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What Is a DAO And How Does It Work?

What Is a DAO And How Does It Work?

Ruth Kise 10 min read
Until recently, the concept of blockchain was only known in the context of cryptocurrencies, but today this technology is actively used in business. What's more, the new acronym DAO is entering the mainstream. So the "untraditional" business model appears along with JSC and attracts the attention of business enthusiasts more and more. DAO Definition and Key Features DAO (decentralized autonomous organization) is a company that is based on blockchain technology, managed using smart contacts. It does not have owners in the traditional sense, as well as controlling and governing bodies like the board of directors. In other words, decentralized autonomous organizations lack a hierarchical structure, and all participants in the ecosystem have the same rights and can vote for changes in the protocol on an equal basis with other participants. strong >Main features of DAO: In contrast to JSC, the «command and control» structure in formal union of groups of people is not applicable in this case. There are no executive boards and the company is managed by the community by voting on any relevant matter relating to the activities of the organization; Instead of traditional hiring, a person receives a smart contract based on the project. After that, the members of the community discuss the offer and vote. After its adoption, the work of the executive begins directly; Quitting is also becoming a consensual issue. So, if a person does not cope with the tasks set for him, token owners who voted to hire him can withdraw their votes, leaving the employee "overboard." Thus, possible conflicts are excluded in the DAO due to lobbying for the interests of certain persons; Agility and flexibility to innovate. This is due to the fact that companies are organized not around people, but around values​ and smart contracts . In a peer-to-peer system, much faster. In a "flat" organization, the community can rally faster and "fund" the best and most promising idea. As noted above, decisions are made by vote; Absence of meetings and colleagues in the traditional sense. DAO organizational policy Note that DAO is also characterized by the presence of internal company policies, but it has a number of differences. In classic business, in particular, management determines the actions of the entire organization. In the case of DAO, the value is the main factor on which all efforts will be focused. Therefore, every community member, who decides the future of the compound protocol, is motivated to bring the maximum benefit without looking back at the leader’s wishes. Since the DAO model does not involve a centralized hierarchy, it relies on alternative approaches, such as token-based memberships. Typically, such governance tokens can be freely purchased and filed on decentralized exchanges , or earned by providing liquidity or computing power for mining or staking. In any case, by holding governance tokens, you become a kind of shareholder and gain access to voting, which determines the organization's development strategy. Managing the DAO: What Are Governance Tokens? Governance token — a token that allows its owner to take part in the management of an organization. Thanks to governance tokens, users can propose, discuss and make changes to the project, and they do not need to rely on the project team or require its participation. "DAO is an organization that can operate on its own, using code, without anyone's responsibility for decision-making," explains blockchain enthusiast Travis Miller. "Imagine a corporation without a CEO." In addition, participants can use tokens to delegate voting rights to other users and monitor the distribution of funds allocated to support the project. DAO in Crypto: Examples The first thing you should note is that the meaning of the DAO economy is to attract users to actively manage and develop the ecosystem of a particular platform. As a rule, users who participate in voting can receive a reward. Thanks to Ethereum , the built on smart contracts infrastructure of DAO has appeared in the crypto industry. There are few examples of DAO including Maker, Compound, Forth ( Ampleforth ). DAO Maker DAO Maker — is a decentralized platform based on Ethereum. It was the first who made it possible to create DAI stablecoins , and various other cryptocurrency assets are accepted as collateral. One of the main features of the DAO Maker platform is that the DAI stablecoin is always equal to US $ 1 per 1 DAI unit.  Since this is DAO on the platform uses governance tokens — MKR, a million of which were distributed between the first users of the platform. In the DAO Maker ecosystem, MKR tokens are used as the "fuel" of the entire system, just as gas is used in Ethereum. As soon as the commission is paid, the received MKR tokens are destroyed (burned). New MKR tokens are released as needed, so the system is constantly in a certain balance. Compound Another of the largest credit protocols in the DeFi. In addition to interest on issued loans secured by cryptocurrency, it charges creditors COMP tokens to motivate the community to issue more crypto loans. COMP tokens allow their owners to make decisions about changes to the Compound protocol. When the user enters tokens into the Compound pool, in return he receives cTokens. These cTokens represent the depositor's share of the pool and can be used at any time to redeem the underlying cryptocurrency originally deposited in the pool. For example, when deposited in an ETH pool, in return you will receive a cETH. Over time, the exchange rate of cTokens of the underlying asset increases, which means that you can exchange them for a larger amount of the underlying asset than you originally invested - this is how the interest distribution occurs. Ampleforth This is an Ethereum-based cryptocurrency with an algorithmically regulated number of tokens in the circulating offering. It is intended for use as the base currency of the new decentralized economy and is an asset that is not subject to demand inflation and remains independent of the price movement of other cryptocurrencies, in particular bitcoin (BTC). Besides AMPL the platform has governance tokens FORTH. Ampleforth has a 6-step protocol change process. When the proposal successfully passes the first five stages, the FORTH holders vote for the proposed change. If a majority is reached during voting, then the change is automatically made to the protocol. DAO Pros and Cons Pros: There is no hierarchical ladder, so a separate group or control center cannot make decisions that ignore the interests of the rest of the participants. Decentralized management system. With this approach, the actual power passes into the hands of only those persons who are really interested in this and are ready to develop the project. All rules, requirements and conditions for working with the DAO platform are known in advance and can only be changed with the approval of most owners of control tokens. As a result, only really useful offers "pass." All transaction records are publicly available, eliminating asset fraud. Cons: Slow response to threats. If something atypical happens, you need to vote among all governance token holders to solve the problem. At the same time, the decision must first be prepared by someone, which also requires certain costs. As a result, the reaction is very slow, which threatens potential problems. The development also requires a vote. Moreover, you need not only to offer a further way of development, but also to find an executor who will be ready to do the work. It slows down the development of the DAO platform. Despite the high potential of blockchain in managing systems, it hides many risks associated with protocol security. And history knows the hard chapter with the first DAO case in 2016, when the platform was hacked . But it connected with the organization of decentralized and open platforms. Anyway DAO attracts a lot of enthusiasts from different business areas, and has been already realized in such spheres as art, culture, gaming, automatizing and so on.
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How to Avoid Losing Your Crypto in Cross-Chain Swaps: a Detailed Guide

