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Cryptocurrencies derive their value from supply and demand, with the buyers and sellers playing an enormous role in the market's liquidity, and ultimately, success. This rings true for stocks, commodities and forex markets too, essentially any asset markets with trading volumes.
Anyone participating in these markets will have been a maker or a taker at some stage, most likely, both. In this article, we're breaking down the concept of makers vs takers, exploring their vital role in the market and large quantities of these result in stronger exchanges.
Liquidity Explained
Before we dive in, let's first cover an important concept: liquidity. Assets can sometimes be described as liquid or illiquid, this simply refers to how easily the asset can sell. Gold is a prime example of a liquid asset as anyone could easily trade it for cash without any hassle, while a glass statue of your neighbour's cat would be an illiquid asset as the chances of anyone wanting to own it are slim (except for the neighbour, maybe).
Building on this, market liquidity indicates how liquid a market is. A liquid market means that the asset is in high demand, traders are actively looking to acquire the asset, while also having a high supply, meaning that traders are actively looking to offload the asset. An illiquid market then means that there is low supply and demand, making it difficult to buy or sell the asset for a fair price.
In a liquid market where there are many traders looking to buy and sell an asset, the sell order (ask price) tends to be in the same region as the buy order (buy price). Typically, the lowest sell order will be the same as the highest buy order, creating a tight buy-ask spread.
Now that we've covered liquidity, it's time for makers vs takers.
What Is The Difference Between Market Makers And Market Takers?
As mentioned above, any successful exchange requires a fair amount of makers and takers. Let's explore the difference between the two below.
Market Makers
Exchanges typically use an order book to conduct trades. The order book will store offers to buy and sell as they come in, and execute the trades when the criteria are met, i.e. someone could create an offer that says when Bitcoin reaches $40,000, buy 4. When the BTC price reaches $40,000, the order book with automatically execute this trade.
In this case, the person creating this buy order is known as a maker. They are essentially "making" the market by announcing their intentions ahead of time via the order book. While many retail investors are makers, the field is typically made up of big traders and high-frequency trading institutions.
A market maker is a liquidity provider.
Market Takers
Market takers are then liquidity "takers", removing liquidity from the market. Takers create market orders that indicate to the exchange that the trader wants to buy or sell at the current market price. The exchange will then automatically execute the trade using a maker's offer.
A taker is a trader filling someone else's order. Market makers create offers for the order book, making it easier for users to buy and sell, while market takers exercise this liquidity by buying the asset.
What Are Maker-Taker Fees?
You might have heard of maker-taker fees before, this makes up a considerable amount of how exchanges generate an income (after all, exchanges are businesses that need to make money). When an exchange matches a maker and a taker, they will take a small fee for the efforts on their part. This fee will differ from exchange to exchange, and will also be dependent on how big of a trade it is.
As makers are providing liquidity to the exchange (an enticing attribute for any trading platform) they will pay lower fees compared to a trader taking away from the platform's liquidity. Always be sure to check the fee structure and pricing on a platform before engaging in any trading activity, these will be outlined in the platform's trading policy.
How Do Trading Companies Make Money?
Cryptocurrency and blockchain technology was designed to provide a decentralized financial system that bypasses government control. However, to alleviate regulatory concerns, exchanges were established to provide a reliable and convenient means of operating within the crypto markets. These exchanges provide a secure way in which users can buy, sell and trade cryptocurrencies, and in return make money through the activities of its customers as it is a business after all.
While maker and taker fees make up a large portion of how a platform generates an income, the business also generates income through deposit and withdrawal fees, commissions made on trades and listing fees. These typically make up the cost of production and running the business.
In Conclusion
Market makers contribute to the market's liquidity by creating orders looking to be filled, while market takers fill these orders. Makers are typically rewarded for bringing liquidity to a platform with low maker fees, while takers pay higher fees when they make use of this liquidity, easily buying and selling the asset.
Getting paid in cryptocurrencies has opened the global gig economy to endless opportunities. Gone are the days of needing to be in the same country, or even on the same continent, as your employer. Cryptocurrency jobs are not only more accessible but also more acceptable.
