This decentralized digital currency holds the promise of financial autonomy, lower transaction costs, and a slew of other advantages that have made it highly attractive. If you want to buy Bitcoin, this guide is tailored for you. We'll explore everything from choosing the right platform to advanced security measures you should consider.
Created in 2009 by an unknown person (or persons) using the alias Satoshi Nakamoto, Bitcoin is a form of decentralized digital currency. It operates without a central bank or single administrator, allowing peer-to-peer transactions to take place directly between users without an intermediary.
Bitcoin’s key selling points include:
1. Decentralization: No government or organization controls it.
2. Transparency: All transactions are publicly recorded on the blockchain.
3. Anonymity: While transactions are public, the identities of the people involved are encrypted.
4. Low Fees: Generally lower transaction fees compared to traditional banking systems.
Three main avenues exist for buying Bitcoin:
1. Cryptocurrency Exchanges: Platforms like Redot and Binance let you buy, sell, and hold Bitcoin.
2. Brokers: Websites like eToro or Robinhood make buying easy but often restrict your ability to move your Bitcoin to a personal wallet.
3. Peer-to-Peer (P2P): Websites like LocalBitcoins allow you to buy Bitcoin directly from other people.
Selecting the right platform depends on various factors:
Understand the fee structure, including trading, withdrawal, and deposit fees.
2. Ease of Use:
User experience can vary. Beginners may prefer straightforward platforms, while more advanced users might want sophisticated features.
Ensure the platform uses robust security measures like two-factor authentication (2FA).
Research customer reviews and expert opinions to gauge the platform's credibility.
To set up an account:
1. Visit Redot.com or download their app from the Android Play Store or IOS store.
2. Provide an email address and create a strong password.
3. Verify your email by clicking on the confirmation link sent to you.
Most platforms require identity verification. This can include:
1. Photo ID (passport, driving license).
2. Selfie with your ID or a handwritten note.
3. Proof of address (utility bill, bank statement).
This process can take anywhere from a few minutes to several days, depending on the platform's policies and your location.
The decentralized nature of Bitcoin also means that you bear full responsibility for securing your assets. Therefore, securing your account is crucial.
Enable 2FA to add an extra layer of security. This usually involves a secondary code generated by an app like Google Authenticator or sent to your mobile phone.
Some platforms offer additional security features like:
1. Withdrawal Whitelists: Only allow withdrawals to pre-approved addresses.
2. Cold Storage: A percentage of assets are stored offline, providing additional security.
3. Insurance: Some platforms insure a part of your assets.
You can fund your account through various methods:
1. Bank Transfer: Secure but can take up to several days.
2. Credit/Debit Card: Quick but usually incurs higher fees.
1. PayPal or E-Wallets: Platforms like Coinbase accept PayPal.
2. Cryptocurrency Transfer: If you already own cryptocurrencies, you can deposit them into your trading account.
Most platforms accept deposits in USD, EUR, and other major fiat currencies. Some allow you to deposit in other cryptocurrencies like Ethereum or Litecoin.
When buying, you usually have two options:
1. Market Order: Buys at the current market price.
2. Limit Order: You set the price at which you wish to buy.
More advanced platforms offer additional options like:
1. Stop-loss orders: Automatically sell if the price falls to a certain level.
2. Leverage: Some platforms allow you to buy Bitcoin on leverage, magnifying your exposure. Note that this also magnifies your risk.
These are physical devices like Ledger Nano S and Trezor that store your private keys offline.
These are apps or computer programs that store your Bitcoin keys. Examples include Exodus and Electrum.
For maximum security, you can print or write down your private key and store it in a safe place. Note that if you lose access to this, you lose your Bitcoin.
1. Custodial Wallets: The exchange or platform holds your Bitcoin. More convenient but potentially less secure.
2. Non-Custodial Wallets: You hold your Bitcoin. More secure but also more responsibility.
Buying Bitcoin can seem daunting at first, but the process is fairly straightforward once you understand each step. From selecting the appropriate platform to knowing how to securely store your investment, each stage is crucial to ensure a smooth and safe experience.
Whether you see Bitcoin as an investment, a revolutionary technology, or simply a new asset to explore, make sure you’re fully informed and prepared. Your journey into the world of Bitcoin could be rewarding in many ways, but it's essential to proceed with caution and knowledge.
With this, investors and speculators have been drawn to the coin. Many aim to gain from this rising cryptocurrency. Below, we’ll explore what Litecoin is, what makes it unique, and how you can invest in it.
As a peer-to-peer currency, it allows instantaneous, nearly zero-cost payment to any person in the world. Litecoin is an open-source and decentralized global payment network. At a certain point in time, Litecoin became the third most popular cryptocurrency just behind Bitcoin and Ethereum. However, that position has now been taken by Tether (USDT). Dash, a competition cryptocurrency, was taken off the Litecoin blockchain in 2014.
Every investor intending to invest in Litecoin must first understand the nature of cryptocurrency. What this means is that cryptocurrencies are not like bonds or stocks, so you don’t buy shares of Litecoin. Instead, you swap your local currency for Litecoin currency. For instance, the price of Litecoin currently stands at $61.93.