How to Avoid Losing Your Crypto in Cross-Chain Swaps: a Detailed Guide

June Katz 13 min read
As you must know, there are many types of cryptocurrency operating on different networks and using different protocols. Although bitcoin still dominates the cryptocurrency market, this dominance has been declining in the past few years amid growing interest in DeFi cryptocurrencies and as this happens, the demand for Bitcoin's interaction with DeFi is also growing. The growth of numerous independent blockchain ecosystems with different specifics and geographical niches has led to the fact that the world is becoming more and more multi-blockchain. The ability to freely use the advantages of each of these blockchains and their unique assets within a single application would cause a powerful wave of development of new cross-chain smart contracts - as with the spread of DeFi, NFT , and on-chain gaming economies, when decentralized oracle services for obtaining real data and secure computing outside the blockchain appeared. We could compare the exchange of DeFi and Bitcoin with the exchange of one fiat currency for another, but an analogy would be more accurate, in which one group of people uses Coca-Cola caps for calculations, and the other uses shells, - that's how much the principles of their work differ. What Do Different Blockchain Networks Mean? To understand this difference, we need to touch on the question of how does blockchain work. Blockchain is a continuous chain of blocks that contains all records of transactions.  The chain of blocks is unbreakable since each block contains a link to the previous one. As a result, it is impossible to forge a registry with data on the owners of assets in the blockchain. The addition of new blocks is artificially restricted. If this is not done, the blocks will be added randomly and a reliable sequential chain will not work. For the appearance of a new block to become possible, it must be checked - this is what the miners are doing. First, there was the bitcoin network, with which the cryptocurrency revolution began. ERC-20 ( Ethereum ) network was the next truly big development in this sphere, from which DeFi technology and the use of smart contracts originate. Then other networks using different algorithms appeared. Ethereum uses one blockchain, and Bitcoin uses another, and they are not interconnected. You can't just send tokens between networks. Therefore, to exchange within this exchange pair, you will need other tools and methods Today, there are already dozens or even hundreds of first- and second-level blockchains. Each blockchain is unique in its way and has its advantages and disadvantages. If the world of cryptocurrencies, in which there was only Bitcoin, can be compared with the city where the railway was built, then today there are many types of transport in this city: from bicycles and helicopters to personal cars, trams, and boats.  Each of them has its advantages for the user. At the same time, the user is not obliged to use only a bicycle or a car during the day and has the opportunity to "transfer" between them when he wants. But how? ERC-20 Standard Tokens Before the advent of Ethereum, each token had a separate intelligent contract and, as a result, there were many compliance problems. As a solution for it, a standard protocol ERC-20 (or Ethereum Request For Comments) was created.  The peculiarity of the ERC-20 standard is in several requirements that need to be met to accept a token and its network interaction with other tokens. Assets in the blockchain can be valuable, they can be received and sent, like all cryptocurrencies. The ERC-20 standard is technically easy to apply. This allows specialists to easily develop new tokens. There are a large number of ERC-20 compatible tokens. For example, Maker (MKR), Tether (USB), Fantom (FTM), Dai (DAI), and others. Since any ERC-20 token can be stored in any ETH-compatible wallet, we can switch from one ERC-20 token to another without much risk and difficulties. When transferring Ethereum's assets to an EVM-incompatible chain such as Solana , the bridge connecting the two networks uses two different wallet addresses and token standards. This means that users need to connect a wallet compatible with Ethereum and Solana, such as Meta Mask and Phantom. Other Token Standards There are other technical standards of tokens that serve different purposes: the best-known ones among them are BEP-20, OMNI, and TRC-20, which you will find in the I/O section on a variety of cryptocurrency exchanges. If you transfer an ERC-20 token to the wallet of one of these networks, you will lose it, because when you send it, you will specify a similar address, existing on another network, - as if you came to visit your friend on a street with the same name, but in a different city. Luckily, there are crypto sites that support multiple blockchains, such as Binance or Coinbase. When you deposit or withdraw any of the different blockchain coins, you will be asked to choose the type of network. After entering the wallet address or the recipient's address for withdrawal, Binance will automatically select the network based on the entered address. How to Cross-Chain There are 2 ways to cross-chain exchange: On a Centralized Exchange, like Binance which we've already mentioned , where you can simply exchange bitcoin for ether, Solana for Near, etc. Here large internal pools and algorithms of centralized exchanges are responsible for exchanges. The exchange's developers control these processes, and all this happens nominally on the exchange's wallets, and not in the blockchain itself.  Platforms that provide cross-chain services do not work for free. It is necessary to pay the cost of the operation for the deposit and withdrawal of funds, which is sometimes quite high. In addition, most centralized exchanges (CEX) require KYC procedures (providing copies of documents, photos/videos of the user), which does not always satisfy users.  Decentralized Trading Platforms, such as UniSwap , do not collect personal data about their users, nor do they require complex registration/login procedures. On decentralized platforms, special smart contracts are used to achieve a high level of trust. They allow interaction between different networks and, in case of compliance with the terms of the contract specified by users, to perform automatic exchange (conversion) of assets. However, you need to be prepared for the fact that the exchange pair you need may not be on DEX. When choosing an exchange, it is important to take into account the number of trading pairs. The more of them, the higher the opportunities for trading and investing. To begin with, you need to decide on the choice of an exchange. Then carefully approach the study of trading pairs. It is necessary to work on large platforms with liquid pairs in order to reduce risks. There are also aggregators like SwapSpace , which is designed to make choosing a bit easier by gathering offers from different exchanges in one place. There’s also using blockchain bridges. If we go beyond centralized exchanges into the world of decentralized finance , then, in fact, we go into the blockchain itself. And only bridges will allow you to make a cross whose new exchange is in the blockchain itself. Cross-Chain Bridges Cross-chain solutions, cross-chain bridges, compatibility, or interoperability solutions are a technology that allows you to transfer tokens from one blockchain to another. Blockchains, like islands or individual states, exist in their ecosystems according to their own rules, and initially, the developers did not bother with the standardization and compatibility of networks. With the growing number of projects in the decentralized space, this issue has become acute. The bridge most often refers to the use of managing smart contracts and an oracle service that monitors transactions and listens for events in the managing smart contract. The bridge can be one-way, receiving information via other communication channels . The most important thing is that the bridge is a cryptographic verification of the authenticity of the information. Cross-chain solutions can transfer assets within the same network — from L1 to L2, for example. But bridges do not transfer tokens in the classical sense, - bridges have certain pools of liquidity for pairs of assets. Tokens are blocked in one network and minted again in another For example, to transfer tokens from blockchain A to blockchain B, the bridge temporarily freezes assets in blockchain A (the sender's funds). Then the required tokens are unblocked (minting) in blockchain B (the recipient has access to funds in the addressee blockchain). If the user decides to get his funds back, the reverse process is performed: blockchain B tokens are burned and access to blockchain A tokens is unlocked. You can use various cross-chain bridges. they are built based on burning algorithms (mint-and-burn) or using the process of freezing and reissuing synthetic tokens. It is implied that when a token leaves its blockchain, it is frozen, and at the same time, a synthetic version of this token is released on another platform. Often (but not always) the process is based on the presence of intermediaries (oracles) in the systems to transfer information from one blockchain to another. The burning protocol, as the name suggests, does not freeze, but burns tokens. Cross-chain solutions can be centralized (requiring full trust), federated (federated), and trustless. These characteristics can vary to varying degrees - it all depends on the level of decentralization. Centralized bridges imply full control by any institution/team/company/project. Users transfer their information/funds to the management of the central authority that controls the operation of the blockchain. There is no decentralization, but such solutions are easily and quickly implemented. At the same time, no one guarantees the safety of funds, therefore, this technology does not differ in security. The federated bridge works by analogy with a private blockchain. Nodes must comply with a number of strict rules to become part of the management network and gain control over the movement of tokens. Specialized nodes are called keepers. There are such, for example, in a cross-chain solution between Ethereum and Wanchain . Custodians block tokens in Ethereum and issue tokens in Wanchain. If the user needs to transfer tokens back, he submits a request to the keepers, who send part of the secret key. When a full key is generated, it removes the lock from the tokens. There may be various options for voting mechanisms with partial control. Trustless-bridge is a full-fledged decentralized system that any network participant can join to perform the functions of an agent or validator. He verifies the validity of transactions and receives a commission for it. The Syscoin bridge works according to this algorithm. Nodes here can challenge the work of other agents and report a violation. If the check is successful, then 3 ETH is withdrawn from the violator, but in the opposite case, 3 ETH is lost by the person who reported the violation. Another vivid example of such a bridge is Wormhole, connecting the Solana network and Ethereum. It allows you to convert ERC-20 tokens into native SPL tokens of the Solana blockchain. Examples of cross-chain bridges can be projects such as the AnySwap , BTC Relay, POLKADOT , BLOCKNET, AION , WANCHAIN, etc Advantages of Cross-Chain Bridges Bridges can accelerate the transfer of digital assets in a trustless environment. Interoperability can also contribute to high confidentiality, for example, data is recorded in sidechains accessible only to the parties involved in each specific transaction. Bridges can also provide greater speed and scalability using sharding (segmentation). Individual operations can be recorded in a network segment, while the result of processing a group of operations is recorded in the main registry. Bridges reduce network traffic by distributing between less loaded blockchains, which also contributes to greater scalability. Disadvantages of Cross-Chain Bridges This is still an experimental technology that needs to be honed for mass use. Cross-chain solutions have not yet become sufficiently universal and so far act as a kind of crutches, another add-on, or a level above blockchains, which makes the entire system more cumbersome. Errors and obstacles between the work of various networks are not excluded, because these are complex distributed registries, and not every computer can process such an amount of information. That is, cross-chain bridges are quite resource-intensive, in the sense that they require a lot of human resources and time. There are also questions about security. The more bridges an asset passes, the riskier it becomes, moving further away from the original asset. Since new tokens with new tickers are minted every time they pass through the bridge, this creates inconvenience for users. Now it is necessary to look for a unique approach to each case and each pair of blockchains, and this requires time, money, and serious efforts of developers.
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What Are Stablecoins - And How You Could Use Them

