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Crypto Guides

Learning The Fundamentals Of ‘Tether’ – The Stable Cryptocurrency!

Introduction

Tether is a cryptocurrency founded in 2015, and it was initially known as ‘Realcoin.’ Tether tokens are issued by Tether Limited, a company based in the British Virgin Islands as per the New York Times. The official website says the company is incorporated in Hong Kong, with offices in the US. This company is associated with the Bitfinex, a Hong Kong-based cryptocurrency exchange, which is also one of the biggest in the world. Many members who are on the board of Tether Limited are associated with Bitfinex exchange, as well.

Objective

The value of any cryptocurrency is volatile. We can see the steep increases and decreases in the value of any crypto within a matter of days or hours, as well. We know that these Cryptocurrencies offer a wide range of features that fiat currencies don’t assure.  Therefore, Tether was designed as a stable coin promising the stability of fiat currency with the features of a cryptocurrency as well. Tether is meant to be backed one for one by some of the major fiat currencies like USD, Euro, JPY, etc. If we take the example of USD, the value of each Tether is always one dollar (USDT). For every one tether created, one US dollar is stored as a reserve.

Importance of Tether in the crypto world

Many crypto exchanges across the globe find it extremely difficult to work with traditional banks. The exchanges find it challenging to store USD or any conventional fiat currency as reserves for the payments. Hence major crypto exchanges like Bitfinex hold clients balance in Tether rather than in USD. This means, if the clients hold any money in the exchange and don’t have any open positions, that money is held as Tether in the exchange. It is converted into USD only when the client wants to redeem the cash. Hence Tether offers to be a stable alternative for USD for the crypto exchanges across the world.

Market Cap

Tether is in the fifth position in terms of market cap in the crypto world with a value of more than $4 billion. The price of each Tether is stable and is one dollar or Euro, etc. as described above. The average 24-hour trading volume is just above $43 billion, while the circulating supply is around $4.1 billion in the market as on 1st Nov 2019.

Controversies

Tether has a fair share of controversies in its kitty. As the central banks hold the appropriate amount of gold reserves equivalent to the new currency issued in the market, Tether Limited holds the equivalent amount of US Dollars in its reserve for the Tether coins circulated in the market. Lately, there are claims that the company doesn’t hold enough reserves in USD, claiming Tether Ltd haven’t been too transparent with the audits as to where and how much of the reserves have been stored in different places.

The December 2017 Bitcoin price surge is also attributed to be the work of the Tether limited. It is alleged that the company has created Tether coins out of thin air and bought Bitcoin at a lower price, eventually attributing the price surge of the currency. Thus, there are growing fears in the crypto market that if there are no adequate reserves of USD backing the Tether, the value of the coin should be determined by the market rather than maintaining it stable. Despite all these controversies, this cryptocurrency is still one of the most traded ones in the crypto space because of its stability factor.

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Crypto Guides

Understanding The Basics Of Binance Coin

Introduction

For crypto enthusiasts, Binance is a well-known word as it is one of the largest cryptocurrency exchanges. The word Binance is a portmanteau of Binary and Finance. Binance coin was initially launched on the Ethereum platform and later was moved on to the Binance’s proprietary blockchain (Binance Chain).

Binance was founded by its CEO Changpeng Zhao who is known as CZ in the world of cryptocurrency, with co-founder & CTO Roger Wang.

Objective

The objective of the Binance coin creation was to serve as a medium for transaction fees, which includes trading fees, exchange fees, and listing fees on the Binance exchange. Just like Ether fuels the Ethereum blockchain platform, Binance coin fuels the Binance exchange. Like any other cryptocurrency, this coin can be traded as well in many of the cryptocurrency exchanges. Binance initially had its headquarters in China, and then in Japan, because of local government regulations. Finally, it had to move its headquarters to Malta.

Binance Coin ICO

Binance coin had its Initial Coin Offering from June 14th to June 27th in 2017. Before the  ICO happened, the network minted a total of 200 million tokens. 50% of the total tokens mined (100 million) were reserved for the ICO, and they raised approximately $15 million. The funds raised are used in three different ways; 35% of the funds raised were used to build and maintain the platform. 50% of the funds were used for branding and marketing the platform. The remaining 15% are reserved for emergency contingencies.

Fee model of the exchange

As mentioned earlier, in Binance exchange, BNB acts as a token for transaction fees. There is a benefit for using BNB token for transaction fees in the exchange. At present, Binance charges 0.1% on each trade, but if we use BNB token for transacting, the exchange offers a discount. For the first year, the concession stands at 50%, and from there on, it will be halved till the 4th year. That means, for the second year the discount would be at 25%, the third year it is 12.5% and 6.75% for the fourth year. From the fifth year onwards there wouldn’t be any discounts. Hence, there are high chances of the coin value to get depreciated as the discount decreases for each passing year. Therefore to combat the depreciation, Binance plans to burn 50% of its coins, i.e., a total of 100 million coins overtime to stabilize the currency.

