Learning the friendly way

Decentralized finance, or "DeFi," refers to financial services that provide many of the same features as traditional banks - like earning interest on your money and borrowing from others - but without middlemen who take a fee or charge interest, paperwork, or privacy trade-offs. A chartered accountant and Blockchain do not have much in common, but they are starting to as DeFi and FinTech take over. I

nstead of relying on financial services like banks, users can utilize smart contracts on blockchain. Cryptocurrencies ensuring even more ease of use for DeFi users, providing the hottest speeds, fees, and transparency. Defi and digital currencies are growing in popularity thanks to the perks of Blockchain technology. Let us get more into the concept and how it caters to a larger audience.

The aim and use of DeFi

Decentralized finance is the future of financial services, and it's already here. The aim of DeFi is to provide a decentralized financial services platform that is open and accessible to anyone in the world, using tech like crypto to help advance the everyday life of anyone and any business willing to give decentralization a try.

In the past decade, we've seen a rise in peer-to-peer lending platforms such as Lending Club, Patreon, BTCJam, and an explosion of digital currencies such as Bitcoin and Ethereum.

All of these developments have taken us one step closer to the decentralized future of finance that we've been dreaming about, but there's still more work to be done.

What's wrong and how can DeFi fix it

Many institutions in the financial sector are slow and expensive when it comes to providing basic services like payments. Online lender contracts can charge interest rates as high as 30 percent, and the global remittance industry charges fees that can be as high as 12 percent.

These fees and delays mean some of the most vulnerable individuals of our society are paying the highest prices for financial services when they need them most. While the traditional financial system can be slow and expensive, it doesn't have to be this way. Decentralized finance (DeFi) is an emerging category of services where trust intermediaries such as banks are replaced with cryptographic code and smart contracts, which reduces costs for everyone involved - especially when it comes to international payments.

DeFi is a new category of services that are globally accessible and built on top of blockchain infrastructure, without any charge or barrier to entry. It's also much more secure than traditional financial systems because the technology used isn't connected to a central server that can be hacked. DeFi users smart contracts applications to ensure ease of use and instant transfers of information and funds.

Your money is always yours; it's just moving from one smart contract to another. No permission from an intermediary is required in order to use it. All you need to do is have a cryptocurrency wallet, computer or mobile device, and internet connection like everyone else using DeFi services today.

DeFi isn't coming, it's already here

When you ask yourself, "where is DeFi going?", the answer is simple: everywhere. DeFi can be used from every corner of the world, and it's already available today. Innovation at its finest.

DeFi services are not theoretical. They're already being used by real people today to make real asset payments, earn interest on their digital savings, and borrow money from both friends and strangers, all without ever going through a bank or traditional financial institution. Whether you are investing, a money maker, or an asset holder, the shift to DeFi is inevitable.
Blockchain technology provides the first-ever opportunity for these separate building blocks to come together in order for the entire financial system to work seamlessly without any intermediaries, so it will only get better with time. From an economic standpoint, DeFi offers better rates and all the perks of FinTech. Cryptocurrency assets like Ethereum have seen plenty of investment opportunities arise as DeFi and Blockchain merge.

DeFi pros and cons

In order to get a complete picture of what DeFi is, it's important to understand all the good and bad parts that we are facing now. So let's dive into the details.

DeFi pros:

• The interest rate on savings and money lending is relatively high, just as it would be without intermediaries.
• Financial services are more accessible than in traditional bank systems because there aren't any barriers to entry, like non-existent internet infrastructure or bank account fees.
• Transaction and disruption times are much faster because DeFi transactions can move directly from peer to peer without having to go through intermediaries.

DeFi Cons:

• Some transactions might not be as private due to the public records of smart contracts on a blockchain (keeping that in mind, transparency is always beneficial). This however increases security because fraud or reversal can't happen.
• Access to DeFi services can be limited if you live in a part of the globe where these services aren't supported or don't have high enough adoption rates, as compared to traditional banking systems in developed countries. Regulator issues may also occur.
• There isn't a built-in mechanism for handling consumer disputes between peers because the technology simply wasn't designed with this function in mind.
• It's difficult to understand what you're getting yourself into when joining a DeFi service, since it varies from one application to the next and is based on new technology. This doesn't have to be the case in the future.
  

