Learning the friendly way

When it comes to understanding Bitcoin, an important aspect to get familiar with is the mining of it. As we explore what is Bitcoin mining and how does it work, we aim to empower you with a greater understanding of how the network functions as well as how blockchain technology facilitates the operations on the backend. Adaptable to many industries outside of the cryptocurrency space, blockchain technology is at the forefront of the tech revolution. Understanding how Bitcoin mining works is the first step to understanding the technology too. 

What does Bitcoin mining entail?

Forget about shovels and dark tunnels, Bitcoin mining is the decentralized manner in which transactions are verified and new coins are minted. Mining also plays a vital role in the maintenance and operation of the network, ensuring both the security and integrity of the platform at all times. The actual process of Bitcoin mining involves miners using sophisticated computers to solve complex cryptography problems.

The Bitcoin network is made up of a number of nodes (computers) and miners around the world that communicate with each other and constantly share the updated record of the blockchain. The blockchain stores all transactions in a transparent and immutable manner, allowing anyone to view it from wherever they are, however, no one can make any changes.

How does Bitcoin mining work?

Let’s say someone in Japan wants to send money to someone in America through the Bitcoin network. The user in Japan would initiate a transaction from their chosen wallet, pay a network fee, and execute the transaction. This transaction would then enter a mempool, a pool of transactions that are waiting to be confirmed. Typically mempools work on a “first come first serve” basis, however, users can opt to pay a higher network fee should they want to push their transaction further forward in the que. 

Miners will then pick up a number of transactions in the mempool and attempt to solve the complex cryptographic puzzle that will lead them to mining the block. The first miner to solve the puzzle is rewarded with the task of verifying the transactions and adding them to a block, in turn receiving the network fees as well as the block reward. Each block on the Bitcoin network can hold 1MB of transactional data. 

While many miners will attempt to solve the math problem using their own resources, only one miner will be successful. This has sparked a conversation, largely fueled by Elon Musk’s recent tweet, over the electricity consumption it takes to mine Bitcoin. Tesla, the company that Musk heads, recently withdrew Bitcoin from their payment options due to the un-eco friendly manner in which the network operates, as it goes against their company ethos. 

Once the miner has verified the transactions, ensuring that the wallet addresses exist and that there are available coins in the senders’ account, all the transactions are added to a block. This block is then added to the blockchain after the most recently added block, each block indicating the hash code of that block and the block before. This ensures that no one can tamper with the order or edit the content of any blocks. 

The user in America will then receive a notification confirming that their wallet has received the BTC, however it will need to go through three confirmations (sometimes more) before being accessible. Each confirmation is represented by a new block added to the blockchain following the block with your transaction. 

What is a block reward?

The block reward is a monetary reward given in Bitcoin to the miners for adding a new block to the blockchain. It is also the process used to mint new coins and in the process enter them into circulation. Alongside the block rewards, the miner responsible for adding the new block to the blockchain will also receive the network fees of each transaction verified within that block. 

This makes Bitcoin mining a lucrative endeavour, however, the start up costs are significant and your success rate will depend on the equipment, power, and cost of electricity in your area.

What is the halving mechanism?

As Bitcoin will only ever have 21 million coins released, Satoshi Nakamoto created a mechanism that ensures the slow release of coins over time. This is called the halving mechanism, and it automatically executes every 210,000 blocks. During the halving the block reward is halved, ensuring that the cryptocurrency remains deflationary in nature.

This means that for every 210,000 blocks added to the blockchain, the block reward given to the miners will halve. To date there have been three halvings in Bitcoin’s history, with the last one taking effect in May 2020. The block reward is currently 6.25 BTC for every block added to the blockchain.

Want to enjoy the benefits of Bitcoin without mining?

There’s another way to get in on the Bitcoin action without the use of sophisticated hardware and high electricity consumption. Users can tap into the Bitcoin network by buying BTC directly from their phones through the Tap Global app. The process is simple, takes minutes, and allows you to own your very own BTC. Through the Tap app users can also trade, store and spend their cryptocurrency, with advanced technology facilitating the process on the backend to ensure smooth and secure trading.