What Are Stablecoins - And How You Could Use Them

June Katz 5 min read
The cryptocurrency market is growing rapidly. The turnover on the exchanges is trillions of dollars. The value of individual digital assets exceeds the value of large companies. Investor interest is increasing. However, the risks remain. One tool for reducing risks is the so-called stablecoins. Their main strength is the same as that of recognized fiat currencies, - relative stability. It is possible to make predictable calculations using them. The most popular stablecoins are: USD Tether (USDT) Binance BUSD (BUSD) True USD (TUSD) Paxos Standard (PAX) USD Coin (USDC) Now there are several types of stablecoins, the most common of which group them by the type of the underlying asset, i.e. the asset to which the cryptocurrency is linked: to fiat money, for example, USDT (Tether, pegged to the dollar) and bitCNY (to the yuan); to goods traded on the stock exchange, for example, precious metals and gas or it could be even crypto-backed stablecoins. What are stablecoins used for? Stablecoins are most often used to fix profits, and to preserve the balance from drawdowns during jumps in the value of the main trading cryptocurrency. Large investors sometimes transfer their profits "overnight" to a stablecoin to continue trading without losses in the morning. In addition to the protective function, this type of digital currency is used for: Everyday transactions Optimized recurrent payments and transfers from card to card Cheap international transfers, for example, for foreign workers Guarding against hyperinflation of the local currency Increasing the speed and quality of cryptocurrency exchanges to reduce dependence on bitcoin . On some exchanges, it is already faster and cheaper to trade through a stablecoin. And it takes time and additional checks to enter fiat money into the system. Also, this type of digital asset allows you to diversify risks: while the price of bitcoin is changing a lot, you can store funds practically in euros or dollars. The presence of stablecoins ensures the trust and acceptance of cryptocurrencies in general. Institutional investors use stablecoins, increasing the turnover of the industry as a whole, and increasing profitability for smaller investors. Plus, the more trust in cryptocurrencies, the easier it is to use them in the real world when buying goods /services. So, which stablecoin will suit you the most depends primarily on your goals. Often people who need to transfer money from one state to another in a quick transit (in a day or two), use Tether (USDT) because it has the best liquidity. The main thing here is not to keep large amounts of money in it for a longer time. For the longer-term storage of a backup crypto cushion for a rainy day, it might be a good choice to collect a diversified portfolio from USDC, BUSD, and DAI . Terra USD (UST) is not a reliable stablecoin for storage. It makes sense to go to it only if you are going to make money on staking. Challenges and risks of stablecoins Despite all the advantages, stablecoins have several risks to be reckoned with. Firstly, not all of them are stable enough, despite the name – new projects appear, but do not always survive. It is reasonable to use well-established stablecoins and gradually diversify into others. Secondly, by linking to other assets, they receive the following risks - the collapse of guaranteeing currency (if linked to it) and legal restrictions: linking to fiat currencies increases not only trust but also the number of requirements for mandatory execution. For example, Facebook decided to launch its cryptocurrency, which is based on different fiat currencies – and got mired in bureaucratic problems. Thirdly, the owner of the stablecoin in most cases is one company with centralized management. In such cases maintaining trust and stability requires constant monitoring, audits, and inspections , as concentrating power in the hands of just a few people makes it easy to abuse . Even the popular Tether at some point (according to rumors) began to offer a larger volume of cryptocurrency than there were real assets. An investigation by the US Department of Justice has begun. To sum up , stablecoins allow payments to be made quickly and at a low cost, which requires effective financial, organizational, and technical conditions. However, in the absence of a proper regulatory system, various risks may appear, which may cause undesirable consequences.
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What Are Cross-Chain Swaps? An Introduction

What Are Cross-Chain Swaps? An Introduction

Ruth Kise 5 min read
Despite the fact that at the dawn of development, blockchain (initially designed mostly for Bitcoin ) perfectly managed with primary tasks within the same ecosystem, time has shown that the possible use case of it is much wider. Thus, according to their ideas and needs, users started to create their new blockchains. And today there are many separate blockchain platforms, ranging from the first-generation blockchain type Bitcoin to the third-generation like Avalanche . All of these projects have separated and isolated chains with their limitations in terms of scalability and innovation within ecosystems. Then there is a major problem of exchanging assets or trading cryptocurrency designed on different protocols. Despite the capabilities provided by platforms such as Ethereum , where tons of decentralized chains running on its protocol are compatible and can easily interact in exchanging cryptocurrencies, assets, and trades, they are still isolated from other platforms. The exchange issue is still open and there is no freedom to exchange tokens running on different protocols. So what if you want coins on one blockchain and have coins on another system. This is where cross-chain swaps come in handy. What Is a Cross-Chain Swap? A cross-chain swap, also known as an atomic swap, is a completely decentralized smart contract technology of exchanging two different cryptocurrencies that run on their own blockchain without any escrow or intermediary. In other words, it allows users to swap different crypto between two chains directly. To better understand the basic principle of these online crypto swaps, consider the following example. Each country has its legal means of payment. Dollars cannot be used in China and yuans in America. That is, currency systems are independent of each other, and different ecosystems of blockchains are also independent. Without using the cross-chain you cannot transfer BTC directly to ETH, since there is no interoperability between these assets. In the traditional financial system, this problem is solved by automatic currency conversion. So if two people (one with USD and the other with CNY) want to exchange their currencies for each other, each of the parties can give the other the number of coins equivalent to the change according to a certain rate. For example, $ 100 would be equivalent to about ¥ 636,099. The same happens with crypto, cross-chain swap allows individuals to exchange tokens (BTC for LTC, for example, as Charlie Lee first did in 2017 and explained the mechanism of cross-chain swap) with crypto holders of different chains. Moreover, the crypto swap takes place directly at the wallet, fastening the process. How Does Cross-Chain Work? As it’s been said before, cross-chain swaps use smart contacts, enabling the exchange of two different tokens running on single blockchains. These smart applications are called Hash Time Lock Contracts (HTCLs), which lock the assets with a key within a specified time to ensure that each party consents. To reduce the counterparty risk the HTCL protocols have two main features: Hashlock Hashlock technology allows smart contracts to lock the deposits with a hash key. When the transaction on both ends is verified, each participant gets a hash key and exchanges them to unlock the coins. Timelock Timelock system sets time limits to secure the operations in the blockchain. The transaction is executed if deposits are made within a timeframe. If not the deposited amounts are returned. Advantages of a Cross-Chain Swap Decentralized functionality Today decentralization is a world high trend, and many upcoming blockchains are being introduced. Cross-chain swaps provide a multi-cryptocurrency exchange and independence on centralized or decentralized exchanges . Enhanced security HTCL smart contracts technology provides improved security and guarantees users a refund if something goes wrong. Cost-friendly P2P Transactions As no centralized network manages the protocol, there are no high switching fees and no need for compliance like registration, KYS, finding a reliable exchange, and more. That's the way how you can save funds and time on swapping your coins. Conclusion Cryptos still outstrip traditional forms of investments in the long run and are an excellent means of hedging wealth. High interest in DeFi brings in more and more investors. In contrast with a centralized exchange system, cross-chain swaps give users the freedom of discovering previously inaccessible markets by dealing with different isolated currencies fast, safely, and without intermediaries. Due to this, organizations nowadays prefer a decentralized system, with blockchain-based solutions developed on multiple protocols. Positive competition and decentralization between them will ensure the profitable development of cross chains, as well as make many digital assets very flexible in their application. All in all, the general idea of the growth of the audience of crypto through simplification makes cross-chain protocols the logical choice.
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Bitcoin Futures Trading And ETFs: What's All the Fuss?

Bitcoin Futures Trading And ETFs: What's All the Fuss?