In this article, we’re breaking down where you can find jobs that specifically pay in cryptocurrencies. Before we do though, let’s touch base on the advantages the new digital currency realm is offering.
The Advantages Of Being Paid With Blockchain Technology
The ever-evolving blockchain industry is now integrating cryptocurrencies into traditional job markets, from temporary gigs to full-time jobs, anyone can now get paid in crypto.
The decentralized world of cryptocurrencies provides many demographics with many advantages. For employees, these advantages allow the job market to be blown wide open as international payments are now easily accessible and don’t come with high transaction costs and delays.
Due to the nature of crypto transactions, payments can be executed in a matter of minutes with minimal transaction fees offering a quick and cost-effective solution to moving money across borders. The minimal transaction fees also allow freelancers to take on many smaller projects, an opportunity otherwise impossible with international fiat transactions.
Arguably the biggest advantage to cryptocurrency jobs is that anyone anywhere can now work for anyone anywhere, as borders are no longer a consideration. With many freelancers turning to remote work after the pandemic, the opportunity to work on international projects and be conveniently paid for doing so has increased dramatically.
No matter your skill set or ability, there is likely a business out there willing to hire you.
Where Job Seekers Can Connect With A Crypto Job Board
LaborX is a job board-style website that connects employers with employees, covering everything from small temporary jobs to full-time ones, from data scientists to marketing managers. The platform also offers a wide range of cryptocurrencies as payment options.
LaborX is owned and operated by a blockchain company that also offers HR software solutions, which makes it feel more accountable and solid.
Despite what the name suggests, Jobs4Bitcoins offers a range of crypto-paying jobs. Run as a Reddit channel, r/Jobs4Bitcoins, the forum allows anyone to post a job they require or skills they can provide.
While not run in the traditional job-seeking website sense, the opportunities for finding work and self-promotion are endless. There is obviously no vetting of employees or employers, however, so bear this in mind when engaging on the platform.
Blocklancer matches job seekers with job providers and pays in Ethereum. If you’re not fond of Ethereum, no problem, you can easily trade it for another cryptocurrency or fiat currency through the Tap app once you have received the funds.
The platform covers a wide range of jobs, from research analyst to content creator to experts in the field of blockchain and ICOs. It also offers an option allowing users to help mediate disputes.
If the formal job market is not what you are looking for, you can earn tips in Bitcoin for offering suggestions. Not only Bitcoin, you can also earn Bitcoin Cash, NANO, and Tezos.
Users post their questions and then should they find your idea or suggestion helpful, will tip you.
PompCryptoJobs was created to connect job seekers with providers within the crypto space. The platform caters to an extremely wide range of fully-paid crypto positions, from writer to product designer to data scientist.
The platform is professional, neat and informative, and is used by some of the biggest companies in the crypto space.
Whether you're a research analyst, marketing manager or data scientists, there are plenty of job opportunities that pay in crypto.
Final Thoughts: How To Get Paid In Crypto
If you’re unsure on how to go about getting an account that enables you to be paid in Bitcoin or other cryptocurrencies, look no further than Tap.
Tap offer to freelancers and self employed accounts, enabling you to receive payments in both crypto and fiat currencies. When creating an account, you will immediately gain access to a number of crypto wallets, as well as dedicated money accounts from where you can access the individual wallet addresses. Simply send the wallet address to your employer and the funds will clear in minutes (depending on the network).
On top of that, Tap also allows enables you to pay your bills and everyday purchases with your Tap card to spend your fiat and cryptocurrencies in a swipe of the wrist.
UNI is the native token to the Ethereum-based automated crypto exchange, Uniswap. A prominent contender in the DeFi space, Uniswap has become synonymous with decentralised exchanges and the automated trading of decentralised finance (DeFi) tokens.
Covering everything from its growth to rewards to its supply, learn about the leading cryptocurrency linked to the automated market maker.
What Is Uniswap (UNI)?
As mentioned above, Uniswap is a decentralised exchange that facilitates the automated trading of DeFi assets. Decentralised in nature, all trading is facilitated by crypto smart contracts as opposed to employees at a company managing operations, a level up from the decentralised ideology of Bitcoin.