Most investors aim to buy it in hopes that the value will rise. When this rise occurs, you could exchange your Litecoin back to your dollar on an exchange. There are marketplaces where this occurs and it is at the stockbroker. You would need a digital wallet, and one such wallet is Coinbase.
With Coinbase, you can not only buy Bitcoin and other cryptocurrencies but also sell them in the app. Other places are Uphold, Coinmama, or CEX.io. Digital wallets like Coinbase allow investors to use their wallets for buying, selling, and receiving Litecoin.
Litecoin can be sold in the same exchange where they are bought. However, selling your coins on decentralized exchanges is different from selling them on a centralized exchange. For instance, using decentralized exchanges like crypto.com, or Kucoin requires that you connect your wallet to the exchange. Then perform the Know Your Customer (KYC) registration process. When approved, you can deposit your coins and begin to sell them.
On the other hand, if you sell on exchanges like Kraken, you must send the Litecoin to your Kraken address. There, the exchange would facilitate the sales of Litecoin. Some exchanges allow the withdrawal of fiat currencies. If you intend to exchange your Litecoin for a fiat currency, then you should find such exchanges.
Though Litecoin uses blockchain technology, it differs from many cryptocurrencies in several ways. For instance, unlike Ethereum and Bitcoin, Litecoin makes use of a “scrypt” (software algorithm) for mining units. This method prevents people from using rigs (powerful custom computers) to specifically mine it.
Secondly, Litecoin ranks among the fastest transaction times for cryptocurrencies. It clocks in 2.5 minutes whereas bitcoin is 10 minutes. The third and most crucial for investors is that it is the cheapest of all three major cryptocurrencies.
Like other cryptocurrencies, investing in Litecoin carries a certain risk. Individuals must ascertain their risk tolerance before investing in Litecoin. With its features like secured transactions, low price points, fast transactions, and tools for investment, investors might be tempted to invest in large amounts. However, like every investment, you must first consider important risk factors, study the market, and start small. Remember, cryptocurrency is volatile, therefore you must be cautious.
While the headlines are dominated by wealthy investors spending tens of millions of dollars on rare pieces of art, everyday investors are increasingly getting in on the action behind the scenes.
Masterworks, a company that offers investors the opportunity to own fractional shares in potentially lucrative pieces of art, and other platforms like Noyack, are playing a critical role in popularizing art as an investment choice for the ordinary investor.
Art is often a lucrative investment choice. Since 1995, this asset class has returned 14.5%, compared to the S&P 500's 9.9%. While each investment platform works differently, Masterworks's approach is perhaps the most attractive for the ordinary investor. Here's why.
On the surface, opportunities on the Masterworks platform seem high-priced. The system requires a minimum investment of $15,000, capping the maximum investment at $100,000. Investors typically hold onto their positions for three to 10 years before works are sold when returns are potentially realized. However, the underlying structure of these investments shows why Masterworks's model works.
Masterworks allows investors to own fractional shares in a single work of art. The company opens a Limited Liability Company (LLC) associated with each piece and issues shares in the LLC for investors to purchase.
Investors on the platform can then buy shares in the LLC, with each share’s value dependent on the eventual sale price of the painting or sculpture. Assuming Masterworks sells the painting for a profit, the company's shares reflect it, giving investors a nice gain.
This approach is in contrast to the competing platform Yieldstreet's model. Yieldstreet offers shares in a mutual fund that invests in a basket of famous pieces of art, instead of a single one. Typical mutual fund rules apply, with management fees and lockup periods where investors cannot redeem their positions for cash.
Masterworks offers investors flexibility since people on the platform can sell their shares at any time to each other. While these shares are not the most liquid, they give investors complete control over their portfolios. Since Masterworks ties one piece of art to a company, investors can evaluate prospects better, instead of trying to value an entire basket's worth of art.
Masterworks does not limit the kinds of physical artwork investors can access. The platform offers everything from older works by Monet to modern pieces by Banksy. A wide range of choices is important since most investors in this niche are not necessarily expert art appraisers.
Masterworks is not unique in offering several choices, with competing platforms offering similar choices. However, the way the platform packages these works of art is distinctive. Having launched four years ago, Masterworks also benefits from being one of the oldest platforms on the fractional art scene, giving it better access to lucrative opportunities.
Newer entrants do not have this access, forcing them to find a niche by limiting their breadth. For instance, some platforms focus solely on modern or contemporary art. Others involve artists as co-investors in a fund to lend credibility.
These measures limit opportunities. For example, including artists as partners is possible only in the case of newer pieces, excluding classical art that has the highest intrinsic value. Investors who prefer safe returns over speculative ones will find limited opportunities in such an arrangement.
In addition, Masterworks's decision to offer investors access to single pieces, instead of a diversified bag of art, boosts returns in the long run. While it increases the risk inherent in the investment, smart investors treat art as an alternative asset that does not demand a huge portion of their portfolio, typically less than 10%.
Their objective is to maximize gains, and diversifying their holdings defeats the purpose of investing in an alternative asset. Masterworks's structure, therefore, makes sense when viewed from a holistic portfolio perspective.
Non-fungible Tokens or NFTs have dominated art circles recently, and Masterworks doesn't offer any opportunities yet. Platforms like Fractional.art and Unic.ly give investors several fractional NFT possibilities. However, they are not the most accessible, with investors having to navigate the blockchain and crypto wallets.