As of now, it's still the early days for DeFi and there are some challenges to overcome before we can look at it as a real alternative. There's still a lot of work to be done, but it will all pay off in the end.

Cryptocurrencies have truly sparked a revolution, haven't they? It feels like just yesterday they were the secret of tech enthusiasts and visionaries. Now, they’ve transformed into a bustling digital marketplace that’s open to everyone. It’s incredible to see how businesses, both big and small, are embracing these technologies, eager to be part of this vibrant growth story.

Crypto technologies are here to stay. The era where crypto was only for a specific circle of people is over and more companies are taking advantage of this steadily growing market.  More large corporations than ever before are willing to develop and invest in the advantageous market of cryptocurrencies.

The crypto-world is blooming with new developments, and it seems that developers in this field can't stop pumping out innovative updates. Skilled developers and talented specialists in this field are making exchanges more accessible with their innovative work, by turning simple tasks into ease of access for users around the globe.

Crypto banking has been the go-to for many people in need of an alternative to conventional banking. With its lack of certain features, it still provides all that is needed with crypto limitations taken care of and more!  Here's a look at some advantages of using this service over fiat currency.

The first thing you'll notice when comparing bank services side by side is how similar they can be despite being different types altogether; one might not work without another if both suit your needs well enough

Crypto banking is a revolutionary new way of doing banking. It has many advantages and disadvantages when compared with regular fiat banking. Let’s explore in more detail and analyse what are the advantage and disadvantages of crypto- banking.

The advantages:

Independent system   

Cryptocurrency, as a whole, is set to be free of reliance on outdated and archaic centralized economies allowing users to manage every aspect of it while giving them full control over its finance. There are no strings attached to trap you into a quagmire of peculiar circumstances.

Low withdrawal fees

Banks are generally charging a fee whenever you withdraw cash from an ATM or the terminal, while crypto banking enables you to withdraw cash for free up to a certain amount.

Withdrawal fees with crypto banking are one of the best features and a major step towards the future, they charge users as low as 0.01% for their transactions no matter how big the amount you try to withdraw is compared to conventional banks.

Openness

Crypto banking platforms have created opportunities for people who were previously shut out of traditional financial services. If you've credit score is low, it'll be hard to find a loan that's affordable and most banks don't offer good interest rates on their saving accounts either.

Higher returns rate

Crypto platforms offer high-yield savings accounts with rates that far exceed traditional ones, enabling their users to beat the inflationary effects. They also provide secured loans without a credit check and other financial services for people in need who are not considered eligible elsewhere.

Currency exchange

So, you’re exchanging your currency for another one? Well, that could cost as much as 4% - applied to a large amount that could be as high as 40£ for every 1000£ that you are converting! Crypto banking, on the other hand, provides an opportunity for you to exchange between various cryptos with a commission as low as 0.1% and conduct rapid peer-to-peer transfers that can be, depending on your plan, free of charge.

The cons

Online-based   

Crypto banking is based and operated online. It’s all about convenience with a quick and easy app for your smart device to control any of your operations in real-time. However, they might not be the best option for seniors or customers who are challenged with using these online services as they often need more personal attention than what this system offers them.   

Assets volatility

While cryptocurrencies have gained in popularity over the years, they remain volatile assets. Thankfully you can now use fiat currencies and stable coins with many crypto banking providers in order to eliminate this risk.

Conclusion:

In conclusion, crypto banking became an essential part of the global financial transformation happening worldwide. In view of the advancement pace it evolved at, we wouldn’t be surprised to see it prosper in the coming years, and infiltrate every aspect of our everyday life.  