June Katz 5 min read
Despite the governments around the globe’s growing efforts to bring crypto markets under control, many aspects of them still somewhat resemble the Wild West — what with the play-to-earn games boom, NFT speculation, and other features that are often poorly understood by the officials. However, at the same time, there are some tendencies bringing “traditional” legitimacy to some aspects of the vast cryptocurrency market. One of the signs that Bitcoin , specifically, is getting more and more mature as a currency and as a market is the recent appearance of the Bitcoin futures ETFs. Going Legit: What Are Bitcoin Futures First, let’s take a quick look at what the futures themselves are. In short, they are contracts that obligate the parties to sell and buy the specified asset at some fixed time in the future (at the contract expiration date) for a fixed price. The underlying assets for the futures contracts may be stocks, commodities, etc; in 2017, Bitcoin joined the ranks of such assets. Bitcoin futures have been trading on several exchanges since then, some of them institutionally regulated, like Chicago Mercantile Exchange (CME), and some unregulated, like Binance. In general, the purpose of a futures contract may be to hedge against volatility, to speculate on the prices, or to reduce uncertainly while planning future investments (as the price paid at the expiration is known in advance). Some futures markets allow cash delivery instead of physical one, meaning that the parties don’t have to exchange an underlying asset at the end of the contract, operating with its cash equivalents instead (and in the case of the Bitcoin futures, this means fiat currency). Just like another popular cryptocurrency derivative product, perpetual swaps, futures trading is usually leveraged. This means that the buyer doesn’t pay the whole price of the contract upfront but just a part of it (the rest is put up by the broker, hence “leverage”). This allows the trader to get more profits, compared to the initial payment, if the trade goes well, although the risks are higher too (bad trade may put him or her into debt towards the broker by the contract’s close). Bitcoin Futures Trading: Pros And Cons Bitcoin futures, specifically, have several features that fit this particular asset very well. First of all, as futures don’t require access to the underlying asset itself, the investor can gain exposure to it without getting into Bitcoin trading which sometimes deters institutional investors (and even retail investors are sometimes hesitant to create wallets and learn the nuances of trading crypto itself). Secondly, the futures market is regulated — which, again, is more attractive to institutional investors. Also, there are mechanisms akin to stop-loss in place, which allow the investor to cut their losses. There are also some negatives to watch for. Leverage makes the trading riskier: as the wins are amplified, so are the losses Futures are “not the real thing”: the traders don’t own Bitcoin, just the contracts to buy and sell Futures contract’s value is fixed (you can’t buy a partial contract), and it can be pretty steep. For example, the CME Bitcoin futures price is 5 bitcoin for one futures contract (although it’s in the process of launching micro Bitcoin futures, with the price of 1/10 bitcoin). We Must Go Deeper: Why ETFs There has been a big push towards the crypto ETFs, and in October 2021 the news came: SEC has approved Bitcoin ETF, which is the first for this market. ETF is an exchange-traded fund tracking the price of an underlying asset. In the case of the futures-based Bitcoin ETFs, the price getting tracked is not the current, or spot, Bitcoin price, but, as the name implies, the price of the Bitcoin futures available at the moment. The purpose of Bitcoin ETF is ostensibly to offer exposure to this asset to the traditional investors with more trust in the stock market than the crypto one, who nonetheless are looking for the best crypto to invest in now (as seemingly everybody does). Bitcoin ETF Trading: Pros And Cons ETFs issue shares, and as such allow for more granular trades than the futures contracts. Bitcoin (or, for that matter, any crypto) ETFs are traded on a stock exchange, eliminating the need to either learn specifics of the futures trading or, in the case of Bitcoin, learn the ins and outs of the cryptocurrency trading . On the other hand, there are issues with ETFs. Just a few examples are: Futures-based ETF can underperform the underlying asset, both because of the management and other fees taken from the investments and because of the imperfections in the tracking mechanism. ETFs are traded during market hours, not 24/7. ETFs gains are also subject to more taxes than futures. Considerations And Consequences: Bitcoin Futures Trading And Bitcoin ETF News Trading Bitcoin futures themselves, while may be profitable for the experienced investor familiar with this instrument, is not easy to get right (and expensive!) for a novice. Moreover, it can prove either too risky (if it’s happening on an unregulated platform) or hard to get into (on the regulated futures exchanges requiring setting up an account). On the other hand, it’s easier to start trading Bitcoin futures ETFs, which can be as simple as buying some shares through a Fidelity account. While not necessarily offering as much to gain as futures (and still risky), they can mitigate some investors’ concerns. Combined with the above-board structure of the ETFs, this facilitated strong investor interest: just a month after its launch, the pioneering ProShares Bitcoin ETF (ticker BITO) has more than $1.3bn in exposure, with others — Valkyrie and VanEck Bitcoin ETFs — trailing not far behind. Still, this is not all that the brokers and investors wanted. In 2021, the battle with SEC for the spot, not futures-based Bitcoin ETF approval seems all but lost — but there’s no way this is the end. By the looks of it, though, for this kind of SEC Bitcoin ETF approval, BTC undoubtedly will have to come under the regulator’s gaze even more. Conclusion: What Does It All Tell Us About the Bitcoin Future While the Holy Grail for the traditional trader interested in crypto exposure — a spot-based Bitcoin ETF — is not yet here, the current situation is a big step toward Bitcoin’s wider adoption and legitimization. It’s undeniable now that both institutional and retail investors are taking note of Bitcoin’s market power, despite the general public’s history of distrust toward the cryptocurrency crowd. This also might be opening the doors to other cryptocurrency ETFs and futures to follow. While this is exciting for many, there’s also the opposite opinion: bringing Bitcoin into the big leagues defeats its purpose as a decentralized currency. It does seem ironic that the asset whose whole history started with the words “Chancellor on brink of second bailout for banks” is moving full steam into Wall Street markets. But of course, it might be that Bitcoin trading will bring changes there — and not the other way around.
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El Salvador Adoption of Bitcoin as Legal Tender: Why Is This Exciting and How to Understand It Better

El Salvador Adoption of Bitcoin as Legal Tender: Why Is This Exciting and How to Understand It Better

June Katz 8 min read
For the past few weeks, the crypto world has been abuzz with the news of El Salvador’s official adoption of Bitcoin as legal tender. But why is it such a big deal? Let’s review the regulatory situations concerning digital money, look at why cryptocurrencies are special among them, and in the process find out what makes El Salvador’s case so unique. Types of Digital Money There are many kinds of digital money, many of which differ only in detail. So, for the purposes of this article, they can be roughly divided into three groups: centralized virtual currency, central bank digital currency, and cryptocurrency. Centralized Virtual Currency This is a type of currency that is accepted in some environments, like online game communities. Such currencies have a central authority that has the right to mint them and impose policies — for example, the publisher of the game. Those are not usable in the world outside the community, and there’s no real chance of any government to adopt any of them. Central Bank Digital Currency Central bank digital currency (CBDC) has been widely discussed in several countries for a long time. It’s a fiat currency that’s supposed to be minted digitally, not corresponding with the physical bank reserves but “in parallel” with them. On its face, a digital currency that is accepted as legal tender sounds innocent enough and incredibly convenient, as it’s basically an official endorsement of the touchless payment systems liked by many people already.  However, depending on the country, CBDC can be used as a part of a larger effort to regulate the payments market within its territory. One of the most obvious examples of this is China, whose digital renminbi has been in the works since 2014 and is slated for the country-wide rollout in 2022. At the same time, China has been slowly tightening regulations on cryptocurrencies, banning crypto exchanges, prohibiting financial institutions from dealing with crypto, clamping down on crypto mining. There’s no reason to assume that those regulations will loosen any time soon; if anything, it seems like China is looking to offer its citizens the user experience associated with crypto, but replaced with the CBDC, and drive the crypto community out of the country.  Cryptocurrency Obviously, this is the most interesting (and intriguing) one. After starting out as just a small subgroup of virtual currencies, crypto can be said to have won its unique position among digital money.  As opposed to most virtual money, its use is not limited to one community (even if some opponents claim that the only people using cryptocurrency are criminals and drug lords — we all know it isn’t true). On the other hand, most governments are wary of crypto, and probably rightfully at that, as it’s unregulated (more than that, even if you wanted to regulate it somehow, nobody understands yet how to do it in practice) and can be used to avoid capital control. The cryptocurrency case is a curious one, as it’s been invented with the exact purpose of being a decentralized, non-governmental form of money, but at the same time, crypto developers and users are clamoring for the widespread crypto adoption (and there’s nothing wrong with that, obviously). But the adoption trend contradicts the initial idea of crypto, which is evidenced by the high-profile clashes between the regulators and crypto communities. We will probably see many more of those in the future, although there can always be exceptions.  Regulatory Practices: A Short Overview We have looked at three types of electronic money. Now let’s quickly lay out what people and institutions may or may not be allowed to do with it in general, before talking about what’s being done in reality. Without diving deep into the regulatory waters, we can say that there’s basically a spectrum: the asset (or currency in this case) can be banned outright within a certain country, under the fear of criminal proceedings; it can be fully legal (for currencies — with the status of legal tender); or it can be somewhere in between. A government can ban a class of asset, citing lack of regulation, caring about the citizens, or some traditions prohibiting the use of this asset.  The governments that are open to more nuanced interpretation of the laws may put some partial restrictions, for example, on banking or use as a payment tool, or just discourage the use of an asset without passing formal regulations. Others can allow any use of an asset in the private sphere, while not wanting anything to do with it in public and governmental affairs. And on the extreme end of this spectrum is full adoption of an asset class with the full backing of the government. We mentioned the status of legal tender several times here, so to give a quick definition — to be legal tender means for a currency to be accepted in the settlement, or tender, for all debts within the country. This means that the government fully supports the currency, and because of it it’s usually widely accepted by various institutions and merchants. This is why being legal tender is a big deal. The State of Digital Money Regulation in 2021 In practice, the discussion about the digital money regulatory status can be reduced to the question concerning only cryptocurrencies. As any centralized virtual money existing now is essentially private, it’s obvious that it’s not going to enjoy full legal status anytime soon. Virtual money is not banned in most countries (with some exceptions like Algeria and Morocco, where any form of it is illegal), but at the same time, it’s not accepted outside of its community of origin. Central bank digital currency, as opposed to virtual money, is basically obligated to have a full legal tender status, because anything less defeats its purpose. Cryptocurrency regulation, until very recently, could fall on any point of the spectrum described in the previous section — except being backed by the government. Crypto has been banned fully (like, for example, in Egypt, Bolivia, or Nepal), legal (like in the US, Australia, and most of the EU), or partially regulated, taxed, etc. all around the globe. But only in 2021 it became adopted as legal tender for the first time, in El Salvador. So, What’s the Deal with the El Salvador Bitcoin Law? El Salvador is a small Central American country without its own fiat currency, choosing to use the US dollars instead. This has some consequences for the economy: for example, simply put, the El Salvador government has too much debt and too few reserves — not a good situation for the government to be in. To fix the economy somewhat, El Salvador needs to attract new investors. Many El Salvadorians live and work abroad and send remittances to their families, which is good for the economy, but this process is usually slow and difficult; besides, much of the population is unbanked.  These considerations, among others, led El Salvador’s government to propose officially adopting Bitcoin. This, they argued, would revitalize the economy, bringing the new investments and allowing unbanked citizens to manage, send and spend their money more efficiently. In June 2021, El Salvador President Nayib Bukele put the cryptocurrency adoption law through Congress, and on Tuesday, September 7, it went into effect.  The Bitcoin adoption in this country is surrounded by controversy. For example, El Salvador Bitcoin wallet Chivo, officially endorsed by Bukele, has some corrupt officials on its management team, not to mention the accusations of the El Salvador President of being corrupt himself — or, at the very least, a populist. Many people felt the crypto volatility as well — new Chivo owners in El Salvador received $30 in Bitcoin on signup, only to see it lose more than 15% of its value in one day. These and many other “hiccups” led to El Salvadorans protesting Bitcoin adoption and Bukele personally. One of the biggest protests happened on September 15, when El Salvador is celebrating its independence from Spain. Despite the somewhat botched execution in this case, it doesn’t seem to be fair to summarily reject the idea of the governmental adoption of crypto. Other countries have been carefully expressing their interest in following El Salvador’s suit — although, hopefully, if they do, they will learn from each other’s mistakes. Besides, the El Salvadoran story itself is far from over right now, and the potential good effects of Bitcoin adoption, noted at the beginning of the discussion, may still be realized. So, it seems like we need to watch the situation some more to decide whether it’s going to be a net positive. Final Thoughts El Salvador Bitcoin adoption move, while controversial, is also inspiring. The issues we touched upon in this article show that currently, among all digital currencies, crypto is the biggest headache for regulators all over — but for many people, it’s exciting to see what happens next in this new world. The crypto adoption does seem like the final frontier for now, doesn’t it? We will write more about this topic, as the stories unfold — so stay tuned. 
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What is IDO?