Digital art is yet to reach the eye-watering valuations physical art has attained. Over time, fractional art investing platforms will undoubtedly offer opportunities here.
For now, though, if Masterworks does begin offering NFT fractionalization, its ability to slice an opportunity into shares for investors will likely give it a head start in a crowded marketplace.
Fractional art investing has given ordinary investors the chance to diversify their portfolios beyond mere stocks and bonds. While investors have several choices, Masterworks probably offers the most accessible and easily understood method of investing in art.
While only the future will reveal how the market performs, there is no denying that savvy investors must position themselves right now to leverage this lucrative asset class.
Bitcoin, the revolutionary digital currency, has taken the world by storm since its inception in 2009. What used to be a niche financial technology for the tech-savvy has now grown into a global phenomenon, attracting attention from individuals and institutions alike.
With a wide range of unique features, Bitcoin has disrupted traditional financial systems and changed the way we perceive money. But like any innovation, this cryptocurrency comes with its own set of advantages and disadvantages that users need to consider.
To help you understand that, below, we'll delve deeper into the world of Bitcoin by highlighting its main benefits and drawbacks. This will give you a better idea of whether or not this digital asset is the right choice for your needs - or if you should stick with more traditional options.
Read on and discover the most important facets of Bitcoin!
One of the most significant benefits of Bitcoin is its underlying technology, the blockchain. This specialized digital ledger records all transactions made with Bitcoin, ensuring a high level of security and transparency.
Each transaction is verified by a network of computers, making it nearly impossible to manipulate or tamper with the data. Moreover, as blockchain is a public ledger, anyone can access and review transactions, fostering trust and accountability in the Bitcoin ecosystem.
Of course, blockchain technology isn't limited to cryptocurrencies themselves. This innovative solution has a range of potential applications, from streamlining supply chains to improving the security of sensitive business data. Blockchain may even be used to create a Bitcoin ad network through a platform like Adshares, enabling more efficient and effective digital advertising.
Furthermore, decentralization fosters innovation and competition within the financial industry. Since Bitcoin is not bound by the limitations and regulations of traditional banking systems, it has encouraged the development of new financial products and services that challenge established norms.
Bitcoin's accessibility is another factor contributing to its success. Anyone with an internet connection can access the digital currency, regardless of their location or socioeconomic status. This opens up a world of possibilities for people in developing countries or those who traditional financial institutions have previously underserved.
Additionally, Bitcoin transactions are borderless, meaning they can be sent and received anywhere in the world without the need for third-party intermediaries such as banks. As a result, the unbanked population can now access global markets, send remittances back home, and secure their savings without relying on unreliable local currencies.
Bitcoin offers lower transaction fees compared to traditional payment methods like credit cards or money transfers. This makes it particularly useful for small businesses looking to save on processing fees, as well as individuals sending money internationally.
Another advantage of Bitcoin transactions is their speed. Traditional bank transfers can take days to clear, while Bitcoin transactions are usually confirmed within an hour or two. This is especially beneficial for time-sensitive transactions, such as cross-border payments or emergency funds transfers.
While these advantages are certainly appealing, it's important to remember that Bitcoin isn't a perfect solution. There are also a few potential disadvantages that may render it unsuitable for some applications or users.
One of Bitcoin's most notable drawbacks is its volatility. The value of this digital currency can fluctuate wildly from day to day or even hour to hour. While some investors see this as an opportunity for large profits, others view it as a major risk that makes Bitcoin unsuitable for long-term investments or as a stable store of value.
This high volatility also makes it difficult for businesses to accept Bitcoin as a form of payment. If the currency's value drops significantly after a transaction, a company could lose money on the sale. This unpredictability may dissuade some merchants from adopting Bitcoin as a payment option.
Another significant concern surrounding Bitcoin is its environmental impact. Mining new coins and validating transactions requires a tremendous amount of computing power and energy consumption. According to some estimates, global Bitcoin energy usage is equivalent to that of a small country.
This has led to growing concerns about the sustainability of Bitcoin mining practices, particularly in countries that rely heavily on fossil fuels for electricity generation. Critics argue that the environmental costs associated with Bitcoin mining are simply too high, while proponents believe technological advances and increased renewable energy adoption will help mitigate these issues over time.
The environmental concerns could be mitigated if Bitcoin switched its consensus algorithm from proof-of-work to proof-of-stake. Proof-of-stake is a system in which users can validate transactions based on the number of coins they hold rather than their computing power. This would reduce energy consumption and make Bitcoin mining more sustainable in the long term.
Unfortunately, there are no plans to implement this switch at the moment.
As a relatively new financial instrument, Bitcoin faces uncertainty in terms of regulation and legal status. Different countries have adopted varying approaches to cryptocurrency regulation, ranging from strict bans to more lenient frameworks. This lack of uniformity can create confusion for users and businesses alike, making it difficult to navigate the legal landscape surrounding digital currencies.
Furthermore, regulatory uncertainty can result in sudden changes to the legal status of cryptocurrencies, which may negatively impact their value or use cases. As governments continue to grapple with how best to regulate this emerging technology, the potential for legal complications remains an ongoing challenge for the Bitcoin community.
Bitcoin is a groundbreaking financial technology with the potential to disrupt traditional systems and revolutionize the way we think about money.