Consensus 

Binance Chain uses the Tendermint Byzantine fault tolerance (BFT) consensus mechanism. The network uses different types of nodes in the system to validate and broadcast the transactions to other nodes. Validator nodes, as the name suggests, validate the transactions in the network. Witness nodes act as a witness for the consensus process and broadcast transactions to all the nodes involved in the network. Finally, the accelerator nodes are owned by the organization to speed up the validation process.

Market Cap

Binance coin stands in eighth place in terms of market cap with a value of approximately 3 billion dollars. Each coin is traded at $19.91 as of 28/10/2019. The 24-hour trading volume is $353 million, while a total of 155 million BNB’s are available in the market as of now.

Conclusion

Binance coin is one of the most innovative cryptos out there in terms of its consensus and usage. As discussed, the founders plan to burn 50% of their coins to stabilize the value of the currency. 20% of the profits are to be burnt every quarter, eventually burning 100 million of the existing tokens. By looking at the history of the coin, the industry experts believe that the currency will sustain the market and emerge as one of the leading cryptocurrencies due to its strong backing and security.

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Crypto Guides

What Should You Know About Ripple? The Most Centralized Cryptocurrency!

Introduction 

In our previous articles, we have seen that Bitcoin has inspired and paved the way for a multitude of new and affordable platforms using cryptocurrencies. Ripple is one such platform developed by Ripple Lab’s incorporation, a US-based company in 2012. It is a payment platform built upon a distributed open-source protocol. This best part about this cryptocurrency is that it is backed by major Banking and financial institutions. They use Ripple for transferring money, commodities, cryptocurrencies, or any other units of value like flier miles or free mobile minutes.

Objective

The Objective of Ripple is to rule over all the international transactions worldwide. They have come up with this objective as the cost of international transactions is too high if we transact using traditional means. It also takes days to settle the transaction. The most innovative idea behind this platform is that we can use the network to transfer any currency, not only cryptocurrency, to be more specific. Thus, making the platform currency independent. Ripple Network, also knows as RippleNet, enables many banks and financial institutions to send and receive money smoothly throughout the world.

How is Ripple different from other cryptocurrencies?

In the world of blockchain, the upcoming networks or platforms are trying to eradicate the existing systems. Ripple is doing precisely the opposite. Instead of trying to remove them, this technology is trying to cooperate with them to make them better. Several products by Ripple Labs (XCurremt, XVia, and XRapid) are being used by several banks to perform transactions globally. The native cryptocurrency of the platform XRP plays an essential role in the system.

Let us see how the transactions are performed globally using Ripple technology. The currency which is being transacted is converted into XRP before the transaction. As the recipient receives the money, the user will have an option to convert the XRP into his/her desired currency. Thus, XRP plays a bridge between two different currencies in this case. The transaction fees for this transaction is as less as $0.00001. This transaction fee disappears from the network after the transaction is processed.

Market Capitalization 

Ripple’s XRP is in third place in terms of market capitalization amongst Cryptocurrencies. Currently, this crypto is trading at $0.295, while the total market cap is around 12 billion dollars. The 24-hour trading volume is $1,729,560,739. The maximum number of coins the XRP ever can have is 100,000,000,000, while 43,242,653,330 out of them are already in circulation (43.2%).

Pros and Cons of Ripple

We have already seen that many banks have trust in Ripple technology and started using this network. By using this technology, some world-renowned banks claim that they are potentially saving 70% of the transaction costs annually. Since all the coins are minted already, inflation i.e., the value of Ripple, remains stable over the period.

Ripple is highly centralized, unlike other cryptocurrencies. 61% of the coins minted are in control of the founders of the Ripple Labs. They decide when and how much of the coins are released. Hence centralization is the major con. In May 2018, Ripple was accused of alleged cheating through its ICO.

Conclusion

Since 2013, many traditional platforms that serve international transactions have adopted Ripple as an alternative remittance option to its customers. By December 2014, Ripple combined its services with Earhports payments systems, making it the first-ever partnership of Ripple with a giant payments network. Western Union, American Express, and Unicredit are some of the largest customers of this technology, making the technology achieve its goal closer every passing day.

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Crypto Guides

What Is Market Capitalization? Top Cryptocurrencies With Highest Market Cap!

Introduction

Market capitalization is estimated for publicly traded companies in general to determine the value of that company. The value is calculated based on the total number of outstanding shares in the market multiplied by the individual share price. In simple words, the market cap is nothing but the market value of a publicly trading company.

Initial Public Offering (IPO)

Initial Public Offering or IPO’s are widely known. Companys which issue IPOs are publicly trading companies willing to raise capital for investing in the business to diversify and expand the company. When a company issues IPO, it agrees to sell a certain stake of the company to the public to raise the company. There are many successful IPO’s since 1602, when the first-ever IPO was recorded. Global companies like Amazon and Apple crossed one trillion-dollar in market cap, making them powerful than some smaller countries.

