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crypto cfd

Trading with Crypto Exchanges and Crypto CFDs

CFD could be a very foreign word for a crypto trader, but for traditional market traders, it is one of the most useful assets to trade with on different markets. CFD is an abbreviation for Contracts for Difference, which are basically assets that help you “buy a price” and not the asset itself. It may sound a bit confusing, but it is still quite easy to understand once you know the basics.

The primary difference between actual cryptos and crypto CFDs is the ownership. Meaning that when you are trading on a crypto exchange, you are using actual cryptocurrencies. But when you are trading crypto CFDs on a CFD broker’s platform, you are trading with the contract, meaning that you don’t actually own cryptos. Immediately it should spark some controversy as to why you should even consider such a trade, so let’s check out the advantages and disadvantages.

Crypto CFD: Advantages

Crypto CFDs are exclusive to CFD or Forex brokers. These companies are able to offer leverage on these assets, which is the primary reason why they are so attractive. For example, if I go to this CFD broker and engage in a $100 trade for BTC CFDs, I can then use a leverage of 1:100. Basically what that leverage does is increase the volume of my trade by 100, meaning I can now trade with $10,000 instead of $100. This, in the end, may earn me more than I would with my own assets. Basically, the broker lends you funds in order to increase your trades and thus your profits as well. Crypto exchanges rarely have this feature, which is why CFDs are not as well known among the crypto community.

Liquidity is also an advantage of crypto CFDs because they can be sold for fiat currencies, making them a lot more valuable.

Another small advantage is the lack of a crypto wallet, as there is no need for one. Therefore traders have all of their assets on one single platform, which helps the logistics. Unfortunately, this is where the advantages end and massive disadvantages begin.

>> How to Become a Bitcoin Trader: A Beginner’s Guide

Crypto CFD: Disadvantages

Leveraging can be a double-edged sword. Although leveraging can offer bigger profits, it can also lead to massive losses, which may cause the trader to fall into debt with the broker. If you ever decide to engage in a crypto CFD trade with leverage, make sure to set a stop-loss on a point where you have half of your initial investment left. So if you invested $100 and got 1:100 leverage, you would have to set the stop loss at somewhere around $9,950 to avoid a complete zero-out of your account.

Another disadvantage is that CFD trades have deadlines. This means that when you place an order, that order will expire in a few days or so. This renders long-term investments completely useless. You could technically still do it, but the over-night fees for maintaining the position would just make it unprofitable. The over-night position is as it sounds, a position that lasts more than 24 hours, and it is usually accompanied by a fee.

Another disadvantage is that you don’t actually own cryptocurrencies, meaning that you cannot allocate them anywhere you like. For example, let’s say that there is a service that is only available in Bitcoin or Ethereum; you would not be able to pay with a Bitcoin or Ethereum CFD, because they are not real cryptos. Furthermore, the allocation may become a problem as a broker’s policies may change about crypto CFDs, which could stick you with the trade or force you to opt-out in an unprofitable position. With crypto exchanges, it’s different as you can immediately allocate the cryptos to another exchange’s account.

Conclusion

We have two very clear paths in front of us. Crypto CFDs come with advantages as well as disadvantages, so deciding how you want to proceed requires extensive research and comprehension. Hopefully this article can be a starting point to both.

Featured image: Pixabay

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stablecoin

3 Stablecoins Everyone Should Know

You may be familiar with the term stablecoin. But because it is a relatively new type of cryptocurrency, you may not be familiar with what it is.

So what is it? Why is there so much fuss surrounding these coins and what are the stablecoins you should know about?

Let’s dig in!

Stablecoins: What On Earth are They?

In its most simple terms, a stablecoin is a cryptocurrency that is pegged to a tangible, or stable, asset. Examples of a stable asset include gold or the US dollar. The idea of backing a cryptocurrency with a tangible asset is to reduce the price volatility associated with standard cryptocurrency. In doing so, digital coins become far more practical for everyday use, and it may encourage global adoption.

Cryptocurrency Volatility

Standard cryptocurrencies such as Bitcoin have high volatility. On any given day, the value can suddenly increase or decrease (often by significant percentages) for no apparent reason other than market hearsay or fear mongering. This is because the value of Bitcoin, and other cryptocurrencies, depends on what value is given to it by investors. It does not depend on a physical asset to determine its worth. Because of this, Bitcoin and most cryptocurrencies are inconvenient for daily transactions.