Uniswap was created to provide liquidity to the DeFi industry and allows anyone to create a liquidity pool for any pair of digital assets. After launching in late 2018, the platform experienced an unexpected boom when the DeFi movement exploded. Despite being a technical process, customers and traders around the world joined in on the action.
Following the DeFi phenomenon of increased liquidity mining and yield farming platforms, the automated market maker (AMM) saw a significant increase in the tokens invested in and traded on the platform.
Competing with centralised exchanges, Uniswap provides a trading platform to anyone, without the need for any identity verification or credentials. With no KYC verification, users can swap a wide range of tokens depending on the liquidity pools available.
Who created Uniswap?
Created by Hayden Adams, an Ethereum developer, Uniswap was designed to introduce AMMs to the Ethereum network. Adams worked closely with Ethereum founder, Vitalik Buterin, as he built and implemented the protocol.
Adams states that he was inspired to create the platform following a post by Buterin himself. In a short amount of time, this protocol became one of the biggest disruptors to the financial market.
How does Uniswap work?
A unique element of the platform is the advent of the Constant Product Market Maker Model. This pricing mechanism works in a way that instead of determining the price of a token by connecting a buyer with a seller, the price is determined by a constant equation (x multiplied by y = k).
In order to add a token to Uniswap, users would need to fund it with the equivalent value of ETH and the ERC-20 token in question. Say, for instance, that you wanted to add a token to Uniswap called FIRE. You would need to launch a new Uniswap smart contract for the token FIRE and also create a liquidity pool that holds the same amount of FIRE and ETH.
In this case, x in the equation would equal the number of ETH while y equals the number of FIRE in the liquidity pool. K represents the constant value, using the balance of supply and demand to determine the value. As someone buys FIRE using ETH, the FIRE supply decreases and the ETH supply increases, thus driving up the price of FIRE.
The platform allows any ERC-20 token to be traded, with an easy means of creating the smart contract and liquidity pool necessary. In May 2020, Uniswap V2 was launched which allowed for direct ERC20 to ERC20 exchanges as well as support for several incompatible ERC20 tokens like OmiseGo (OMG) and Tether (USDT).
In order to trade on Uniswap a user will need to have a wallet that complies with the platform, like MetaMask, Fortmatic, WalletConnect, or Portis Wallet.
How does the Uniswap token work?
Launched in September 2020, 400 governance tokens (UNI) were airdropped to each wallet that had made use of the platform before 1 September that year. 66 million of the 150 million UNI tokens distributed were claimed in the first 24 hours.
According to the platform, Uniswap tokens were created to "officially enshrin[e] Uniswap as publicly-owned and self-sustainable infrastructure while continuing to carefully protect its indestructible and autonomous qualities."
Providing both profitability potential and governance rights, holders of the digital asset have the right to vote in how the platform develops, unifying the protocol's authority and cutting out the middleman. This grants holders immediate ownership of a number of Uniswap initiatives including the UNI community treasury, eth ENS, the protocol fee switch, SOCKS liquidity tokens and the Uniswap Default List (tokens.uniswap.eth).
The launch of UNI was seen as a direct retaliation to SushiSwap, another decentralised exchange that cloned the platform and added its own token (SUSHI).
The digital asset is an Ethereum-based ERC-20 token and operates on the Ethereum blockchain.
What is Uniswap Version 3?
More commonly referred to as Uniswap V3, the latest version of the automated market maker was launched on 5 May 2021. This upgrade incorporated better capital efficiency for liquidity providers, improved infrastructure and enhanced execution for traders. Prior to the launch of Uniswap V3, the price of the native token reached its all-time high.
Where can I buy Uniswap (UNI)?
Users looking to incorporate Uniswap (UNI) into their crypto portfolios can do so securely and conveniently through the Tap app. Simply download the app, sign up for an account and complete the quick verification process. Once approved, users can easily load funds (both crypto and traditional fiat currencies) and buy UNI tokens. These tokens will then be stored in the user's secure UNI wallet, and can be used for a number of functions or simply held there.
Investing centers around making gains off of your initial capital. When determining the potential gains one could make there are a number of variables one needs to consider, such as how much capital one has put into the investment and what returns are associated with that asset class.
