Tag: Banking

  • Tech Game Changers

    Tech Game Changers

    The pandemic has thrown us into a state of flux and some tech entrepreneurs have found opportunities in the funk. One major trend involves playing with blockchain technology.

    Even though most people you come across pretend to understand blockchain, many don’t actually understand its full capabilities. Some clever Trevors, however, are making it work for them.

    DeFi (Decentralised Finance)

    For centuries, our money has been controlled by central banks. But this has given too much power to certain authorities. Now cryptocurrencies are set to help us shake the game up.

    Enter DeFi or Decentralised Finance – an umbrella term that refers to a variety of financial applications in cryptocurrency. These DApps are geared toward changing the roles of financial intermediaries or removing them altogether.

    Essentially, DeFi is a financial system built on public blockchains such as Binance Chain, PolkaDot, and Ethereum.

    It is a relatively new project which started later than Bitcoin in 2014. It was brought into the limelight in 2020 by a little-known South African called Andre Cronje. Cronje created the now almost billion-dollar DeFi-protocol called Yearn Finance (YFI).

    DeFi is an alternative to what people feel is an outdated, clunky financial system that is inefficient and prone to abuse. The idea is that DeFi will be a new digital-only and fully automated financial system which exists separately from our enormous, interlinked financial system.

    When you swipe your card, the institution has control over your transaction and retains the authority to record it in its private ledger, stop or pause it.

    Advert

    They also control financial all matters like insurance, loans, and alternative investments like derivatives, crowdfunding, and gambling. All this while literally owning all your data. They can use or share them with their stakeholders as they wish.

    Functionality

    DeFi aims to create an open-source, permissionless, and transparent financial service system. The yields you get from borrowing and lending digital assets on these platforms also put those offered by traditional banks to shame. This system is also relatively safe because lenders are certain to get their assets back because you need collateral (other cryptos) to borrow in the first place.

    You even, in DeFi, have mechanisms to maintain liquidity – just like Central Bank’s liquidity swaps. Some of them have ridiculous names like SushiSwap or PancakeSwap and perform these functions surprisingly well. this is possible because of their underlying computer-backed algorithmic technology.

    The current centralized nature of the global financial system means wealth is only amassed by those that have access to financial services. This has created further inequalities in our societies.

    Nevertheless, DeFi is a rapid technological innovation that is helping us to decentralize financial systems and foster financial inclusion. Cutting out the middleman also involves the use of Smart Contracts. Naturally prone to attach it is evolving but quickly gaining the acceptance of those ‘in the know’.

    Smarter Contracts

    According to Blockgeeks, a smart contract is a computer protocol intended digitally to facilitate, verify or enforce the negotiation or performance of a contract. They allow the performance of credible transactions without third parties.

    For example, ordinarily, you would go to a lawyer or a notary, pay them, and wait while you get the document. With smart contracts, you simply drop Crypto into a vending machine-type structure (digital ledger), and your escrow, driver’s license, or whatever, drops into your account.

    Courtesy: Law and Forensics.


    Smart contracts define the rules and penalties around an agreement just like a traditional contract does. Additionally, they also automatically help you enforce those obligations.

    Ethereum is the industry-leading Crypto company/platform that provides that functionality. It is, however, receiving strong competition from newcomer platforms such as Binance Smart Chain – which is actually a revised clone of Ethereum.

    Non-Fungible Tokens (NFTs)

    This is a technology that has been around for a few years but is enjoying new popularity. Fungibility refers to something that is easily interchangeable, such as the exchanging of a $50 note for five $10 notes.

    But non-fungible tokens have been created with the opposite goal.

    These are unique or scarce digital objects represented as tokens that cannot be replicated.

    They are literally anything that can be digitalized to form a collectible item – just like your paintings, collectible cards, or stamps.

    This is why they are infiltrating the auctioneering world. Digital content is tokenized through a process called minting.

    Minting involves assigning a coin on a blockchain to any given work and you can assign as many copies as you so desire.

    A key difference from authenticating other objects is that instead of a physical certificate of authentication, NFTs use blockchain technology as a verifiable digital ledger.

    The NFTs created on Ethereum’s blockchain are immutable, so they cannot be altered. No one can undo your ownership of the NFT.

    Some of the notable tradable (native) NFT tokens include Enjin Coin (gaming), Chiliz (entertainment) and Terra Virtua Kolect (VR artwork).

    Coloured coined NFTs

    In 2017, a game called CryptoKitties was invented. This was a blockchain game that allowed players to adopt, raise, and trade virtual cats.

    At one point, CryptoKitties were selling hundreds for thousands of euros. Since then, people have been pumping money into the NFT market which has more than quadrupled in value since the pandemic.

    Investors saw the value of investing in a verified item of art that no one else possesses. As a result, many new digital (NFT) marketplaces such as OpenSea and SuperRare were established – and thriving. The NBA has also gotten in on the action. NBA Top Shot is a first-of-its-kind collectible website that allows you to collect, trade, and sell your favorite NBA highlights as digital tokens. One of the highest-selling NFTs there (only 2 minted) is one of a reverse dunk by LeBron James – which fetches a cool $210 000.

    Rock band, Kings of Leon earlier in March 2021 became the first musical artist to sell its album as an NFT. Their eighth studio album, When You See Yourself, is being sold in standard digital and physical formats but also has an NFT.

    Within a week, the album had made more than $2m. This includes around $500 000 which was donated to Live Nation’s Crew Nation, designed to support live music crews during the pandemic.

    Enter the Dogecoin

    The year 2021 wanted to add a bit of humor to the world whilst making some people rich. You may call them clever or maybe reckless – or both, but some people traded an invisible investment called Dogecoin and significantly pushed up its price.

