As Blue Chips Acquire Bitcoin, Here Is The Pathway To The Future

AS big companies move part of their equity into bitcoin, here is the path to the future!

What the big-ticket financial companies buying into Bitcoin could mean in 2021

Bitcoin is having much of a renaissance.

While the cryptocurrencies like bitcoin were never properly considered dead, over the past few months we’ve seen their prices steadily increase, and as of the time of this writing, the value of Bitcoin has broken into a new high of $24,000.

For regular people, it’s easy to read this as a comeback: The strong, unstoppable bitcoin many economists predicted three years ago before the value suddenly crashed is finally coming true. Bitcoin is, then, poised to become the de-facto currency of the future, and everyone should rush to purchase all the tokens they can.

There is certain logic to this reading, and in all honesty if you saw the price data without getting any extra information you wouldn’t be wrong to expect so.

But we do have extra information. Not long after Bitcoin’s value spiked, data was released pointing out a single company, in this case, PayPal had made purchases equaling all of the tokens that had been created over a month.

Financial data from other companies shows that financial giants like Square, Stone Ridge Holdings, and MicroStrategy have also invested millions of dollars in Bitcoin recently. But what does this mean? Does this mean they’re preparing for a cryptocurrency-fueled economy?

Hedging their bets – or why simpler answers are better

No, it doesn’t. While certainly having a large amount of Bitcoin would give these companies a boost if cryptocurrencies were to suddenly move our global economy, there’s no expectation that such a thing will happen in the short-to-mid term. Crypto adoption has grown steadily, and there’s a decent chance we’ll see cryptocurrency transactions as a regular thing… by 2030 or so. Not by 2022.

What these companies are doing instead is an old, common practice for financial giants: They’re buying gold. Only, it’s digital gold.

And they’re doing this because… well, because they don’t trust the economy.

Vital Read: The 7 Must-Know Rules of Cryptocurrencies and Stock Market Investment

The recession hasn’t hit in full force… yet

Economists have been predicting a major economic recession for years, partly thanks to historical data that shows the economy works in cycles, and the longer a period of growth and stability lasts the more imminent a recession becomes. Warnings had been written since 2015, arguing that the correct thing to do would be to get ready for a recession.

And then the recession hit, during March 2020. Stock markets went down. The Dow Jones wiped all of its earnings from the previous year in a single day. Chaos ensued, at least among certain circles.

But soon after, the markets recovered. Taking a look at them today, and it’s almost like nothing happened. Many stocks are at all-time highs. Indicators went back up. Was it the shortest recession in history? No, it wasn’t.

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A variable called Coronavirus

The Coronavirus pandemic played a part in the express recession we saw back in March. As it turns out, it’s also part of the reason the apparent recovery was so quick.

The truth is, we’re still in a recession – it’s just not noticeable because economic indicators have shifted due to the pandemic. The economy is currently working at half of its capacity, but we don’t notice it because most of us have been locked up, or nearly locked up, for too many months.

With a vaccine approved, however, the pandemic won’t last much longer – although it won’t be gone in just a couple months either. And once that happens, tens of millions of people will have to face the harsh realities of workplaces closing, unemployment soaring, and the largest number of evictions we’ve seen since the housing bubble burst.

All those things are actually happening as we speak, but we don’t see them, or feel them, because of lockdowns and protections that have been put in place… but will be lifted soon.

Bitcoin is the new gold

Companies have been buying Bitcoin largely because they know this. As it stands, the world is on the brink of a huge recession, and we’ll see it unfold sooner rather than later. While that doesn’t mean the economy will inevitably shatter.

From the above, governments still can do a lot to minimize the impact – having an impending recession doesn’t precisely fill people with hope and trust in fiat currencies.

So they turn to values as a way to hedge their bets. They buy precious metals. They stockpile goods. And, in 2020, they also buy Bitcoin – a largely speculative virtual currency that many have predicted will withstand a recession.

That’s why companies are investing. It’s not because the Bitcoin future is coming, but because they believe Bitcoin will hold its value better than the USD in case of a recession. And they may be right, or they may be wrong – but the risk is worth taking nonetheless.

Should I run and invest, then?