As you become acquainted with the cryptocurrency industry there will be several new phrases added to your vocabulary. One of them is Hodl. While not a term used in the traditional finance industry, we'll cover the reason why hodl has become a treasured part of the cryptosphere. In this article, we explore the history of the infamous term, what it means, and why every crypto trader should be learning about the concept. 

What does hodl mean?

Hodl refers to holding a particular digital currency for a long period of time in order to make money from the price gains. In recent times, many in the crypto community have built the acronym into Hold On for Dear Life, however, this is not part of the origin story. 

Hodl has become synonymous with not selling a cryptocurrency during a bear market or period of heightened volatility. The term has become widely adopted by the crypto community and can be seen used in content across all platforms and calibres. 

Where does hodl come from?

Hodl was first conceptualised in a BitcoinTalk forum in 2013 when a user by the name of GameKyuubi misspelt the word “hold”. The inebriated user posted the following message: 

“I type d that tyitle twice because I knew it was wrong the first time. Still wrong. w/e," GameKyuubi wrote about the now-famous misspelling of "holding." "WHY AM I HODLING? I'LL TELL YOU WHY," he continued. "It's because I'm a bad trader and I KNOW I'M A BAD TRADER. Yeah you good traders can spot the highs and the lows pit pat piffy wing wong wang just like that and make a millino bucks sure no problem bro.”

In 2013, the price of Bitcoin went through a volatile period, soaring from $130 in April to $950 in December. The user encouraged fellow Bitcoin investors not to sell and rather “hodl”. 

Within an hour of the post, the new term had become a widespread meme and continues to be used a decade later. 

Hodl as a trading strategy

In cryptocurrency investing, price volatility is a constant concern. However, the concept of "hodling" offers a strategic approach to weathering these fluctuations. Hodling refers to holding onto your investments for an extended period, regardless of short-term price movements. Despite market ups and downs, hodling can provide stability and potentially lead to long-term gains. This strategy allows investors to navigate price volatility with patience and confidence in future growth.

The concept has been widely adopted by a large portion of the Bitcoin and greater cryptocurrency community as a strategy to earn gains. For Bitcoin maximalists, it’s a way of life. Many maximalists have taken on the hodl strategy to avoid any profit-eroding moves, including reactions to FUD (Fear, Uncertainty, and Doubt) and FOMO (Fear of Missing Out), more on this later.

When is the best time to hodl?

Much in the same way as the Chinese proverb, “The best time to plant a tree was 20 years ago. The second best time is now,” the best time to hodl is now. As an investment strategy, buying and holding an asset in any market is always believed to be lucrative as its value grows over time. 

Hodling is an ideological belief in the long-term prospects of blockchain technology, cryptocurrencies, and the communities that have formed around them. Some stock market traders have even adopted this mindset, although the term "hodl" remains predominantly used when referring to crypto.

Other important crypto terms to know

As you continue to build your crypto vocabulary, here are several other terms you are likely to come across. These include:

BTFD (buy the f***ing dip)

A slang term commonly used on Twitter, BTFD encourages traders to buy when the prices are low (when coins are in a dip) with the intention to make profits when the prices return to normal levels. 

FUD (fear, uncertainty, doubt)

As mentioned above, FUD refers to misinformation spread by individuals and organisations that typically encourages traders to sell. 

FOMO (fear of missing out)

Content creators or the mainstream media might use FOMO as a way to entice people to buy a coin. They play on the emotion that traders might miss out on big profits or the next big thing. 

Lambo

Short for Lamborghini, lambo refers to asset prices becoming so high that the user can sell them and buy the luxury vehicle. “When Lambo?” is a common phrase which asks when the price is going to reach such levels. 

To The Moon

Used to describe prices reaching extraordinary levels, as if they’re going so high they’re going to the moon. 

Whale

A crypto whale is an individual or organisation that holds a large amount of a particular cryptocurrency. This is generally considered to be around 10% of that cryptocurrency's total supply.