    Dogecoin was like a parody of Bitcoin symbolized by its face, the Doge meme. Entrepreneur Elon Musk punted the coin which was actually started as a joke in 2013. The price of dogecoin has exploded by more than 1,100% this year.

    The cryptocurrency has gained increased attention from endorsements by Musk, who at one point was the world’s richest man on paper. Entrepreneur Mark Cuban, rapper Snoop Dogg, and musician Gene Simmons are also backers of the Crypto-coin.

    Now Musk wants you to be able to trade Dogecoin using the Coinbase platform.

    Musk’s Tesla motor car company had allegedly used the Cryptocurrency exchange to buy $1.5bn worth of Bitcoin in February.

    The Gamestop effect

    Also this year, online traders caused chaos among financial systems, showing big institutions that they can beat them at their own game.

    A bunch of people got together on Reddit and discussed how they would pump up the price of Gamestop, a US rental games company. Gamestop saw its fortunes wane as people turned away from buying or renting disc versions of games in favor of downloads. The Reddit ‘movement’ was aided and abetted by a group called WallStreetbets.

    The group has since pledged millions of dollars from the proceeds towards saving Gorillas – epic!

    Its founder, Jaime Rogozinski, has also signed a deal in Hollywood to make a film about the incident.

    The price went through the roof as Gamestop became a gambling tool, with little underlying value in the company.

    A number of people won big but others who got in late weren’t as lucky. The price later crashed, costing gamblers a lot.

    It has since fluctuated wildly and is now on a downtrend. For every new multimillionaire, there has been someone who has lost their life savings.

    Tread carefully with new technologies

    It will take time for the use of these new technologies to settle in our society. You must, however, be skeptical even when Musk, who recently changed his designation from CEO of Tesla to ‘Technoking’ posts such things on a social platform.

    Whenever he tweets something, people react. Musk convinced scores of people to buy Dogecoin and now he is quite excited about NFTs.

    The Billionaire recently actually turned down a $1.1m offer to buy one of his tweets as an NFT after putting it up for sale, quoted saying: “it doesn’t feel quite right.”

    Musk said that he was going to sell a tweet of a song about NFTs as an NFT. This was days after an NFT had sold for a record $69m. But it turned out he was joking around when he tweeted: “Actually, doesn’t feel quite right selling this. Will pass.”

    Elon’s $1m NFT

    Musk’s tweet was listed on the blockchain-backed auction platform valuables and has attracted a bid of $1.12m from a user called @sinaEstavi.

    The tweet is of a techno song about NFTs, with the lyrics: “NFT, for your vanity, computers never sleep, it’s verified, it’s guaranteed.”

    If you don’t believe how volatile these currencies are, just check out how Bitcoin lost more than 80% of its value from December 2017 to May 2018. It is currently hovering just below $60,000 after a low of around $3,500 only in March 2020.

    If you decide to invest, do so knowing that rapid price fluctuations come with the territory.

    Remember these new blockchain assets are highly volatile investments. Their values can swing literally like a yoyo, based on the jokes made by a multi-billionaire who wants to live in space.







  • Banking on Crypto

    Banking on Crypto

    The world is slowly realizing that it needs to rely less on old systems in order to manage its way out of financial crises. One of the oldest systems which saw the US dollar as the vehicular currency of the world may be slowly coming to an end.

    Enter the Bitcoin: the brainchild of cryptocurrency, a means of exchange that is less regulated and which is built on the Blockchain, a technology that is supposedly difficult to hack into.

    A quick recap for those of you not familiar with the tech: A Bitcoin is a computer file that can be stored in a ‘digital wallet’ app on your smartphone or computer. With this technology, every single transaction you make is recorded in a public list or publicly distributed ledger.

    This makes it easier for authorities to track and record your transactions but not you personally. We will not, however, get into the potential abuse of such anonymity in this article.

    Adoption

    We have been very slow to adopt new financial technologies for two reasons. First, there are many regulations that help maintain the US dollar as the vehicular currency, used by central banks and other financial institutions to secure assets. Second, many developers of the technology are hesitant to throw it upon us – yet.

    But this will change as the robustness and reliability of cryptocurrencies is proved study by study and case by case. One method is by using cryptology.

    Cryptology is used to protect your information from hackers. In fact, the protection of your data is more important than ever before. We have made our lives more public thanks to social media.

    While you may not mind so much if hackers get unauthorized access to your pictures and social media profiles, some information is actually valuable. This includes your banking details, birth certificate, licenses, and intellectual property.

    The Covid-19 pandemic has forced us all to work from home. Those employees of numerous companies are accessing commercial information using personal computers instead of office computers. But personal computers might lack anti-virus software, firewalls, and other security measures.

    Right now, cybercrime is costing companies at least $45bn a year worldwide.

    This is why now is cryptology’s time to shine. It will also be used to protect your online purchases made using cryptocurrencies instead of traditional money. It will help ensure that funds go from your bank account to a retailer’s quickly but securely.

    Using Crypto for daily activities

    Digital Cash

    Let’s face it, we are going to use Blockchain for shopping: Lamborghini already accepts purchases in Bitcoin. The concept might still be difficult for you to grasp, but they are still being developed and soon it will be near impossible to live without them.

    Read more about Distributed Applications ‘DApps’ here

    Gaming companies are already embracing cryptocurrencies. Fortnite, a popular online game, with more than 250-million players, allows you to buy in-game products using cryptocurrencies.

    Beyond regular shopping, you could soon buy a house using a cryptocurrency. Blockchain technology and the underlying distributed ledger technology is being used to increase transparency in real estate transactions using smart contracts.

