Cryptocurrency is becoming popular every day as the world is adjusting to accommodate it. Therefore, more traders are looking for platforms where they can buy and sell Bitcoin and other digital currencies to make profits. In this case, Bitcoin Motion is one of those websites where traders can buy and sell Bitcoin.

Is Cryptocurrency Trading Profitable?

Cryptocurrency trading is highly profitable because of the high volatility of digital currencies. In this case, with Bitcoin Motion, trades are made by buying and selling Bitcoin, which has high volatility. Therefore, you can easily make profits through cryptocurrency trading.

Moreover, there are short-term speculative interests that make the trading so exciting. The prices can increase rapidly and consistently when the market push and pull factors interact. In such circumstances, cryptocurrency traders get massive profits.

However, it would be best to remember that these investments are also risky. After all, you can also make significant losses if you do not keep track of the changes in the market. Therefore, it is good to invest wisely if you want to get profits comfortably.

What Is Bitcoin Motion?

Bitcoin Motion is a platform with tools and automated features that allow cryptocurrency traders to transact safely. This platform has market data and tech indicators integrated into the system to give traders trading solutions when buying and selling digital currencies.

This platform was founded by a group of cryptocurrency professionals who hold a firm belief that digital currency is the future. They aim to make cryptocurrency trade easy for all traders to encourage more traders to join this platform and trade.

How Bitcoin Motion Works

Once the website is launched, every trader will be free to trade efficiently and seamlessly through the website. To start, you only need to register by providing your personal details to create your account. Then, you can deposit as low as $250 using the various supported means of payment.

The registration process is fast because you only need to provide your name, email address, and phone number. Then, you will easily be logged in to your account. After registration, you can buy and sell Bitcoin to other traders on the platform. Aside from this, you can enjoy the platform’s numerous benefits, such as its 24/7 support, and you will be dealing with trustworthy brokers.

Moreover, here, you will join a community of cryptocurrency traders who are determined to make profits. Since the platform is built on freedom and trust, traders of all walks of life can register.

Can I Make Money On Bitcoin Motion Website?

Many people think that you can only succeed in the cryptocurrency trading industry if you are an experienced trader. However, this is not true because even beginners can learn from the information posted on the site, as well as other reputable sources, and make huge profits after trading. Therefore, you can make money if you trade the right way and be aware of the changing market trends. However, because of the high volatility of the cryptocurrency markets, you need to be aware of any market changes that would affect the price and value of Bitcoin and other digital currencies.

Is Digital Currency The Future?

Cryptocurrency has been widely misunderstood for years, with many people calling it a scam. Moreover, some people claimed that it is a gamble and a scheme by online fraudsters to get money from unsuspecting Internet users. Unfortunately, these unfounded claims have made some people retract for fear of being scammed.

However, governments and central banks have failed to ensure equal access and security of financial services to the citizens. Therefore, people are slowly resorting to the electronic payment system whose security is guaranteed by cryptography.

The launch of Bitcoin Motion’s website can help affirm that cryptocurrency trading is here to stay. Today, many people are embracing digital currency because it has proved to be legitimate and trustworthy. Therefore, cryptocurrency is the future. So, it’s best to embrace it now and keep up with the changing times.

Conclusion

Bill Gates once said that digital currency is the future of money. This statement can be considered accurate because digital currency is steadily becoming popular. Therefore, the launch of the Bitcoin Motion website is a big step towards the actualisation of the cryptocurrency trade for all traders.  

If yes then probably with the help of this article you will get to know about the ways which will help you to get free Bitcoins easily. There are lots of ways available nowadays which are offering you to earn free Bitcoins quickly. Therefore, you should not miss any of the chances to earn a free Bitcoin for yourself. In addition, you will have to read this whole article to find out the ways which are offered for helping people to get a free Bitcoin quickly.

Today it is possible to earn a free Bitcoin for yourself by taking the help of the Internet and by visiting different types of websites as well. Playing online games and watching ads can help you to generate a small portion of Bitcoin for yourself. However, with time you can arrange the whole Bitcoin for yourself though it will take lots of years to have it. Additionally, those who are interested in earning a little portion of Bitcoin should try out the below steps every day. In addition, there is another important thing that you need to know about Bitcoin is the 51 per cent attack.