Closing thoughts

Hodling refers to a buy-and-hold strategy created from a typo in a BitcoinTalk forum in 2013. The concept remains relevant a decade later with many traders and maximalists opting to use this approach. The goal of hodling is to experience the benefits of substantial price gains and mitigate volatile markets. 

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The Lightning Network is a second layer solution that enables Bitcoin users to make fast and cheap transactions without compromising on security. The layer two technology allows users to enjoy the benefits of both the Bitcoin and Lightning Network layers simultaneously. Learn more about the Lightning Network solution below.

The Bitcoin trilemma

In order to compete with other payment channels like Visa, the Bitcoin network must be able to process transactions much faster and at a fraction of the cost. However, this scaling cannot come at the expense of decentralization or security.

The "Bitcoin trilemma" is a term used to outline the conflict between these three principles, scaling, security, and decentralization. 

The aim of Bitcoin Cash, Bitcoin SV, and other forks was to increase the block size in order to make Bitcoin transactions faster and more affordable on-chain.

However, these attempts failed to produce an effective method to transact quickly and inexpensively on-chain while still maintaining Satoshi's design. Hence, the Bitcoin Lightning Network.

The lightning network payment channels solution

Is it possible for the Bitcoin network to have it both ways, to keep its original architecture while also functioning as a fast micropayments network? The answer is yes, and thanks to the advent of Lightning Network transactions, Bitcoin can be used for everyday transactions like paying for a cup of coffee.

The Lightning Network is a type of layer two solution that is compatible with the Bitcoin service. This off-chain solution was first conceptualized in 2015 by Joseph Poon and Thaddeus Dryja.

The Lightning Network works by removing the burden of micropayments from the Bitcoin blockchain and instead utilizes multiple payment channels, which are controlled via multi-signature (multi-sig) Lightning Network wallets.

Why the lightning network?

How quickly can the Bitcoin network process transactions? Bitcoin is presently capable of processing between 2 and 7 transactions per second.

Visa, the current payment channel that drives your debit and credit card transactions, handles 150 million transactions each day, that's 24,000 transactions per second.

In order to make Bitcoin a competitive service to Visa, the Lightning Network needs to be implemented. This channel ensures that micropayments are instantly and cost-effectively executed, and is able to process thousands to hundreds of thousands of transactions instantly. 

The core concepts of how the Lightning Network works.

So how does the Lightning Network work? This layer 2 solution works on top of the Bitcoin blockchain, allowing thousands of micropayments to be executed at one time. This lowers the costs and increases the transaction speed of the initial transaction. There are three core components of the Lightning Network: the nodes, channels, and invoices. 

Lightning Network Nodes

This software connects with other nodes in order to form a network that connects to the Lightning Network to facilitate the sending and receiving of Bitcoin. 

Lightning Network Channel

Users of the Lightning Network establish payment channels with one another so that they may conduct transactions off-chain, which can then be settled (closed) on the mainchain (on-chain).

Invoices

Invoices are QR codes that represent requests for Lightning Network payments on the Lightning Network. Invoices include all of the data necessary to complete a payment on the network, such as the payment amount, which blockchain the invoice is associated with, expiration date, payee pubkey, routing hints, and other information.

How to use the lightning network

In order to make use of the Bitcoin Lightning Network, you will need to open a compatible Lightning Network wallet. Once you have downloaded and signed up for the wallet, you will need to send funds. Simply locate the wallet address of the Lightning Network-enabled wallet and send the funds via your normal payment channel. Once the funds appear in your wallet, you can then send transactions via the Lightning Network to other enabled wallets.

Cryptocurrencies have gained a reputation for being largely volatile investments. While stock too can have their moments (what with Peloton stocks dropping 20% every other day) the crypto market carries the brunt of it. 

Thankfully, stablecoins have come to the rescue. While still functioning as digital currencies powered by blockchain technology, stablecoins are pegged to external assets such as fiat currencies or gold, thereby eradicating (most of) their volatility. 