Imagine this: You are a vendor, and you sell a dress in exchange for 300 RPX. At the time of the transaction, 300 RPX could be worth $35 USD. However, the next day that same amount of RPX could now equal $23 USD. You wouldn’t be a very happy vendor. Further, you would be consistently aware of the ever-changing value to which your wares are a victim too.

Price changes like this are shocking for merchants and consumers alike. But the adoption of stablecoins may be a catalyst to the decentralized cryptocurrency system working mainstream.

>> Are Stablecoins the Future? The Winklevoss Twins Seem to Think So!

Stablecoins Offer an Optimal Currency

The goal is to create an optimal currency.

According to Forbes“an optimal cryptocurrency should have the following four traits: price stability, scalability, privacy, and decentralization.”

Price stability is the key trait, and this is what a stablecoin aims to achieve. As Forbes explains further, “Short-term stability is important for transactions and long-term stability is important for holding.”

So let’s look at some examples of stablecoin projects aiming to create the optimal cryptocurrency.

Tether: The Pioneer

You can’t talk about stablecoins without giving a nod to the pioneer. Tether is notable because it’s widely considered the first stablecoin.

1-to-1 USD

Tether claims it is 100% backed by fiat currency held in a reserve bank account. It is said to be backed 1-for-1 to the US dollar, with 1 Tether being equal to $1 USD. It will remain fully backed once all Tethers in circulation are less than or equal to all the fiat held in the reserve.

stablecoin

Most Established but Controversial

As it is the pioneering stablecoin, Tether is the most established and is well-integrated. However, Tether has faced controversy in the past, as its claims have not been legitimately proven. The company’s terms and conditions state that “Tether reserves the right to refuse to issue or redeem Tether Tokens.”

Some fear this statement gives the company credence to not redeem the currency at the 1-to-1 value it claims.

uBUCK: The All-in-One Convenience

uBUCK is a digital currency wallet that has fiat capabilities.

According to its website, uBUCK enables you to “pay people with uBUCK cash with lightning speed, make purchases online at approved merchants or withdraw cash at the ATM.”

With the ability to buy uBUCK Cash using either Bitcoin or Ethereum cryptocurrencies, a user is effectively “storing” their cryptocurrency in a stablecoin that is tied to the US dollar.

>> Circle and Coinbase Launch Their Joint Stablecoin USDC

How Does It Work?

It works like this: A user buys a prepaid uBUCK voucher from the uBUCK mobile application. As stated, you can use BTC or ETH to buy, but regular fiat credit and debit purchases are also accepted.

stablecoin

Users then load the uBUCK Debit MasterCard (linked to the uBUCK wallet) with their voucher credit, effectively converting the uBUCK Cash into dollars by doing so. This then means ATM withdrawals and regular shopping around the globe is possible with the uBUCK MasterCard.

Wallets

uBUCK comes with four secure wallets. These are the uBUCK Cash Wallet, a Bitcoin wallet, Ethereum wallet, and the USD Debit card. By having a multi-functional wallet, a user can manage their digital and fiat currency in one convenient place. Then, as stated, by using the uBUCK app, the wallet enables users to store, convert, and spend their fiat and cryptocurrencies.

Free Money Transfer

Another interesting feature of this platform is that users can send uBUCK vouchers to other recipients anywhere around the world for free. Essentially, the service allows free money transfers in only a few minutes.

MakerDao: Complex but Transparent

Maker is a decentralized autonomous organization, and its stablecoin is called Dai. Pegged against the US dollar, Dai operates on the Ethereum blockchain and, as such, it is transparent.

Asset Collateral

Each Dai is worth $1 USD, and the website states that “Every Dai is backed in excess by collateral at all times, so you never have to worry about its value moving up or down.

Further:

“Every Dai is backed by another asset of value. Our collateral portfolio is diversified, allowing multiple assets to guarantee the value of each Dai.”

stablecoin

Ethereum Blockchain

The system is said to be quite complex. To receive Dai, you have to first send your ETH tokens to the Maker platform where they will be “locked up.” Then using the Ethereum blockchain, Maker maintains stability by an autonomous system of smart contracts.

According to its website, Dai offers freedom from volatility:

“Dai stands to transform the financial industry by creating a stable and decentralized currency that will allow businesses to realize the future of money.”

>> Facebook Cryptocurrency: Is the Tech Giant Developing a Stablecoin?

The Takeaway

Stablecoins can bring stability to the crypto world and offer real potential for global adoption. The key is to create the optimal cryptocurrency inclusive of price stability, decentralization, scalability, and privacy.

