization FATF (The Financial Action Task Force).
Commodity and currency trading poses a risk. Prices can vary, on any day or hour. Due to such price fluctuations, you may gain or lose the value of your assets at any given time. Any currency can be subject to significant fluctuations in value and can even become completely worthless. There is always an inherent risk that losses will occur as a result of buying, selling or trading any commodity in the market.
Cryptocurrency trading has specific risks that are not shared with other government currencies, goods or commodities in the market.
Unlike most currencies, which are backed by government reserves or other legal entities, as well as commodities such as silver and gold, cryptocurrency is backed only by mathematics, technology, and trust. Cryptocurrencies are largely decentralized, which means that there is no body that can take corrective action to protect the value of cryptocurrencies in times of crisis.
Cryptocurrencies form their own autonomous and mostly unregulated global payment system. When using cryptocurrencies, merchants trust a digital, decentralized, and partially anonymous transaction confirmation system that relies on P2P connectivity and cryptography while maintaining its integrity.
Cryptocurrency trading is prone to irrational or rational bubbles or a loss of market confidence that could collapse demand / supply. Any action, even if remotely linked to cryptocurrencies, can undermine confidence, such as unexpected changes brought about by currency developers, government intervention, the creation of a reasonable competitive alternative, or even deflation or an inflationary spiral.
Confidence can also collapse due to various technical problems: if the declared anonymity of the system is potentially disrupted, funds will be lost or stolen, or if hackers or governments will be able to prevent the verification of transactions.
There may be other risks that cannot be anticipated or identified in the current conditions of use. Each user must carefully assess whether his financial situation and risk tolerance is to such extent that he takes the risk of buying / selling / trading cryptocurrencies.
In the cryptocurrency market it is not possible to guarantee a certain return. Depending on the type of purchased virtual currency, there may be one or more risks described below, leading to an increase in the overall risk arising from the investment.
Every activity involves certain risks. This also applies in the case of trading in cryptocurrencies. Depending on the type of virtual currency purchased, there may be one or more of the risks described below, leading to an increase in these risks associated with the cryptocurrency trade.
Paralla does not provide any investment services!
Changes in the course of market economies always have an effect on changes in the prices of virtual currencies and exchange rates. Prices change more or less depending on whether the economic cycle is rising or falling. The duration and extent of cyclical declines and increases alternate, as does their effect on different types of sectors in the economy. In addition, economic cycles may differ in different countries.
A decrease or incorrect analysis of economic trends in deciding which cryptocurrencies to choose for purchase can lead to losses. Of course, these fluctuations can negatively affect the cryptocurrency market. Particular attention should therefore be paid to the impact of economic cycles on price developments. Therefore, it is necessary to constantly check the appropriateness of purchasing a cryptocurrency and, in view of the economic situation and, where necessary, to make the necessary reallocation.
When purchasing cryptocurrencies, one may suffer financial losses in the event of currency devaluation following the transactions performed, i. e. losses in currency value. Such a loss of value has an impact on the real, i. e. the market value of the existing assets as well as the realizable profit to be made from those assets.
As there are not many jurisdictions in the world that fully accept cryptocurrencies, the risk of banning the use of cryptocurrencies as a whole must be taken into account. Given that we are in the European Union, it is assumed that, the adopted regulatory schemes will, on the contrary, allow more and more cryptocurrencies to be used in their payment systems.
Due to restrictions on the transfer of cryptocurrency or fiat money, you do not have to accept a payment that would otherwise be due to you. In addition, even in the absence of a crisis, government in some sectors of the economy may affect the value of your assets by disproportionately repressing interference in the regulation of cryptocurrencies. In general, it can be stated that political and / or economic and / or social instability in some countries can lead to significant price fluctuations.
Exchange rates fluctuate against each other. Therefore, there is an exchange rate risk if transactions are denominated in different currencies. Depending on the exchange rates, the same transaction can generate both a loss and a profit. Because there are foreign exchange-linked business transactions of companies to a greater or lesser extent, changes in these rates are also likely to affect the value of cryptocurrencies.
The main reasons that affect the country’s exchange rates are mainly the rate of inflation in the country, the difference between interest rates compared to abroad, estimates of expected economic trends, the global political situation. In addition, events of a psychological nature may weaken the country’s currency.
Liquidity means the ability to sell the cryptocurrencies, which hold a market price at a particular time. In case of insufficient liquidity in the market, you cannot sell your assets at market price. However, you must distinguish between a lack of liquidity due to the interaction of supply and demand and a lack of liquidity due to the nature of the cryptocurrency setting or market practices.
Lack of liquidity due to the interaction of supply and demand can occur when the supply (price of the seller) or demand (price of the buyer) for a given virtual currency are exclusively resp. almost exclusively at a precisely determined price. In such a situation, the realization of a contract for the purchase or the sale may be made not immediately and / or only partially and / or under unfavourable conditions. In addition, transaction costs may increase.
Lack of liquidity due to the nature of the cryptocurrency setting or market practices occurs, for example, in the case of long registration procedures for transactions, long lead times due to market practices, restrictions on exchanges over which the transaction takes place or other trading limits etc.
Among the most common factors that can affect the overall change in the price of cryptocurrencies are psychological factors. For example, trends, opinions or mistakes may lead to a significant drop in prices, despite the fact that the company’s financial situation and outlook have not changed significantly.
The purchase of credit-financed cryptocurrencies is subject to several additional risks. On one hand, an additional guarantee may be required (sometimes on the basis of a very quick notice) in the event that the credit line is exceeded due to a change in the value of the established assets. A special caution should be made towards the fact that the leverage effect obtained when buying cryptocurrencies on credit creates a proportionally greater sensitivity to price fluctuations and therefore offers the possibility of higher profits, but at the same time there is also the risk of much greater losses. The risk arising from such a purchase increases in direct proportion to the degree of leverage – credit.