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Trading with Crypto Exchanges and Crypto CFDs

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crypto cfd

crypto cfd

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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3 Stablecoins Everyone Should Know

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stablecoin

stablecoin

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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ICON ($ICX) Charters Course to Blockchain Supremacy

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ICON

ICON

ICON

ICON (#ICONProject), the South Korean blockchain startup, is one of the few blockchain companies that has risen from the ashes of the crypto bubble of 2018. It has demonstrated a strong commitment to leading the charge towards realizing a blockchain-powered future.

ICON has a solid plan, through which it plans to become a central pillar that will support blockchain integration in many facets of society and the economy. However, we must look back a bit to understand the gravity of ICON’s plans and its journey ahead.

1. THE ROAD SO FAR

THE DEVELOPMENT OF BLOCKCHAIN TECHNOLOGY

The concept of blockchain technology was introduced alongside Bitcoin, which was the first cryptocurrency. Back then, the digital currency cast a huge shadow on blockchain and everything else as it scaled the heights of the brave new world. However, later, it started to become clear that blockchain represented a key component in the dawn of the decentralized world. The realization that blockchain would bring about many efficiencies was the foundation on which companies like ICON and many others were born.

BLOCKCHAIN IS NOT JUST A TECHNOLOGY THAT SUPPORTS CRYPTOCURRENCIES

Blockchain technology, otherwise known as decentralized ledger technology, allows cryptocurrencies to exist and to be sent from one crypto wallet to another. One can view it as a highway for digital currency, but it goes beyond that description. It is also a highway for rapid and secure transfer of data, as well as storage. These characteristics are the underpinnings that support the development of solutions that leverage the power of blockchain to achieve unparalleled efficiencies in various sectors. ICON aims to spearhead the development of such solutions that tap into decentralized technology.

ICON’S PURSUIT OF OPPORTUNITIES THAT BLOCKCHAIN HAS TO OFFER

Now that the public eye has shifted towards Bitcoin and identifying the advantages that it has to offer, ICON and other blockchain startups are kicking their developments into high gear so that they can demonstrate the capabilities of the technology.

Most of the opportunities that ICON is pursuing are government projects. Fortunately, the South Korean government is open to exploring blockchain’s potential and so it has vowed to invest heavily in the segment. The Korea Internet and Security Agency (KISA) recently announced that ICT and the Ministry of Science had identified 10 blockchain projects that they will fund in 2020. Each project will receive roughly KRW 600 million, which means that the Korean government plans to invest a total of KRW 6 billion in blockchain projects. This is exciting because it means the South Korean government is confident in blockchain technology.

The 10 blockchain projects include:

  1. The Ministry of Health and Welfare’s welfare management system.
  2. Jeju’s system that will manage the life cycle of electric batteries.
  3. Sejong City’s autonomous vehicle platform.
  4. Busan’s smart quality control system for sewer water.
  5. The National Highway Authority’s mutual trust system.
  6. Gangwon Province’s chronic disease management system.
  7. The Ministry of Food and Drug Safety’s platform for food safety data.
  8. South Gyeongsang Province’s blockchain project for regional public service based on DID.
  9. The Rural Development Authority’s management system for crop production and distribution.
  10. The country’s police force digital management system for handling evidence.

Another indicator that South Korea is going full speed with digital currencies and blockchain is the fact that the country will host a cryptocurrency conference in February 2020. Interestingly, it has not been without controversy because the UN issued a warning claiming that attending the event might be considered an international sanctions violation.

2. PUSHING THE BLOCKCHAIN ADOPTION AGENDA

ICON

ICON has made it clear that it is aggressively pushing forward with its plan to facilitate blockchain adoption. It highlighted some of those plans in the development roadmap update that it released in December 2019. The adoption agenda aims to provide various blockchain-based solutions that can be adopted to bring efficiencies into various sectors.

The adoption agenda has already started attracting key players. For example, the ICONLOOP’s practical solution called BROOF, which is a certificate issuance service, has already been adopted by the Pohang University of Science and Technology to facilitate the issuance of diplomas. This solution will digitize the diploma issuance process and allow easy certificate searches by employers. It will also discourage the existence of fraudulent certificates. It is one of the use cases that demonstrate how blockchain-based solutions can be integrated into society.

ICONLOOP also revealed recently that it secured anti-spam deals with the Korea Internet and Security Agency, Financial Supervisory Service (FSS), and 15 banks. The deal will allow the partners to use an ICONLOOP blockchain solution called Chain Sign as well as a Cyberdigm.

Chain Sign, just like its name suggests, is a platform for contract signing, while Cyberdigm is aimed at contract management. These developments leverage smart contracts technology, and they are aimed at bringing blockchain-based digital contracts into the mainstream. ICON is not limiting itself as far as its blockchain expansion pursuits are concerned. It has a lot planned out for various segments or industries, as seen below.