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Cryptocurrencies have been revolutionary in their pursuit of merging decentralization with the finance sector. The industry has grown to provide many alternative options to the traditional financial products available, with most of them at a fraction of the cost. Cryptocurrencies have digitized the way we view, use and manage our funds, and it's only the beginning of the digital assets revolution.

What is cryptocurrency?

Cryptocurrency is the blanket term used to describe any digital asset that utilizes blockchain technology or distributed ledger technology to operate. The first cryptocurrency that came into existence was the Bitcoin network, created in 2009 by the mysterious Satoshi Nakamoto.

The cryptocurrency was designed to provide an alternative monetary system to the traditional banking sector, free from politics. Instead of a central authority, Bitcoin operates using a decentralized network of computers that work together to transact and verify any financial transactions using the Bitcoin protocol. For the first time ever people could manage their money without having to rely on a centralized institution.

Since Bitcoin's success, many other cryptocurrencies have emerged, some providing a revised solution to the digital cash system Bitcoin created, while others have brought innovation to the crypto space.

The Ethereum blockchain, as an example, provides the industry with a platform on which developers can create decentralized apps (dapps) merging the app concept with the decentralized nature of blockchain technology.

Cryptocurrency vs traditional currencies

Traditional currencies, also known as fiat currencies, are operated by government institutions while cryptocurrencies are maintained through a network of computers following a specific protocol. While a Federal Reserve typically sits behind a fiat currency, the key players in a cryptocurrency's existence typically involve:

• Core developers, responsible for updating a network's protocol
• Miners, responsible for validating and executing transactions
• Users, the people using the cryptocurrency
• Exchanges and trading platforms, facilitating the trade of these cryptocurrencies.

While governments have free control over printing new money, most cryptocurrencies are created with a hard cap. For instance, Bitcoin was designed with a maximum limit of 21 million coins, meaning that there will only ever be that number in existence. Not all cryptocurrencies have this hard cap though, Ethereum has an infinite supply due to the nature of the platform and the cryptocurrency.

Unlike fiat currencies, Bitcoin and many other cryptocurrencies were designed to be deflationary, with the necessary factors in place to ensure that the value of the currency increases over time (based on simple supply-demand economics).

Another pressing difference between cryptocurrencies and fiat currencies is that cryptocurrencies are still undergoing regulatory processes. While they are not illegal to trade (in most countries), they are not yet considered to be legal tenders (again, in most countries). Regulators around the world are working on a legal framework in which cryptocurrencies can operate in mainstream markets.

How do cryptocurrencies work?

Now that we've covered the basics on what is cryptocurrency, let's take a look at how these digital currencies actually function. First and foremost, through the use of blockchain technology. While not all cryptocurrencies use this technology, most do and we will use it as an example (as the concept is roughly the same).

Blockchain technology explained

Blockchain is best explained as a digital record-keeping system, or a distributed database. All transactions made on the network are stored in a transparent manner for anyone to see, with no way to edit or omit any of the information. All data is stored in blocks, which are added chronologically to a chain, hence the name.

A block will contain information relating to every cryptocurrency transaction, like timestamps of when it took place, the sending and receiving wallet addresses, transactional hash, and amounts. Depending on their size, blocks typically store data for a few hundred to a few thousand transactions. Blocks will then also hold a block hash, a unique identifying number associated with the block, and the hash of the previous block to prove its order.

When companies incorporate blockchain technology into their businesses they will typically use a private network where the information is only transparent to certain users. This is referred to as a "permissioned" blockchain, different from a "permissionless" blockchain used for Bitcoin and other cryptocurrencies.

Cryptocurrency transactions explained

While blockchain forms the backbone of a cryptocurrency network, miners facilitate the transactions. In a process called mining, cryptocurrency transactions are validated and executed, and through cryptocurrency mining new coins are minted. To make this easier to understand, we're going to use an example of Lucy sending Bitcoin to Jane.