What is IDO?

June Katz 8 min read
What is an IDO? IDO or Initial DEX offering is a way of amassing financing, a relatively new fundraising model that follows the success of the DeFi. IDO is the initial offer of coins on decentralized exchanges (DEX). This is an alternative to ICOs and IEOs, but fundraising takes place through liquidity pools. Unlike ICO and IEO, where investors first buy coins of the project, and then it is listed on the exchange, in IDO, the initial sale of coins and their listing occur almost simultaneously. The main difference between these models of fundraising is that in IDO, projects do not need to pass verification by the crypto exchange. It’s worth learning how IDOs work and what the advantages, disadvantages, and prospects for the future are, which we will cover in this article.  How it works Funds are raised using smart contracts of liquidity pools that work as automated market makers. They allow traders to exchange assets directly from the pool, without waiting for buyers or sellers. The specific exchange price is set by a complex pricing algorithm called Bonding Curves. It is based on the ratio of assets in the pool: when coins are bought, their price increases, and when they are sold, it falls. The price balance is maintained at the expense of traders. They "freeze" their assets in the pool, providing liquidity, receiving remuneration for this. At the same time, the asset price in the pool may differ from the prices on centralized exchanges. Formally, any DEX user can conduct an IDO so the sites select projects which end up on launchpad platforms. When launching an IDO, developers need to follow multiple steps: One needs to determine the options for using the token and the system for distributing it to users.  Next, you need to set the token issue and the number of coins for IDO. Then you turn to the auditors who will analyze the smart contract.  To participate in most IDOs, participants need to register in advance and enroll in the white list via social media or a website. More important websites to keep in mind when dealing with IDOs are Coinspaid, Coinlist, and Uniswap . High fees on the Ethereum network have led to projects choosing other blockchains to conduct IDOs. For example, such as Binance Smart Chain or Polkastarter . The Solana platform also introduced its own launcher. Other options are Chainlink and Thorchain . Examples of IDOs The first-ever IDO is known to have happened in June 2019 on Binance DEX by Raven developers. The most profitable IDO at the moment is Flow from the Dapper Labs project. There has been growing public interest in IDOs ever since.  Among other major IDOs, there are Compound , bZx Protocol , mStable, SushiSwap , Shift, and ExeedMe. The coins of these projects have grown tenfold after the tokensale. Advantages and disadvantages of IDOs + IDO’s advantages include immediate token liquidity, instant start of trading and lower costs for conducting it. IDOs are also suitable for new small projects and start-ups. It is decentralized and has no high fees. IDO can be used not only by companies from the DeFi sector, but also by centralized ones. Due to lower costs than ICO and IEO, the new method of attracting funding is suitable for small crypto projects. In case the IDO token is a governance token, it gives its holders the right to vote and control the direction of development of the basic protocol. If it is a native token on a DEX exchange, for example, users can also get discounts on making transactions on the platform. - Even though projects issue tokens that are already backed by DEX liquidity pools and the tokens are guaranteed to be on the crypto market without the need to wait for listings, this doesn't necessarily mean that the token will be successful. Before taking part in any IDO, one needs to study the project and be prepared for all the risks since sometimes participating in IDOs can cause serious losses. The trading volumes of decentralized crypto exchanges are actively growing, but they are still significantly inferior to classical platforms. At the same time, DEX is more difficult to use, which makes them accessible to a limited number of technologically advanced users. What Does Participating in an IDO Mean for a Crypto Investor: a Brief Run-Through We’ve looked at the advantages and disadvantages of going through this process mostly from the token issuer’s standpoint, but what about an ordinary crypto enthusiast wanting to get into a new project? There are some peculiarities associated with IDO compared to other kinds of initial offerings like ICO. As we said before, all buyers usually need to be whitelisted. This means, on the one hand, somewhat forced participation in the IDO token community. On the other hand, it’s not a bad thing; besides, the whitelisting mechanic can facilitate a more honest asset distribution, as it means less frenzy and more order. Speaking of honest distribution: with IDOs, there are often additional measures against the whales, helping even small investors to get their share before everything is quickly snatched by just a few people; The tokens are usually listed immediately after an IDO, meaning that the investors can trade their tokens without waiting. If a user chooses to do so, they can use the same platform that handled the IDO, or move to the other platforms they’re used to — an exchange aggregator would be one way to do that. Conclusion Overall, IDO is a new way of attracting financing to cryptocurrency projects that focuses on transparency and being easy to use. They majorly depend on DeFi and its success. In comparison with ICO and IEO, IDO projects do not have to pay hefty sums for listing on the stock exchange and conduct lengthy discussions with regulators in different countries. Some claim that IDO is the optimal option for entering the DeFi space and gaining trust of the DeFi market participants. This can be illustrated by already existing examples like Compound, bZx Protocol, mStable, SushiSwap, Shift, and ExeedMe. Undoubtedly, IDO should go down in the history of the crypto economy and will launch new opportunities in the DeFi sector.
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Top 5 Bitcoin Myths Debunked