This led to the creation of ROI (return on investment), a measure that allows anyone to calculate the net profit or loss of an investment in percentage form.
What is return on investment?
All investments, including stocks, bonds, real estate, and small businesses, come with the goal of making more money than you put in. The money you earn over and above your initial investment is called profit. When discussing investment profitability, people often use the term ROI, meaning return on investment. This metric expresses the amount of net profit one can earn/earned as a percentage of what the initial investment was.
ROI can help you assess if buying property or investing in a business is worth it. It's also helped companies determine the value of adding new products, building more facilities, acquiring other businesses, advertising campaigns, etc.
ROI (return on investment) is the percentage of gain or loss on an investment relative to the total cost of the investment. In other terms, it's a way to compare different investments in order to figure out which ones are worth pursuing. For example, you could calculate ROI to decide whether selling one stock and buying another would be a good idea.
While there is no limit to a return on investment theoretically, in practice, no investment is guaranteed to have any return. If your ROI is negative, it means you not only failed to make a profit but also lost some of your original investment. The worst possible outcome would be -100% ROI, meaning you completely lost your initial investment. An ROI of 0% signifies that you at least recovered the money you put in, but gained nothing beyond that.
While ROI is often used as a marker of profitability, it isn't foolproof. There are several limitations to calculating ROI as your only measure which include the time frame in which you will earn back your investment, inflation rates, how risky a venture is, and additional maintenance costs that may be incurred.
Calculating ROI terminology
Before we dive in, let's first cover some basic terminology.
Net profit or net income
Net profit is the amount of money left over after all operating costs, such as the cost of transaction costs or maintenance costs, and other expenses have been accounted for and subtracted from the total revenue. It is used to measure profitability. Net profit can also be called net income, net earnings, or the bottom line.
Total cost of investment
This figure will look at the amount of money invested in a particular investment.
How to calculate ROI: the ROI formula
The ROI formula is a simple equation that looks at the price change of the asset and the net profits (the initial cost of the investment minus its value when you sell it). When calculating ROI you would use this formula:
ROI = (Net Profit / Total Cost of Investment) x 100
To factor trading costs into your ROI figure, you'll use:
ROI = ((Value of Investment - Cost of Investment – Associated Costs) / Cost of Investment) x 100
As an example, let's say you buy 5 shares of $100 each in Twitter, equating to $500. You sell them a year later for $150 each, equating to $750. Let's say you paid $5 commission on each trade, costing you $25 in trading fees.
ROI = (($750 - $500 - $25) / $500) x 100 = 45%
This means that you made a 45% return on investment on that particular investment.
How to determine a strong ROI
A "good" return on investment is any number above 0, as this means you made some profit. However, the ideal ROI should be higher than what you could've earned had you chosen another investment (the next best thing).
To compare this, investors often compare their earnings to what they could've made on the broader stock market or in a high-yield savings account. Using the S&P 500 as a control, over the past four decades it has made gains of around 7% (after inflation). An ROI is generally considered to be a strong one if it beats the stock market in the long term.
It's always important to note that past performance does not equate to future results. Another pearl of wisdom to remember is that high rewards generally come alongside high risks. If an investment promises very high ROIs, consider this also means that it comes with high risks.
Therefore, a strong ROI will vary depending on the investment's level of risk, your goals, and how much risk you're willing to take.
Where the ROI formula falls short
The main limitation of using this return on investment ROI formula as a marker of success is that it doesn't show how long it took to earn the money back. When comparing various investments, the time it takes to mature will have a significant impact on the profits you could earn.
For instance, a year loan versus a bond held for five years versus a property held for 10 years will all have varying ROIs once you've established how long it will take to earn the specified ROIs.
In this scenario, the ROI calculations mentioned above skimp on the full story. It also doesn't account for risk. For instance, the loan repayments could be delayed or the property market might be in a slump, all affecting the potential profits earnable.
With many variables, it becomes harder to predict what the exact ROI calculation on an investment will be, so be sure to factor this in when using the return on investment ROI formula to determine how attractive an investment opportunity or business venture is.
