Learning the friendly way

Since the debut of Bitcoin in 2009, central banks have been living in fear of the disruptive technology that is cryptocurrency. Distributed ledger technology has revolutionized the digital world and has continued to challenge the corruption of central bank morals. 

Financial institutions can’t beat or control cryptocurrency, so they are joining them in creating digital currencies. Governments have now been embracing digital currencies in the form of CBDCs, otherwise known as central bank digital currencies. 

Central bank digital currencies are digital tokens, similar to cryptocurrency, issued by a central bank. They are pegged to the value of that country's fiat currency, acting as a digital currency version of the national currency. CBDCs are created and regulated by a country's central bank and monetary authorities.

A central bank digital currency is generally created for a sense of financial inclusion and to improve the application of monetary and fiscal policy. Central banks adopting currency in digital form presents great benefits for the federal reserve system as well as citizens, but there are some cons lurking behind the central bank digital currency facade.

Types of central bank digital currencies

While the concept of a central bank digital currency is quite easy to understand, there are layers to central bank money in its digital form. Before we take a deep dive into the possibilities presented by the central banks and their digital money, we will break down the different types of central bank digital currencies. 

Wholesale CBDCs

Wholesale central bank digital currencies are targeted at financial institutions, whereby reserve balances are held within a central bank. This integration assists the financial system and institutions in improving payment systems and security payment efficiency. 

This is much simpler than rolling out a central bank digital currency to the whole country but provides support for large businesses when they want to transfer money. These digital payments would also act as a digital ledger and aid in the avoidance of money laundering.

Retail CBDCs

A retail central bank digital currency refers to government-backed digital assets used between businesses and customers. This type of central bank digital currency is aimed at traditional currency, acting as a digital version of physical currency. These digital assets would allow retail payment systems, direct P2P CBDC transactions, as well as international settlements among businesses. It would be similar to having a bank account, where you could digitally transfer money through commercial banks, except the currency would be in the form of a digital yuan or euro, rather than the federal reserve of currency held by central banks.

Pros and cons of a central bank digital currency (CBDC)

Central banks are looking for ways to keep their money in the country, as opposed to it being spent on buying cryptocurrencies, thus losing it to a global market. As digital currencies become more popular, each central bank must decide whether they want to fight it or profit from the potential. Regardless of adoption, central banks creating their own digital currencies comes with benefits and disadvantages to users that you need to know. 

Pros of central bank digital currency (CBDC)

• Cross border payments
• Track money laundering activity 
• Secure international monetary fund
• Reduces risk of commercial bank collapse 
• Cheaper
• More secure
• Promotes financial inclusion

Cons of central bank digital currency (CDBC)

• Central banks have complete control
• No anonymity of digital currency transfers
• Cybersecurity issues 
• Price reliant on fiat currency equivalent 
• Physical money may be eliminated 
• Ban of distributed ledger technology and cryptocurrency

Central bank digital currency conclusion

Central bank money in an electronic form has been a big debate in the blockchain technology space, with so many countries considering the possibility. The European Central Bank, as well as other central banks, have been considering the possibility of central bank digital currencies as a means of improving the financial system. The Chinese government is in the midst of testing out their e-CNY, which some are calling the digital yuan. They have seen great success so far, but only after completely banning Bitcoin trading.

There is a lot of good that can come from CBDCs, but the benefits are mostly for the federal reserve system and central banks. Bank-account holders and citizens may have their privacy compromised and their investment options limited if the world adopts CBDCs.

It's important to remember that central bank digital currencies are not cryptocurrencies. They do not compete with cryptocurrencies and the benefits of blockchain technology. Their limited use cases can only be applied when reinforced by a financial system authority. Only time will tell if CBDCs will succeed, but right now you can appreciate the advantages brought to you by crypto.

Public and private keys are integral to the use of cryptocurrencies. They not only allow people to send and receive cryptocurrencies but also to maintain the security and ownership of the funds. Private and public keys are generated when one creates a digital wallet.