    To reiterate the use case for Crypto, many countries like Germany are relaxing laws and giving licenses to allow ‘Crypto Banks’ to operate. This is one effort to ensure that your Cryptos are properly taxed when used for investment purposes.

    One such bank, Bitwala, allows you to purchase Bitcoins or Etheruem securely and quickly from a charges-free bank account which they provide.

    Your transactions are then documented so that you can seamlessly submit reports of the purchases to the local tax authorities (Finazamt) to avoid penalties. You can do this all directly from the Bitwala App.

    The blockchain and cryptocurrency are even being explored on national levels: China is allegedly creating its own national digital currency.

    The way forward

    Monetary systems will continue to be tested every day. Banks the world over are spending big bucks to protect themselves from hacks. But one day, a hacker could throw them into turmoil.

    When that happens, you might be unable to withdraw your money. A central bank’s database could be hacked making it difficult for it to work with other banks. In the meantime, alternatives to classic monetary systems need to be developed.

    Cryptocurrencies backed by cryptology could be a very strong alternative. There are also some valid cases for using Bitcoin as a global currency. This, however, will only become a reality if it shakes off its high trading volatility to become more stable.

    We live in a world where we need to be cognisant of our health and how viruses can spread easily and quickly like wildfire. It equally is imperative to realize that cyber attackers could get and infect our data just as swiftly. Using modern technologies can help prevent these intruders from creating a ‘digital security collapse’ pandemic.

  • Open Banking – too exposed?

    Open Banking – too exposed?

    As a human race, we are constantly striving for easier ways of doing things: simpler, faster, and more practical. Thanks to better tech, you can now interact with people globally and instantly with the click of a few buttons.

    Likewise, you can also physically move quickly due to advances in transportation technology. When it comes to the age-old practice of banking – the same is now happening.

    Provided you have the necessities, a passport, residential address and a mobile phone, you can now open a bank account within minutes. This is brought about by a Fintech offering better known as Open Banking.

    Open banking uses APIs that enable third-party developers to build applications and services around the financial institution.

    Wikipedia

    It is ultimately about giving you a better, secure, and flawless service experience. This comes with the opportunity to gain access to excellent financial products.

    Online security expert and Chairwoman of Zortrex, Susan Brown reflects on the advent of the new offering:

    “Just over a year ago when Open Banking came into the limelight for the Fintech world. CMA9 were effectively mandated to make their banking platform accessible for third party companies.”

    A comprehensive global report commissioned by Accenture emphatically highlighted growth and talking points about the emerging industry in 2017.

    MS Office package

    This is all wonderful, innovative, and promotes transparency within the financial services market. There is only one drawback:

    “Consumers really do not know what Open Banking means, there has been a lot published about the benefits that are to be had from Open Banking. At the same time, consumers have become very aware of the negative aspects around sharing their data.”

    Scourge of hacks & breaches

    Daily, you hear more and more about hacks, and data compromises. With the UK’s Lloyds Bank breach last year; the trust by its consumers to share their financial and personal information, some would say, is completely gone.

    In addition, you go onto a site to review products and before you know it, you are bombarded with adverts on the products that you have been looking at elsewhere. This has led some consumers to abandon shopping carts and refrain from using online retailers.

    If not adequately protected, the newly established Fintech system might suffer a similar data breaches.

    Visa and Mastercard for one, are among the established firms threatened by Open (Mobile) Banking. And so, they should be according to Brown.

    “As consumers knowledge grows about their data and the security around their financial data has not been secure as shown with the Marriott hack.”

    Naturally, new systems pose a huge threat for banks. They become the digital gateway channel connection to the financial sector. This eliminates the direct relationship between consumers and banks.

    This is not a bad thing as banks are overwhelmed and cannot always keep in touch with everyone.

    An added layer of protection

    The solution for failing global acceptance would be for a new Fintech company to gain the trust of its new customers. They would naturally also be able to chip away at the market share of other expensive financial institutions.

    What you as a consumer know and want is privacy and security. Currently, only banks can make this happen – but at a high cost.

    With a new digital tokenisation system like Zortrex vault, you can concurrently let your consumers reap the awards on their transactions.

    They can as a result, gain redeemable tokens for patronising your services. This can occur while both you and your partners offer them products globally.

    “Don’t be a gateway for the challenger banks be in control of your omni channel for your consumers,” Brown advises

    Read more about Zortrex’s solution to privacy here.

    This contains excerpts from Susan Brown about Open Banking initially published on her LinkedIn page.  

     

     

     

  • How countries operate

    How countries operate

    At times, we can all become frustrated by political agendas, misfortunes, and perceived lack of planning by various governments around the world. As a result, not quite often see the bigger picture – or the economics of how countries work.

    Naturally, the political fracases provide fuel for media companies who in turn bombard us with their 24-hour news cycles. But we need to understand that politicians are only temporary custodians of the country and its economy. Each economic model is built on the same premise that started many hundreds of years ago – that of bartering.

    Two pillars of government

    There are two main mandates or rather tasks that a ruling party is assigned by the electorate when it comes to governing. These are: controlling the country’s fiscal and monetary policy.

    Fiscal policy is the internal running of the country and basically deals with tax and how it is allocated. The fiscal budget is then awarded to the various sectors of any economy.


    These include education, transport, healthcare, finance, trade and industry, defense, agriculture, and many other building blocks of your country.
    How the government prioritizes the spending on each of these sectors will determine its policy priorities.

    It will also be a signal of its wider political intentions. And this not only to voters but also to its neighbouring countries in regard to international trade and security.