Hold on, you should first slow down a bit.

Investing right now might be a good move. Or it might be a bad one. Investing six months ago would’ve been a brilliant move, but then again hindsight is 20/20.

How the Bitcoin market develops from here on isn’t clear, because it depends largely on how those huge companies act in the future. As long as they keep holding, and investing into, Bitcoin tokens, the price should remain stable and even go higher.

But as soon as one of these companies decide to cash out? A huge influx of offer vs stagnant demand will spell a price crash. On top of that, this price crash happening is a matter of when rather than if – because it will happen.

However, we don’t know when. It could take two years. Or it might happen next week.

Shall you invest in Bitcoin right now, then, you should see it as playing the lottery. Variables entirely outside of your control will dictate whether you win or lose, and every day you’ll face the question of whether you want to jump off the ship now, or risk another day.

You may win big. But you may also lose big, if you are nit timing the market.

How Staking Works With Ethereum 2.0

Ethereum 2.0 was long awaited and now it has arrived with a promise. Here is how staking works on the new platform.

After a long time and repeated delays, Ethereum has finally moved away from its proof-of-work model to validate transactions into the cutting-edge, less resource intensive proof-of-stake model that most new blockchain projects over the last couple years have adopted.

Along with this change has, as one would expect, come many questions from Ethereum’s own users, particularly those who mined Ethereum either as a hobby or to make ends meet, about how the system works, or why it is any better. In some cases, when people only mined and invested in Ethereum and no other tokens, they genuinely don’t know anything about the proof-of-stake mechanism that has become commonplace.

So what’s this proof-of-stake?

Proof-of-stake is the now preferred method of assigning transaction blocks for validating transactions in blockchain environments.

The older system, called proof-of-work (and more commonly known as “mining,”) tasked participants (that is, miners) with solving an extremely complex mathematical problem via brute force. Whoever solved the problem first was assigned the block for validation along with the reward, which was the cryptocurrency that was “mined.”

This system is extremely wasteful, because said mathematical problems have no actual use other than help the system decide who gets what. In the end, they proof-of-work model leads to huge losses in energy and processing power. To deal with this, the proof-of-stake method was created.

In a proof-of-stake environment, you don’t need to dedicate your computer’s processing power to solving repetitive problems. Instead, in order to establish your credibility with the network and ensure you’ll authenticate transactions properly, you put some of your cryptocurrency at stake, hence the term “staking”.

If your authentication is considered correct (that is, if you’re not trying to meddle with the blockchain,) at the end of the process you’re given back the crypto you staked plus extra crypto rewards. If it isn’t, the system takes the crypto you staked, or a part of it, as a fine of sorts.

What do I need to stake?

Staking is a much easier process than mining, because all you need is to have some cryptocurrency at hand. For the ETH network, said currency is naturally ETH tokens. If you want to operate your own node, which will net you full rewards from staking, you’ll have to stake a minimum of 32 ETH. That’s about $20,000, which is pretty much pocket change and an amount so small people have asked Ethereum to raise it, lest the have-nots start staking too.

Alright, joke’s over. It’s a huge amount. More money than most people have ever held in their lives, or will ever hold. Luckily, you only need such a monstrous amount of Ethereum if you want to run a full node yourself. For people who don’t have massive amounts of money invested in crypto, staking pools exist.

Staking pools work in the same way mining pools did: They allow many people to chip in with whatever they can, in this case to reach the minimum 32ETH or surpass it so the node can be run. The rewards for staking are then divided among all people staking, proportional to how much they staked and for how long.

How do I set up a stake? Can I just jump in and out?

While some systems using proof-of-stake allow individuals to jump in and out, it’s a bit more complicated with the Ethereum network. Every time you choose to run a staking node or join a staking pool, you should think of it as a timed deposit – meaning you shouldn’t expect to be able to take back your staked Ethereum before the time is up.

Certain staking pools can allow you to retrieve your ETH, although usually this will imply forfeiting any earnings, and some will not allow you to retrieve it at all until your agreed upon time is over. As such, you shouldn’t stake any crypto you might soon need. The feelers from Binance-supporetd pools is that you must leave your stake untouched for at least one year.