ICON

3. WHAT HAS BEEN HOLDING BACK THE MARKET?

THE SPECULATIVE TRENDS

Blockchain technology has been heavily associated with cryptocurrencies, and people did not recognize or were not aware of its capacity outside the scope of digital currencies during its early stages of the technology. Unfortunately, this also meant that the technology was overshadowed by cryptocurrencies, which were primarily driven by speculation. It stood in the way of progress as industries and critical market influencers held back the technology.

CAUTIOUS OUTLOOK

The speculation in the market hurt blockchain since it promoted caution in the market. It was also still a relatively new technology, and that meant that industries were not willing to invest in a technology that might affect their performance. Industries prefer to invest in technologies that are tested and proven.

ICON’S TIMING

All good projects must get the timing right; otherwise, they fail. ICON was waiting for the right time to execute its strategy. Now that the world has started to understand what blockchain is and its potentially positive impact, there has been an increased uptake of blockchain projects. It means that the atmosphere is changing in favor of the technology and so it is now the right time to make moves.

4. SURVIVING OR THRIVING AFTER THE CRYPTO BUBBLE POPPED

HOW THE CRYPTO BUBBLE WOULD HELP SEPARATE THE JOKERS FROM REAL INDUSTRY CHANGERS

There were many blockchain projects and startups that promised to be the next big thing at around the same time that the cryptocurrency market was booming. However, most of them seem to have failed along when the crypto bubble popped. This means that most of the projects that were not serious were automatically pushed out, and only those that had robust strategies remained. ICON is among those that are still going strong.

COMPARISON TO THE DOT-COM ERA

The cryptocurrency bubble has been compared with the dot-com era because of the boom that came with the dawn of the internet age. Many startups were launched back then, each attracting investors with their enticing growth plans. However, some did not make it as the proverbial bubble popped, but it did not end there. The internet has now developed into something that is far from what was initially imagined. And most of all, it is quite a lucrative technology. Blockchain is also seen as such, and it has also demonstrated similar trends to the initial years of the dot-com era.

5. ICON’S APPROACH TO THE MARKET AND WHY IT WILL LIKELY SUCCEED

ICON’S DEVELOPMENTS

ICONbet is one of the most notable developments from ICON. It is a DApp that is designed for the gaming industry, and it is based on ICON’s protocol. The blockchain startup expressed excitement over the growth of ICONbet, especially due to its fast-paced growth in terms of transaction volumes. It has become the leading DApp on the blockchain startup’s network. It gives a glimpse of a possible future where decentralized applications might be the norm, and that is where ICON wants to steer towards.

ICON’S INTEGRATION INTO THE SOCIAL AND ECONOMIC FABRICS

ICON’s strategy seems to be focused on segments that directly touch on societal trends. For example, its partnership with POSTECH enables the issuance of certificates and diplomas digitally and is a direct advantage to society. ICONbet also highlights how digital contracts can be used to improve aspects that are already deeply rooted in society, such as gambling. ICON aims to lead the migration towards digital contracts, which will offer a lot of efficiencies while saving resources such as time and money since contracts will be executed in a matter of minutes, if not seconds. This expedited and secure approach will provide efficiency. ICON can integrate this technology into different areas, and this is something that it plans to pursue.

ICON TO INTEGRATE WITH CHAINLINK

ICON also plans to widen its scope through high-profile collaborations such as its recent partnership with Chainlink, which is one of the top oracle solutions. Oracles facilitate interactions between smart contracts and data, as well as systems that are not in the native blockchain. In other words, Chainlink makes it possible for developers to create custom communications between smart contracts and off-chain systems.

If you are wondering why the partnership is essential, it is because it provides a real-world working scenario of cross-blockchain operations. For example, it will enable the use of the ICON app to access data from different blockchains. One can make a payment on one blockchain after a transaction goes through on a separate blockchain. The partnership will make it easier to develop ICON DApp-based financial products, with ICX in the middle of it all.

ICON’S APPROACH TO INTEROPERABILITY

Interoperability has been a recurrent subject in the blockchain community. There are many blockchain projects out there, and existing in a fragmented state would present other issues, especially to users. Fortunately, developers came up with the idea of interoperability to facilitate communication between different blockchains and blockchain-based solutions. ICON developed an interoperability solution called blockchain transmission protocol (BTP).

BTP VERSION 1.0

ICON revealed in its Roadmap update that it would release its BTP version 1.0 plans soon, probably at around the same time as the launch of the BTP version 0.5. ICON plans to commercialize BTP technology within the first half of 2020. The technology will facilitate interoperability between public and private blockchains. The blockchain startup is pleased with its progress so far.