Top 5 Bitcoin Myths Debunked

June Katz 4 min read
Despite the fact that Bitcoin has been around for over eleven years and has gained numerous supporters over the course of its existence, there are still multiple misconceptions associated with it, further endorsed even by notorious financial institutions like Golden Sachs. They are based on faulty analysis, irrelevant arguments, and outdatedinformation. The ultimate goal of understanding Bitcoin can be achieved by providing every one of such questionable statements with facts and explanations. Myth #1: Bitcoin’s volatility obstructs it to be a trustworthy financial asset In reality: It actually proves the credibility of its monetary policy People criticize Bitcoin for its fluctuations in price and see this as an obstacle to being stable or a favorable unit for storing and investing. There’s a microeconomic politics trilemma called The Impossible Trinity which explains why it can’t be any other way. Simplified, you can only have two of the three factors in a monetary unit: fixed exchange rate, independent monetary policy, and free capital movement. Any one of these factors would contradict the other two. For Bitcoin, the odd one is the fixed exchange rate. Fiat money follows the principle as well and Bitcoin’s volatility is nothing but the logical outcome based on this trilemma. Moreover, Bitcoin’s volatility declines over time. The more it is adapted, the less the fluctuations in price will be in their amplitude. Bitcoin’s purchasing power, as a result, has also shown growth despite all the volatility. Its price has been increasing by roughly 200 percent every year since 2011 despite the fluctuations within the year itself. Since 2014 it has also shown growth as demonstrated by the lowest price each year. Myth #2: Bitcoin is an isolated form of payment that is used by a small number of people In reality: Bitcoin has full potential to become the payment instrument of the future People question Bitcoin’s capabilities of being a proper investment active that won’t disappear and lose its worth one day. Another argument is that it doesn’t hold any value in it. Contrary to these arguments, Bitcoin possesses positive characteristics which can make it the equivalent of gold but in the digital world. It is transparent, divisible, safe to use, and verifiable. Experts expect continuous growing demand for Bitcoin. Currently, its market capitalization is 2 percent of that of gold.  Myth #3: Continuous forks and copies will eventually lead Bitcoin to lose its value In reality: Bitcoin’s value can’t be duplicated by software alone Bitcoin’s software is free and open-code and technically, anyone could copy it, just like users can make copies of digital files. However, this won’t necessarily increase the number of Bitcoins themselves in circulation and the new networks still comply with the same sets of rules and principles. Instead, it stimulates the market and gives the opportunity to create new projects and coins. Bitcoin still stays deficit and the number of new coins created doesn't equal in value to the original Bitcoins. It was proven that forks still couldn’t influence Bitcoin’s number of active users, hashpower, and liquidity. Myth #4: Bitcoin is mainly used for performing criminal and illegal operations In reality: It is against any form of censorship Everything that people don’t completely understand they generally label as bad or dangerous. This is the case with Bitcoin which is criticized for financing criminal and illegal operations. At its inception, it was accused of hosting a black market platform. In reality, Bitcoin is negative towards any case of censorship and puts this principle among its core values. The platform itself is as helpful to criminals as any asset in the real world, be it the Internet or mobile phones. The percentage of Bitcoin operations connected to illegal activity is actually less than 1 percent, so it is surely not used exclusively to fund crimes. Moreover, most illicit activity still happens with fiat as demonstrated by both absolute and relative terms. Myth #5: Bitcoin is a waste of energy In reality: It uses more resources than gold or banks but for the sake of safer transactions The hefty sums of money accumulated as a result of mining Bitcoin are posed as a guarantee that the transaction was made. Bitcoin’s supporters see this as its fundamental difference of the cryptocurrency from other forms of using energy. They claim that there’s a balance between the calculations made and the safety of the transaction. While Bitcoin spends more in one place, it uses less in other aspects. The estimated dollar cost of Bitcoin mining per GJ spent is 40 times more efficient than traditional banking, and 10 times more efficient than gold mining. It also uses renewable energy and has the intention to solve the problem of regions that have unused power.  Conclusion While Bitcoin is relatively complicated and new, it shouldn’t discourage its critics from doing proper research based on facts and logic rather than indulging in urban legends about it. There should be a constructive debate between its supporters and protestors. So far, Bitcoin has proven to be a good candidate for the role of the digital money of the future, to use power effectively, to have credible monetary policy, to be censorship-resistant, and independent of fork and copies.
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How to Create an NFT Token?

How to Create an NFT Token?

June Katz 5 min read
The NFT craze There probably isn’t a hotter trend in crypto right now than the NFT surge of the last few weeks. Just like in many other trends, a significant amount of celebrities and billionaires have jumped on the boat that’s taken it to the mainstream, driving overall sales by over 55% with respect to last year. This might be the new crypto gold rush, as it turns out to be an asset that can be created by anyone regardless of their following community or income level. But, what exactly is an NFT, and why should you care about it?Let’s talk about fungibility first. If I have $10 in quarter-dollar coins in my pockets, I can comfortably go to the market and get a $10 bill in exchange for my quarters, because fiat currency is very fungible. By the same token, if I have a portrait from Picasso sitting in my living room, I cannot go to the market and have it exchanged by any other item, because Picassos, unlike fiat currency, are each unique and irreplaceable, and therefore non-fungible. Around this concept, non-fungible tokens (NFTs) are created as the tokenization of a collectible digital object or art piece. All of us can google Banksy and freely download virtually all of his artwork because the Internet is flooded with pictures of his creations. These, however, are gonna be as unique as the quarters in your pocket. A very different thing is to have Banksy sign each of his paintings and mint them onto the blockchain so that there can only be one authentic copy for every piece of art that he has ever produced. That’s exactly how NFTs work. Everyone can create a piece of digital art, mint it, and sell it as the unique creation that it is. These creations are held in wallets, which also happen to be unique. Every token ID is associated with a wallet on the publicly available blockchain, meaning digital ownership is verifiable, and the authenticity of the NFT is strictly not replicable.  How to create your own NFT There are different blockchains that support different NFT token standards, with Ethereum being the largest one by far. It is important to note that there are other options like the Binance Smart Chain and Polkadot , which have their own wallet services and marketplaces that are increasing in popularity. However, the tokens you create will only be sold on the blockchain that they were minted at. The largest marketplaces at the time of writing are OpenSea , Rarible , and Mintable , all of them Ethereum-based. Since OpenSea is currently the largest, let’s use it as an example to dissect the process of creating and selling your first NFT.The first thing you’ll need to do is setting up an Ethereum wallet that supports ERC-721 standard tokens, which can be easily made at Coinbase , MetaMask , or Trust Wallet at no cost. Once you’re there, you will need to fund your wallet with around $100 worth of Ethereum that will be later required for gas fees. While Coinbase allows you to transfer fiat money to your wallet and then exchange it for Ethereum, MetaMask and Trust Wallet will both require you to transfer your ETH directly from another cryptocurrency exchange. As your wallet is connected to OpenSea and your Ethereum funds have successfully made it there, you’ll be ready to create your NFT. To do so, you’ll first need to go to the top right corner of OpenSea and click on the “Create” option, which will directly ask you to connect your wallet. After that, you’ll be requested to digitally sign a proof of ownership over your wallet, which is merely a transactional requirement that doesn’t incur any fees. That marks the end of the bureaucratic part of the process and the very beginning of your own creative digital business.Next, you should go to the “Create” option once again and click on the “My Collections” button. You’ll be shown a window where you can name your NFT collection and it will give you access to uploading your creations with their corresponding names and descriptions. This is the part of the process where you can include special features of your NFT that can increase its scarcity and make it more attractive for buyers. After that, you can proceed to determine the number of copies you want to issue and the retail price at which you want to sell.  How to list and sell your NFT The next step is to take your creation to the marketplace. It is important to know that while creating an NFT is free of charge, OpenSea and other platforms will charge you with a gas fee to list your creations on the marketplace. This is why you needed some Ethereum on your wallet, to begin with. Once you’ve decided your selling conditions, that is, whether you’d like to sell it at a fixed price or you’d prefer to run an auction, you’ll be asked to establish a seller’s fee, otherwise known as a royalty. This will give you a percentage of each sale that involves your NFT in the secondary markets, creating an attractive source of passive income that you’ll be able to enjoy all your life thanks to the self-executing nature of smart contracts .The first time you list an article on the marketplace, the gas fee will likely be high. That is because you’ll be establishing a personal trading smart contract for your wallet, which is a step of the process that only needs to be done once. Everything you want to sell after your first creation will be free of charge unless you decide to list your items in a different currency than ETH. In that case, there will be much smaller gas fees than the one you’ll have to pay on your first listing.  Is it a good time to enter the NFT market? The hype around the NFT space is real, as every day more and more artists and celebrities decide to take part in what might be the future of art and collectibles. NBA’s Topshot has made over $230 million in gross sales of highlight videos of their top stars. Grimes has sold over $6 million among images and short videos related to her music. Beeple had never sold a piece of his artwork for more than $100, until he sold $69 million worth of art over the last weeks. While it does help to have a large community of followers or a large audience that you can easily target, the price to pay as an artist is simply the initial gas fee and the amount of time it takes you to create the next work of art. So, now that you know how to sell your creations, are you ready to see how much your creativity can be worth?
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Which Cryptocurrencies Have the Lowest Transaction Fees?

Which Cryptocurrencies Have the Lowest Transaction Fees?