A Short History Of Stablecoins

After the advent of Bitcoin in 2009, it was only a few years later that a stable digital asset entered the market. Stablecoins came into existence in 2014 when a Hong-Kong based company named Tether Limited released a coin of the same name. The Tether coins' value was pegged to the US dollar, meaning that 1 USDT would always be worth $1. 

In order to guarantee this value, the company held the dollar equivalent in bank accounts. Skip past the controversy surrounding their reserves and lack of financial analysis, and there are now plenty of other stablecoin options on the market. 

Seeing the infinite benefits of digital currency transactions and blockchain technology, like speed, transparency and low fees, many companies around the world have created their own version of the stablecoin, mostly improving on the previous release. These coins have proven to be invaluable with businesses and retail merchants around the world.

Today, the two biggest stablecoins on the market are Tether (USDT) and USD Coin (USDC). One can argue whether these are "safe haven" assets, but one cannot deny that these tokens hold most of the advantages that digital currencies hold while considerably diminishing the unpredictable market swings. 

In our attempt to better understand the concept, let's take a look at the two biggest stablecoins.

Tether (USDT) vs USD Coin (USDC)

Below we explore the two multi-billion-dollar market cap stablecoins, while they both provide the same service in terms of a digital currency, the companies behind them operate quite differently.

What Is Tether (USDT)?

As mentioned above, Tether is the first stablecoin to enter the market. Launched in 2014, the network was initially built on the Ethereum blockchain but is now compatible with a number of other networks. 

Note that the Ethereum-based USDT cannot be traded as a TRON-based token, coins need to stick to their respective blockchain networks as this is how the transactions are processed. 

It wasn't long before USDT was listed on the top exchanges, and included in dozens of trading pairs. 

Tether Limited have since released a Euro-based stablecoin as well as Tether crypto coin pegged to the price of gold. The downside to Tether falls on the company's reputation surrounding transparency and reserve funds. 

There have been several court cases where individuals and regulatory bodies have called for transparency surrounding the funds held in reserves. Tether has since provided access to this information but is yet to go through a third party audit. Regardless, Tether holds the third biggest market cap (at the time of writing). 

What Is USD Coin?

USD Coin is a stablecoin created by the Centre Consortium, an organisation made up of crypto trading platform Coinbase and Circle, a peer to peer payment platform. It launched in 2018 as an ERC-20 token and has since climbed the ranks to be in the top 5 biggest cryptocurrencies based on market cap. USD Coin is available on the Ethereum blockchain, as well as Solana, Polygon, Algorand and Binance Smart Chain networks. 

The significant bonus that USDC holds over its biggest competitor, USDT, is that the coin is regularly audited by a third-party institution. These audits are made public, allowing any user to verify the authenticity of their USDC value each month. Since launching USDC, Coinbase has removed USDT from its platform. 

Which Is Better: USDT vs USDC?

Due to the fact that these respective companies are holding the dollar-equivalent value in reserves, these two digital currencies are considered to be centralized, while the rest of the cryptocurrency market holds a decentralized nature. As the demand for digital currencies increases, it is likely that these two stablecoins will only continue to grow.

When looking for a stablecoin, these are two mos recognised options. When deciding which are the better of the two, consider what you will be using these for, and which networks you would ideally like to trade through.

Users can both buy and sell USDT and USDC directly through the Tap app. Simply create your account, complete the KYC process and deposit funds into your digital wallet. Manage your entire crypto (and fiat) portfolio from one convenient, secure location.

Before you invest in any crypto projects or assets, the golden rule is to always do your own research (DYOR). Hearing about a new coin from your neighbor or cousin's friend on Facebook is great, but it still requires a sizable chunk of your own research. Before you part ways with your money in the crypto space ensure that you've weighed up both the risks and the potential, the responsibility lies with you.

Crypto investing has a track record of being volatile, so the more clued up you are on the crypto assets you invest in, the better. While market data and fundamental analysis are important, be sure to understand the basics of a project and the project's potential.