However, it's important to be aware of the risks and challenges associated with this digital currency before investing or using it for real-world transactions. By understanding both the advantages and disadvantages of Bitcoin, you can make a more informed decision about whether or not this cryptocurrency is right for you.
At the same time, it's important to remember that Bitcoin isn't the only cryptocurrency worth considering. There are numerous other digital currencies available, from highly decentralized options like Ethereum to stablecoins backed by traditional fiat currencies. Even if Bitcoin is not the best solution for your needs, with enough research, you should be able to find a cryptocurrency that meets your specific requirements. Good luck!
We saw the fall of the Terra network in May, the high-profile collapse of crypto exchange FTX, and many companies left with little choice but to reduce their workforces. It would be easy to assume that the downturn affected all industry participants equally but this wasn't the case. While many companies suffered, those focused on developing crypto solutions for real problems continued to grow. At the same time, regulation continued to dominate the agenda, a trend that is unlikely to change in the near term. 2023 will be vital in restoring trust in crypto and encouraging innovation and growth.
Sendi Young, Managing Director of Ripple, predicts what to expect from the industry in the year ahead.
Market setbacks fail to put the brakes on institutional adoption of crypto
Despite the market downturn, institutional adoption of blockchain and digital assets will accelerate as corporations launch pilots and continue to investigate the technology. Banks are no longer questioning whether they require a crypto strategy but are instead asking themselves what their crypto strategy should be. There is a recognition from traditional financial institutions that the technology is here to stay, creating opportunities to bring greater efficiencies, transparency and speed to existing financial infrastructure.
While many legacy financial services companies continue to exercise caution around incorporating digital assets across their businesses, particularly in light of recent market turmoil. A significant number of traditional finance and payments institutions such as Barclays, Goldman Sachs, JP Morgan, Mastercard, Morgan Stanley, SBI Holdings and Visa are already pursuing blockchain-related projects ranging from cryptocurrency custody and trading, to data processing, to payments and trade execution. The investment horizon of banks and other large financial institutions is measured not in days and weeks, but in years, so we see the embrace of digital assets and blockchain continuing throughout 2023 and beyond.
Increasing consolidation as the market matures
2023 will see increased consolidation in the industry as healthier companies look to acquire those that are struggling to plug gaps in their own capabilities following the collapse of FTX, as well as casualties from earlier in 2022 like Celsius, Voyager and Three Arrows Capital. Valuations across the industry have declined significantly since the highs of late 2021 and early 2022, creating appealing opportunities to acquire capabilities and expertise that would otherwise require significant time and resources to build in-house. We will also see an increasing trend for crypto/blockchain firms to be acquired by traditional financial services players, as well as established companies from other sectors.
Europe emerges as a leader in the drive towards sustainable crypto
The sustainability credentials of crypto and blockchain will continue to be scrutinised, driven by pressure from consumers and policymakers. This trend will be particularly pronounced in Europe where the shift toward a green economy is a significant economic and political aspiration. The drive towards greater sustainability will manifest both in projects gravitating towards less energy-intensive blockchains and an increased focus on providing blockchain-enabled solutions to the challenges we face as a society, for instance through the tokenisation of carbon credits and the establishing of sustainable value chains.
Central Bank Digital Currencies come of age
A number of non-eurozone nations in Europe will announce their intentions to pilot a Central Bank Digital Currency (CBDC). Several non-European nations have already publicly committed to launching CBDC pilots, with India and Brazil amongst the most notable, however European nations are also realising the benefits that a CBDC can bring. These include the preservation of the local central bank's role and the ability to boost financial inclusion. What’s more, the collapse of FTX has further highlighted the need for nations to have in place a dependable, risk-free digital settlement asset as a more secure alternative to other crypto solutions.
New stablecoins created as adoption resumes
During 2020 and 2021, $165 billion entered the crypto market via stablecoin creation. Thanks to the collapse of Terra, 2022 proved to be difficult year for stablecoins, however, this forced the market to differentiate between fiat-backed stablecoins and algorithmic stablecoins, and drove value towards more transparently managed stablecoins, such as USDC whose market cap is currently above the level it was at in late 2021. We’ve also seen new fiat-backed stablecoins issued, such as EURS in Europe and AUDC in Australia.
Given market volatility, and the loss of confidence in tokens such as FTT created by the collapse of FTX, 2023 will witness a greater adoption of fiat-backed stablecoins as institutions look to realise the benefits of blockchain technology such as real-time merchant settlement. The creation of new non-USD fiat currencies will also drive this trend.
Crypto regulation finally arrives in the UK and Europe
After the UK’s Financial Services and Markets Bill comes into force, regulators will use these powers to develop an actionable crypto regime to put the UK in good standing to support the development of its cryptoasset sector. Meanwhile, in the EU, Markets in Crypto-Assets (MiCA) will finally be passed by the European Parliament in February. While it won’t come into force until 2024, as soon as MiCA is ratified, the ‘Level 2’ European Supervisory Agencies will immediately start developing detailed rules and standards to make the law work in practice.
All of the above leads us to believe that 2023 will be another exciting year for the industry, as real utility is prioritised and new use cases emerge. Significant developments across a range of areas will see the industry evolve and move forwards – building trust and driving growth. By this time next year, we will have seen measurable change in the industry which will have made further progress towards realising the opportunities that crypto presents.