What is a private key?

Every cryptocurrency wallet consists of a public key and a private key. Anyone can deposit cryptocurrency into a public address (public key), but no one except the owner of the corresponding private key can remove funds from that same account.

A private key, also known as a secret key, is a random string of numbers and/or letters used to protect one's cryptocurrency wallet and receive crypto transactions, similar to a pin code for a bank account. Private keys prove ownership of one's wallet address, protect it from unauthorized access and theft, and are used to sign transactions on the blockchain. 

Private keys are used in conjunction with an algorithm to encrypt or decrypt data. The holder of the private key should be the only one who knows it, as this secrecy is what gives the private key its power. The golden rule is to keep your private key safe.

Private key vs public key

Public and private keys are mathematically linked to each other and relevant to only one blockchain wallet. A public key can be compared to your traditional bank account while the private key is akin to the pin code to access this account. 

Users would share the public key with anyone looking to transfer funds to their crypto wallet, however, under no circumstances should your unique private key ever be shared with anyone. It is also strongly recommended that one stores their private key offline in a safe space, and not on a desktop or accessible location (in the event of a hack).

When one loses their private key, whether lost or maliciously taken, they will lose access to their crypto funds. Due to the decentralized nature of cryptocurrencies, there is no support line or central authority that can access that information.

This is where exchange wallets come in handy as the account is created using an identity that once verified can gain access to the funds. This is known as a custodial wallet where the platform holds the private keys for you and allows you to access the funds through a user-generated password. When it comes to storing private keys, this is the most convenient option, however, if you use an untrustworthy platform that increases your risks greatly. It is strongly recommended to enable two-factor authentication when using this option.

How do private keys work?

A public key is generated using complicated mathematics by your private key, ensuring they form a matched pair. These digital keys are created when one creates their crypto wallet on a particular blockchain. 

After being generated, a private key must be stored in a secure location, ideally offline. Furthermore, private keys can have an extra layer of security by being password-protected, encrypted or hashed, ideally all three.

The owner of the public key will use the private key to encrypt the digital signature when making a transaction. 

A transaction is encrypted using a public key and can only be decrypted by using the matching private key. Therefore, when someone sends a transaction they will need their private key to decrypt and prove they own the funds being used in this transaction. 

The private key is used to sign the transaction, which verifies that the transaction hasn't been modified. A digital signature is created when someone combines their private key with the data that's being sent as part of a transaction. 

Once the transaction has been executed the nodes on the network will check and authenticate the details of the transaction and if any information is incorrect the transaction will be rejected. Once executed transactions cannot be reversed. 

Where should you store your private key?

Your private keys are essentially your passwords, so it's of utmost importance that you keep them safe.  Your best bet is to store them offline somewhere safe. This might mean written on a piece of paper, stored on an offline device, or kept in a password manager.  As mentioned above, public keys can be stored anywhere and shared with anyone.

To avoid the hassle and stress of ensuring the safety of your private keys at all times, you can use a hot wallet supplied through a reputable exchange. If you choose to take this route ensure that the crypto platform is regulated and adheres to stringent security measures. The Tap app ticks these regulatory boxes and ensures that customers have full access to their funds at all times, without the risk of losing them if they lose their private keys. 

In conclusion

Private keys are digital passwords used to establish one's ownership in a crypto wallet and are created in conjunction with the public key of the same wallet. One should never share their private keys with anyone. 

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Here we discuss what dividends are and how they work so you can make informed decisions when investing in dividend paying stocks. As a company, regular dividend payments create an incentive for shareholders to remain invested and keep the business growing, while for investors a dividend payment can increase the overall ROI and provide additional income streams. Learn the difference between stock dividends and cash dividends below.

What is a dividend?

Dividends are a way for companies to share their profits with shareholders. When a company earns profits, it can choose to distribute those profits back to its shareholders in the form of dividends. Dividend payments are typically made in cash and are usually paid out every quarter or semi-annually. Dividend paying companies can also choose to pay stock dividends, which is essentially dividend income paid out in shares.