From her Bitcoin wallet, Lucy will initiate a transaction to Jane, sending 1 BTC. After entering Jane's wallet address, she will confirm the network fees presented (these are paid directly to the miner for their time and effort), and execute the transaction.

The transaction will then enter a pool of transactions waiting to be executed called a mempool. Miners then compete to be the first to solve a computational puzzle, the winner of which will be rewarded with verifying and executing the next batch of transactions (cryptocurrency mining).

Confirming that each wallet address exists and each sender has the available funds, the miners will collect each of the network fees that the senders paid. The data from the confirmed transactions will then be added to a block and added to the blockchain right after the last published one. For adding a new block to the blockchain, the miner receives a block reward.

This block reward is based on the current rate, which is halved every 210,000 blocks (roughly every 4 years). This is how new Bitcoin enters circulation and the currency is able to maintain a deflationary status.

Jane will then receive a notification to say that she has received 1 BTC, and depending on her wallet will need to wait for 3 - 6 confirmations before being able to access the funds. Each confirmation is when a new block is added to the blockchain, which typically takes 10 minutes.

This process is typical of a proof of work network, used on networks like Bitcoin. This process is also the same whether you are buying crypto from crypto exchanges or sending to a friend.

The only time this differs is when using a cryptocurrency blockchain that utilizes a proof of stake consensus. In this case, instead of miners competing to solve the puzzle (requiring a lot of energy), validators will be selected by the network to conduct the verification process afterwhich this information will be verified and added to the relevant blockchain ledger.

The different types of cryptocurrencies

With tens of thousands of virtual currencies on the market, a number of subcategories have been created. While Bitcoin is a digital cash system providing a store of value and a medium of exchange, not all cryptocurrencies follow this structure.

Cryptocurrencies that are not Bitcoin are referred to as altcoins, (alternative coins), a term coined in the early days when new coins started emerging. Some altcoins are focused on providing heightened privacy, security, or speed while others are created for entertainment and leisure.

There are nine main types of cryptocurrencies, which we'll briefly highlight below:

• Utility, provide access to the platform service
• Payment, used to pay for goods and services within and outside of its network
• Exchange, native to cryptocurrency exchange platforms
• Security, where its usage and issuance are governed by financial regulations
• Stablecoins, digital currencies with prices pegged to fiat currencies
• DeFi tokens, digital currencies used on DeFi (decentralized finance) exchanges
• NFTs, non-fungible tokens representing unique identities that cannot be replicated
• Asset-backed tokens, where their underlying value is backed by a real-world asset

Another category that is gaining popularity around the world is Central Bank Digital Currencies, CBDCs. These digital currencies are operated and maintained by a central bank with the price pegged to the local currency.

What are the benefits of digital currency?

Cryptocurrencies are known for their fast and secure transactions, not limited by borders or government intervention. Below are several highlights that cryptocurrencies bring to the financial sector.

• Decentralized. Eliminating third parties and centralized authority, cryptocurrencies make the transfer of assets possible while reducing costs and time constraints.
• Security. Blockchain provides a transparent and immutable means of storing transactional data ensuring smooth and accountable operations.
• Deflationary. Most cryptocurrencies with a limited supply are designed to be deflationary in nature due to the decreasing supply mechanisms set in place. With basic supply-demand economics, a reduced supply and increased demand drive the price up.
• Reduced transaction fees. Cryptocurrencies provide a much cheaper alternative to sending fiat currencies across borders. With no need to exchange currencies and bypass several middlemen, cryptocurrencies are able to be sent on a peer-to-peer basis in a matter of minutes.
• Diversification. When it comes to investing, cryptocurrencies present a measure of diversification. Considering your risk tolerance and asset allocation, cryptocurrencies could be a part of your investment portfolio.

What are the risks associated with cryptocurrencies?