Simple Ways To Get Bitcoin Without Mining

Now quickly find out all those ways which help you to generate a little portion of Bitcoin for yourself. 

Use A Crypto Browser

If you want to earn Bitcoin in the easiest way then you can follow all those websites which ask you to do some activities on their site. By using the Crypto tab Browser you can easily avail of Bitcoin for yourself. Therefore, those who are looking for ways to get bitcoin by themselves immediately should use the Crypto Browser to bring in Bitcoins.

Learning About Bitcoin

Another way that you can earn bitcoin for free is by learning about Bitcoins. With the help of the website coinbase you can get more information about Bitcoin and how you can earn a bitcoin as well. However, this website often asks the user to perform some tasks and throw some questions as well in front of them. If the users successfully complete all the given tasks and answers as well then they will get the chance to have a bitcoin or a little portion of Bitcoin. 

Play Online Games to Earn Bitcoins

Several online games are offering their users to bring a small portion of Bitcoin by playing online games or watching the ads as well. However, this method becomes one of the easiest ways for advertisement. By simply watching the ads and playing the online games you can earn a portion of Bitcoin for yourself. However, the amount of winning Bitcoins is very little. Still, people are taking much interest in playing online games and earning a free portion of Bitcoins. 

Trading

By trading on cryptocurrency, you can get the chance to win a free Bitcoin for yourself anytime. However, at a later time, you can sell your Bitcoin if you get a better amount of money instead of it. Therefore, trading is another way that will help you to generate or to help to earn a bitcoin. 

Shopping rewards

There is another way through which you can earn a free Bitcoin by yourself by doing your regular online shopping. Therefore, one just simply needs to download the extension Browser and with the help of that browser, they will have to shop from different online shops. At a later time, they will offer you cashback from their sides as well. In addition, the cashback will help you to get free Bitcoins easily. 

Bitcoin Lending

Another popular way which people can follow to earn a free Bitcoin is by following Bitcoin lending. With the help of the binance earn lending platform, it will become much easier for all the people to earn a free Bitcoin or a little amount of Bitcoin as well.

Conclusion

Therefore, try out all these ways to have a free Bitcoin for yourself. However, many other ways are also available to earn free Bitcoin. 

Digital assets are powered by blockchain technology, which is a distributed, immutable, and public ledger that contains a list of all transactions processed within a network. More specifically, blockchain is a chain of blocks or data structures where transaction data are permanently recorded. Blocks also have a record of some or all of the blockchain’s previous transactions. In summary, blockchain technology creates a secure and tamper-proof method of recording transactions.

However, this does not mean that it’s impossible for bad actors to infiltrate someone's wallet and steal their crypto holdings. Cryptocurrencies are built on public-key cryptography (PKC), a cryptographic system that uses public and private keys. Public keys allow users to receive cryptocurrency transactions—meaning it’s not dangerous to share these keys publicly. However, a private key is needed to unlock those transactions and prove that someone is the owner of the crypto received. Private keys should never be shared—ever.

Private keys are like a gateway to a wallet's crypto holdings—and the only security measure protecting users from thieves and malicious access to the wallet. Since the key is a highly sophisticated string of letters and words, it is highly improbable for a user to randomly guess it. However, if a bad actor gains access to a wallet's private keys, they can transfer all of the crypto inside the wallet. Therefore, crypto users need to scrupulously choose a safe place to store their private keys.

Among the different methods of storing cryptocurrencies, there are also different levels of vulnerability. Much of this depends on who has access to a user’s private keys.

Centralised Cryptocurrency Exchanges Are Prone To Hacks And Exploitation

The majority of crypto users prefer to store their crypto holdings on centralised crypto exchanges, and for good reasons. Crypto exchanges constitute the easiest and most user-friendly ways to buy cryptocurrencies. Many of these reliable crypto exchanges provide users with hundreds of trading pairs, the ability to cash out into fiat currency at any time, and the option to choose from a wide range of payment and withdrawal methods. Not to mention that centralised crypto exchanges have done a nice job of creating an easy-to-use and friendly platform—which can be rare in the digital asset space. 