    A nation concerned with information and its human capital will prioritize education in its budget. There are however other approaches to budgetary allocation such as funding trade and industrial activities.
    This leads to job creation that will, in turn, drive a need for tradesmen and women to diversify and obtain the new skills required.


    This also provides an incentive for state-run schools, privately funded schools, and institutions to develop new skill sets. Doing both is ideal – as governments must foster innovation by promoting and funding higher learning institutions where top talent can be nurtured and developed.

    Fiscal policy forms the larger mandate as this budget is derived from the collective taxation of income, capital gains, trading and customs, sin taxes, corporate, and simple public services.
    That way allocation of the fiscal budget to finance will pave the way for monetary policy to function.

    International trade is the key to generating further income as a government cannot rely on an internally driven economy to sustain wealth. The same applies to business so an agreed trade policy would need to accommodate all aspects of the country’s economy.

    National specialization

    Every thriving nation has been built on either skilfully utilizing internal resources or have created global demand for a service or industry.
    The UK has strong financial and corporate offerings plus its geo-positioning (GMT) allows it to be a central commercial trading point for the world.
    Germany has always had a rich source of steel enabling the production of cars, rail brands, and manufacturing.


    In addition, it continues to be a market leader in developing technologies to complement those industries thus allowing the country to thrive as a major European power.


    The Nordic countries are rich in mineral resources of which they have converted the revenues into national trust funds. These are used to aid its citizens; many of whom develop skills in trade, innovation, and finance (and now Fintech).


    Though Japan is geographically smaller and is made up of two islands it continues to prosper by becoming a global leader. This comes from its exports of tech innovation, artificial intelligence (robotics), and fishing stocks.
    It even ‘exports’ financial aid (loans) to other countries due to its strong and disciplined monetary policy.


    The US has invested heavily in services, human capital, and innovation – to large extent immigration has played a major role in these areas of growth.

    The emerging economies

    Russia is mineral-rich and has outsourced its intelligence gathering skills, military technology, and training for years.


    China continues to grow and subsidizes its agriculture and manufacturing industries fully utilizing the abundance of manual labour at its disposal.

    China even exports this labour thus gaining influence and soft power enabling Chinese goods and services to be exported more freely to other economies.


    The ability to offer the global economy a form of expertise or goods/service can attribute hugely to each country’s economic wealth.  Israel – military and intelligence; Brazil agriculture and tourism not to mention countries in the Far East – oil and fossil fuels.

    Most African countries obtain their sources of income (though not as much as they should) from natural minerals, agriculture, and tourism.


    Ghana has gold and cocoa; Nigeria – oil; South Africa – gold and many mineral resources; Kenya and Tanzania – tourism. Even a poor country like Zambia has survived because of its coal and coffee reserves.


    Any country without resources or the ability to offer goods and services would have to be more subsistence-like. This usually means having to rely on aid or import goods and services.


    That, however, comes at a price and leads to the country functioning with an unsustainable debt burden.

    Application of policies

    Interesting food for thought by Dr. Jagdish Bhagwati, a famous Indian-born economist in the US:
     
    Americans spend, save little. Also US imports more than it exports.
    Has an annual trade deficit of over $400 billion. Yet, the American economy is considered strong and trusted to get stronger.
     
    The Japanese on a contrary, save a lot. They do not spend much. Also, Japan exports far more than it imports, has an annual trade surplus of over 100 billion. Yet Japanese economy is considered weak, even collapsing.
     
    Modern economists complain that Japanese do not spend, so they do not grow. To force the Japanese to spend, the Japanese government exerted itself, reduced the savings rates, even charged the savers. Even then the Japanese did not spend (habits don’t change, even with taxes, do they?). Their traditional postal savings alone is over $1.2 trillion.
     
    Thus, savings, far from being the strength of Japan, has become its pain.
     

    International trade

    This then gives way to various trading blocs, which over time have been built, broken, or renegotiated when it was not suiting either of the participants.

    The strength of a country’s currency is primarily determined by supply and demand for its sovereign currency. This demand can only be fostered by trade.

    The more the demand for a countries commodity the greater the demand for its currency. This is the medium we use to compensate for transactions. In terms of a country’s monetary policy, it is more of a singular relationship between a government and its banks.

    The banking system

    Banking is the system to which you can place your disposable income (gross income after-tax) in a digital repository. The central (reserve) bank regulates the money supply into the economy ensuring that locally, inflation does not corrode the value of its currency. The central bank controls how much it lends to local banks and at which payable interest rate.


    The central bank is independent of the government. They have their policies shaped by fiscal influences and are under obligation to impact the strength of the economy through its interest rates and exchange rates.
    So, the central bank sets the mandate by which banks offer security interest, loans, and building deposits to help you benefit from their hard-earned cash.


    Banks, however, have a wide range of consumer charges so transacting doesn’t offer much protection against inflation. In some cases, banks offer you zero interest on savings deposited!


    You can therefore understand the frustration of citizens who would like to see increased corporate taxes, especially for banks. This especially as they reward executives with excessive remuneration packages even in a failing economy.

    Financial governance and regulations

    The new wave of Cryptocurrency aims to shake-up these long-standing benefits banks have enjoyed. Benefits such as the bailouts from taxpayers’ money from risk-taking behaviour that nearly brought the global economy to its knees.


    Banks behave like a petulant child knowing well that their ‘parents’ will only mildly reprimand them. This ultimately enables the continuation of behaviour with as they get away with only a slap on the wrist.


    Governments tolerate bank’s excessive salary packages and risk-taking because they play a strategic role in the stability and growth of an economy.

