Category: Market Cap

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Centralised and decentralised exchanges – what is the difference?

Categories Blockchain, Cryptocurrency, Technology, Cryptocurrency Exchange, Tokens, Wallet, Market, Market Cap, Exchanges, DLT, FIAT

Centralised and decentralised exchanges – what is the difference?

In the world of cryptocurrency, there are two different and very distinct types of exchange, a centralised and a decentralised ones. But what is the difference between the two?

A cryptocurrency exchange is an online platform where digital currencies are traded or exchanged for other digital currencies or even fiat currencies. Both types of exchange are similar in the way that they both facilitate the buying and selling of cryptocurrencies but both suffer from different complications as well as enjoying different benefits.

What is a centralised exchange?

A centralised exchange is one of the most common types of crypto exchange and it allows the user to buy and sell cryptocurrencies with fiat currencies, as well as buying cryptocurrencies with other cryptocurrencies. The majority of these exchanges accepts payments via debit or credit card, as well as bank and wire transfer.

When we call it a centralised exchange, we mean that third parties assist with conducting the transactions that take place on it, whilst all daily operations are supervised by an organisation. They are similar in type to a traditional stock exchanges but deal with crypto and fiat rather than stocks.

Benefits of a centralised exchange include the simplicity of use as well as extreme accessibility. In case if something goes wrong on the exchange, the fact that it is operated by an organisation means that it takes all the responsibility. Another benefit is the high level of trading volume which means that these type of exchanges are not considered as volatile.

Disadvantages include the fact that they are susceptible to hackers because when crypto is bought on a centralised exchange, the users don’t actually own the coins and therefore are not in possession of the funds private keys. As in February of this year, there have been more than 30 crypto exchange hacks that have resulted in a loss of almost a million of Bitcoins.

What is a decentralised exchange?

A decentralised exchange doesn’t rely on a third party to hold the cryptocurrencies which makes it much quicker to conduct a transaction than on a centralised one. Those that opt for a decentralised exchange, trade their assets in a P2P manner automatically.

This type of exchange has seen a big increase in popularity over the last six months due to the fact that they are less susceptible to hackers. Another bonus is that these exchanges do not require any personal information to conduct a trade meaning data-hungry hackers are less likely to strike.

But of course, there are some limitations. For example, they tend to be more difficult and complicated to use than centralised exchanges, particularly for beginners. Decentralised exchanges also have a limited level of functionality when compared to their centralised counterparts, as well as a lower trading volume.

E&S Group is a leading corporate & law firm offering various services with regards to ICOs. Feel free to contact us directly on +356 20103020 or by email at [email protected] to find out how E&S can help you in ‘making things happen’.

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Why our world needs tokenomics?

Categories Economy, Blockchain, Cryptocurrency, Regulatory, ICOs, Technology, Trading, Tokenomics, Tokens, Market, Market Cap, Cryptoeconomics

Why our world needs tokenomics?

There is no doubt that blockchain technology is going to pay a pretty big part in our future. Blockchain has the capacity to unlock a previously untapped economy of trust and it also has the potential to completely revolutionise many sectors from finance to healthcare and everything in between. But before it can reach its full potential, there is one extremely important thing missing: an established and well thought out theory of tokenomics.

Moving forward with blockchain technology and its implementation will require a significant increase in the advancement of tokenomics analysis. We are currently in the midst of a truly unchartered territory – governments and regulatory authorities don’t have a clue what is happening and even those involved directly in the industry are lacking clarity and certainty. Whilst the concept of tokenomics has been around for centuries, there is not much knowledge on artificial economies such as the of crypto world. One way that token economies can be analysed more closely is through the use of agent-based modelling, but there is still a lot of work to do.

Why study token economics?

Firstly, because tokenomics is extremely important. With the advent of blockchain technology, we are seeing more and more startups move towards using market business models. These models facilitate the incentivisation of users to make them more proactive in their day to day life. For example, a government could incentivise users to pay their taxes over the blockchain network. A retail company could offer discounts if clients use the blockchain to make their payments. Knowing and understanding how best to create and promote rewards through a particular economy requires a proper understanding of tokenomics models.