However, these exchanges are always prone to security breaches and hacks, as centralised crypto exchanges hold their users’ private keys. As a result, popular exchanges have billions of dollars worth of digital assets, which makes them an attractive option for hackers. Furthermore, at times, the trouble may also originate from within the exchange — i.e., the exchange may mismanage or even somehow lose the private keys. 

Just recently, major crypto exchange Crypto.com was hacked for more than $34 million worth of digital assets. The incident affected 483 of the exchange's users, who were drained from their crypto assets without any authorisation. Crypto.com claims all of the affected users have been reimbursed, but the incident reminds everyone that centralised exchanges—despite their convenience—are not 100% secure when it comes to storing crypto assets.

The Many Ways To Store Cryptocurrencies

Mobile, desktop, web, and most exchange custody wallets are categorised as hot wallets. In simple words, hot wallets are online wallets that run on internet-connected devices like computers, phones, or tablets. Hot wallets are easy-to-use as they enable users to access their funds at any time and make transactions quickly, but they lack security. These wallets generate private keys on internet-connected devices, which creates a vulnerability.

Hot wallets are designed to be used for small amounts of digital assets or temporary purposes. These wallets can be compared to checking accounts, which are suitable for storing only spending money while the bulk of the money is expected to be stored in other forms, such as savings accounts. Examples of hot wallets include MetaMask, Coinbase Wallet, and Edge Wallet. 

Another type of wallet is the cold wallet, also referred to as an offline wallet or cold storage. Unlike hot wallets, cold wallets are not connected to the internet which makes them much safer. These types of wallets usually come with software that enables users to view stats regarding their crypto holdings without the need for the internet.

An example of a cold wallet, and arguably the most secure type of crypto wallet, is a paper wallet. A paper wallet produces public and private keys that can be printed out on a piece of paper, without which no one can access digital assets stored in those addresses. Paper wallets are very rudimentary and have no corresponding user interface.

Hardware wallets are another type of cold wallet. In general, these are devices in the form of a USB drive that store private keys but are not connected to the internet. One major advantage of these wallets is that they are not affected by viruses that can easily compromise hot wallets and steal one's private keys. The two leading hardware wallet manufacturers are Trezor and Ledger. 

It is worth noting that cold wallets require some level of technical knowledge to set up. Further, while all types of crypto wallets come with UI/UX hurdles, cold wallets are considered even more difficult to work with. Many users have lost funds due to errors and a lack of familiarity with cold storage.

Beware Of Crypto Scams

It is important to choose the right type of wallet in order to make sure bad actors don't stand a chance of stealing your crypto holdings. It is equally important to be aware of scammers and to not hand over your hard-earned, well-secured crypto assets to an illegitimate prospect.

The crypto industry's eye-popping growth has attracted a horde of scammers and defrauders who are constantly trying to discover new and creative ways to trick crypto users and steal their assets. While their techniques evolve every day, their principle is almost always the same: they promise considerable returns within a short amount of time.

Prevalent types of crypto scams include fake celebrity endorsements, fake giveaways, and rug pulls. Therefore, users need to stay attentive and do proper research before investing in a crypto platform.

According to a report by blockchain analytics firm Chainalysis, more than $7.7 billion worth of digital assets were stolen via scams in 2021. Notably, Finiko, a Ponzi scheme that posed as a legitimate BTC investment firm, accounted for more than $1.1 billion of that tally. Finiko attracted big investors by promising returns of up to 30% monthly. 

Some traders prefer to avoid the custody of digital assets altogether by turning to various derivatives trading as a means of access to cryptocurrencies. There are several different ways this can be achieved, from futures to options, and even trading binary options contracts. However, all of these represent a sophisticated means of trading and should only be undertaken by experienced traders.

For those who prefer to buy, store, and trade cryptocurrencies directly, a general rule that can help avoid scams is to abstain from new and non-reputable crypto firms, particularly those that offer well-above-average returns. Furthermore, investors should always keep two golden rules in mind, to be safe: only invest what they can afford to lose, and, if it’s too good to be true, then it usually is.

In an attempt to be helpful, many traders point newbies towards forums, such as r/cryptocurrency on Reddit, hoping that they will find answers there. But this can actually make the process even more complicated - there is so much conflicting advice that it can feel impossible to know which advice to trust, and which to ignore. More than anything, it is impossible to know which users are telling the truth, and which users are making up fake wins in order to try and build a following. 