By investing in dividend paying stocks, investors have the potential to earn regular income from their investments as well as benefit from capital appreciation when stock prices rise.

Dividend paying stock and the stock exchange

Investors in the stock market can earn returns in two ways, one is through an increase in the stock price from when they purchased it, and the other is through dividends. A company can decide whether they pay out dividends or not, and it's worth noting that not every company on the stock market does pay out dividends. The ones that do are typically mature ones. 

Companies might instead decide to use the profits to reinvest in the company, hire new employees, or expand their business. Start-ups and newer companies are more likely to take this approach as their goals are more aligned with growth. 

These payments are made in cash and generally occur at regular intervals, be it quarterly or annually. The amount per share, and when and how often dividends are paid out are determined by the company's board of directors.

Why a company might pay dividends 

When a company is profitable, it might do one of these three things with its profits:

• pay off debt
• chase a growth opportunity by reinvesting the money into the business
• pay dividends to their shareholders, attracting new ones and rewarding current ones

Companies pay dividends to reward their shareholders, generating a steady income stream, and increasing the overall value of their stock. Additionally, dividend payments can be used to attract new investors and signal financial strength. Only profitable companies will pay out dividends, and typically ones without significant debt. 

Stocks that pay dividends

Whether a company pays dividends is directly related to its goals and priorities. As mentioned above, younger companies typically use profits to reinvest in the business as the current goal is growth, while more mature, established companies opt to reward (and attract) shareholders. 

Growth stocks

Companies looking to capitalize on growth opportunities might make the wiser move by reinvesting their earnings instead of offering dividends to shareholders. 

Let's use retail as an example. If a company has just released a new product, it'd likely benefit more from hiring additional salespeople who can promote it than partaking in payouts for investors. In doing so, this allows the business to seek out maximum returns and drive the stock price up instead of giving away potential gains prematurely.

Mature stocks

As companies reach their peak and shift to a sustaining stage, they are more likely to prioritize dividend payments for shareholders over investing any additional funds into growth. 

Ultimately, leaders must determine what is best for the company's shareholders depending on its size and age: paying dividends, funding development opportunities, or debt reduction. The ideal choice depends heavily upon the organization’s state of expansion as well as other considerations.

Mutual funds and ETFs

Investors in mutual funds and exchange-traded funds can also tap into dividend income provided that the stocks pay dividends. These are typically paid out on an annual basis, however, this will be determined by the shareholder's brokerage account.

Timeline of dividend payouts

Whether a company pays out dividends at regular intervals or on a once-off basis, below are several dates to note with regard to the when and how of these payments. From the declaration date to the ex-dividend date to the payment date, these all play an important role for investors looking to benefit from dividend yield.

• The Declaration Date

When the Board of Directors announces the value, record date, and payment date for the upcoming dividend.

• Ex-Dividend Date

The ex-dividend date is the final date by which you can buy the stock and earn dividends. If you purchase stock after the ex-dividend date you are not liable to receive dividends. Stock purchases can sometimes take two days to clear so ensure that you do so at the right time. 

• Record Date

The date that you need to be an official shareholder in order to receive dividends. If your stock purchase is not settled by this date you are not liable for the payouts. The record date is typically one date after the ex-dividend date.

• Payment Date

When payments are made to all registered shareholders (as of the record date). Depending on the preferences specified in your brokerage account, the dividend could either be credited to you as cash (cash dividends) or reinvested back into the issuing business, distributed as stock dividends. 

How dividend payments can affect the share price

Due to dividends being paid out by profitable businesses, when a business does pay out dividends this sends a signal to the market that the business is doing well and could drive the stock price up. However, it could have the opposite effect too, driving the price down when there is no dividend payout. 

• when dividends drive the stock price up

Dividends can be a celebration of a company's profits and act as rewards to shareholders for investing in the company. This makes the stock more attractive to investors looking to earn passive income and will ultimately drive the price up. 