The technology is still relatively young and will continually evolve, but it is clear that demand is there. People are looking for the balance between a decentralized payment network and stable value.

Everybody wants to feel secure in their transactions and know that they won’t lose value on their assets for no reason other than market hype.

We’ve mentioned only a few stablecoins here. There are more out there! Do you have any favorites? Do believe the technology will work and bring us towards that optimal currency?

Let us know below!

Featured image: DepositPhotos © zim90

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cryptocurrency regulation

SEC and CFTC May Combine Efforts to Regulate Cryptocurrencies

Bitcoin ETFs are a hot topic with the US regulators. The Securities and Exchange Commission, in particular, has been expected to approve some of the applications for some time now, but it looks like they are trying to avoid it at all costs. Furthermore, most of the applications have been either denied or completely ignored without even the slightest hint of feedback. The applications are long overdue, and the applicants are starting to become restless.

However, the SEC had a ‘meeting’ with the other US regulator called the CFTC (Commodity Futures Trading Commission), it has been reported that the two regulators have shared their opinions about the matter and are ready to partner up to tackle cryptocurrencies.

Comments about the Industry

The ‘Crypto Mom’ (Hester Peirce) herself explained the SEC’s stance towards Bitcoin ETFs. She noted that they have been rather reluctant to sign off on the Bitcoin ETF applications they have been receiving. Although it is not the best type of feedback, it is still better than nothing. So now we know that the applications could be far away from approvals.

>> ICO Scams: FBI Seeks to Educate Investors with Red Flags for ICO Fraud

There is one contradiction about the announcements, however. Peirce noted that there are numerous markets that are not regulated by the SEC, but products are still being developed within them. She also noted that the Bitcoin ETF approach seemed a bit merit-based, which was dangerous. However, it is hard to connect the two statements together. If it is as dangerous as any other unregulated industry, then why are other industries still able to operate but cryptocurrencies are kept lagging behind? These are the questions that most Bitcoin ETF applicants are willing to find an answer for.

The CFTC Commissioner, Brian Quintenz, noted on top of Crypto Mom’s announcement that the CFTC has a pattern when dealing with such a predicament. For example, if there is a side that had an application with the CFTC, the regulator has a specified amount of time to reply with either “Yes, we agree, let’s do it,” or with “No, we disagree and here’s why.” If the CFTC fails to make any of these two answers, then the applicant will have the chance to self-certify, meaning that there will be no involvement from the side of the regulator.

Clashing Ideals

Although both of the institutions are trying to regulate crypto assets, they still have a division in the way they look at them. For example, the CFTC is responsible for Bitcoin and Ethereum directly, and the SEC is more in-tune with the ICO (Initial Coin Offering) market. These two are practically inseparable, that’s just basics of cryptocurrency, meaning that no matter what, if a full regulatory framework is introduced from both sides, a joint effort will be required at some point.

>> Cryptocurrency Bull Run: An Improving Economy Encourages Gains

Crypto Mom even mentioned the fact that she and Brian Quintenz are interested in combining their efforts in tackling this “confusing” market. Whether or not a joint effort is announced remains to be seen, but nothing can be certain. If there indeed is a partnership to come, then Bitcoin ETFs can have two options. Either be completely forgotten by the SEC or be more quickly adapted thanks to the CFTC’s ideals.

Featured image: DepositPhotos © hello.artmagination.com

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crypto trading

How to Beat Trading Losses in a Cryptocurrency Market Slump

Losing money is painful, and since it can disrupt your way of life, many people try to avoid it. As volatile as the crypto market is, losses can be inevitable, but you can master the market.

The reality of financial markets is that there will always be highs and lows, just like other segments of life. Amid the lingering bear market that cryptocurrencies have languished in for several months now, some nuggets can help. For many people who entered the trading scene at the onset of the price slump, finding a breather so far might have been far-fetched.

In all honesty, that the market has largely traded in dips is not a death-knell just yet. The traditional stock market has taken a hit in the last year, yet, activities have continued on the platforms. Why then must anyone think differently of cryptocurrency markets?

As a cryptocurrency trader, it is important to own your space and be geared to make the best of the opportunities available. Have you suffered losses of late? You can ride the market once more. Here are five tips you can use:

1. The Chill Pill

There is no one who just suffered a setback that can be said to be in the best state of mind. This is true irrespective of the kind of loss that might have resulted. Whether it is financial, emotional, or material, the recommendation is to pull back.