June Katz 7 min read
While cryptocurrencies have been around for a long time, they are still confusing for many people. The less obvious and common concern about cryptocurrencies is the so-called transaction fees that differ from one coin to another and how to find the cheapest of them.  What is a crypto transaction fee? A crypto transaction fee is essentially a fee that is charged to users when transferring coins from one account to another. In order for the transaction to pass and be recorded in the blockchain, a certain transaction fee is taken. It varies from coin to coin and depends on multiple factors which we will analyze in this article. The main purpose of a transaction fee is to make sure the transaction is validated to keep the corresponding platform running and developing – thus, to secure transactions.  Types of transaction fees While we usually think of a transaction fee as the network commission of a certain cryptocurrency, that is, one operational transfer of its coins to another address, it’s also worth considering other types of fees that currently exist.  Blockchain transaction fee, or network fee Blockchain transaction fee is a kind of fee used as an incentive for the miners on the network. Mining (and staking as well) commissions or transaction fees are small amounts of cryptocurrencies assigned to miners to process a transaction. These small payments reward the miners and stakers for the work done. All new transactions on the blockchain are recorded in blocks at regular intervals. The first record of all new transactions is made by the miner who managed to get the next coin. In addition, he also receives a reward for this operation.  Crypto exchange fees Apart from mining commissions, there are also exchange fees. All cryptocurrency exchanges charge fees from their users, it’s one of the ways they make money along with selling advertising space and charging listing fees from ICO teams that want to see their token at an exchange. Wallet fees Another kind of commission is wallet fees that are charged for using a particular wallet. The money goes towards software development and maintenance of a digital wallet. There can also be withdrawal fees for when you want to take out a certain amount of coins.Notably, the more confirmations there are by most crypto wallets and exchanges, the better. This follows the general logic, according to which, with such a number of confirmations, the probability of this transaction being fake becomes rather low. Due to safety purposes, this number can be further extended in cases of network overload and 51% attacks . Cryptocurrency with lowest transaction fees Naturally, people are interested in finding the lowest fees. Cryptocurrencies are already tricky and complicated enough, so a common concern is not losing money due to the fluctuations in the market and the hefty fees as well. Generally, the medium crypto transaction fee on the market is about $0.15-0.25 (and up to $25 for Bitcoin and Ethereum in a busy time like now). Here’s a list of the cheapest cryptocurrency transaction fees of the most popular coins according to the data of BitInfoCharts (March 2021). This data is approximate and can change after the time of the article being published so it’s worth double-checking on the official sources before making transactions. The list goes as follows: Ethereum Classic : transaction fee is so low that starts from $0.00023 Bitcoin SV : has an average transaction fee starting from $0.0005 Bitcoin Gold : at the moment, the cheapest transaction fee for BTG coin is about $0.00063 Reddcoin : RDD's transaction fee is $0.00089 Vertcoin : 0.002 dollars fee in average Bitcoin Cash : 0.0025 USD fee per transaction Dash : exchange fee equals $0.0051 Litecoin's fee is $0.042 DOGE : while Doge itself costs less than a dollar, its transaction fee of $0.242 remains extremely low, What are the lowest fee cryptocurrencies? Zero-fee cryptocurrencies Nano : cryptocurrency without transaction fees Surprisingly, zero-fee cryptocurrency exists, and this is Nano. Except the lowest crypto fee in our list, the coin masters claim near-instant transactions. Nano works by utilizing Delegated Proof-of-Stake consensus mechanism with a block lattice architecture where accounts have their own blockchains. It essentially means no need to incentivize miners for keeping the network secure using selected representatives instead. It ensures the cheapest transaction fee comparing to a traditional blockchain. Dash: cryptocurrency almost without fees Well, almost zero-fee, though it’s usually called feeless. The very point of Dash cryptocurrency is to be a fast and near feeless means of payment among people and businesses. On the official website, it is promised that with the help of Dash you can “say goodbye to chargebacks” – indeed, it’s quite profitable compared to other money transfer methods. Just check, any size transaction’s fee is less than $0.01, let alone they will remain anonymous!  IOTA : tech novelty to ensure transactions without fees One more cryptocurrency without blockchain in the list! IOTA literally charges no fee, demanding to validate two more transactions while creating one instead. You don’t need to incentivize miners if you as a user are a small miner yourself, huh? Parameters that influence cryptocurrency fees? While deciding on such parameters, it’s important to consider several factors. The amount of the fee charged can depend on how busy the native network of the coin is . For example, Ethereum currently has an average transaction value of 0.011 ETH equal to 19.41 USD which is much bigger than the average transaction value. This can also be explained by the fact that the system needs to run complicated decentralized apps. Following the previous example, a good rule of thumb when analyzing the peculiarities of the coins that influence their fees is also calculating how much is charged compared to the current value of the coin or token on the market. For example, Dash trades at $161.66, while its average transaction value is $0.0051. Transaction speed also influences the transaction fee. It can be standard, which is currently the most relevant case for the networks, and you can also set a custom option if you want your transaction to go faster. Bitcoin is a good example of this since its volatility results in exchange rate fluctuations and time becomes the defining factor in this case. Traders are willing to pay an increased commission so they don’t lose on such fluctuations.The fees charged also depend on the amount of crypto you are intended to transfer, how abundant it is, how much of the total amount of the coins is currently in circulation. The amount of the fee also depends on its native network. For example, Bitcoin, Bitcoin Cash, and Bitcoin SV all have different transaction values. On several blockchains like Ethereum and in the case of Ethereum-based coins, the amount of the transaction can also depend on how busy the network is. In some cases, no transaction fees are charged, as is the case of IOTA. You need to take multiple factors into account when analyzing the fees. When in doubt, it’s also worth comparing the fees to those of other cryptocurrencies, similar in price, purpose, and popularity. Where can you find current low cryptocurrency fees? When you want to find the lowest cryptocurrency fees, consider that such fees change dramatically over time. You can get this info online: check the websites like Bitinfocharts to find current network fees for old but gold cryptocurrencies and keep an eye on the brand new developments – probably one day it will be possible to invest without fees entirely. To find the data about exchange or wallet fees, just check the FAQs of the exchange service you use. It won’t be complicated to imagine the final numbers since you know the difference we described above. Check the compilations of exchanges with the lowest fees if you are interested in trading as well – for example, on SwapSpace you can see the difference in various exchanges’ rates onscreen, and this helps to find a good deal. Exchange crypto with best rates SwapSpace provides exchange options for more than 420 cryptocurrencies and tokens and 150,000 exchange pairs, including zero and low-fee coins. Here you can find the rates based on 12 different exchanges and choose the lowest-fee cryptocurrency exchange. Exchange Nano and Dash and without extra fee added.
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What Is NFT? Non-fungible Tokens Explained