NAGA founder Benjamin Bilski talks about exactly this in his recent interview with Hackernoon, Any Financial Advice You Can Get Online Should be Taken with Caution.

What are the key pitfalls for beginners trying to get involved in crypto?

The key pitfalls for beginner crypto investors are very similar to the pitfalls involved in investing in virtually anything. And one of the main problems with investing is that we often let our emotions control us. There’s even a term for it: emotional investing. 

“One challenge for beginners that applies to any asset class might be not understanding how to control emotions, namely fear and greed, and when it might be wise to take profit/cut losses,” says Bilski. 

For new investors, this can be easier said than done - especially for those who only have a limited amount of money to invest in, and who first got into crypto because they’d read about the huge gains made by other investors. Realising that investing can be difficult and often involves lots of trial and error can be a difficult pill to swallow.

Another big pitfall - as we touched on earlier - is that new investors will often believe anything they hear because they want it to work. The problem with this is that anyone can use platforms like TikTok and YouTube and say they made millions by investing in a certain coin - but there’s no proof, and there’s no accountability. It can be difficult to tell whether influencers are being incentivised by companies to push a particular coin, and by the time large influencers are exposed, it is often already too late. In fact, this has become such a problem that TikTok has cracked down on crypto, share trading, and finance influencer promotions after it was revealed that scammers were using influencers to dupe investors. 

What if you could get investment advice from experts with a proven track record, and even copy their trades?

Crypto moves extremely fast, and there’s a steep learning curve. Ultimately, this means that unfortunately, it is not a very beginner-friendly industry. This is exactly the problem that Bilski is trying to solve - and the reason he built NAGA, the social trading platform that has racked up a global community of over a million users. 

NAGA is a super app for investing, crypto, and payments. It was founded back in 2015 and has since developed a lot of unique technology that is designed to bring more people into crypto trading while rewarding professional traders. 

The key feature of NAGA that has made it so popular is its auto-copy feature - a tool that allows new traders to essentially spy on other professional traders, and to copy from experts. The app is powered by the NAGA Coin, which allows skilled traders to monetise their trading strategies and get payments deposited instantly into their wallets as more copiers follow them. 

NAGA’s protocol can be compared to the industry trading version of Facebook. This means that users can essentially leverage the platform for all of their trading needs, instead of having to continuously hop between different platforms. Creating a single account allows traders to get involved with the vast, growing community, hold stocks, participate in events and educational seminars, win prizes, and pay for anything using their NAGA card. 

By far, the main benefit for new crypto traders is that the NAGA platform is completely transparent. Instead of guessing who to follow based on who is the loudest on forums, or who has paid the most to advertise themselves, users have access to a fully transparent leaderboard that shows the platform’s top traders, along with the amount of profit they have made, the number of auto-copiers they have, and their win ratio. 

How do experienced traders benefit from this?

The benefit for new traders is clear - they get to copy the trades of experienced traders and then carry on their lives as usual. But at this point, you might be wondering: ‘what’s in it for investors? Why should they share their trading strategies with me?’ 

Experienced traders, on the other hand, get to benefit from the NAGA Popular Investor Programme. In exchange for sharing their trading strategies with other users on the platform, traders can get paid up to $100,000 per month from the Popular Investors’ fund. 

In addition, copiers will pay €1 for each copied trade. Approximately 35% of this will be shared with the trader that they are copying from. This will incentivise traders who usually monetise their audience through email lists, Facebook, or YouTube to bring their audience over to NAGA and get paid directly instead.

Social trading platforms like NAGA are helping to reduce the risks associated with investing

Unlike an anonymous platform such as Reddit, an investing super app where everything is combined into a single platform increases accountability between users. Given that the entire premise of NAGA is based around transparency, we can be hopeful that it is a step in the right direction when it comes to reducing the number of crypto scams, which increased significantly throughout 2021. 

“I think increasing the general understanding of cryptocurrencies among the public could be the way to minimise risks - in other words, not let risky scams get attention and let good projects prosper and bring value to people around the world,” Bilski told Hackernoon. 

In Asian hours on Thursday morning, the world’s largest cryptocurrency dropped to a low of $42,500 after trading above $47,000 on Wednesday. Traders saw losses worth $317 million on bitcoin-tracked futures alone, with 87% of those positions having betted on upward price movements. 