• when dividends drive the stock price down 

Companies generally pay dividends only when they are assured that the rate of return can be sustained, thanks to reliable profits. Therefore, if a company announces any reduction in this rate of dividend payment, it is likely because their business is encountering certain difficulties, sending out a negative signal instead.

In conclusion: what is a dividend payment?

A dividend is a payment that companies make to their shareholders, usually in the form of cash or stock. It's a type of reward for investors who have held onto the company's shares for a certain period of time. Usually companies pay dividends on a quarterly basis, often based on a portion of the company’s profits.

Because dividends are usually paid in cash, they can be a great source of income for investors. This extra income comes with less risk than other types of investing, which makes them attractive to many people who are looking for reliable returns on their investments. Dividend stocks also tend to outperform the overall stock market.

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When learning about cryptocurrencies you're likely to come across the term "smart contracts". First popularised by Ethereum, smart contract functionality is now a regular feature among platforms that allow developers to build decentralized apps (dapps).

In this article, we're breaking down what smart contracts are, how smart contracts work, and where they came from.

What is a smart contract?

A smart contract is a digital agreement that executes based on the terms of the agreement. The terms are predetermined and written into the smart contract's code, ensuring that no edits can be made once the smart contract has been executed. As the smart contract is written using blockchain, the transactions are transparent and irreversible.

Due to the nature of these digital agreements, they can be carried out by two anonymous parties without the need for a third party/ central authority.

Smart contracts generally require payment for their creation, as the execution of the smart contract will require energy from the network. Ethereum smart contracts, for example, require gas fees in order to be created and executed, which are paid directly to the platform. The more complex the smart contract, the higher the gas fees. Other smart contracts will require payment in the digital assets utilized by the platform.

Smart contracts work because they are automated and utilize powerful decentralized technology.

Benefits of smart contracts

First and foremost, the biggest benefit of smart contracts is that they are trustworthy as they cannot be tampered with, nor can a third party intervene. So smart contracts cannot be hacked as they use blockchain technology to encrypt the information.

Smart contracts are cost-effective as they eradicate the middleman and save the users both time and fees that would otherwise come with them. Once certain criteria are met, smart contracts automatically execute, requiring no time delays, paperwork, or room for error. A smart contracts accuracy is determined by the accuracy of the coding used to create the smart contract.

many industries including insurance companies are using smart contracts to streamline and automate their business processes, including fulfilling legal obligations and managing financial transactions. By utilizing if-then statements, the insurance company can create smart contracts that automatically execute the insurance payment to policyholders when certain conditions are met. This can be used to process claims, pay out benefits, and manage other contracts in the same way.

How do smart contracts work?

Smart contracts are digital agreements built using blockchain. Developers looking to create a smart contract will need to utilize a blockchain platform that provides such functionality.

Determine agreement terms

Developers will first need to determine what the agreement terms are as well as the desired outcome. For example, one might create a smart contract that stipulates when 0.5 BTC is received by a certain digital assets wallet the code to a keypad on a property will be sent to the renter.

Determine conditions of agreement

Establish the conditions of the smart contract such as payment authorization or shipment receipt.

Write code

Using a smart contract writing platform, developers will write the code. This will then be sent to another team, such as an internal expert, for security testing.

Smart contracts deployed

Once approved, the code is then deployed on the blockchain platform. The smart contract will then be alerted to any event updates.

Smart contracts executed

Once the terms of the agreement are met and communicated to the blockchain through an oracle (a secure streaming data source), the smart contract will then automatically execute the desired outcome.

One might liken a smart contract to a digital vending machine. The terms of the agreement are understood by both parties involved prior to the transaction. Through an automated process, one party will input the initial criteria (the funds) and the predetermined outcome will be executed automatically (the selected goods will be released).

History of smart contracts

Smart contracts were first conceptualized by American computer scientist, Nick Szabo, the creator of the first digital money "Bit Gold", in 1998. He created them with the intention to digitize transaction methods to replace traditional contract and defined these smart contracts as "computerized transaction protocols that execute terms of a contract."