With 7+ years of experience in the financial services industry and her global perspective, the entrepreneurial-minded Lissele is a recognised expert in financial technology, cryptocurrency and international payments.
Lissele's hard work and determination landed her a spot on the Forbes 30 Under 30 Finance list in 2021. She has also been shortlisted for this year's Great British Businesswoman Awards, European Women in Finance awards and the Women in Finance UK awards.
This month, social media mogul Kim Kardashian was charged $1.26 million by the Securities and Exchange Commission (SEC) for failing to disclose that she was paid £250,0000 to promote Ethereum Max on her Instagram page.
The rise of social media influencers has been a boon for many industries, but the crypto world is still divided on whether or not they are helpful to the space. Some believe that influencers are a necessary evil, helping to bring awareness to a still largely unknown industry. Others think they're nothing more than shills looking to make a quick buck off unsuspecting investors.
So, what's the truth? Are crypto influencers a curse or blessing for the FinTech industry?
If you've ever scrolled through your Twitter or Instagram feed, you've likely seen an influencer in action. Influencers have become a mainstay in our social media-driven world, from promoting a new product to simply sharing their daily life with followers.
The crypto industry is no different. In recent years, we've seen the rise of crypto influencers – individuals who use their social media platforms to promote cryptocurrencies, initial coin offerings (ICOs), and blockchain-based projects.
Crypto influencers come in all shapes and sizes. Some, like Kim Kardashian, have millions of followers and can command a handsome fee for a single post. Others, like aspiring YouTubers and Twitter personalities, are just starting to build their followings but are no less enthusiastic about the industry.
According to Influencer Marketing Hub, crypto influencers make around $500 to $1500 per thousand views. If you look at an influencer's average views for a video for a month, and the video views are around 10,000 views, you will make approximately $5,000 to $15,000.
There's no doubt that crypto influencers have the potential to reach a large audience and bring much-needed attention to the industry. After all, the more people are aware of cryptocurrencies and blockchain technology, the more likely they will invest in them.
In addition, some crypto influencers are true believers in the technology and can help to promote its use cases and potential benefits to the mainstream world.
However, not all crypto influencers are created equal. Unfortunately, many promote dubious ICOs and pump-and-dump schemes.
A pump-and-dump involves artificially inflating the price of an asset through false and misleading positive statements to sell the asset at a higher price. Once the price has been pumped up, the perpetrators will then dump their shares. This results in the price crashing, and investors left with worthless assets.
As mentioned earlier, Kim Kardashian has recently been involved in what the class action case deemed a pump-and-dump scheme.
In response to the case, SEC Chairman Gary Gensler said it was a "reminder" that celebrity endorsement did not necessarily make a product worth investing in.
Later, in a Youtube video about crypto investment, he added: "Celebrity endorsements don't mean that an investment product is right for you or even, frankly, that it's legitimate. Even if a celebrity endorsement is genuine, each investment has its risks."
Another famous example of a pump-and-dump scheme is the FaZe Clan and Save the Kids crypto fiasco. Several members of the organisation promoted a new altcoin: Save the Kids. They generated interest in the cryptocurrency through a series of Tweets, videos and even announced themselves as brand ambassadors on their websites. The idea was that a percentage of the proceeds would go to a Children's charity.
People bought into the coin, and shortly after, it plummeted by a whopping 60%. The members of FaZe Clan that were involved in the scheme pumped interest into Save the Kids and then pulled the rug from investors, causing the price to crash.
Another notable example is the $SQUID Game coin, named after the popular Netflix show. Although the coin had nothing to do with the show, it still managed to create a lot of buzz due to the popularity of the show. Influencers were quick to jump on the bandwagon and started promoting the coin.
The coin soared from just over a cent to $2,800 in a short period. However, after reaching this peak, it fell back to only a few cents a few minutes later.
It is essential to be realistic about the fact that most influencers are not financial experts and may not fully understand the risks involved in investing in crypto. In addition, influencers are paid to promote particular projects, which means that they may not be impartial.
Working with reputable brands that are transparent about their fees and have a good track record can help to mitigate some of the risks associated with crypto investment. For businesses looking to use influencer marketing to promote their project, it is essential to vet the influencers carefully and make sure they are a good fit for your project.
Around the world, cryptocurrencies are coming under regulatory pressure, but some exciting developments have come out of the UK in the past few weeks.
The British Treasury announced that it intends to bring stablecoins under the Financial Conduct Authority's (the UK regulator) remit if used for payments as part of a broader plan to make the UK a hub for digital payment companies.
In January of last year, the British Treasury consulted on whether and how it should regulate crypto assets. Given that stablecoins have a stable value linked to traditional currencies or assets like gold, the Treasury's view that they have the potential to develop into more mainstream usage; therefore, regulating stablecoins would ensure they are used safely by the public.
The FCA has come under widespread criticism in recent months for stifling the innovation of FinTech – an industry in which the UK supposedly wants to be a leader. But as crypto is quickly becoming more widely adopted, delays in implementing regulation is causing the UK to fall behind on this ambition. For example, in the US, stablecoins are already being used to facilitate trading, lending, or borrowing other digital assets. As a result, they are moving to craft regulations to support faster, more efficient, and more inclusive payment options.