Initial Coin Offering (ICO)

Similar to IPOs, we have ICOs called Initial Coin offering with regards to cryptocurrencies. ICOs help crypto companies to raise funds that will be invested in creating a new coin, service, or dApps. These companies generally release a white paper detailing the aim of the ICO, minimum capital they intend to raise, and the basic design and properties of the product they are trying to create. Many investors plan to invest in ICOs to make quick bucks and earn tremendous profits. The result of some of the prominent ICOs promises the same.

Hence, the market cap of a cryptocurrency is determined by the number of outstanding coins in the market multiplied by the individual value of a coin.

Now, let’s look at the top 10 cryptocurrencies in terms of market capitalization.

  1. Bitcoin (Market Cap – $146.1 BN)

Bitcoin is the first-ever cryptocurrency, and it is obvious that this crypto tops the list in terms of market cap. The market cap of Bitcoin is $146,141,293,771, with the total number of coins in circulation being almost 18 million. As we all know, only 21 million Bitcoins can ever be mined.

  1. Ethereum (Market Cap – $19.1 BN)

Ethereum rightly earned its second place as it was developed to overcome the limitations of bitcoin, and it has become the second favorite amongst the investors. The market cap of Ethereum is around $19,191,075,792 with 108,182,195 coins in circulation.

  1. Ripple (Market Cap – $12.8 BN)

Ripples XRP takes third place with $12,833,995,058 as a market cap. The total number of coins in circulation is around 43,166,787,298. This crypto earned its credibility by gaining support from some of the most powerful centralized institutions like Federal Reserva.

  1. Tether (Market Cap – $4.1 BN)

Tether has been developed to be a stable coin, i.e., the price will always be maintained as one dollar. This coin has been developed to have the stability of fiat currency while having the key properties of cryptocurrency. The market cap of Tether is $4,121,497,986, with 4,108,044,456 coins being circulated in the market.

  1. Bitcoin Cash (Market Cap – $3.9 BN)

Bitcoin cash is created by forking the main Bitcoin platform. The market cap is around $3,956,035,700 with 18,061,950 number of coins in the market.

  1. Litecoin (Market Cap – $3.4 BN)

Litecoin is a spinoff of Bitcoin, thus earning the name of altcoin, which means alternate coin (to bitcoin). Around 63,484,804 Litecoins are currently circulating in the market.

Some of the other cryptos with high market cap include

Binance Coin (Market Cap – $2.8 BN)

EOS (Market Cap – $2.7 BN)

Bitcoin SV (Market Cap – $1.5 BN)

Stellar (Market Cap – $1.3 BN)

All the above information is as of 16th October 2019. For real-time figures, you can visit this website.

The adoption and usage of cryptocurrencies will only increase in the future as they are here to stay. At the peak of the bitcoin price in December 2017, the market cap of all the cryptocurrencies was around 125 billion dollars, and as of today, it is 221.3 billion dollars. Given the history, the market cap of all the cryptocurrencies can quickly reach a trillion dollars in the near future.

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Crypto Market Analysis

Cryptocurrencies and Manipulation

Cryptocurrency Market Manipulation

Cryptocurrency Market Manipulation

It’s a well-known fact that cryptocurrency market manipulation is caused by many factors. But so is every other market in the world. So why are cryptocurrencies so much more volatile in the times of manipulation?

Why Does Manipulation Affect Cryptos So Much?

Cryptocurrencies, and mainly Bitcoin are extremely susceptible to manipulation. The reason for that is the big growth crypto movement had in the past years. If you think about it more, market cap certainly does not reflect the total money that went into the crypto markets. Another reason would be the youth of the market and the general mentality of an average crypto investor.

Overleveraged Dollar Value

Early investors could buy Bitcoin for as low as $400 not so long ago. And as the value of a cryptocurrency is just as much about what the next person is willing to pay, with more adoption and speculation, the price rose. With the price, market cap rose too. That made every dollar put in become overleveraged and worth a lot more, for both up and down moves. In trading, this means that less actual money is needed to bring a market up or down. People brought markets down, and rose it up for several billion market cap wise, with only several million dollar orders.

Average Investor Mindset

If we look at an average crypto market investor, it does not match the profile of a traditional markets investor. A traditional investor is in his mid-40s or 50s, middle class and calm. On the other hand, an average crypto investor is young, without much knowledge of the markets, financially dependent and very susceptible to fear of missing out and fear of losing. That’s why the reactions of crypto investors are much more linear, both to the up and down side.

This creates a problem as an already overleveraged market cap of cryptocurrencies gets shook by multi-million dollar manipulative order, and that creates unreasonable fear with the investors. And since our average investor is young and does not handle stress well, he buys or sells in excess, which further accentuates the move. This happens in both a downturn and an upswing.

Conclusion

Cryptocurrencies will remain volatile for a couple more years until the profile of an average investor changes. When investors become more mature, the market will follow. This, however, will not happen in a month or two. Market maturity is a process that every tradable asset needs to go through.