ROI alternatives
Although the return on investment doesn't consider how long you keep an asset, it's essential to compare the ROI of investments held for comparable lengths of time as a more clear performance measure. If that's not possible, there are a few other options.
Average Annual Return
Also known as annualized return on investment, this adjusts the ROI formula to factor in the timing. Here you would divide the ROI by the number of years you hold the asset.
Compound Annual Growth Rate (CAGR)
This option is more complicated but yields more accurate results as it factors in compound interest generated over time.
Internal Rate of Return (IRR)
This measure factors in the notion that profits earned earlier outway the same profits earned later, taking into account interest that could've been earned and factors like inflation. This equation is quite complicated but there are online calculators one can use.
Conclusion
A return on investment (ROI) is a formula used to calculate the net profit or loss of an investment in percentage form. The ROI calculation can present valuable information when investing capital or determining profitability ratios. The ROI equation looks at the initial value of one investment and determines the financial return. A negative ROI indicates that the investment returns were lower than the investment cost.
When it comes to navigating the cryptocurrency markets, staying informed and staying away from FUD can oftentimes be more complicated than one might imagine. In this article, we're going to guide you through how to recognize FUD in the blockchain space and how to avoid it.
Since Bitcoin entered the scene in 2009, the crypto markets have seen their fair share of ups and downs. Although it's true that each market downturn has been followed by a recovery and considerable development, experienced and novice traders alike may find that times of decline are difficult to navigate. Particularly with the rise in FUD.
Before we cover the tools of the trade to recognize and avoid FUD, let's first cover what FUD is exactly.
What is FUD?
FUD in the cryptocurrency realm stands for Fear, Uncertainty and Doubt. This term is used to refer to inaccurate information released by people who wish to manipulate the markets. Releasing FUD content is intended to influence a trader to make decisions that might affect the cryptocurrency's price or their holdings in some way (usually encouraging them to sell).
While commonly used against Bitcoin, Ethereum and other cryptocurrencies are also targeted. FUD typically leads to investors selling off their coins, leading to a panic sell which snowballs and results in a significant loss in value for the coin.
Often mentioned alongside FUD is the term FOMO, Fear Of Missing Out. FOMO is centered around the fear of people missing out on profits, leading them to make quick decisions that aren't necessarily the best ones. While FUD tends to instigate selling an asset, FOMO tends to drive traders to buy an asset. Essentially, these two terms are designed to tap into human emotions that lead to quick decisions.
FUD is typically released through a rumor published on a well-respected website, a negative news item, or a well-known figure expressing concerns about a certain asset (commonly done over Twitter ). Content surrounding FUD and FOMO tend to be from organizations or individuals that have something to gain from the intended action. The content is designed to strongly influence the reader.
FUD and FOMO aren't strictly related to the crypto market, such tactics have also been witnessed in the stock market and other commodity trading spaces. The jargon has become synonymous with trading.
How to recognise FUD
The crypto community might seem tight-knit but there are often ill-actors that gain access to the trusted space and infiltrate it with bad news. This is often seen when people use a commonly discussed topic, such as regulation, to build a narrative that isn't necessarily true to influence traders.
Here are several tips to ensure that you don’t fall victim to FUD:
Establish a trading goal
Before you enter the crypto market ensure that you have definitive goals, with accompanying timelines. When faced with FUD or FOMO information, consider if the resulting actions of this news will move you closer to your goal or further away. If you stay focused on your goal you are less likely to be swayed by market sentiment.
Build a trading strategy before entering a trade
A trading strategy generally involves determining a stop loss, entry point, target sell point, and amount of capital. By establishing this before entering the trade, you will have clear objectives to follow and be less likely to fall victim to FUD-centered misinformation.
Stay informed, but verify sources
Keeping an eye on the crypto markets and staying informed is imperative for any trader, especially day traders. Ensure that the places that you acquire your information from are reputable and legitimate, and if something sounds suspicious, verify it through a number of other sources.
Be patient and consistent
Engaging in crypto trading involves making well-informed decisions based on market trends and supporting technology. Rather than seeking rapid financial gains, it's important to maintain patience and consistency in working toward your goals, while staying focused on your intended path.