Liquidations, which futures trading is especially prone to, are caused by an exchange forcefully closing a trader’s leveraged position as a safety mechanism necessary because of a partial or total loss of the trader’s initial margin. 

Over 87% of the $812 million in liquidations occurred on long positions. These are futures contracts in which traders bet on a price increase.

Seychelles-based cryptocurrency exchange OKEx witnessed $241 million in liquidations, the most among major exchanges. Meanwhile, Binance traders saw $236 million in losses and futures on ether saw over $164 million in liquidations. Losses for altcoin traders were limited by comparison, with Solna traders seeing $18 million in losses while XRP saw $16 million in losses.

Bitcoin was down 1.8% to trade at $48,310. Earlier in the week, the price of bitcoin had surged, passing $49,000 but failing to reach the key level of $50,000. Furthermore, bitcoin is currently down around 30% from its all-time high of roughly $68,000, which it hit in November.

Meanwhile, ethereum, the second-largest crypto by market cap, dropped 2.6% and was trading at $3,917. 

It appears that investors are instead moving their focus to smaller crypto assets, with cryptocurrencies such as ripple, cardano, polkadot, dogecoin, and shiba inu increasing by 1 to 5%. 

Speaking to Yahoo Finance, Kalkine Group CEO Kunal Sawhney said, “Cryptocurrencies have remained turbulent in the recent past with the most populous crypto-asset bitcoin continuing to hover below the mark of $50,000.”

"The persisting uncertainty in financial markets have severely dismantled the growth prospects for most risky assets including some of the tech stocks and cryptocurrencies," Sawhney added.

The milestone, which took almost 12 years to meet, means that 18.89 million bitcoins out of 21 million are now on the open market. However, based on network activity estimates, the remaining 10% supply is not expected to be mined until February 2140. 

Bitcoin prices have reflected the increasing supply as demand for newer bitcoin ramps up. When 10% of the supply was mined in early 2010, the asset went for less than $0.10, later hovering at $7.50 when 50% of the supply was mined in late 2012. In November of this year, bitcoin’s price rocketed to a new record high of over $68,000.

While the rest of bitcoin’s supply is not expected to be mined until 2140, miners can continue to earn bitcoin in the meantime. Miners currently receive 6.25 bitcoin for each block mined. This would drop to 3.125 bitcoin per block after the next halving in 2024. 

In a statement, the company said it was reserving the decision which it made in January 2018 as the crypto landscape continues to “mature and stabilise.” Meta also said that new government regulations had provided clearer rules for the sector.

Crypto companies will now have access to the more than 3 billion people who use Meta’s platforms across the world. These include Facebook, Instagram, and WhatsApp. 

Meta also plans to expand the number of regulatory licenses it accepts from 3 to 27, though advertisers still require written permission from the company before moving to promote crypto exchanges, lending and borrowing, crypto wallets, and crypto mining tools. 

“These changes will help to make our policy in this space more equitable and transparent and help more advertisers, including small businesses, grow their audiences and reach more potential customers,” Meta said. “Cryptocurrency continues to be an evolving space and we may refine these rules over time as the industry changes.”

The move comes as Meta pushes toward the metaverse, a virtual world in which people can interact via digital avatars. It is hoped that the metaverse will support crypto payments and other blockchain-based technologies. 

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.

Michael Kamerman, CEO of Skilling explains why crypto is here to stay. 

On the one hand, the continuing emergence of new cryptocurrencies presents a new way for traders to manage their finances, but on the other, crypto is perceived as a “get rich scheme” influenced by endorsements from celebrities and social media. The Bank of England is pushing to regulate crypto, arguing its volatility poses an existential threat to the global financial system, which is problematic for those who know of its potential and see its drive within the younger generation. Today’s retail traders must apply emotional intelligence and carry out thorough research in their crypto trading if they wish to reap long-term rewards from its growth.

Crypto’s misguided reputation

For those not yet involved in crypto trading, the crypto world may seem slightly daunting to begin putting their hard-earned money into. Its current volatility is sometimes directly driven by notable influencers online such as Elon Musk who recently, upon simply sharing a picture of his dog on social media, dramatically raised the value of the Shiba Inu coin - which is now the world’s 11th largest crypto. Social media influence from magnates directly causing the rise and fall of crypto assets has also been seen with other popular cryptos such as Dogecoin, emphasising the importance of applying emotional intelligence when trading.