While there are plenty of benefits, as with any "new" asset class, there are risks to be considered too.

• Market volatility. Cryptocurrencies are prone to bouts of volatility with prices rising and falling dramatically in various frames of time.
• Market manipulation. Some cryptocurrencies might fall victim to a pump-and-dump scheme through no fault of the networks'. These are typically orchestrated by third parties.
• Theft. While blockchains can't typically be hacked, many cryptocurrency exchanges and wallets that don't utilize the necessary security measures can fall prey to hackers. To avoid this ensure that you always stick to a regulated platform with high-security measures.

How does one store cryptocurrency?

Cryptocurrency is stored in a digital wallet, similar to how one would store money at financial institutions only with cryptocurrency you are entirely in control of your funds. From the wallet you can make crypto transactions, store a wide range of cryptocurrency assets and hold your cryptocurrency investments long term.

Each cryptocurrency wallet is specifically designed to hold a certain type of cryptocurrency. For example, you cannot accept Bitcoin in an Ethereum wallet or send Bitcoin Cash to a Bitcoin wallet. Each wallet also comes with a set of public and private keys, the latter of which gives the holder access to the funds.

How to trade cryptocurrencies on cryptocurrency exchanges

Now that you understand what is cryptocurrency, let's cover how to enter the world of crypto assets. Entering the world of cryptocurrencies can be both exciting and rewarding. While we encourage every single person to conduct their own research prior to getting involved, once you're ready to start your journey into the cryptocurrency space, we're here for you.

Crypto exchanges

In order to buy any digital currency, traders will need to utilize cryptocurrency exchanges. These exchanges facilitate the buying and selling of crypto assets, and depending on the structure, often require users to offer some proof of identification before conducting any cryptocurrency transactions.

Decentralized vs centralized

The cryptocurrency market is made up of decentralized exchanges and centralized exchanges. The difference between the two is how they are operated, with centralized exchanges have a central authority. Typically, the centralized ones are more reliable and trustworthy as they require licenses which hold them accountable to certain standards within the financial sector. When looking to trade any digital currency, find an exchange that is regulated and licensed by a financial body.

The Tap app is a mobile app that allows users to buy, sell, trade, store and even earn crypto through a secure wallet infrastructure. Supporting a number of popular cryptocurrencies, users gain access to a wide range of markets. Fully regulated by the Gibraltar Financial Services Commission, the app uses top-of-the-range security technology to ensure that all data and funds are secured at all times.

Open an account

To engage in the cryptocurrency market all one needs to do is create an account. To open an account on Tap simply download the app from the App or Google Play store, enter the details required and complete the KYC process, an international requirement on all reputable digital currency platforms. Users will then gain access to a number of crypto and fiat wallets, with the ability to accumulate a wide range of cryptocurrencies.

From there, users can make cryptocurrency transactions, whether to friends also using the platform, external wallets or even external bank accounts for online payments, such as municipalities. The app offers a modern approach to banking services where funds can be used for real world payments. 

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We know the cryptocurrency market has a reputation for being volatile, however, these last few months have been particularly nail-biting for many investors. As markets swing in wild directions, some have made impressive gains while others have lost out. In this article, we explore whether crypto markets will ever overcome volatility and what one can do to gain financial stability in turbulent times. 

What causes the markets to be so volatile?

Due to a lack of central authority, the markets more accurately present investor sentiment, rising and falling as a result of the actions of people actively buying and selling. While volatility has a bad name and is certainly a hinder in terms of mainstream payment method adoption, it is valued by traders as it poses an opportunity to make big gains. Traders have created full-time jobs that benefit solely from the crypto market's volatility.

Regulatory frameworks are likely to positively affect the volatility prevalent in the digital currencies markets, but until that is implemented let's explore the biggest factors behind the volatility.

Entirely digital

Due to cryptocurrencies being digital and not backed by any commodity or real-world currency, their prices remain dependent on supply and demand. Essentially relying on faith: the prices will rise based on people believing in the product and accumulating more, while prices will drop when investors lose faith and sell. The markets remain volatile as investors are not concrete in their positions.