"These new securities are formed by combining securities (such as bonds) and derivatives (options and futures) in a wide variety of ways. Very complex term structures for payments can now be built into standardized contracts and traded with low transaction costs, due to computerized analysis of these complex term structures."

Szabo's concept remained purely theoretical until the invention of public blockchain technology, which provided the necessary infrastructure for storing and executing smart contracts. In recent years, smart contracts have been used in a variety of industries, including finance, real estate, and supply chain management. While there are still some security concerns with the technology, the use of smart contracts could further increase the efficiency and reliability of transactions.

Conclusion

Smart contracts are digital a contracts between two parties that are automatically executed once certain conditions are met without time delay. Built on the blockchain, smart contracts are immutable, irreversible, and transparent, and require no third parties. Smart contracts are written in varying programming languages dependant on the blockchain network on which they are created. This technology ensures that the smart contracts are implemented correctly.

The crypto industry can feel like it has a language of its own sometimes, so we're here to clear the air on the business of tickers. Tickers were first introduced to the trading world in the 19th century to make trading stock more efficient, listing merely an abbreviation of the company and not the full name. This concept was later adopted by the crypto industry too. In this article, we provide a guide to avoiding crypto ticker confusion.

What is a crypto ticker?

Crypto tickers are abbreviated forms of a cryptocurrency used to represent the coin on centralized and decentralized exchanges. For example, BTC is used for Bitcoin and ETH for Ethereum.

Can two cryptocurrencies have the same ticker?

As both cryptocurrencies will likely be searched for and traded on the same exchange, each will need its own ticker in order to differentiate from the other. It has however been witnessed that smaller coins have adopted a more prominent cryptocurrency's ticker in order to drive interest. This is often related to scam coins and should be considered a red flag. 

To simplify this guide we've broken it down into sections, covering tickers across payment focused cryptocurrencies, stablecoins, meme coins, development-focused platforms and a gaming platform.  ‍

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Payment-focused cryptocurrencies

Since Bitcoin was launched in 2009, many coins have followed in its footsteps, attempting to recreate a more efficient digital money. While this isn't a bad thing, there have been a number of digital assets adopting the word "Bitcoin" into their name which has caused a considerable amount of confusion. 

Here we take a look at the three most prominent payment-focused cryptocurrencies:

BTC - Bitcoin 

The first and biggest cryptocurrency in existence, Bitcoin is the most widely adopted coin to this day. 

LTC - Litecoin 

One of the most successful forks off of the Bitcoin blockchain, Litecoin provides fast and cheap transactions.

XRP - Ripple

XRP offers one of the fastest value transactions, challenging the SWIFT payment method with its blockchain functionalities. 

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Stablecoins

Stablecoins were created to combat the volatility that crypto markets have become known for. These coins are pegged to fiat currencies, ensuring that their value remains the equivalent to one unit at all times. Stablecoins have gained popularity since the launch of the DeFi movement, and both these coins are in the top 5 biggest cryptocurrencies based on market cap. 

USDC - USD Coin

USD Coin is pegged to the US dollar and was launched in 2018 by payment services company Circle and Coinbase.

USDT - Tether

Also pegged to the US dollar, Tether was launched by a Hong Kong-based company Tether in 2014. Tether is the first stablecoin to come into existence. 

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Meme Coins

Since the rise of Dogecoin, many cryptocurrencies have attempted to leverage the brand and incorporate the star Shiba Inu logo. Most of these coins have a minute market cap, so we'll focus on the two biggest ones, which are both currently positioned in the top 15 biggest cryptocurrencies based on market cap. 

DOGE - Dogecoin

The original meme token, Dogecoin was created in 2013 from a hard fork off of the Litecoin blockchain. Dogecoin remains the biggest meme token to date. 