    This is just the tip of the iceberg and paints a big picture of how a country is managed – or indeed can be mismanaged.
  • Conjecture buying

    Conjecture buying

    Before throwing our coins out of the pot or making second guesses about a big crash one must understand how the price of altcoins works.

    The price of some altcoins on the trading market has a lot less to do with its intrinsic value. It is actually what individuals, and most traders (who seek only profit), believe it to be worth.


    So, what is the reason behind the recent downward price spiral? Not much conspiracy to “ruin the cryptocurrency” other than an expected price correction coupled with some external factors.


    Punters including ‘corner shop’ setups inflated the price with rampant price speculation. Speculation based on nothing more than historic (and a short history) rise of the price of the coin from only a few cents to almost $65 000 each (adjusted to 2021 all-time-high price).


    The idea of creating an invention that performs a certain function quite soundly and then limiting its supply displays the financial clout of its creator/s.


    That way, the natural laws of supply and demand would drive up the price of Bitcoin, as it became rarer though needed. It is already becoming harder to attain (through mining) and as it encroaches its supposed 21-million-unit limit.

    “The fact that people keep talking today that bitcoin is below 10,000, it’s a disaster, or bitcoin is above 10,000 and that’s crazy. I think the fact that bitcoin is still alive, and attracting so much attention, is the fact that we’re talking about bitcoin in Davos with a Nobel Prize winner, a central bank governor, and a seasoned investor. I think that’s a powerful tool.” – Jennifer Zhu Scott (Radian Partners principal) – 2018.

     

    External influencers of price

    But there are external factors that come into play that affected its speculative price. Factors such as the rise of other altcoins after the split in its technology.


    Bear in mind that the blockchain code is open to anyone smart enough to develop and run a product on it.
    So, there is also some kind of a substitution effect as newer altcoins become more specific in purpose and faster in executing transactions.


    This results in people switching from Bitcoin to the likes of Ethereum-run newcomers like DigixDAO.
    These new coins are doing well (if the rising price is an indicator) and climbing while others lose both intrinsic a speculative value.


    External factors including market sentiments do in fact play a huge role in determining the demand for the product or service. In the case of Bitcoin, the closing down of some Exchanges in Asia as well as talks of heavier regulation. Such was mentioned at the World Economic Forum in Davos 2018.


    Global leaders pledging to take tougher measures to regulate cryptocurrencies raises cause for concern for people with significant amounts invested.


    So, the usage by criminals, for instance, has created a much-expected reluctance by governments and financial institutions to accept its legitimacy.
    There is also a constant and sometimes subliminal shift in thinking, as trading involves a lot of psychological and emotional play on buying behavior.

    Buyer behaviour

    One such example is the impulse people have when purchasing items that are supposedly on ‘special’ or at a low price.
    A 75% discount on a pair of shoes only tells you that the seller has marked it up so high that they could still make a profit when they knock it down by that much!


    You only notices the price (before and after) the discount. This is without realising that it cost the buyer a fraction of both to produce, package it and get it shipped to the store.

    The true value of ‘the shoe’ lies in the materials (quality) used to produce it for it to last long or give it its level of comfort (its true purpose). That and its appearance of course.


    The “brand name and image” in this case can thus be compared to the speculative aspect of a commodity.
    So, a pair of pumps would sell (at a higher than normal price) if the likes of Beyoncé or Gal Gadot are seen wearing them.
    The same goes for sportspeople and the whole multi-million dollar/euro endorsement deals they carry. Their endorsement of a product thus ‘legitimizes’ it.


    When global leaders, banks, and financial institutions raise concerns about cryptocurrency – it does the very opposite. This sets off-market panic and the selling-off we are currently observing.

    The future of Crypto

    120x600

    So, what will happen from here on? Provided it is not outright outlawed. This is, however, proving to be difficult as even the South Korean government have now softened their tough stance on the Crypto Exchanges.
    This is after they discovered what a tax ‘gold mine’ Crypto exchanges can be. This is then when the speculative buying will begin again.


    Investors who couldn’t purchase Bitcoins at levels above $20 000 will now be seeking an opportunity to enter the market.


    Especially if it dips below the $30000 mark (it is currently $34 000). This with the hope to make some decent profit even if it just pushes back to $50 000.
    Some will hold on and speculate on a return to previous highs – and so the bullish and bearish cycle continues.


    Authorities including the delegates at the Davos talks were in agreement, however, that they will want it at affordable prices. At a level that stays relatively stable, they may even start to consider it as ‘global legal tender’.


    But that will be a long time, especially if traders continue to buy it speculatively to make profits.
    Those awaiting a total crash of Bitcoin, altcoins, or the blockchain, however, would have to hold their breaths.


    The technology is indeed a game-changer and has already been widely adopted. It will only change form to be partially or fully regulated.

    The core functions of blockchain-based currency will remain its main contribution to the evolution of banking and ‘money’ transfers.
  • Forex on steroids!

    Forex on steroids!

    With all the negative and positive commotion surrounding the Crypto market – it still begs the question, for those still curious. What does it take to engage in the trading of Cryptocurrency?

    And by trading, we are not referring to the price speculation in a portfolio as one would with the price of a company’s shares or even CFDs. 

    We are rather referring to trading it as a commodity against other ‘Cryptos’ in a properly regulated online market setting. Similar to how a Foreign Exchange (Forex) market operates.

    As with trading traditional fiat currencies, the price is purely determined by good old supply and demand for the currency and monitored by the availability versus volume traded.

    It is therefore just a medium between traders where they can set limit orders to buy/sell Bitcoins for a certain price.

    So, in the true approach of Debunqed, we will decipher crypto-exchange trading by looking at what you need to do to get into it, and what you stand to gain.