What are the risks in staking?

From a general point of view, staking is risk free as long as you’re not trying to cheat the system. You deposit your crypto, wait a set time, take earnings based on how many blocks you were assigned. The higher your staked amount is, the more likely you’ll be to be assigned blocks. It’s simple and relatively direct.

However, we did mention that staking should be treated as a timed deposit – meaning in many cases you won’t be able to withdraw your staked crypto at a moment’s notice. In a stable or bullish market that’s not a problem, since you won’t need to cash out unexpectedly. But in a bear market, or an outright market crash, staking can mean you won’t be able to react to market movements, and thus will have to soldier through it all.

Now, Ethereum is usually stable, so it’s not a particularly risky move since even when prices crash it recovers relatively quickly. However, the risk still exists – so it’s not an entirely risk-free process.

Is staking good?

The proof-of-stake consensus algorithm has existed for years, and it is generally considered superior to proof-of-work algorithms. On that degree, considering anyone can stake and the carbon footprint of staking is minimal when compared to that of mining, staking is the best model we currently have to assign blocks for authentication.

However, since it has inherent risks not existing in mining, some people stay away from it. This in the end creates a system that’s much greener, much more open than the older one, but that some people who are extremely protective of their investments might wish to stay away from.

Conclusion

The traditional finance options in deposits and financial papers allows for long periods in tenor before rewards are accessed. Same works here for staking except that this platform is a decentralized one. With traditional finance undergoing rejuvenation, staking and its ilks seem to lead the way to a newer frontier.

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The Golem Project: What is it, and why does it matter?

Golem blokchchain provides a better insight into cross-chain capabilities that can truly make a difference in our world.

The Golem Project Homepage

From the beginning, one of the main features of blockchain technology has been the capacity to use both the idle and active processing power of a blockchain’s nodes to create distributed supercomputers.

This power, which would make the likes of folding@home or seti@home seem primitive, has sadly not been fully used so far – with the vast majority of a blockchain’s processing power sadly going to meaningless “mining” activities that provide no service whatsoever other than wasted power and processing.

Over the last couple of years, however, several new projects have tried to take advantage of this, turning what used to be “mining” duties into essentially loaning your PC’s computing power in exchange for crypto. Golem is, as you probably expected, one of these.

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How is it different from usual blockchains?

Most blockchains in today’s world award cryptocurrencies in exchange for processing power. However, the processing power in most blockchains goes for transaction authentication and, for older blockchains, mining.

The mining process is perhaps the most famous blockchain-related activity – it’s been repeatedly hailed as the way many crypto millionaires became millionaires to begin with. While the profitability of this task these days can be argued against, it’s still a relatively common activity, and one that uses huge amounts of processing power.

One would think this processing power would be used for huge, difficult tasks the blockchain requires. And one would be partly right – it is indeed used for huge, difficult tasks, that aren’t at all necessary. Mining basically consists of brute-forcing a complex mathematical problem in order to determine who’ll get the crypto. Said problem isn’t at all relevant, and essentially all that processing power goes to waste.

The actual amount of processing power spent in order to authenticate transactions is, in fact, very small. Small enough that most current-day blockchains have migrated to a staking model – which doesn’t require large amounts of processing power and you can technically do from your phone.

So Golem sells processing power… How? And to whom?

Let’s start with the basics: Yes, they sell processing power. Your processing power. And they pay you for it with their own cryptocurrency.

The “how” part is much more complex, but it can be resumed in a phrase by saying the Golem blockchain is a massive, distributed supercomputer made up of every single node connected to it. Yes, that can be difficult to understand, but no, there aren’t many simpler ways of saying it.

Let’s think of every leaf from a tree as a computer. Your computer is just a leaf, one that’s potent enough for what you need. The Golem blockchain? The Golem blockchain is the tree connecting all the leaves. In fact, the Golem blockchain could be even bigger – an orchard.

The whole point is, Golem would connect all the leaves in a tree (ie, the computers of those lending their power) so that they all together can work on a much larger task.

As for who is the customer? Well, not you or I. That’s for sure.