What is DYOR (do your own research) in the crypto space?

The holy grail of investing in crypto projects, DYOR has become a common abbreviation for do your own research. The phrase is used to remind crypto investors that they should conduct their own research on a crypto project thoroughly before investing any money in it.

Whether you're looking to buy crypto assets, tokens, NFTs, or in any way get involved with a crypto project, be sure to thoroughly investigate the following factors mentioned below when doing your own research. Don't be lured in by a project's fundamental analysis, ensure that you understand everything there is to know about the project. Crypto investing can have devastating consequences for uninformed investors.

The 4 dimensions of how to DYOR on a crypto project

Below we will outline the four main dimensions of conducting your own research on a new cryptocurrency. These four pillars will give crypto traders a solid understanding of what the project represents, how it's been received, and what might happen in the future. Be sure to do this before looking at any technical analysis.

Remember, doing your own research requires reading multiple sources and verifying that the information is correct. When conducting your own research you mind find some disputing information, continue looking until you have the accurate answer.

Team

First and foremost, who is the team running this project? This information is typically presented on the platform's website or in its whitepaper (it's imperative that a project has both of these).

Take a look at the size of the project team, a small team might fall apart if one of the three members leaves while an excessively large team might be a red flag if it is still in its early days.

Check the experience of the leaders on the team. Ideally, you want leaders and executives to have experience in blockchain, Web3, finance, business, computer science, or any other related fields. Also, consider whether their current titles match their experience.

Are the team entirely anonymous? This is considered a red flag as the potential for them to execute an exit run is high. Consider the leaders of the project carefully and decide whether they have the means to steer this ship in the right direction.

Tokenomics

Tokenomics refers to the factors related to the supply and demand of a coin or token. The term merges "token" and "economics" and provides a key area of study for potential investors when establishing a coin's long-term viability. Below are the main aspects of tokenomics:

• Token supply: what is the maximum supply of coins or tokens?
• Token utility: what is the purpose of the coin (does it have governance rights, does it serve a specific function)?
• Market cap: How does the coin's market cap compare to that of its competitors?
• Issuance tactics: does the project intend on conducting token burns or any related activities?
• Minting, allocation, and distribution: how are the coins minted (all at once, gradually), when launched how are the tokens distributed, do a small number of members hold a large amount, are any coins locked up that will be released to the market on a specific date?
• Trading volumes and liquidity: what kind of volumes does this coin trade and how much liquidity does it have?

Innovation

For this pillar of the project, you want to look at what problem this project is solving, and what edge it has over its competitors. It's also worth taking a look at the project's road map and whether it is delivering on its self-set milestones. No roadmap is a red flag, well-managed projects are transparent and eager to release their milestone accomplishments.

Ideally, you want to establish what solution this project is bringing to the greater industry and what competitive advantage this project holds over similar projects. Consider its weaknesses.

If you want to take things one step further, consider what the team might not be telling you, and what elements could work against the growth and success of the project.

Social

This might not seem essential, but social media platforms can offer significant insights into the project's community, achievements, and current state within the crypto space.

When conducting your crypto research check whether the project has active official social media channels, and how often these are updated.

Secondly, how big is their community both in terms of followers and engagement? Are people engaging with the platform or talking about it on their own channels? Community members can shed a big light on how the project has been received.

Lastly, what kind of discussions are being had within the community of these groups? Are people friendly and inviting, or are they blindly promoting the project and pushing "lambo" sentiments? Ideally, you want to have a space where open and honest discussions can be had and constructive criticism accepted.

Toxic communities along with shillers and abandoned channels are all red flags.

The bottom line for DYOR and crypto projects

Establishing these four dimensions of a project is important prior to investing any money. Not only does it give you the opportunity to learn about a new project, but also to become better acquainted with what is happening in the crypto space.

Through the process of conducting your own research, you might discover a viable gem or even gain access to exclusive airdrops as an early supporter. Bear markets are a great time for diving into DYOR explorations.