    Here are the quick steps:

    The first step would be to open a secure Crypto wallet to physically purchase (own) some altcoins. Bitcoin, Ethereum, and Litecoin are the main coins offered by Crypto wallet providers.

    They hold the most value and can thus be broken down into smaller denominations (Altcoins). The same way the dollar is used as the main exchange for other fiat currencies. This example helps to put things into perspective.

    Make sure you do your research into which wallet you will use. Obviously, if you are mining a certain Cryptocurrency you would naturally purchase them directly from that software provider of the Altcoin.

    Using Ripple mining as an example, the platform is supplied by RippleNet and naturally, it follows that the Ripple company mines all the volume and controls its supply.
    Getting the digital currency into a wallet can be a quick exercise.

    photo-1-500x383@2x

    It can take as quickly as between 5 – 20 minutes via a peer-to-peer Bitcoin marketplace connecting buyers with sellers like at Paxful.

    Make sure you deal with reputable sellers.  This wallet provider rates suppliers based on how reliable they are so only deal with sellers of the highest ratings.


    The actual purchase (mostly conducted via online chat) can be made via a Credit/Debit Card, online banking or convenient money transfer facilities like (Europe-based) N26 Bank, Skrill or PayPal.

    You can even purchase and send gift cards from Amazon for instance, to the seller (to the value of the currency being purchased) for the seller to release the Altcoins.

    Security and storage

    The actual coins are stored as an alpha-numeric key code – with the currency value in the wallet once acquired.

    This after the wallet-broker takes a small fee for the transaction. This code/key needs to be kept secure – backed up online and offline (highly recommended). This is possible on special flash-drive (Crypto wallet) like the Trezor or a Ledger Nano. The device would hold the deposit key if you were transferring it to another wallet or to an exchange to trade.

    Time to go shopping!
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    Finding a good exchange

    The next step would be then to source a robust and user-friendly platform to trade your newly acquired currency on.

    The best cryptocurrency exchanges would allow you to swap fiat currency such as dollar/euro for the digital currency directly. Naturally, you can trade one digital currency for another as well.

    Binance

    There are quite a few to choose from so it is good to read the reviews. You should then select one based on the number of deposit/withdrawal methods, the fee structure level, number of countries served, availability of security tools and features.
    The last aspect is a huge determining factor: exchanges can be prone to hacking, or loss from outages. Lastly, their margins and exchange trading functions are good to observe too.

    For serious and equally secure trading, you will likely need to use an exchange like Binance that requires the user to verify their ID before being opening an account. Make sure you have all your documents ready and up to date!

    Trading

    When it comes to the actual trading, let’s take a scenario where two people want to sell an altcoin but not for the market price. One sets a limit order for lower and the other for a slightly higher price. So, the best price to purchase Bitcoins, in this case, would be the median of the two prices.

    If the buyer wants to purchase more than one altcoin, they will continually take the lowest price available. By doing this, the “price” of the altcoin will increase as the lower-price sell orders are no longer available.

    You will then, as with Forex, purchase pairs of where you think your digital currency will be stronger against another e.g. BTC (Bitcoin) vs XRP (Ripple).
    This combo would look like this on the exchange: BTC/ XRP – 0.00011960. What this means is that one Ripple coin is worth that much Bitcoin for instance.

    The little details

    This type of trading, like commodities or forex, requires constant attention and the monitoring of prices. But there are tools that can also help you set prices and have the trades auto-execute.

    So, a platform which provides such tools conveniently allows you the time to do other important things. Like paying attention to your spouse, formal job or family and friends. That would be ideal.
    If you have the cash, time, expertise and financial clout, it is even possible to run your own Crypto Exchange!

    This is another benefit of a decentralized currency system that will allow you to earn some cash by charging for the usage of your robust platform.
    Well, this may be until the fiscal authorities’ crackdown on all of the platforms with restrictive legislation.

    Finally, like many platforms that provide opportunities to purchase something, the software must be stable and be cost-effective to use.

    ADVERT

  • An investor state of mind

    An investor state of mind

    As an Arsenal Football Club fan, one has the natural tendency to follow the progress of both present and past players of the revered North London title-winning institution.

    The prestige of playing for the club comes along with all the bell and whistles required to make life living in the small yet expensive hub city often dubbed to be the centre of modern Europe, a breeze.

    It was rather sad to read about the unfortunate fortune of a former player who had a big heart and passion for the beautiful game. He was, however, a bit aloof and care-free on the pitch. It turns out this was a character trait that perhaps extended to his financial affairs.

    He was recently reported as sleeping on the couch of a friend without a penny to his name. How can that happen, you might ask?

    His weekly wages were a reported 50 000 Great Britain Pounds! So how did he go from earning that figure, to being dead broke?

    Such a bad turn of fortune is not uncommon for celebrities, qualified professionals, and lottery winners. This can be explained by a simple lack of ‘investor mentality’.

    The right state of mind

    This mindset can be instilled in us from a relatively young age if you have had the luxury of growing up with parents, teachers or a mentor who imparts this knowledge to you. It can also be learned later in life – often the hard way.

    Similar to starting a business, the biggest barrier to entry into any form of investment is always the initial capital. Once you have it, coupled with the investor mentality, it’s hard to fail financially in life: just ask the current sitting American president!

    Now as obvious as this sounds, you need to put in money to make money. That is why investing, for instance, is mainly carried out on a large scale by banks – with your money!

    What you do with the money when you inherit it, win it, or save up from a weekly or monthly project-based income is more important than just having it in the first place.

    Wouldn’t you agree that money comes then often goes faster than you realize? Having a grasp on why it leaves so fast is what we should be paying attention to.