What Is NFT? Non-fungible Tokens Explained

June Katz 7 min read
Many call 2021 the year of NFT. We see the evidence of this even outside the crypto world when we hear news about NyanCat being sold or music artists promoting their work and using NFT to monetize it. Even though there’s an undoubtable influence of NFT on people and pop culture, many still don’t know what it is and whether it’s worth paying attention to. Let’s have a look at the definition of NFT, whether it has value and what projects are associated with it.  What is NFT? NFT is a so-called non-fungible token. Any item that is unique due to its characteristics and cannot be formally replaced with the exact same one is considered non-fungible. In contrast, any fiat currency is a classic example of an interchangeable, fungible asset since any dollar bill is equal to another dollar. In the crypto world, there are also fungible kinds of coins like Bitcoin or utility tokens, that can be exchanged one for another. NFT, on its own, is an indivisible token that represents a unique item, digital or existing in real life. It is typically used for digital art, games, and collectibles. Despite all the differences, NFT still runs on the blockchain network and there are two types of new standards created specifically for NFT: ERC-721 and ERC-1155. There are quite a lot of opinions about this type of token in the crypto community. Some say that NFT is the next big thing in the world of cryptocurrencies, but others say that the scale of the NFT market and its user base is limited and that the hype around NFT will eventually cease. Undoubtedly, 2021 has marked a boom in NFT so let’s analyze why exactly it is trending and what are the reasons behind people saying that it will soon overperform DeFi . Why are NFTs important? Fundamentally, an NFT is a digital certificate that represents a unique object. The token will already contain all the information about the given object, as well as an exclusive right to it. When we own, buy, sell, or exchange a token, we perform all these operations with the product itself. Since the tokens are stored in an open and distributed blockchain, information about this product, its owner, and the history of transactions with this product will always be available and reliable. We can always know who made what product and who it currently belongs to. NFT technology potentially allows you to tokenize, that is, transfer any product to the blockchain. One can attach NFT to any digital product like images, videos, audios, or GIFs. The tokens can also be used to prove the ownership of a given item like virtual land and to validate the authenticity of the crypto asset. NFT allows you to digitize the interaction with any virtual and physical goods like digital art, weapons, skins, characters. There are numerous NFT marketplaces, such as SuperRare, Nifty Gateway, Rarible, where users trade collectible items. Why do NFTs have value? Tokenization adds many useful properties to any digital product that increase the value of this product. Firstly, they present ownership and inviolability. When your digital asset is decentralized, it does not depend on the system in which it is located. This is especially true for game items. You buy them, but you own them as long as the developer company allows you to. With NFT, you have a certificate of ownership of a given product. During the transaction, all computers connected to the cryptocurrency network enter data about it in the general chain. Such public records serve as evidence of authenticity, and they cannot be changed or erased. The tokens are also unique and scarce which adds value to the product. On NFT-based platforms collectors can build a network and content creators can express themselves freely and find new audiences and markets. They can be sure that their art won’t be distributed illegally without their consent. The tokens also have liquidity. One can check the originality of a digital work which makes it easier to sell. Another advantage of the tokens is their interoperability. A given item can be used within different platforms, as long as the developers allow users to do that. The tokens are also programmable which means that the items can possess complicated characteristics within themselves.  NFT and digital art The history of NFT started mainly with digital art. On the Internet technically anyone can save a copy of your work and NFT solves the “right-click problem” associated with art. Thanks to the programmability of NFT, it allows the artists to have full control over what happens with their work. By making royalties automatic, for example, artists can receive a percentage of each resale of their work. The commission is registered in the smart contract and goes to the artist’s crypto wallet automatically. This ensures that they get credit for the work and doesn’t depend on the person reselling the work.  Best NFT artists and art projects Currently, these are the most famous and recognizable artists on the NFT network: Beeple, Coldie, MBSJQ, Muratpak, Hackatao, and Fewocius. Many of them operate on platforms for publishing and exploring digital art like SuperRare, Nifty Gateway, Rarible, OpenSea. Some artists like JOY and Josie have used their smart contracts to create real brands. Cent, a social network with a unique micropayment system, has become a relatively popular community where people can share and discuss crypto creations.  SuperRare is one of the first platforms used for rare editions of digital works. It has strict pre-moderation, as well as high quality of work and prices. Nifty Gateway as a popular platform for crypto art has mass drops when one work is sold in several copies. The largest sales in terms of revenue are organized on this platform. For example, Beeple sold $3.5 million worth of works on Nifty Gateway in one weekend. OpenSea is the largest marketplace for NFTs in general and crypto art in particular. Most secondary sales are made on OpenSea.  Rarible is the most democratic platform. Anyone can tokenize their work. In general terms, Rarible is not only for crypto-art but rather a marketplace for any NFT. Other popular NFT projects CryptoKitties Many attribute NFT’s popularity to CryptoKitties , a collectible blockchain game created by Canadian-American studio Axiom Zen. It has built a bridge between blockchain and entertainment. One can nurture a virtual kitten and cross it with another one in order to get a new pet with unique characteristics and sell it.Despite the simple idea, the platform possesses complicated technology. Information about animals is stored in the Ethereum network, and the rules of the game are spelled out in a smart contract. Being programmable, the items in the game possess different characteristics. Each crypto cat has a combination of different properties, such as age, breed, or color. After the crossing of two unique kittens, there is one new cat with a unique 256-bit DNA, derived from a mixture of the parents' DNA and from random mutations. The DNA of a new cat sets its appearance according to the rules defined by the developers. The game also has a commercial component. You can put kittens up for sale, offer them for mating for the desired price and get the money by giving the kitten, or buy one. The virtual animal can only be purchased for Ether. Now, 11% of all transactions in the Ethereum network account for the purchase of these pets. СryptoPunks CryptoPunks , another NFT token project, was launched even before CryptoKitties. Tokens represent the heads of punks made in pixel art. Each punk has different attributes, such as background color, accessories, or an unusual appearance of an alien or a zombie. There are currently 10,000 cryptopunks in circulation, all with unique features. At its inception, CryptoPunks weren't separate tokens, but rather a trading platform that could be used with wallets like Metamask. This certainly simplified interactions and lowered the NFT entry threshold. Moreover, these tokens are compatible with wallets and platforms on Ethereum, although they are based on the usual ERC20, and not on the more modern ERC721 and ERC1155. Сrypto Stamps  Crypto Stamps is another project connected to NFT. Essentially, these are stamps issued by the Austrian postal service. Like any others, they are used to mark postal items, but the main feature is that they are stored as digital images on the Ethereum blockchain, making them available for sale as digital collectibles. This project has connected the digital world with the real world. Conclusion NFT is called the main trend in the blockchain in 2021. There are many use cases for such tokens, and it is likely that many developers will soon offer new, exciting innovations for this promising technology.This technology has already revolutionized the art of the game in particular. There are quite a lot of advantages of blockchain gaming. For users, this is an opportunity to easily exchange in-game assets without the participation of intermediaries. Developers can use the blockchain to generate additional revenue from the sale of game items and tokens, as well as attract new users. The development of the NFT market allows content creators to sell works of art directly to the audience, without intermediaries. Digital collectibles are opening up blockchain technology to completely new industries beyond traditional financial management applications. Representing physical assets in the digital world, NFT tokens can become an important part not only of the blockchain ecosystem but also of the economy as a whole. NFTs have investment value as a popular area that can help blockchain technology achieve mass adoption.
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Wrapped Tokens Explained: What Are Wrapped Tokens and How They Work

Wrapped Tokens Explained: What Are Wrapped Tokens and How They Work

June Katz 4 min read
Ever wondered whether you can perform operations with cryptocurrency outside of its native blockchain? Unfortunately, you can't, at least not directly. This inability to migrate crypto assets from one blockchain to another can be considered by some among the most frustrating problems facing the crypto community. And while there currently is no direct way that would allow using Bitcoin on the Ethereum blockchain, a wrapped crypto token is the next best thing to a completely seamless transition between blockchains. Wrapped tokens explained Wrapped tokens are designed to allow the use of cryptocurrencies across blockchains, without forcing users to resort to selling crypto assets when they wish to trade on a platform utilizing a different blockchain. Essentially, a wrapped crypto token is a special cryptocurrency the value of which is tied to the value of another currency (similarly to stablecoins , the value of which is tied to fiat money like USD). The token is best imagined as a stand-in for a currency that is non-native to some blockchain. Using wrapped tokens allows the holder to preserve their original assets by securing them in a special digital vault. The original asset, however, remains inaccessible to the original owner while the token is in circulation. Though one can still retrieve their original assets, this will require a special notification to be given, which would pull the token out of circulation and destroy it. After this is done, the original crypto asset is released from the vault and given back to the holder.To explain in more detail, let’s look at the process of how wrapped tokens operate. In order for a wrapped token to be created, it requires a custodian – someone or something holding a certain amount of crypto assets. The value of the created wrapped tokens needs to be equivalent to the value of these assets. A custodian is usually a merchant, a multisig wallet (a type of wallet that requires several signatures for access), a DAO (Decentralized Autonomous Organization – an automated and crowd-sourced investment organization, which operates similarly to a venture fund), or a smart contract . A custodian receives a certain amount of crypto, let's say 1 BTC, from someone who wants to trade on an Ethereum-based platform. The transferred BTC is then placed to a digital vault, “wrapped”, while an equal amount – 1 WBTC – is minted on the Ethereum blockchain. The value of the WBTC is tied to the value of BTC and changes in real time accordingly thanks to a smart contract algorithm. In case the client wants to exchange WBTC back to BTC, or “unwrap” it, he or she issues a request to the custodian, who burns the WBTC and releases the BTC back from the vault. Proof of the transactions is stored on the blockchain. It is important to note that there is a fee ( gas ) involved in wrapping and unwrapping the cryptocurrency. Wrapped tokens on Ethereum and the Binance Smart Chain (BSC) You can use wrapped tokens on both Ethereum and Binance Smart Chain. In the case of Ethereum, such tokens can be utilized instead of non-native Ethereum assets – tokens that originate on other platforms – in order for them to be compatible with ERC-20 (the standard that is used on Ethereum to issue tokens). Similarly, on Binance Smart Chain various cryptocurrencies such as Bitcoin (BTC), Ether (ETH), USDT, and others can be wrapped with the help of Binance Bridge into BEP-20 tokens. They can then be bought or sold, or used for different purposes, such as yield farming (lending your funds in exchange or fees in crypto).Interestingly enough, ETH (or Ether), which is needed to pay for transactions on the Ethereum blockchain, predates the ERC-20 standard. This means that Ether needs to be converted into the ERC-20 token , despite being native to the blockchain. To do so, you need to wrap Ether (ETH) into wETH, thus creating a tokenized version of Ether. Pros and cons of using wrapped tokens The most obvious advantage of wrapped tokens is based on the fact that various standards differ across various blockchains, and these standards aren’t compatible with one another. Wrapped tokens help overcome this problem, allowing you to use tokens on a blockchain without them being originally non-native to it. Secondly, wrapped tokens help build connections and contribute to increasing liquidity. Capital efficiency is increased by the proliferation of wrapped tokens as idle and disconnected assets are “put to work”: tokens allow for more assets to potentially become traded and utilized in transactions, while also building bridges between different platforms. Finally, wrapped tokens can help avoid extra fees and increase transaction speed.However, as with everything else, wrapped tokens are not without disadvantages. Tokens do not allow genuine blockchain-to-blockchain migration, and therefore require the presence of a trustworthy third party. This, of course, means extra fees to pay for the user. Conclusively, while wrapped tokens are not ideal and do not allow for true blockchain-to-blockchain transactions, they nevertheless help connect different blockchains to one another bridging the gaps in decentralized finance and making crypto-capital more efficient.
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