What is cryptocurrency Mirror Protocol and why has the price increased?

CRYPTOCURRENCY Mirror Protocol has increased in value in recent days, and is currently up by almost 29% over the past 24 hours.

We explain what you need to know about it, and why the price is up.

If you're thinking of investing, be aware that putting cash in cryptocurrencies, like any investment, is a risky business.

Making money is never guaranteed and you may actually lose all the cash you put in.

Cryptocurrencies are also highly volatile, so the value of your money can make large swings with little to no notice.

You should never invest money in something you don't understand.

5 risks of crypto investments

BELOW we round up five risks of investing in cryptocurrencies.

  • Consumer protection: Some investments advertising high returns based on cryptoassets may not be subject to regulation beyond anti-money laundering requirements. 
  • Price volatility: Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses.
  • Product complexity: The complexity of some products and services relating to cryptoassets can make it hard for consumers to understand the risks. There is no guarantee that cryptoassets can be converted back into cash. Converting a cryptoasset back to cash depends on demand and supply existing in the market. 
  • Charges and fees: Consumers should consider the impact of fees and charges on their investment which may be more than those for regulated investment products.  
  • Marketing materials: Firms may overstate the returns of products or understate the risks involved.

What is Mirror Protocol?

Mirror Protocol (MIR) is the token of the decentralized finance (DeFi) network with the same name.

This allows the creation of so-called fungible assets, which track the price of real world assets, like equity shares, precious metals and real estate.

Myron Jobson, personal finance campaigner of Interactive Investor, told The Sun: "Crucially they are purely synthetic and only captures the price movement of the corresponding asset.

"It is similar to derivatives in the mainstream finance world, which get their value from underlying assets like commodities, precious metals, stock and currencies without the necessity of holding the actual asset itself."

Charlie Barton, investment specialist at comparison site Finder, added: "The project aims to allow for the 24/7 trading of equities, by making these synthetic versions which mirror the real thing.

"Crypto markets never close, as opposed to stock markets which open and close at various times across the world."

Mirror Protocol has been listed on cryptocurrency tracking website CoinMarketCap since January this year.

Why has its value increased?

The value of Mirror Protocol is currently at $5.72, up by almost 29% over the past 24 hours, according to CoinMarketCap.

In comparison, it was worth a lower $3.40 on May 26.

However, it's still down from its $12.52 peak on April 12 – its highest value ever.

The rise in value comes after cryptocurrency platform Gemini announced support for a new set of decentralized finance (DeFi) projects, including Mirror Protocol.

It means people can now trade and own Mirror Protocol on the platform, Mr Jobson said.

The crypto tokens also benefited this week after announcements about an upgraded Mirror Protocol version, named Mirror Protocol V2.

What should investors keep in mind?

Investing in any cryptocurrency is essentially gambling and there are no guarantees that you will see what you pay in go up in value.

Mr Barton added: "Anyone interested in investing in Mirror needs to be aware that their money is at risk, and they could lose or gain dramatically.

"Like any cryptocurrency, it’s extremely volatile, though the genuine use case behind this project makes it an interesting investment for many."

Either way, there's no guarantee that you can convert crypto assests back into cash, as it may depend on the demand and supply in the existing market. 

Cryptocurrency firms aren't regulated in the way that other financial firms are, meaning you won't have any protection if things go wrong.

Plus, newer cryptocurrencies are always riskier than others that have been around for longer, such as Bitcoin, and make you more open to scams.

Bitcoin's value soared this week after Elon Musk revealed Tesla WILL allow transactions with the crypto once it becomes cleaner and greener.

It comes after it crashed last month when he withdrew his support for it citing the harmful effects to the environment that comes with mining.

We explain what you need to know about Theta and TITAN and why their values have changed.

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