In its infancy

Cryptocurrencies have been around for just over a decade, a relatively short time for an asset of such influence. As the technology remains in its earlier years there is still plenty of development that needs to take place. So while Bitcoin has built an incredible market capitalization, there is still a long way for the cryptocurrency to go. 

This contributes to the market's volatility as markets tend to rise when new developments (upgrades, discoveries, implementations) take effect, while markets can fall when deadlines are missed or errors occur, leading investors to lose faith in the technology. 

Outside speculation

Arguably the biggest contributor to the market's volatility is the speculation surrounding cryptocurrencies. Predicting price swings and then acting on them has caused many an upward and downward spiral. From buying in just before the price rises to short just before a crash, speculation plays a large role in the market's swings and increased volatility. Speculation management is a key ingredient when it comes to successfully trading crypto.

Increased media coverage

Another great contender to volatility in the market is the media. Having a great influence over investor sentiment, the media has been behind many price swings in the market. With the power to launch or crash a market, the media plays into the narrative by encouraging investors to quickly buy or sell with attention-grabbing headlines.

Easy accessibility

The final factor to consider in the causes behind the market's infamous volatility is its accessibility. Stock markets and real estate typically attract a certain calibre of investors, while the entry requirements for investing in crypto are very low. It does not require any licences, degrees, lawyers or heavy capital. Anyone can enter the market with a small amount of money and internet access.

The market has typically been dominated by retail investors, however, in recent years institutional investment has been on the rise. The simple way in which anyone can enter the market provides an open invitation for volatility. 

All playing their own role, these factors contribute to market prices being thrown in seemingly random directions at unpredictable time intervals. Understanding the fast nature of price swings and what might be behind them will contribute to investors and traders gaining a tighter grip on what might happen next. 

Can the market stabilize?

Now that we've explored what factors are behind the volatility, let's dive into whether the markets could stabilize. Bitcoin maximalists claim that once Bitcoin reaches a level of adoption, the price will stabilize. While there are no clear criteria for what "adoption" is, the theory remains true. 

According to this data, Bitcoin is currently the 14th biggest currency in the world, sitting comfortably between the Swiss Franc and the Thai Baht. This illustrates the cryptocurrency's affirmative dominance despite its volatility. 

Will it improve with time, or will a seismic shift in the way people perceive cryptocurrency ultimately solve the volatility issues. At this time, one can't say for sure. So in the meantime, continue HODLing if that's what you came here to do, or leverage the swings as you trade, in the end, you can make gains either way and still come out smiling. 

How to maintain financial stability in volatile markets

First and foremost, never invest more than you're willing to lose. This is the golden rule of investment across all asset classes. The next universal rule is to not act on emotions, do not make impulsive decisions when it comes to your trading portfolio, rather expect volatility and have a plan. Below we outline several tips on how to remain calm in stormy markets.

• Do not pay attention to short-term fluctuations and rather stay invested for the long term.
• Create a limit order that will automatically execute if markets crash. This will create a safety net should things turn south.
• Consider that typically when volatility subsides, prices increase.
• Remember why you invested in the asset and refer back to its potential.

Technical analysis is a method of evaluating the strength and weakness of an asset by collecting historical price data to identify trends. It involves using tools like charts, graphs, indicators or signals in order to compare them from past data in order to make predictions about what's going to happen next with the market for a specific financial instrument such as equities, crypto, commodities etc.

Technical analysis is a method of evaluating stocks, crypto and commodities using past market data. The goal here is to determine the future price movements. In contrast fundamental analysis which involves analyzing financial statements in order to assess what fair value would be for that company.

Technical Analysis can be applied to any security with historical trading data, such as cryptocurrencies, forex (foreign exchange), commodities and stocks.

Let’s now dive into the subject and learn more about the different tools and techniques that you can use for technical analysis.