The move to regulate the industry comes at a crucial time for the UK economy. Rishi Sunak, Chancellor of the Exchequer, said in his statement:
"We want to see the [cryptocurrency] businesses of tomorrow – and the jobs they create – here in the UK, and by regulating effectively, we can give them the confidence they need to think and invest long-term."
While no official regulation has been published yet, the British Treasury published a response to consolidation and called for evidence, which considers the following:
Establishing a regulatory environment for stablecoins used as payment allows market entry to support innovation while ensuring regulatory standards apply for the customer's benefit, market integrity, and stability. Ultimately, the regulation intends to safeguard and protect the customer, and organisational and reporting requirements will herald the need for self-regulation.
For the UK's FinTech sector, this is a welcome move and will give the UK a fighting chance to uphold its approach to financial services and future technology innovation by ensuring effective competition continues. It also marks a more serious consideration of the crypto industry, with more announcements coming in the forthcoming months.
That said, the proposed regulation comes with a disadvantage to financial promotions. Firms designated as regulated stablecoin service providers will not be able to act as Section 21 approvers of financial promotions. These businesses will not be able to promote investment opportunities to potential investors who aren't certified as high net worth individuals or sophisticated investors.
This announcement is a pivotal and exciting moment for the future of crypto-asset payments in the UK, and regulation is a crucial enabling factor for the industry.
The UK will be able to attract and retain top FinTech innovation and support its plan of becoming a global hub for digital payments by attracting talent from across the globe. The government will be paid dividends in driving investment in UK FinTech and adding to the value of the exchequer.
About Joaquin Ayuso de Paúl
Joaquín Ayuso de Paúl serves as Head of Nium Crypto. Joaquin’s work focuses on expanding the business into the crypto, investment and lending sectors. He is a firm believer in leveraging the core of Nium’s current offerings to provide new avenues for users. His passions also drive him to explore the NFT, web3 and blockchain spaces.
Prior to Nium, Joaquin co-founded and served as CTO of Tuenti, a private social network often referred to as the “Spanish Facebook”. He also founded Kuapay, which developed a secure, mobile, payment method platform in Chile and Colombia. He also recently co-founded Rayo, a digital bank for immigrants in the US, which launched in 2021.
With such a youthful market, it is natural to have some issues and misunderstandings amongst the people and the network. It, by extension, results in exceptional volatility in the market, with the costs of diverse cryptocurrencies fluctuating from ground to sky and vice versa in a matter of days. This article will examine the four entities present in the cryptocurrency market, their roles, and their dynamics. It will also look for an answer to the question: Who controls cryptocurrency in India?
There are presently four entities in the cryptocurrency market:
As the name suggests, small fishes are the minor players in this huge cryptocurrency market. Now the question arises: who is considered a small fish? To put it simply, a small fish is any crypto investor that does not greatly influence the cryptocurrency market as an individual. It could vary from a housewife placing 10,000 into Bitcoin to millionaires putting 2 crores into cryptocurrency, and such an amount is barely something to look up in such a vast market.
A small fish holds negligible influence in the cryptocurrency market as an individual. Nevertheless, when all the small fishes collaborate, it would make or break the crypto market, or the coin as well.
Whales are individuals or groups of individuals who can shake the cryptocurrency market. It encloses renowned individuals in the world of finance, including CEOs or a group of investors that can invest and trade hundreds of millions of dollars into the budding cryptocurrency market. Their belief alone could swing the cryptocurrency market for notable individuals such as CEOs who have a great impact on the best cryptocurrency to invest in.
The name ‘Creators’ is pretty detailed; they are simply cryptocurrency developers. There are presently more than 1400 different cryptocurrencies present in the market, with some having tens to hundreds of staff, to a small company of only a few developers. There are so many different types of cryptos because anyone can create their crypto with comparative comfort. It results in many cryptos that are not useful being released, even when funding and development are deficient.
Government regulations have been one of the most significant factors influencing the cryptocurrency market. Unlike stock exchanges, where prices can be relatively stable due to some rules, the cryptocurrency market is still in its infancy. Most of the investors in the cryptocurrency market work based on speculation rather than facts. Thus, any bad news, especially regarding future government regulations, would cause a tremendous price drop. As noted, before, the sudden influx of investors had governments precipitously implementing temporary rules to protect their citizens. Many governments have yet to put any form of protection for investors in place. At present, governments (China, South Korea, United States, Singapore, etc.) are scrambling to implement various measures to protect their citizens.
This isn’t surprising considering that throughout the course of recent history cryptocurrencies went from being regarded as a channel for money laundering to becoming a serious proposition for investors very quickly. It now is not just for the opportune amateur investors that’ve got caught up in the media hype as even big businesses and knowledgeable entrepreneurs including Elon Musk have their eyes on the digital currency and many consider it as a genuine form of payment as a result.
Now, we can see major banks testing the crypto waters as they’re simultaneously entering the race to set up their crypto-related operations. Amongst these are the likes of Morgan Stanley and Bank of America launching their own crypto-focused research divisions. State Street revealed their dedicated digital finance division to the public, and following this, JP Morgan and Goldman Sachs have started rolling out their own crypto trading assistances and services.