It doesn’t help that many brokers have taken advantage of the current crypto zeitgeist to create novel crypto coins and tokens – leading traders to unwittingly embark on “pump and dump” schemes. Taking advantage of novice traders by promising to multiply their investment, only to then pull the rug out from underneath them, has also unfairly tarnished crypto’s reputation, epitomised by the recent Squid Game tokens scandal.

However, instability is to be expected with a decentralised asset such as crypto. The fact that it is not issued, regulated, or backed by a central authority cannot be foolishly overlooked. Whilst this can be attractive to novice and younger traders in particular, traders must be mindful of what exactly they are putting their money into by conducting extensive research and not allowing themselves to become emotionally influenced by any social media hype. Crypto can prove to be an incredibly successful financial investment if traders aren’t foolish. After all, you wouldn’t invest in a property without carrying out your due diligence beforehand, nor would you invest in it simply because a celebrity promoted it, so why would you when it comes to crypto investment?

Emotional intelligence and crypto

With a social media post about crypto being uploaded every 2 seconds on the internet, fluctuations in a crypto coin or token’s value are often driven by the over-excitement or fear that comes with it. Fear of missing out on a profit or losing money may cause traders to make a regrettable decision with their trading, resulting in “bad plays” as the value of the coin dramatically changes, for seemingly no reason, sometimes in the space of a few hours.

To mitigate risks, traders need to make sure they are emotionally rational with their investment decisions. Constantly looking at the price of a coin in fear of losing money or missing out on a gain, can do more harm than good, leading to reckless, unwise decisions being made. Instead, being thorough in prior research of a crypto and trusting in its value will help make sure a social media post from a particular celebrity doesn’t cause traders to panic.

A young person’s game

Traditionally, consumers looking to diversify their financial portfolio would likely consider investing in stocks and bonds as a “safe” way of ensuring long term financial gain. Today’s older generations, who started their investing journey decades earlier, are now reaping the benefits and are less concerned with making money in the short-term in a way that might be risky.

For today’s younger, more adventurous and risk-taking traders, stocks and bonds are too slow a way of making money. With many having the luxury of more time on their hands, they can afford to take bigger risks with their investments to multiply their money faster than traditional forms of investments. Crypto is the perfect asset for them to champion, with certain tokens having incredibly innovative business models and using technology in ways that will likely continue to shake up the industry in the coming years. 

Nevertheless, with investing in something as exciting yet volatile as crypto, retail traders need to keep a level head to ride through the inevitable peaks and troughs. Prospective traders should make sure to assess crypto investments as they would any other investment, as being too emotionally vested in the initial outcome may end up hurting their capital, leaving them disillusioned and dissatisfied.

Ultimately, crypto is like any other asset in the market - its value is driven by investors who bump and lower the price. What is fundamentally different, however, is the severity and speed by which its value can change. In such a volatile space, it is crucial that investors are considered, thorough, and apply significant emotional intelligence if they wish to successfully cash in on crypto investment.

This article does not constitute investment advice. 66% of retail CFD accounts lose money. Trading cryptocurrency is not available for UK retail clients.

Bitcoin dropped as much as 8.2% to $58,661, while Ether fell by more than 10%. According to CoinGecko, the global crypto market cap has dropped some 10% in the past 24 hours to $2.7 trillion. The drop was not wholly unanticipated, as technical indicators had suggested that crypto’s recent strong run was due a setback. 

Vijay Ayyar, head of Asia Pacific with crypto exchange Luno in Singapore, said it “would be unusual to keep moving up without corrections,” claiming that “we’re seeing a healthy pullback” after a prolonged rally.

Some analysts have also pinned the drop on new tax-reporting requirements for digital currencies that come as part of the infrastructure bill which President Biden signed into law on Monday. 

This year, bitcoin has more than doubled, while Ether has seen a sixfold increase. Both hit record-highs last week amid an enthusiasm for digital assets driven by speculative demand and controversial arguments that they can lower inflation risks.

What Are Stablecoins?