The Market trend‍

‍‍The most important step in learning how to spot a trend is to figure out what one is. For any beginner in technical analysis, knowing how to identify the trend should be the first order of business. Let’s watch this Chart below:

We can here observe the three different trends:

The Uptrend: In an uptrend, the asset is going up and making higher highs with each wave. Each high is also greater than the last one, resulting in a series of higher lows as well that push prices even further upward.

The Downtrend: A downtrend is a pattern of decreasing price that continues until it breaks. It’s called "downtrend" because the asset keeps going down, making lower highs and lows each time they form.

The sideways trend: The asset trades between a dynamic range of prices in an horizontal channel.

You may as well encounter different terms such as “Bearish” and "Bullish" to refer to a trend. The term, Bullish comes from the bull who strikes upwards with its horns thus pushing prices higher; in contrast, Bearish comes from bear who drives down markets by striking downwards with their paws.

Resistance & Support

Understanding the support and resistance levels of a cryptocurrency can help you time your buying or selling to maximize profit. A technical trader identifies these points on their chart so they know where it's best to buy in, when there is likely an upcoming breakout, as well as knowing where not be eager with new investments because prices are more likely than ever before to reverse quickly at this price point. When the resistance level is broken, it usually becomes a support level and vice versa.

Support: Support is a level where buyers tend to concentrate, and this will help the downtrend that has been occurring stop or rebound.

Resistance: A level where an uptrend can be expected to pause or rebound. This is a concentration of sellers and indicates that the market may have reached its peak for now.

Candlestick

Candlestick charting is a popular way to track the market trend.  Candlestick chart, is also known as a Japanese candlestick chart (Developed in Japan in the 1700s, historical records indicate that this tool was first used to track rice prices). This type of financial chart is used to track stock prices or other asset prices. The candlestick's shape can vary depending on the high, low, opening and closing prices of a given day.

A candlestick shows both bullish and bearish price movement over its duration, and gives more detailed information than the simple bar charts. A candlestick looks at the prices during a specific time interval, such as a day. The main feature which distinguishes this from other charts is the ability to plot each day's open, high, low and close values on a single chart.

This method of charting involves plotting price data over time on an open, high low and close basis with wicks projecting out from each end of the body for daily bars or just one day in higher timeframe charts.

Bullish candle: The close is above the opening‍‍ (green)

‍Bearish candle: The close is below the opening (red)

Moving average and (MACD)

The moving average is a technical trading indicator that calculates the constantly changing stock price over time. It smoothes out this data by creating an average of different subsets to help investors make decisions on what direction prices are heading and how long they will continue to change in such directions.  A moving average is a customizable indicator meaning that an investor can freely choose whatever time frame they want when calculating an average.

The Moving average convergence divergence (MACD) is a trend-following momentum indicator that looks at the relationship between two moving averages of an asset's price and gives traders an indication to changes in momentum, strength, directionality and duration of a trend for a given asset.

It combine these 2 moving average: 

-A short-term moving average

-A long-term moving average

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Chart interpretation:

The lines on the chart below can be interpreted as follows:

-If the green line (MACD) is above or crosses over the orange line (signal), it means that momentum for a certain market is bullish. 

-On conversely, if the green line is below the orange one, then this shows bearishness in terms of momentum 

-When the lines diverge, it denotes a strengthening of the current trend. However, when they converge, this shows that there is likely to be an upcoming reversal in trends.

-When they cross, this signals confirmation that we have evidence for a change in momentum.
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Bollinger bands

Bollinger bands attempt to measure market volatility by creating a band around a moving average. This strategy was created by John Bollinger in the 1980s. They serve as a relative indicator of whether prices are high or low on a moving average.

Bollinger bands are typically used by traders who like to use a long-term approach. This technique can be applied to any major currency pair, as well as commodities and stocks. As opposed to short term strategies that try and capture very small price movements, this strategy works best when combined with a directional view where the trader believes that the market will either go up or down in the long run.