Most people obviously don’t need a supercomputer. We have more than enough with our pcs, or laptops, or phones. However, there are tasks that go well beyond what any single computer can do.

Large simulation tasks, for example, are extremely tasking and can eat up all available resources even in workstations specially built for it. The same goes for large rendering tasks for architecture or video projects. Some security systems can even be quite processing hungry – plus being distributed can help in those tasks.

The companies working in those areas are the customers. Maybe some projects are too big and they need a boost. Maybe they want to get something done faster than their hardware would allow. Maybe they’re just getting started, and hiring processing power is cheaper than buying a workstation, at least while the company finds its footing.

It doesn’t matter. The point is: There are customers out there who would love to pay for your processing power. Golem makes that a possibility.

How is Golem different from other blockchains that trade processing power?

There aren’t that many blockchains trading in processing power to begin with. Even then, the most common proposals for processing power trades using blockchain relate to inter-blockchain transactions and allowing users to exchange their cryptocurrency for another one without having to go through a middleman.

Other than that, most companies selling processing power do so on their own, without blockchains, and without getting you involved. In that regard, Golem is unique.

Will Golem change the blockchain world?

That’s still to be seen. It could be a great addition to the blockchain world – in fact, soon enough we might even see webservices that rely entirely, or almost entirely, on the Golem network, leading us closer to distributed internet.

The project might also fizzle, as many do.

The important part with Golem is that the project offers something new and not niche. Processing power is a commodity these days many companies need. There’s a client base out there for it. Making money out of our processing power is also something people like, as the millions of people mining cryptocurrencies show.

In Golem’s market, then, there’s both offer and demand. Golem is just trying to connect them together. This project is not creating a new market, just facilitating an existing one. Since the market is already there, then, Golem’s chances of success are quite good.

How Flare’s Smart Contract Possibilities is Giving XRP A New Marketplace Leap

Flare Network is bringing smart contract functionality to the Ripple ecosystem. The knock-on effect is real as XRP takes a price leap.

For quite some time now, Ripple, a blockchain-based payment protocol, has been seeking out means to improve the applications and adoption of XRP. Xpring, the investment arm and technology incubator of Ripple, announced its strategic investment in Flare Networks – a smart-contract-based platform.

The Ripple-Flare collaboration promises to add utility, value and new applications for XRP and its connected components.Let’s delve deeper into how the integration of smart contracts will activate Ripple’s market sprint.

The flare network connection

What is the Flare Network?

Flare is an avant-garde blockchain network that feeds off a similar consensus as Stellar and Ripple – the Federated Byzantine Agreement (FBA) protocol. This consensus protocol adopted by the Flare Network has flexible trust and completely ordered, making the possibility of an attack on the order of transactions almost inexistent.

Some of the features of the Flare Network include:

It is completely permissionless, open and Turing-complete.

The overall safety of the network is not dependent on economic incentives.

Owning a token on the network does not grant power

An algorithmic stablecoin that’s generated by burning Ripple (XRP) in parts

Flare adopts XRP’s address schemes and encryption protocols so that both networks can utilize a single key while providing XRP users with a seamless experience

Flare is a useful tool for entrepreneurs and businesses because of the price stability of its token and low volatility. Regardless of the size of your business, even when it grows large, the safety of the Flare Network remains uncompromised. Importantly, this network provides easy and alternative ways for XRP users to explore interesting and complex things.

Also Read: How To Trade Leveraged Tokens on Binance Exchange

How Flare Will Work with Ripple

Late 2019, Flare Network reported its investment and partnership deal with Xpring. A moved poised at bringing partners and an avalanche of resources to expand and enhance the XRP, Xpring and Flare ecosystems. The process entails the integration of the ETH Virtual Machine to allow private and public networks to take maximum advantage of Turing-complete smart contract.

According to the Xpring team, Flare will leverage on Ripple’s encryption system and address to offer Ripple users seamless interfacing with smart contracts. This mechanism is targeted at ensuring that ripple users can explore a variety of use cases for the XPR ledger, such as the development of apps and settlement of contracts

At the launch of the network, a protocol built on Flare, FXRP, will safely activate the trustless distribution, redemption and usage of Ripple (XRP) on Flare. XRP will be trustlessly and safely converted to FXRP and secured by Spark, Flare’s token. Flare will facilitate the interoperability of XRP and other networks through protocols such as Polkadot and Cosmos or with ETH via a structured bridge protocol.