The blockchain startup released a block structure upgrade at the end of 2019, and this added BTP capabilities. Some of those capabilities include allowing heterogeneous chains to facilitate cross-chain communication. The company has been working on bringing more stability to the feature. It had even halted the feature briefly after it was affected by a leader node initializing bug, but that problem was quickly resolved.

MOBILE STAKING

ICON’s October Roadmap update revealed that the blockchain startup had already completed development work that will enable mobile staking on its network. The update, however, announced that the developed features had not been released because they were going through quality assurance. ICON also noted that it planned to release the features in a matter of weeks, and sure enough, they were released by December.

ICONLOOP LAUNCHES MYID WITH PARTNERS IN MAJOR ECONOMIC SEGMENTS

2020 is shaping up to be an exciting year not only for ICON but also for the parent that is responsible for its developments, ICONLOOP. The latter plans to launch MyID, its blockchain identification service sometime this year. It already launched MyID Alliance in November 2019, which attracted more than 39 partners from different economic segments, including the manufacturing industry, e-commerce, securities, and finance, among others.

The partners will use MyID to incorporate a trusted decentralized ID into their ecosystems. ICONLOOP has three primary mission targets that it hopes to achieve together with MyID partners.

  • Business-focused: to facilitate business expansion through trust and financial sector authentication.
  • User-focused: to solve inconveniences suffered by users and also to develop use cases.
  • Globalization-focused: MyID aims to achieve globalization through its business model, which aims to connect and bring the IDs of countries and also to help them expand.

ICONLOOP’s Chief Financial Officer Jay Kim is the current business director in charge of MyID. He pointed out in a statement that ICONLOOP was excited about the launch of MyID because it is a step forward towards achieving a digital ID ecosystem that is based on blockchain technology. Mr. Kim also added that the partnership features both industries in the financial sector and those that are not of the financial sector.

ICON

The firms that have partnered with the project have joined because MyID Alliance is the first consortium that is ready to push digital ID into the mainstream. It makes a lot of sense that financial institutions, insurance firms, and security companies would jump on board since MyID is highly secure. It also offers a superior solution for authentication. It is so safe that Korea’s Financial Services Commission deemed it the only identification verification system that can be applied across the financial sector in South Korea.

MYID’S FUTURE LOOKS BRIGHT

So far, things are looking good for MyID, considering that it has already attracted several partners. However, ICONLOOP hopes that more firms will jump on board in the future. The blockchain startup estimates that it will have more than 100 partners by the end of the year and over 250 partners by 2022.

ICONLOOP hopes that MyID will attract significant companies such as Samsung. This is not a far-fetched scenario, considering that the authentication platform is quite robust. Major companies will likely want a piece of the pie. The involvement of significant firms would be a massive deal for ICONLOOP because it would help boost MyID’s popularity and contribute towards the agenda of doing it a global service.

ICONLOOP would get a leg-up if significant companies such as Samsung were to become MyID partners. Such a move would encourage investors to jump on board, thus providing more resources not only for MyID but for ICONLOOP’s other blockchain-based projects. Hopefully, this would lead to a ripple effect where those projects would also get global recognition.

6. HOW CAN INVESTORS LEVERAGE ICON’S GROWTH?

ICON’s aggressive growth has been paying off nicely. For example, the blockchain startup reported 5 percent weekly growth after decentralization compared to just 0.75 percent growth before decentralization. The startup’s network has been gaining more traction and currently has more than 80 validators. Meanwhile, ICX is recognized by 31 exchanges and cryptocurrency wallets. This data gives a glimpse of the growth opportunities now in the market.

To understand how to leverage these opportunities, we must first dive deeper into some of the platform’s operations. ICON uses a reward system and staking to power its Incentives Scoring System (IISS) ecosystem. The latter encourages activities and new developments on the network. ICON believes that it currently has the best Delegated Proof-of-Stake (DPOS) blockchain.

The reward system and the growth that ICON has been enjoying have been generating value for ICX, which the platform’s native token is. For example, it has a 9.7 percent yield rate, making it an ideal cryptocurrency to stake. Investors should consider investing in ICX, especially since the developments provide organic growth. JH. Kim, the CEO of ICONLoop, is optimistic about future growth, especially as decentralization continues to spread far and wide. So, investors should act now if they wish to enjoy the benefits of the anticipated growth well into the future.

7. SUMMARY

ICON’s roadmap and developments, as well as ICONLOOP’s other blockchain projects, highlight the steps that the blockchain startup has been making to lay the foundations of a blockchain-based future. ICONLOOP is slowly carving a name for itself as one of the most influential blockchain startups thanks to its world-class solutions, and soon enough, its popularity will be global. So far, the groundwork has focused heavily on developing the infrastructure as the solutions that can be adopted by multiple industries. ICONLOOP is carefully arranging the pieces of the blockchain supremacy puzzle together, and the picture is rapidly coming together.

Featured image: ICON

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