Our traditional understanding of an asset in finance terms is generally anything of worth to an individual or company, or more specifically it can be regarded as a resource ‘of value’ that can be, in turn, converted into cash. Typically, an asset can often generate cashflows. For instance, stocks can provide dividends, bonds can provide coupons, loans can provide interest, etc.
However, there are assets in existence that don’t tend to produce cashflows, but they’re still regarded as an important asset class. For instance, this can include assets such as gold, wine, and even art. Gold is widely considered to be an important asset class by many. This is the case considering it has limited industrial use that doesn’t generate cashflows. The collective thought is that gold is valuable, and this is what provides the value to the asset; an inflated artificial value that we give to a shiny lump of metal.
This can in turn apply to any fiat currency as money is only a credit that a currency’s user gives to the issuer. Thereby, for a currency to prosper, belief and confidence is the most important factor for its success. The issuers of fiat currencies are sovereign entities that are deemed to be the most trustworthy. If an economic crisis occurs that leads to governmental distrust, the value of the fiat currency has the potential to drop substantially.
Risks do exist and they are well known, and some would argue, substantial.
In the past, financial institutions and investors have primarily recognised only “traditional” asset classes. They regard cash and equivalents, bonds, and stocks as the big three. However, since the rise of cryptocurrency (a decentralised means of digital currency) in our society, many have questioned whether they should also be regarded as an asset class. This debate is more important now than ever before, especially as legislators and policymakers have continued to ponder upon taxing cryptocurrency in line with other assets.
Professionals must now begin to change their outlook on cryptocurrency and adapt processes to enable investors to deal with cryptocurrency more effectively. Gone are the days of solely dealing with traditional assets.
There is a broad consensus that Bitcoin is the most valued—and thereby appealing—cryptocurrency on the market. Experts have largely accredited this to its scarcity, Bitcoin in particular benefits from investor confidence because of its snowballing popularity. Just as people in society believe in the value of diamonds because others believe in it, Bitcoin shares this artificial value.
Bitcoin was the first scarce digital asset ever created. Societies have always based the price of a currency on this concept of scarcity, which is why precious metals have been the pillar of many economies for centuries. Bitcoin supply had low inflation built-in from day one. To ensure that the issuing of Bitcoin would eventually cease completely, its creator Satoshi Nakamoto encoded a way to halve Bitcoin’s mining reward roughly every four years; the Bitcoin supply will thereby never exceed 21 million coins.
But what is driving that faith? And what is underpinning the huge increases in the value of cryptocurrencies? This is more to do with its ability to store worth relative to other asset classes. Widespread social adoption, together with their privacy, security, and transferability, make cryptocurrencies a significant asset class to store values.
Cryptocurrencies do not follow the same rules as fiat currencies, or even secured assets; instead, matters tend to get complicated. Given that a cryptocurrency does not generate or support cash flow, it needs to be valued against potential and —critically—future prices. That then opens the door to several different valuation methods and guess what—our old friend gold is back. Amongst the differing valuation models now available—the stock-to-flow method, institutional participation method, and high-net-worth participation method—we find the gold valuation method.
But let’s not forget this is a new asset class, so we would expect investors will consider a range of valuation methodologies to estimate future value. This is, however, not risk-free. It is a new asset class and one that does not exist physically. It is not gold, as we have repeatedly said. Risks do exist and they are well known, and some would argue, substantial. We are therefore firm believers that the financial industry needs to address—and support—government initiatives around regulation.
The key questions remain: Should institutional investors dive in, and is this in fact a dedicated new asset class?
El Salvador became the first country in the world to adopt Bitcoin as its national currency, allowing people to use a digital wallet to pay for everyday goods. Many countries are considering issuing their own central bank digital currencies. All these developments tell of cryptocurrencies’ future potential in line with an asset class.
The primary reason why some do not regard cryptocurrency as an asset class is because of its unclear regulatory environment and high volatility. However, more and more institutional investors use cryptocurrencies to hedge against inflation and currency debasement and to diversify their portfolios in the pursuit of higher risk-adjusted returns.
This is, without doubt, a new asset class and one that will increasingly gain acceptance and the participation of institutional investors as time goes on.
Tess Rinearson, who has led engineering teams at cryptocurrency startups such as Interchains, Chain, and Tendermint, has been brought in by Twitter to lead the effort. Rinearson will report to Twitter CTO Parag Agrawal, who will help set the direction of the newly-formed team which will explore three primary areas of interest. Firstly, the team will look at how Twitter can continue to support cryptocurrencies as a payment form for creators. Secondly, the team will explore how blockchain technologies can create a new way for creators to earn a living. And, lastly, they will lead Twitter’s efforts to decentralise social media with the support of Bluesky.
“There’s massive and growing interest among creators to use decentralized apps to manage virtual goods and currencies,” Twitter said. “Tess will focus here, with a long term goal of exploring how ideas from crypto can help us push the boundaries of what’s possible with identity, community and more.”
But, on the other hand, the coins can also collapse again very quickly. So it's important to take a good look at how things are going. This is the only way you can keep a close eye on the trends. Here you will find some tips that you can easily use when investing.
Of course, it all starts with the basics. It is always the case that the price of the coins is the starting point. So that means it helps you to find websites with the most accurate information on this. A good example is websites on crypto. These are the kind of websites where you can very simply get started with the rates of the various coins. Where you can also look at the trends and expectations. Only in this way can you make the best possible choices. That is ultimately the basis of success.