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What does this even mean? Basically, Flare can be utilized as a trustless and defined bridge between XRP and other networks, and more significantly, it can serve as XRP’s smart contract platform.

Furthermore, the Flare Protocol (FXRP) methodology could also be adopted by other non-flare tokens, as the means to determine suitable tokens is embedded into the system and its governance network.

Mechanism of the Flare Network and Ripple

FXRP grants holders of XRP (originators) the ability to transfer their asset to certain XRP Ledger (XPRL) addresses dubbed “agents.” In turn, originators get FXRP on a 1:1 conversion basis with XRP, of course, secured with Flare’s Spark. It is also possible for an FXRP holder (redeemers in this case) to redeem the equivalent worth of FXRP back in XRP.

All they need do is, transfer the FXRP back to Flare, and the agents will send the equivalent amount of XRP to the XPRL address of the redeemer; all facilitated by smart contracts. If for one reason or the other, the agent is unable to quickly see the redemption process through, the redeemer receives the equivalent value of FXRP in XRP and also compensation to cover transaction cost on the next XRP trade. Let’s take a typical illustration of the Flare-Ripple workflow.

“Say, Jake, for instance, wants to convert his XRP to FXRP on Flare; Jake is the originator. As already established, he’ll incur a transaction fee that’s a certain percentage of XRP. Jake specifies the volume to be converted and the FXRP system suggests the available agent (say Peter) on Flare and records the originator’s address on the XPRL.

If there exists an adequate volume of FXRP in the system, an escrow-like protocol locks the required volume of FXRP for some time, pending the authentication of Jake’s transaction. This means that James doesn’t have to contact Peter or even trust him.

Consequently, Peter’s address is generated by a set of algorithmic instructions and forwarded to Jake to fulfil his part of the transaction by transferring XRP to the XRPL, inclusive of transaction fees. The Flare system then mints FXRP and sends to Jake through his nominated address. If by any chance, the system does not have the desired volume FXRP, Jake is refunded his escrowed asset.”

The innovation in the mix

Ripple is in a league of its own for many reasons. It’s very unlike several other blockchain projects that just want to live up to BTC’s standards, without any particular use case or aim. Since its blowout in 2012, has always had the goal of using blockchain, XRP and the internet for cheap, cheap and reliable cross-border transfer of value.

In other words, Ripple hopes for banks and financial institutions to adopt its tech, but it’s been quite the opposite. Mainstream adoption has been a long-standing issue and Ripple resolved to delve into other use cases that will ignite the interest of the world. This concern is a contributing factor to the innovative collaboration with the Flare Network.

The ideology of the Flare-XRP collaboration was birthed to increase the use cases of the XPR token, promote platform interoperability and the utilization of XPRL. while also receiving massive representation in decentralized finance. It was only reasonable to have looked on to Flare Network, a new smart contracts platform for integration, although some enthusiasts disagree with Ripple’s move.

Conclusion

When you take a look at platforms that utilize the Proof-of-Work and Proof-of-Stake protocols, the security of such networks is mostly dictated by incentive given to nodes. In this case, Flare boasts an innovative security architecture that doesn’t survive on economic incentives. Also, the Flare-XRP collaboration has largely improved Ripple’s market performance and created avenues for more use cases.

How To Trade Leveraged Tokens on Binance Exchange

Binance exchange provides a remarkable experience with leveraged tokens. Here are the vital insights.

Margin trading is a risky business where profit margins are paper-thin. That’s a fact. While hundreds of thousands of people have dabbled into the market, be it via forex or cryptocurrencies, the truth still remains: Making a living out of regular margin trading can be extremely difficult, if not impossible. Moreover, a single mistake can completely destroy your position, sending you back weeks or months.

Due to the extremely thin profit margins, leverage trading is also a common practice: In this model, a user receives an amount of money for trading that’s several times higher (Usually 5x or 10x, though in some cases much larger) than the amount of money they have. They are then allowed to trade with that money, with the caveat that if they lose an amount of money equal to their initial amount (their leverage) they must immediately liquidate their position and pay back the loan.