    Let’s firstly be sensible about this – investing is always a long-term project. A desire to reap short-term gains or having such a mentality is paramount to risky gambling or betting against the odds.

    “Patience is an investor’s game – if you don’t have any, don’t bother with the mechanisms that don’t lock you in for a few months to enable you to realize a return.”

    Enough of the rhetorical questions and statements. Let’s briefly look at a few investment vehicles in the true fashion of Debunqed.

    Savings

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    This is the least risky investing vehicle and tends to suit patient investors. Usually, it is for you if yo are the kind that loves to watch paint dry. 🙂


    Your only risk would be using a non-government backed bank for it. The higher the amount you invest, the better the interest rate you get. So this basically benefits the already wealthy. Some savings accounts are even known to offer you 0% or fractional decimal interest rates which are calculated nominally.

    So it begs the question – why would you even consider putting your money in savings? Well, using this investment strategy helps with a good credit score. That comes in handy when you apply for loans or obtaining financial backing to start your new business. So they do have some use.
    Risk level: Little to none.

    Property (residential or commercial)

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    This is the golden nest egg of investing – that is if you can raise the bond for property or inherit one.


    Property is one asset class that tends to only appreciate and relatively well over the years depending on what is happening in the area/town or economy.
    Getting in is the difference between having a spender or an investor’s mentality.

    What do we mean by this? Well, if you can save up for a deposit to buy a brand-new luxury car, you could and should do the same for a house.

    That way each “monthly rent” payment goes towards something you will eventually own. You could also buy-to-rent. The income generated from the tenant (rent) will help you pay off the bond.

    Consider the appreciation value of property in your local area over the years. But like anything valuable, you must be prepared to maintain its upkeep – the costs will be more than your weekly carwash.


    In the long-run when you realize the greater future value, you could even downgrade to have some extra cash to spend. You could then get that car of your dreams or travel and see the world.
    Risk level: Low to moderate.

    Share/Stocks

    The days of stockbrokers are numbered. Trading firms and hedge fund companies are slowly being replaced by AI computers. These days, you can take full charge of a portfolio of equities, CFDs, Futures, Commodities, Options, Forex and Cryptocurrency directly from your laptop.


    There are a number of online trading platforms out there so it is a good idea to go with the accredited ones.


    One of the key benefits is that they all offer a free trial – which often gives you a mock .account. That’s a great way to learn about the tools and the above-mentioned markets.


    There are aspects you need to pay attention to. One of them is leverage trading . It is essentially borrowing money to trade (payable with interest) – a double whammy if or when things go south for you.
    Risk level: High to Excessive.

    Mutual funds

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    As the name suggests it is derived from a pool of funds from a specific institution or industry. Mutual funds are offered by institutions as a supplement to retirement plans (pensions and annuities).

    They offer you a return (often a stable monthly or quarterly pay-out) based on a fixed term that you agree on with your portfolio manager.
    The offering institution would then apply your pooled monthly contributions into a diverse portfolio to spread your risk exposure.


    This, however, requires the attention of a (paid) portfolio manager and is thus susceptible to the principal-agent problem.
    Risk level: Low to moderate.

    Venture Capitalism/Angel funds

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    If you have some spare cash and don’t want to bear the risk and burden of running a business yourself, you can fund other people you believe will be successful.


    In this arrangement, confidence is placed by you on the owner and the offering. You can then state the terms for the release of your funds such as a quarterly return on investment or a larger stake in the business and its profits.


    Rapper Nas is known for his investment in Silicon Valley start-ups as a Venture Capitalist – which gives him a share in the companies he backs with the hope of it growing exponentially to increase that shareholding’s worth.

    Celebrities and sports stars usually have the capital to diversify their portfolio by investing in or starting up a new business. One such notable venture was the one where Rapper/Producer Dre’s Beats brand got bought by Apple for three billion USD.
    Risk level: Moderate to high.

    Rare items

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    Though not an easy commodity to come by because often the initial value can be quite high (unless of course, you are lucky to find an item at a junk sale or low-key auction), rare commodities can also form part of your future financial security.

    Rare coins tend to take a long time to mature in value. Likewise, a painting can appreciate quickly in value if the artist’s “interesting” background comes to light in the press for good or bad reasons.

    As an example, a rare Nelson Mandela coin once sold for 100 000 USD while he was still living. So, one can only imagine what the few in circulation are worth now.

    Read more about rare coins here.


    A rummage around old antique shops and secondhand sales can reap rewards if you know what you’re looking for.
    Risk level: Low to moderate.

    Bonds

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    These are long-term interest-bearing certificates issued primarily by governments (via monetary policy) but also by certain large public institutions.


    Bonds give you a guarantee of a future value using a specially controlled interest rate. They are usually issued with fixed terms and can only be accessed after 3 to 10 years.

    This locks you in, to hold the bond for the agreed period regardless of which way the interest rates are going.


    Naturally the higher the rates the better for you. As a cautionary note, you will be subjected to the regulatory activities and monetary policies of the country in which you hold the bonds. Choose where you buy very wisely.
    and research your product.

    Accessing bond markets is also not easy and you may be subject to complex rules pertaining to the country, residence status and your credit score, and so on.


    It is really for the long-term investor and can be used in the same way mutual funds tend to be applied, to supplement one’s retirement annuity package.
    Risk level: Moderate to high.

    All things investment

    You need to remember the importance of imparting this knowledge to our youth, friends, and family so as to continue the cycle.


    The simple answer being: Education. The lack of it is one of the fundamental causes of poverty.


    A number of celebrities and sports stars have overlooked it’s true importance so as to follow their true passion and skill. This is not necessarily a bad thing. If you have the right people around you to help you manage your finances.