When you decide to invest in crypto coins, you can also anticipate the trends and expectations. After all, these come from somewhere. This is actually no different from other types of investments. This is because of the news and current events. This means, therefore, that it is smart to look at what is out there to follow this. More and more news is very easy to get. Especially since this market has become so big. So you can take advantage of that when you invest.
It is also fun to focus on the different types of coins. After all, there are a lot of them, including Bitcoin, Ripple XRP, Dogecoin, Ethereum.
It is good to know what the differences are and why one does better than the other. The best place to start is with real specialists. This website, for example, is the place to go. That's the kind of provider where you can get all the information very easily. This way you can be sure that you really make the right choice when you bet. It's exactly what you need for this.
Then finally, there is one more point to consider. The world of cryptocurrencies does change very quickly. So you do need to see your opportunities in it. By getting in and out on time you seize the opportunities on the market. That is the way to ensure that you actually earn something from the coins. Many people have already been successful with this. For that reason alone it is advisable to find good sources and consult them regularly to be sure.
Arguably, the move is a very good one for PayPal. PayPal’s crypto play seems to have brought more users and higher transaction volumes to its platform. More users than ever before are moving to crypto, particularly younger people and millennials internationally. It has served PayPal well to get in there early.
This move was also great for Bitcoin. It certainly brought them media attention. It also helps the world see how Bitcoin – and crypto – can be made user-friendly and safe in a multitude of uses. It makes a statement to the world that Bitcoin is good, works and has use cases. PayPal’s acceptance of Bitcoin and crypto spells out in big letters to any critic claiming crypto is just for scams or crime that Bitcoin is ok.
Yet, in many ways, this move benefits PayPal more than it does Bitcoin. Bitcoin already has its users, anyone who really wanted to buy Bitcoin by now already will have done so. PayPal however has been rather static. Crypto is a new offering for its users and a new way to attract both more users and more transactions. There isn’t really a reason to check Paypal’s app on a daily or frequent basis, unless users are making a transaction. Accepting crypto means that the amount of times its users check the app – and its transaction volume – has gone up!
PayPal has around 350 million users and 26 million merchants. At the time PayPal started to accept Bitcoin transactions, in October last year, the market cap of PayPal – approximately $250 billion – was roughly the same as that of Bitcoin – approximately $240 billion. Now, PayPal’s has gone up to around $280 billion. Bitcoin, however, is currently hovering around $750 billion and has gone far past that previously. PayPal is, in many ways, replaceable. Sure, PayPal has many users and has first user advantage for the service it offers (and strong backers) but, in theory, PayPal could be replaced by another similar app with a better user experience, cooler marketing and a better brand to appeal to a bigger and younger audience. On the other hand, it’s hard to imagine that Bitcoin could ever be fully replaced. For sure, there are thousands of other cryptocurrencies, but they are simply not the same, for many reasons. Bitcoin has first mover advantage, is trust, safe, secure, has a great ecosystem of loyal (and highly skilled) supporters and developers, a big user base and is developing rapidly as well as other differentiating factors.
PayPal’s acceptance of Bitcoin and crypto spells out in big letters to any critic claiming crypto is just for scams or crime that Bitcoin is ok.
It’s not yet known how much Bitcoin and crypto holders will use PayPal to pay with Bitcoin. Generally, most Bitcoin holders want to hold on to the digital currency for the long term, in the belief that it will go up in value. Bitcoin tends to be seen as a nest egg rather than a spending pot.
PayPal’s public endorsement of Bitcoin is great. But it doesn’t change as much as one would think, either for Bitcoin, or PayPal, or traditional banking. Any merchant or user accepting Bitcoin via the app won’t actually receive Bitcoin. The digital currency will be converted in same time to their choice of fiat currency, meaning that as far as they’re concerned, they receive fiat. Had PayPal enabled its merchants to accept and hold money in Bitcoin, and to make other payments in Bitcoin, that might be a slightly different story.
PayPal has indicated they are keen to work closely with regulators and governments to ensure legal compliance in their crypto offering. This will also be true of the many other payment firms looking to accept crypto or already that have a crypto offering. This will potentially help regulators come up with ways to make it easier for other crypto related offerings to get regulated and thus be accepted and used in traditional finance. Other payments firms may also follow Paypal’s lead, making crypto the norm rather than the exception in the roster of offerings expected of traditional finance.
So is PayPal’s acceptance of Bitcoin likely to drastically change anything for traditional banking? No, probably not. The move helps win over some new users for PayPal, ups its transaction volume and increases visits to its app. This in turn could help PayPal come up with new ways to monetise its platform. It’s helped prove the legitimacy of Bitcoin, and more broadly crypto, and is another message to traditional finance that accepting crypto will become far more mainstream soon. Even if traditional banks start allowing their users to accept crypto transactions, most likely they will be cashed out into fiat in live time, just as is happening now with PayPal. Will this move be the one that makes traditional banks open up Bitcoin custody offerings to all their clients? No. Not yet, at least.
Crypto Wars: Faked Deaths, Missing Billions and Industry Disruption by Erica Stanford is published by Kogan Page, priced £14.99, available online and from all good bookshops.