SHIB - Shiba Inu

Leveraging the success of Dogecoin, Shiba Inu was launched in 2020 and provides a crypto ecosystem compared to Dogecoin's simple payment functionality. 

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Development-Focused Cryptocurrencies

Since the rise of Ethereum and the incredible innovation, it has provided a platform for, many other projects have launched a similar concept where developers can also create dapps. While they all share this common denominator, each project brings something unique to the table. 

ETH - Ethereum

The original development-focused platform, Ethereum was launched in 2015 and is the most widely used by developers. Often susceptible to high transaction fees, many other projects have attempted to rectify this problem. 

ADA - Cardano

Cardano was created by a co-founder of the Ethereum network and through rigorous academic research aims to provide a more streamlined platform on which developers can create blockchain-based applications.

DOT - Polkadot

Polkadot focuses on providing interconnectivity and interoperability between blockchains, allowing inoperable blockchains to exchange data and value.

LINK - Chainlink

Chainlink is an oracle network that allows smart contracts to connect with outside data, providing a "bridge" between blockchains and off-chain environments.

SOL - Solana

Solana is a high-performance blockchain that provides dapp and smart contract creation. Solana provides a faster and more cost-effective alternative to Ethereum.

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Gaming Platform

Last but not least, we'll also cover this metaverse-focused coin which functions to assist the inner workings of the virtual reality game of the same name. 

MANA - Decentraland

Launched in 2020, MANA operates as the in-house currency for players using the Decentraland platform. The coin can also be traded in the outside world on many popular exchanges. 

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An Informative Guide To Avoiding Crypto Ticker Confusion

We hope the guide above helps to dispel any crypto ticker confusion, particularly as you embark on your crypto investment journey. While the world waits for cryptocurrencies to become regulated, if you're looking to get in before this takes place, Tap provides a convenient, simple and secure solution to buy, sell and store cryptocurrencies.

All coins are displayed with their real-time price, allowing anyone, anywhere to obtain one of the digital currencies on offer using simply a bank transfer.

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In a world where dreams often seem out of reach, we find ourselves humbled and elated to share a remarkable achievement with all of you: Tap has reached an incredible milestone of 150,000 users and counting! Today, we take a moment to pause, reflect, and appreciate the extraordinary journey that has brought us here.

As we trace our steps back to the beginning, we are reminded of the countless hours, late nights, and tireless efforts poured into building something meaningful— Tap, a financial app that would make a difference in people's lives.

Our dedicated team of talented individuals, driven by a shared vision, embarked on this magical journey with a humble determination to reshape the future of finance.

Together, we faced challenges, learned from our mistakes, and celebrated small victories along the way. It was a journey filled with passion, resilience, and unwavering belief in the transformative power of our app. But we couldn't have come this far without the unwavering support and trust of our incredible user community.

To every single user who embraced Tap, believed in our mission, and allowed us to be a part of their financial lives, we express our deepest gratitude. Your feedback, enthusiasm, and inspiring stories have fueled our motivation and guided us on the path to improvement.

From the stories of individuals triumphing over debt, saving for their first homes, or pursuing their entrepreneurial dreams, we have witnessed the impact of our app in transforming lives. It is your dedication, commitment, and unwavering belief in our shared journey that has brought us to this momentous milestone.

But let us not rest on our laurels. As we celebrate this remarkable achievement, we look to the future with eager anticipation.

The landscape of finance is ever-evolving, and together, we have the power to shape its course. It is our collective responsibility to continue building a future of finance that is inclusive, empowering, and accessible to all.

As we navigate the uncharted territories ahead, we remain committed to listening, learning, and evolving. We will continue to harness our team's collective knowledge, passion, and expertise to bring you even more groundbreaking features, enhanced user experiences, and financial solutions that inspire and uplift.

With hearts full of gratitude and excitement, we celebrate this moment. To our dedicated team, our invaluable user community, and all the individuals who believe in our mission, we extend our deepest appreciation.

Together, let us forge ahead and build the future of finance that transforms lives and paves the way for countless new dreams to be realized.