    It was reported he signed documents without knowing the full content and liability of what was being presented to him. It was also said that she would even bring paperwork to the football club’s training ground for him to sign.

    Let’s be honest, we don’t know the full facts but there is a lesson. This “wife” character could be anyone that you entrust with managing your finances so, be wise as to who you choose to oversee your accounts.

    Make a plan

    Having a grasp of your assets (if any) less your liabilities is the first place to start. Once you know what you have or don’t have, you can then set goals.
    Think about what you need to do to achieve a net worth that will sustain you for the long term.

    Granted we all must pay bills. We will write down that part of our income but we need to focus on what is being done with the money that is left once your overheads are met.


    Educate yourself (skip a binge session on Netflix). Take a deeper dive into the investment vehicles briefly spoken about. The resources page will provide more comprehensive details about all seven vehicles discussed.

    It will also guide you on where to go to find out more once you have decided and which vehicle or combo would fit your investment type and appetite for risk.

    Make 2018 a sensible year finance-wise and happy investing!

  • The Big ‘Crypture’

    The Big ‘Crypture’

    I’m not quite sure if anyone has given some careful thought – in the heat of this ‘Crypto mania’. More specifically, have you ever considered the ramifications of the blockchain and its impact on the global economy?

    This is an attempt to perform a calculated prophecy, based on the conversations we’ve had with like-minded visionaries.


    An introspection into this ‘much-talked-about technology’ has led to endless possibilities.

    Presently, every Tom, Anastasia, and Patel are pursuing short-term gains. You are all probably investigating ways in which they too can “cash in” by investing in new digital currencies.

    This frenzy is mainly driven by how some of the altcoins are performing in value. Some digital coins are rising as much as 1000% in a ‘Crypto bull-run’. But the real appeal for digital “currencies” comes from the security, speed, and cost of transactions they facilitate.

    A case for Cryptos

    Most of you are understandably looking at it solely from an investment point of view – after all,  greed never sleeps.

    Also, let’s not forget the anonymity it affords one – great for criminals and money launderers. Because of the increased risk, monetary authorities and regulatory bodies will make a case for tighter controls.

    They may even push for the outright banning of this new currency altogether.


    Retail banks, are currently entrusted with the movement of your funds (electronic transfers) and are governed by economic monetary policy. This happens under the watchful eye of big brother – the Reserve Bank.

    These commercial banks are the “primary targets” so to say of the blockchain. They were, therefore, the first to react by investing or attempting to start up their own blockchains.


    Such projects, however, prove to be expensive and still risky ventures given that no-one knows the source and destination of the blockchain.

    Banks are nevertheless having to either make quick decisions about whether they get on board or partner with developers of Cryptos such as Ripple).

    We also look at other financial institutions such as credit lending facilities and money transfer institutions. They are also are naturally in partnerships with the banks. They, however, stand to get wiped out by the blockchain if you think about it.

    Really, who would want to cough up a 10% commission or a transfer fee for money sent abroad to your family? You could simply use something like IOTA which, by the way, is as a Crypto hovering around 3-5 USD (at time of publishing) per unit.

    It is capable of transacting very quickly and securely with no transaction fees!

    And how so you may ask? Those details are listed clearly on their respective websites.

    Peer review functionality

    It is the belief that the plan for Cryptos’ was to enable anyone to have access to a shared (decentralized) peer-to-peer type service that enables the secure transacting of literally – anything!

    You can look at the blockchain working in the same manner as BitTorrent or E-Mule (for those who remember that far back). In the way, that data, albeit mostly bootlegged music, videos, and software, was distributed and downloaded on the web.

    “Blockchain is essentially a quick peer-to-peer transaction of digital currency”

    The value of Cryptocurrencies is now driven by how well it works as a system. You must look more closely at the added value it can offer society from a functional, practical, convenient, and of course, cost-saving perspective.

    A real threat?

    So, what does that then mean for companies like Visa, Mastercard, or even a digital banking app like PayPal?

    You can also imagine the implications for investment banks and their traders. That is if markets such as the very volatile foreign exchange (Forex) are completely abandoned and substituted by Cryptos.


    There are now many an exchange for Cryptos in the appearing monthly.
    You will be able to switch or trade Bitcoin for Ethereum, Litecoin, IOTA, or Ripple.

    Handy if you need them quickly for a specific transaction, country, or product that accepts digital currency.

    More practical uses of Crypto

    The purpose of ‘Cryptos’ running on the blockchain is, therefore, to change the way we transact and pay for goods and services.


    The aim was to make it a ‘form of exchange’ but also to provide the resources for you to “mine” and own them.  This can be an alternative income generator alleviating the need for job creation. It can also be a substitute vocation for those you who were perhaps made redundant by automation and AI.

    So, once you mine the currency (provided you have the infrastructure and pay the overheads), you can use it to get the things you need or must pay for.
    Your electricity bill, for example, can then be processed and paid for directly from an IOTA-holding wallet.


    Speaking of electricity, we came across a very insightful article (referenced in the resource section) focusing on the impact of energy consumption that global rampant mining will cause the price of electricity and the environment.

    Coupled with the switch to electric cars this could surely force you to invest in better ways to generate electricity. That is if we are to maintain sensible levels of sustainability.

    Whether the price of electricity goes up or down will be determined by how quickly energy providers globally will be able to meet this surging demand.

    We can surely be in a position to observe the upcoming impact on electricity consumption from next year.

    More and more of the global population are beginning to mine altcoins for themselves.

    As we head into the festive season and bonuses are being paid out, be responsible for how you splash out. Do your research first – even if it means waiting a year to see how it all plays out.

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