Leveraged tokens are an attempt to help with this complicated process. Instead of having to ask for leverage and then invest using it, you just buy leveraged tokens. Leveraged tokens have their value semi-pegged to that of another crypto token… except their value changes at 2-3x the rate.

In other words, if you want to try leverage trading, using leveraged tokens make the process much easier by getting rid of the middleman and allowing you to multiply your gains (or losses) automatically.

How do Leveraged Tokens on Binance work?

First of all, not every token that’s traded on Binance works as a leveraged token. Not all tokens have a leveraged equivalent, either. As with other Binance programs, like pegged tokens, leveraged tokens are only offered for a handful of cryptocurrencies – naturally, the ones that see leverage trading more often, and thus where there’s a market.

An important thing to note is that a leveraged token isn’t equivalent to the actual token. A Binance Leveraged Bitcoin, for example, can’t be used to make Bitcoin purchases. They’re essentially a separate token, whose value is pegged to that of Bitcoin.

Knowing that, the process is simple: You can buy or trade leveraged tokens on Binance in almost the same way you can buy or trade the actual tokens, with the only difference being that the leveraged token’s daily change will be steeper. For example, if the price of a Bitcoin goes up by $1,000 during a trading session, the price of a Bitcoin-based BLVT will go up by $2,000-$3,000.

Sounds like easy money… Where’s the catch?

There isn’t much of a catch in the sense that there’s no small print that will make you lose your money. However, one thing you’ll have to know is that leveraged trading tokens are rebalance every day to make sure the relative value to the base token holds.

What does this mean? Well, it’s simple. Say, a BTC leveraged token (we’ll call it BTCL) releases today, with the initial exchange being 1BCT = 1BTCL. At the end of the first day, BTC gains 10% of its value. Since BTCL was set to 3x leverage, that means that at the end of that day 1.3BTC = 1BTCL.

That works for a single day. However, as more days go on, problems start arising: First, because maintaining the same ratio over many trading sessions can get difficult – what started as a 3x leverage can easily balloon into much higher values after successive positive sessions, for example. But more importantly, because the exchange needs to have liquidity so they can perform token payouts.

This directly affects the value of the token, as one would expect. In many cases, this will make earnings somewhat smaller over a longer period than the actual accumulative. It can also make losses smaller over a longer period in the same way. Due to how the market and rebalancing works, it can also create losses even when the original token’s price variation evens out to 0% (that is, if price goes up, then down, over two separate sessions.)

Rebalancing is important to maintain liquidity and keep the reference existing, but you need to look into how your exchange does it to know exactly what to expect. For more information, see the “Volatility decay” section in Binance’s own website.

Alright. What else is there? Why should I trade on Binance and not elsewhere?

Your choice of trading company is entirely yours, and people tend to have vastly different preferences depending on their goals. However, Binance does offer a few things to their leverage traders that might sway your opinion:

Tiny trading fees. Binance leveraged tokens exist in Binance’s own blockchain – and, as usual for Binance operations, its own intra-blockchain trades have much smaller fees than extra-blockchain ones. Obtaining Binance Leveraged Tokens will result in a much lower fee than obtaining the tokens themselves, on top of the extra earnings.

Constant leverage rebalance. While other exchanges only rebalance the token value, Binance also changes the leverage for each trading session depending on how the token has been faring. Generally, this means the leverage will flow between 20 and 30% depending on the current market, but it can also go higher or lower at times.

High Market Liquidity. Binance is one of the crypto exchanges with the highest liquidity in the world – and thus they have enough crypto in storage to weather almost any market swings. This is important when the market is particularly volatile, since smaller exchanges with lower liquidity could run into issues if prices vary widely in an unexpected manner. For Binance, this shouldn’t be a problem.

Conclusion

The market depth of cryptocurrencies is improving and there are more ways to trade and explore digital currencies.

With Binance LVT, you can take more positions and reap rewards. As exciting as the crypto market might be, never forget that it is high risk, and only invest what you can lose and still be able to get a good night rest.