Stablecoins are a digital currency pegged to a “stable” reserve asset such as the US dollar or gold, designed to reduce volatility relative to unpegged cryptocurrencies such as bitcoin. Because the price of stablecoins is pegged to a reserve asset, they bridge the worlds of crypto and fiat currency, such as the pound sterling, the euro, or the US dollar, significantly lowering the volatility of stablecoin when compared to a cryptocurrency such as bitcoin. Consequently, some consider stablecoins to be better suited to almost everything, including everyday commerce and making transfers between exchanges. 

How do stablecoins work?

As the name suggests, stablecoins are designed to function with stability. Multiple sources back stablecoins, including fiat currency, but also other cryptocurrencies, precious metals and algorithmic functions. However, a crypto’s backing source can influence its risk level. For example, a fiat-backed stablecoin may have greater stability because it is linked to a centralised financial system that has an authority figure, such as a central bank, that can control prices when valuations become volatile. However, a stablecoin that isn’t linked to a centralised financial system, such as a bitcoin-backed stablecoin, may change dramatically because, in part, there isn’t a regulating body to control what the coin is pegged to. 

Fiat-backed stablecoins: Investors use their fiat currency, whether it be US dollars or euros, to buy stablecoins that they are later able to redeem for their original currency. Unlike other cryptocurrencies that can fluctuate dramatically, fiat-backed stablecoins aim to have limited price fluctuations. However, this does not mean that there is no risk involved. It’s important to note that they are still relatively new and have a limited track record. 

Crypto-backed stablecoins: This type of stablecoin is backed by other crypto assets, and because this backing asset can be volatile, crypto-backed stablecoins are overcollateralized to ensure the coin’s value. These assets are more volatile than fiat-backed stablecoins. Consequently, as an investor, it’s wise to keep an eye on how the coin’s underlying crypto asset is performing.  

Precious metal-backed stablecoins: These coins use precious metals, such as gold, to help maintain their value. They are centralised, which may be considered a disadvantage by some. However, this also protects the coins from crypto volatility. 

Algorithmic stablecoins: Algorithmic stablecoins are often considered to be the most difficult to understand as they aren’t backed by any asset. Instead, they use a computer algorithm to prevent the coins’ value from over-fluctuating. For example, if the price of an algorithmic stablecoin is pegged to $1 but the stablecoin becomes higher, then the algorithm would release more tokens automatically to bring the price back down.  Similarly, if the value drops below $1, then the algorithm would reduce the supply to bring the price up again. 

The benefits of stablecoin

As well as reduced volatility, there are several benefits to stablecoins:

• Earn interest: Users can earn more interest on a stablecoin investment than what most traditional banks would offer. 
• Trade and save assets: A bank account isn’t required to hold stablecoins and they’re typically easy to transfer. Stablecoins’ value can be sent around the world, even to places where the local currency may be unstable. 
• Affordable money transfers: The transfer fees for stablecoins are typically very affordable. 
• Transfer internationally: Thanks to the low transaction fees and fast processing, stablecoins can be a great choice for transferring money to different countries. 

What are the risks of stablecoin?

Despite the benefits of stablecoin, there are nonetheless several risks to be aware of:

• Counterparty risk: With stablecoins, there is the risk that a bank run could lead to the price of the coin dropping substantially. This is because, by trusting a third party to print money and keep a cryptocurrency stable, there’s the possibility that the dollars could be fractionally reserved rather than being fully backed. 

• Centralisation risk: A second major risk is that accounts can be blocked, embezzled, or accessed by an unauthorised third party. Centralisation risks also apply to fiat currencies — when a central authority can print money without oversight, a potential consequence is hyperinflation. 

• Algorithm manipulations: Another major risk to consider is algorithm manipulations. Most decentralised stablecoins live within smart contracts in protocols such as Ethereum. As such, there’s the risk that the algorithm that keeps the currency stable could fail or even be manipulated by a third party. 

While there are many great benefits to stablecoin, there are also significant risks that need to be thoroughly researched and considered. Additionally, there are also many different issuers of stablecoins, with each offering its own policy and varying degrees of transparency. Stablecoin may be highly appealing, but it’s important to tread as carefully as you would with any other type of investment. 

This article does not constitute financial advice. The author and Universal Media Ltd. are not qualified financial advisers. All investments are made at the reader’s own risk.