Taking some time off the routine will help your mind get back to an optimal state. Losses bring disenchantment even to the strongest among men. The aftermath of a financial loss should be such that makes you leave the trading scene for a while.

The immediate justification for a pull-back is to prevent you from making trading decisions that will get you deeper into the mire of losses. While you observe a chill, your mind will be reinvigorated, and you can begin to take hold of the reins once more.

>> Coinbase Wallet Expanding with New Support for Bitcoin Cash

2. Assess and Review What Went Wrong

In the period following the hiatus you take from trading, you also need to begin to get ready for a return. That you suffered losses does not mean that you should bolt from trading. No matter how painful it all might be, the time calls for you to begin to assess what went wrong.

Sometimes, it is the wisest thing to lay out the sheets. What did you do wrong? Could you have used a safeguard? Did you rush in head first? The answers to all of these questions form the assessment process. You must be able to put your fingers on what went wrong.

The truth is that even the biggest and most renowned traders suffer losses too, but they have learned to use safeguards. No financial trader can altogether avoid losses, and this is the reason using the reverse scenario must not be neglected. What if my projections fail? What if there is no payback? Can the trading platform be trusted? Is the reputation of my broker worth the trust?

Painting the reverse picture in your present circumstance is a great hedge in many turns in life. If you did not do this before your losses occurred, then you should recognize that you missed the plot.

3. Build Your Resource

An important nugget that Warren Buffet always points at is knowing your turf. Never trade crypto because you saw an advert by the best crypto exchange. Have you learned the basics? The crypto scene is huge, and there are segments to understand. The altcoins are a different ball game in comparison to the leading coins like Bitcoin.

Your duty is to research and build a resource that you can master about the target of your trade. If you choose to follow ICOs or STOs, make sure you understand the dynamics. Find a niche you can know through and through. The biggest moneymakers in the financial markets dominate a turf. They don’t trade everything and all things.

Part of crypto trading is knowing that significant losses may occur with a small change that topples the market. Knowing this, it’s foolhardy not to have a grip on your trades.

4. It’s Not Over ‘Til…

As the saying goes, it’s not over ’til it’s over. As long as you are able to recognize where you went wrong, you need to gear up and start again.

It is a clear fact that an understanding of the market can earn you millions with a surge in market prices. Despite the pull of the bears, many people are still making money on the scene. Knowing what to leverage and the tools to hedge is a smart way to ride the market.

>> Crypto News: Elon Musk Talks Bitcoin and Binance Expands

You need to brace up and face the future as only the brave and courageous take the spoils. As blockchain adoption deepens across the globe, many opportunities are emerging on the crypto scene that cannot be ignored. That is why you must give time to adequately research and fact find.

5. A New Start

Having cleaned out the loss and opened your mind to a new lease of life, you are set to start trading again. With all the lessons you have learned, you can now proceed like the sage and trade with confidence.

You need to know that no matter how careful or smart you become, losses will still occur. If you have learned hedging techniques and not to follow the rave, you have a chance to make some decent money. You are set to get the best returns when you know where to look and pick your trades.

Last words

For a determined trader, losses cannot be the end of life. Riding the highs and lows of crypto markets is the leeway to making money. While some see the bear market and stop trading, others seek out the goldmine and explore the same.

You can bounce back and trade profitably after a season of losses if you put the lessons here to work.

Featured image: DepositPhotos © iqoncept

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Corporate and Government Blockchain Use

In the past few years, the public perception of blockchain has shifted from being an esoteric, little-understood technology to nothing short of a revolution that may define the future of the internet. We have been seeing massive venture capital being pumped into blockchain startups for a while now and blockchain based startups are now finding footing even in Asia and in emerging economies across the world.

Research shows that blockchain and blockchain startups globally received around $1.3 billion in investment capital in 2018 (since May). However, blockchain now brings with it a “fear of missing out” and everyone from tech giants to Fortune 500 companies to country and state governments want to be seen as adopting blockchain technology in a big way. Let’s talk about how major companies and governments are implementing blockchain solutions and whether it will lead to a long-term technology transformation for these institutions.

How Major Companies and Governments are Adopting Blockchain Technology

Corporations are starting to wake up to the need to invest in blockchain. It’s expected that corporate spending on blockchain software will reach $2.1 billion in 2018, up from $945 million in 2017.

Visa

One of the major uses of blockchain technology is bringing down the costs of international payments and money transfers by replacing a third party intermediary with a decentralized, trustless system. It’s no wonder that Visa wants to get ahead in the blockchain game and use the new technology to change its business model and retain market leadership.