Also, token economies can also fall foul of all the problems that traditional economies have. For example, inflation, volatility, and crashes are all issues that can affect the long-term viability of a blockchain based business. Token economies do make it possible, however, to automatically collect data on transactions which can then be used to calculate metrics such as the total traded volume or the velocity. The tokenomics research community has a lot of work to do when it comes to being able to utilize the unique opportunities that are offered by the blockchain. By doing this they will be able to better understand how to solve some of the presented challenges.

The issue of token pricing

Some of the other issues that are at the forefront of the challenges faced by the sector include understanding token pricing. There is no definitive answer on how tokens should be priced, or how many should be issued. There is also much work needed when it comes to the equation of exchange that is used to help derive valuations for cryptocurrencies, some of which can be used to provide a better understanding of token pricing for ICOs. The problem is that at the moment, there is no proper model around this topic and until there is, the sector will struggle to find its feet.

Long-term viability

Many ICOs that have been launched made use of a model where tokens are disposed of as they are used up. This means that as the number of tokens decreases, supply becomes limited and the price goes up. Whilst this is attractive to investors and speculators, it doesn’t give much information or hope for the long-term viability of the token.

Controlling speculation

Unfounded speculation has caused untold amounts of damage to the crypto-economy, but it can also be one of the driving force behind the popularity surge of cryptocurrencies. Speculating and trading are not bad things per se, rather it is when they get out of control and result in market crashes similar to the one that we saw in January. Control needs to be exerted so that speculation is allowed, but does not wield power that can see a market decimated in days.

The economics of the future

Blockchain is not going anywhere anytime soon and it is becoming clearer that it is set to become an integral part of our lives. ICOs have raised an astonishing $6.5bn to date, but without a proper tokenomics model, many are sadly destined to fail. As ICOs mature, the same is required by tokenomics and understanding topics such as the ones mentioned above is an integral part of blockchains long-term success.

 

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Virtual Currencies are increasing in value

Categories Blockchain, Cryptocurrency, ICOs, Smart Contracts, Cryptocurrency Exchange, Payments, Bitcoin, Regulation, Ethereum, Ripple, Market, Market Cap

Virtual Currencies are increasing in value

For the first time in two months, the value of Bitcoin has exceeded $8200 and it seems that slowly but surely the value of the world’s most popular cryptocurrency is regaining some of the strength that it had before the spectacular crash of January 2018.

In July, the value spiked rather suddenly and it value started to creep towards the price it reached two months ago at $7502. But what is causing its price to grow? Here are five reasons why?

Facebook and Google relax their rules

When news broke that both Google and Facebook had relaxed their rules around advertising cryptocurrencies and related products on their platforms. Coinbase, one of the largest cryptocurrency exchanges in the world is now allowed to advertise its services on Facebook and Google has now listed the top cryptocurrencies in its exchange rate converted. This newly founded web visibility and a significant vote of confidence from the world’s largest tech giants has undoubtedly had a positive effect on the value of BTC.

The possibility of a BTC ETF

Another big vote of confidence for BTC was the announcement from the Chicago Board Options Exchange that they had sought approval for a Bitcoin ETF. This request from one of the most well-known exchanges comes at the same time as a number of similar requests from other leading big names. Whether or not the application will be approved, remains to be seen but in the meantime, this news is believed to have helped create the surge in value that we are seeing today.

Approval from big institutions

Some of the world’s leading banks such as JP Morgan and Goldman Sachs have started showing more and more interest in cryptocurrencies. At one time, leading figures in the industry were quick to criticise and dismiss the technology, but it appears that the tides have turned. The fact that such prominent names have shown interest in investing in and utilising the technology has been a big boost for the industry as a whole.