Navigating FUD
Despite this sounding difficult, FUD is easily avoidable if you stick to these tips above and only seek information from reliable news sources. While Twitter may have quick tips, it's also hard to determine what the author's intentions are.
Consider whether something sounds accurate or not, and always conduct your own research when considering involvement in a new project. From a financial standpoint, participating in digital currency can be a profitable endeavor, so be sure to act responsibly and observe market trends with a critical perspective.
As we explore the world of crypto assets, we take a look at the different types of crypto assets on the market and at the wide range of diversity in the new-age industry. As more people enter the market and start exchanging digital assets, the industry grows and expands to allow new variations.
Below we explore the vast diversity in the industry, from crypto assets used as money to ones that reward users for viewing a website. Each business offers a unique solution, and to navigate this we offer you guidance below.
What Are Crypto Assets?
The terms "crypto asset" and "cryptocurrency" can be used interchangeably. They both refer to a digital asset built using blockchain that can be transferred in a direct peer-to-peer manner. The first crypto asset to launch is Bitcoin, which entered (and created) the scene in 2009. Since then thousands of crypto assets have been created, each one with its own unique use case.
The Different Types Of Crypto Assets
While crypto assets might fall into one or more categories, each has its own set of rules and use cases.
Payment-Focused
These crypto assets can be used to pay for everyday goods and services or as a store of value (in some cases). These include the likes of Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), Bitcoin Cash (BCH), etc.
Stablecoins
Stablecoins are crypto assets that have their value pegged to a fiat currency or commodity. These crypto assets are designed to bypass the volatility synonymous with the crypto market. These include the likes of Tether (USDT) and USD Coin (USDC).
Privacy Coins
Privacy coins are digital assets that hide details of the transaction, such as the origin, destination and amount. These crypto assets offer untraceable monetary transfers. These include the likes of Monero (XMR) and ZCash (ZEC).
CBDCs
Central Bank Digital Currencies (CBDCs) are crypto assets built and maintained by banks. Used as digital currencies alongside the traditional currency, CBDCs are designed to provide a digital version of the local fiat to which the value is pegged.
Governance Tokens
Common among decentralized finance (DeFi) protocols, governance tokens provide holders with a say in the platform and in future updates.
Utility Tokens
Utility tokens will typically provide a service to the holder on the platform on which it was created. Commonly created using the ERC-20 token standard, utility tokens might represent a subscription on a platform or a use case specific to that ecosystem.
Non-Fungible Tokens
Non-fungible tokens, also known as NFTs, are crypto assets that cannot be used interchangeably and instead hold unique and rare properties. Each NFT represents a singular function that cannot be changed.
How Are Crypto Assets Created And Distributed?
Before crypto assets are created the project's intentions are generally circulated through a white paper. In this white paper, the asset's tokenomics will be outlined which will cover how the asset is created and distributed.
Bitcoin, for example, uses a Proof of Work consensus which means that new coins are entered into circulation through miners solving complex mathematical problems. The network was designed to only ever have 21 million coins created, and new coins are slowly entered into the system each time a miner verifies and adds a new block to the blockchain.
Ethereum on the other hand has no limit to the number of ETH that can be created. The platform is currently moving from a PoW to a Proof of Stake consensus, which alters the way in which transactions are verified, however, new coins still enter circulation through verifying transactions.
XRP minted all its coins prelaunch and slowly release them into the system through a central authority while Tether creates USDT on demand. For each $1 sent, 1 USDT is created, which can later be removed from circulation should it be sold.
The Future Of Crypto Assets
With the ICO Boom in 2017, the DeFi boom in 2020 and the more recent NFT Craze, crypto assets aren't going anywhere. With constant innovation and increasing adoption, crypto assets have become an integral part of the modern day financial landscape.
While mainstream adoption is on the rise, a few wrinkles still need to be ironed out. For one, regulatory bodies around the world are working toward creating legal frameworks in which these crypto assets can exist, while centralized banks are exploring whether CBDCs can co-exist with their physical counterparts. While the world seeks to figure these out, one this is for certain: crypto assets are here, and the industry is becoming bigger by the day.
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