Visa has filed as many as 17 blockchain patents. One of its important patents (patent number 20170237554A) describes the foundation of a fast and secure way to store and transfer digital assets of substantial value. In December 2017, Visa launched its B2B Connect platform based on this patent. This platform aims to reduce the friction and high cost of high-value international transactions. It is currently in its testing phase. Visa clearly takes the potential of blockchain technology and its future very seriously and the hype around its blockchain strategy is backed by substance.

Walmart

Walmart’s “Farm to Fork” blockchain project, launched in 2017, is a system that will help Walmart determine where the bad food came from once a product is recalled. This is expected to massively improve food safety standards, reduce food consumption related diseases, and reduce costs of waste.

Walmart now uses this blockchain to maintain the supply chain ledger for 30 products. The process is simpler and more secure than the barcodes, scanners, paper forms, and individual databases Walmart usually uses. For every 1% reduction in food-borne diseases in the United States, that’s a saving to the U.S. economy of about $700 million,” said Frank Yiannas, head of food safety at Walmart. The blockchain system takes 2.2 seconds to trace the origin of sliced mangoes, verses 6 plus days using other systems.

Air France

Air France started examining the possibility of applying blockchain technology to optimize aircraft maintenance workflows in 2017. It believes that the main advantages of blockchain – resilience, traceability, integrity, and disintermediation – are well suited to the aviation supply chain.

However, when it comes to making a complete switch to blockchain based systems, Air France has a major obstacle in the way. Most airline data is still maintained on paper, so Air France will first have to move towards digitization of data before it can implement a blockchain system with any kind of efficacy.

Estonian Government

The Estonian government has been one of the pioneers of blockchain implementation, starting as early as 2008 before the term blockchain was even coined. The E-Estonia program uses blockchain to integrate all Government services on one platform. The blockchain ledger protects sensitive data from the healthcare, judiciary, legislature, security, and commercial code registries from corruption and misuse.

They have also developed a blockchain-based security system called KSI which can function even under constant cyber attack. Estonia is a prime example of a proactive government that has persevered with blockchain implementation for a long time.

State of Delaware

The state of Delaware launched the Delaware Blockchain Initiative in 2016 which enables a more efficient governance structure for the 30,000 companies that are incorporated in the State. The government hopes that this will give the state a competitive edge and encourage more companies to be incorporated in Delaware.

However, the state has been slow to implement the initiative. This could be (at least partly) because the initiative would make agencies who make their living from company filings redundant. The government may be hesitant to implement this disruptive technology due to the potential job losses it could cause.

The European Union

Counterfeiting costs the European Union almost €60 billion every year. The EU Intellectual Property Office and the European Commission are working on a blockchain based solution to combat counterfeiting.

They are now in negotiations with a private company that can create blockchain based working products to deal with counterfeiting. It remains to be seen what the final solution will look like and how effectively it will deal with widespread counterfeiting of products all over the EU.

Blockchain Implementation by Corporates and Governments – Reality or Hype?

The major rush to announce blockchain projects to the media and jump on the blockchain bandwagon that was seen in the past two years has now cooled off significantly. According to Forrester Research Inc, a number of blockchain projects will be wound down this year, and many companies are scaling back on blockchain pilots that they were pushing aggressively just last year.

In 90% of the cases, blockchain experiments never become incorporated in the operations of the company. A survey of CIOs by Gartner Inc said that only 1% of them were implementing blockchain projects in their companies while 80% of CIOs said they had no interest in the technology. Other studies have shown different results, but similar sentiment… a majority of corporations surveyed say they don’t plan on using blockchain technology.

A major reason for this disconnect between hype and reality is that most companies had thought that it would be easy to find use cases for their blockchain projects. They are now realizing that introducing blockchain requires broad collaboration with many industry participants and scalable implementation could take 5 to 10 years instead of the 2 to 3-year horizon that had been expected.

The Future of Blockchain Implementation in Governments and Large Companies

While blockchain implementation among corporates and governments has seen a bit of caution throughout 2018, it seems to be a natural course correction after the exuberance and hype of the past couple of years.

Big tech players like IBM and Microsoft continue to invest heavily in blockchain software and have captured over 51% of the $700 million market for blockchain products. While there has been a tempering of enthusiasm when it comes to implementation of blockchain, and many companies are still testing the waters, it is widely believed by blockchain backers that there will be an upswing in blockchain projects next year and that the optimism of governments and companies will definitely return in good measure.

Featured Image: DepositPhotos/ sdecoret

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