Regulatory changes

Following in the footsteps of Malta that recently introduced three new Acts that would support the growth and development of cryptocurrencies, ICOs and blockchain technology, more and more jurisdictions are considering changing their approach. The market has suffered from a lack of regulation or unclear laws which has lead to confusion, abuse, and crippling of cryptocurrencies value. Now the US Chamber of Commerce along with the SEC and CFTC are working on creating a better regulatory environment, crypto is set to thrive.

It’s summer!

The price of BTC seems to surge every summer and 2018 is no exception. Whilst the leap of 2017 was the largest so far, before that we saw considerable upswings during the summer season. So far, the level of growth in 2018 pales in comparison to previous years, we still have August to go and considering points 1-4, we could be in for a pleasant surprise.

If you have invested in Bitcoin or are considering doing so, contact one of our team today to ensure that you are making the best out of your investment and that you are in compliance with all applicable fiscal regulations.

 

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How digital exchanges work

Categories Blockchain, Cryptocurrency, Technology, Cryptocurrency Exchange, Market, Market Cap, Exchanges

How digital exchanges work

It seems that everyone is using cryptocurrency exchanges, but if you are someone that is new to the whole concept, you might be a little confused. In this guide, will give you a full, clear, and succinct explanation of what cryptocurrency exchanges are and how they work.

Put simply, a cryptocurrency exchange allows the exchange of one cryptocurrency for another, the exchange of a cryptocurrency into fiat currency or vice versa, or the buying and selling of cryptocurrency.

A cryptocurrency exchange will typically set the rate of each currency – both coins and tokens and the rate will usually depend on the actions of the buyers or sellers as well as various other factors that can impact the price.

Different cryptocurrency exchanges will have different options; some are made for traders whereas some are made for prompt crypto-fiat exchange, others are made for regular traders where you can buy crypto and sell them for a lower fee than on a typical crypto to fiat exchange. Most trading platforms also charge an additional fee depending on the amount of money that you are withdrawing from the account.

A cryptocurrency exchange works in much the same way as a regular stock exchange but the difference is that on a stock exchange, a trader will buy and sell assets whereas, on a crypto exchange, a trader will use crypto pairs to profit from their volatile value rates.

What are cryptocurrency pairs?

A cryptocurrency pair allows you to gain profit from the changing rate of the currency as is the main business for crypto traders.

When considering a trading pair, the order of the currencies in that pair is always relevant.  For example, if you think that ETH will increase in value against the USD, then you should buy the ETH/USD pair, ensuring that ETH is in the first place, with USD second. If you believe that ETH will fall against USD then you should pick a USD/ETH pair.

Some of the most popular exchanges actually avoid using fiat money altogether and only offer pairs in cryptocurrency. The most popular of the crypto-crypto pairs are BTC/LTC or LTC/BTC as well as ETH/BTC and BTC/ETH.

Why do some cryptocurrency exchanges have different prices?

This is because exchanges are completely independent of each other meaning that prices will vary depending on the buy and sell activity of each one.

Each exchange will calculate the price of Bitcoin depending on the volume of its own trades as well as the rate of supply and demand from customers. This means that the bigger the exchange, the more market-relevant the price that you are able to benefit from.

When it comes to BTC, there is no such thing as a stable or fair price for BTC or any other coin- it is always decided by the market at the exact moment. Many news portals and sites such as Google will use the aggregate price of BTC and other cryptocurrencies. Some portals such as Cointelegraph will use its own price index for crypto coins which is calculated as the average price of each coin based on the prices over 27 of the leading exchanges.

Is it possible to profit from price differences across different exchanges?

In a nutshell, yes it is but it would only be a small profit and may not even cover the exchange fees.

If you compare the price of BTC across five exchanges at the same time on any given day, the chances are that you will only see a price difference of around one or two percent. This difference may go up to even 5% on an active trading day that experiences high volumes- usually, the volume goes up a lot each time that the prices dramatically rise or fall.

If you are planning to sell your Bitcoins on one exchange for a higher price and then buy them back on another at a cheaper price just be sure that the fees do not surpass the difference in value. More often than not, it is not worth it.

So where do I start trading?

You will need to get your hands on some cryptocurrencies first.

First up, you will need to start your own account at a cryptocurrency exchange. Then you will need to transfer an initial amount of money into the account but be aware that many exchanges do not accept USD or EUR as a domestic currency.

Instead you will need to buy cryptocurrency and then transfer it to the address that your exchange provides you. You may find a few platforms that accept fiat currency or credit cards but these are not particularly common.

If you don’t have enough money to make the trades that you want to make, you can borrow from the exchange. This is known as margin trading but be sure to know what you are doing and don’t get yourself into a situation that you cannot afford!

 

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Digital Currency prices go through the roof following announcement from IBM

Categories Blockchain, Cryptocurrency, Technology, Cryptocurrency Exchange, Bitcoin, Tokens, Wallet, Ethereum, Market, Market Cap

Digital Currency prices go through the roof following announcement from IBM

IBM has just announced a new partnership with a fintech start-up called Stronghold in an aim to become more involved in the world of cryptocurrency.

Whilst the tech giant actively involves itself in blockchain technology, until now they have not shown a particular interest in cryptocurrency. In conjunction with Stronghold, they aim to explore the possibility of using Stablecoin which would be pegged to the US Dollar so it would be able to mitigate volatility.

According to the official press release, the cryptocurrency will be called Stronghold USD and will be backed by the US Dollar. The reserves will be held by a blockchain focussed asset manager, Prime Trust.

IBM will then experiment with virtual currencies to explore the potential of the technology as well as seeing how it could be used to help banks and other financial entities, without taking too much of a risk.

Whilst Stablecoin is supposed to be immutable to the volatility that other cryptocurrencies experience, there is a bit of controversy around the way that it is tethered. There are some that believe it was used to manipulate the price of Bitcoin during its bull run towards the end of 2017.

The news of IBM’s foray into the crypto world may have been responsible for an enormous spike in the value of BTC- as much as $20 billion in 24 hours. A single BTC skyrocketed to over $7000 with around 9% gains on a day to day basis. At the time of writing, Ethereum, the world’s second largest coin had reached an important hurdle of $500 per Ether. Ripple has also seen increases of around 6.5% and is trading at $0.5100.

 

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Contact us directly on +356 20103020 or by email at [email protected] to find out more.

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Stock analysts say that crypto is tipped to continue rising 

Categories Economy, Blockchain, Cryptocurrency, ICOs, Bitcoin, Ethereum, Market, Market Cap

Stock analysts say that crypto is tipped to continue rising

A prominent stock analyst Ronnie Moas has stated that the value of cryptocurrencies will continue to thrive in 2018, rising to all-time highs. He believes that cryptocurrencies are poised to take market shares away from stocks, bonds, and other currencies and that this is just the beginning.

In a report published last week, Moas, the founder of Standpoint Research and leading independent analyst has remained positive in his predictions for the future of the sector. After spending last month testing out a range of virtual currencies, he wrote that he expects coins such as Bitcoin and Ether to continue, with the value of Ether doubling by the end of 2018. He has previously tipped Bitcoin to reach an all-time high of $50,000 in the next 10 years.

At the moment, one Ether token is worth $219, an increase of 5% on the previous week, whilst a BTC is valued at $3000. Moas’ report also featured predictions for the alternative cryptocurrency, Litecoin, stating that he believes it will double to $80 by the end of the year.

“In my view, the genie is out of the bottle, and cryptocurrencies will continue to rise and take market share away from stocks, other precious metals, bonds, and currencies,” Moas told CNBC.

His ultimate message to investors is to have a go at investing in cryptocurrencies.

“I think investors should take a shot on this and hold for a few years. If you lose a few bucks, at least you took a shot. In life, you miss every shot that you do not take. It will probably be more upsetting to watch it (from the sidelines) go up another 1,000 percent.”

 

To know more about ICO legislation in Malta please follow this link.

Contact us directly on +356 20103020 or by mail at [email protected] to find out more.

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