The main disadvantage to this technical analysis is that it is not as effective when markets are flat or choppy (trading range). This strategy can also be difficult to use for novice traders who do not have a good understanding of market conditions, and an entry/exit approach.

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News are a big influencer of crypto prices

Cryptocurrencies are heavily influenced by speculation, and even a small piece of news can trigger multiple price reactions by investors. 

For example, when Bitcoin Cash was launched on August 1st 2017, it resulted in a sharp decline in the price of Bitcoin as well as other cryptocurrencies as investors feared that a new competitor could undermine the value of existing cryptocurrencies.

The use of advance statistical techniques helps you to take into consideration past data to generate price forecasts. The best way to do this would be to look at historical prices and volumes for cryptos, and compare them to current data. This allows analysts and traders to gain some degree of insight on how the market price will react to future events.

Our aims is to help you grow your knowledge about trading and cryptocurrencies. That's why we're here to help you better understand Cryptocurrencies and trading technics. We want everyone who uses Tap not only to feel informed about market trends but also be inspired by crypto culture, which drives people like you and me into a passionate future for this technology.

If you wish to learn more find more resources in our dedicated education centre available here: Crypto Basics

Since stablecoins emerged in the crypto sphere, many have questioned their legitimacy. While cryptocurrencies are perhaps more frequently used as a tool for value storage rather than a means of transaction, coins (or any financial products) that cannot appreciate in value certainly raise several questions. So why have stablecoins become so popular among businesses and individuals alike? Below we're taking a look at their use cases and reporting on whether they're the safe haven of crypto. 

What are stablecoins?

Before we continue, let's clarify what stablecoins are. These types of cryptocurrencies are "stable assets" that have their value pegged to a fiat currency or commodity. This might include the US dollar, Euros, the price of gold or even other cryptocurrencies. So while Bitcoin (BTC) and Ethereum (ETH) are subject to bouts of volatility, stablecoins remain consistent with the price of the money they are pegged to.

Stablecoins are not to be confused with CBDCs (central bank digital currencies) which are operated by a government-controlled organisation, usually a country's national bank. Stablecoins are controlled by a company and utilise blockchain technology to facilitate transactions, store the relevant data and maintain security.

Stablecoins' economic policy ensures that they maintain their value through the use of smart contracts, algorithms and reserves. For each Tether in circulation, for example, one US dollar needs to be held in a reserve account. These types of cryptocurrency tokens provide a reliable and non-volatile means of making payments with the companies issuing them regulating the circulating supply.

What value do Stablecoins provide?

While many might not initially see that value in a fiat-pegged cryptocurrency, stablecoins are actually hugely useful in a largely volatile market. Let the current top 5 biggest cryptocurrencies based on market cap in the industry be an indication, with two of the five being stablecoins. 

As stablecoins utilise blockchain technology, the coins naturally inherit all the characteristics of seamless and fast digital transactions (as well as transparency when it comes to transactions). Much like traditional digital assets, stablecoins can be transferred across borders instantly, a much faster and cheaper alternative to using fiat currencies and without the chance of price swings. Users, whether consumers or businesses are able to buy, store and sell stablecoins as they would any other cryptocurrency on the market.

For example, should you wish to pay a business in another country for services rendered or any other expense, it would prove to be much faster and cheaper to use a stablecoin than to send your local currency via traditional banking services. Stablecoins offer a much more streamlined means of completing the job.

Stablecoins also provide an entry into exchanges that don't work with fiat currencies, providing a reliable means of trading on those platforms. Stablecoins have also come to be known as "risk-off" assets, giving newer traders a chance to "test" the markets without the volatility. 

This innovation in the blockchain space has opened many new markets to the use of cryptocurrencies, certainly more mainstream markets across a wide range of countries. As information regarding how they work spreads, more businesses have opened their mind to using them in everyday working life. Stablecoins have also become a popular option with users trading on DeFi (decentralised finance) platforms, providing a secure and efficient means of using the products.

Are stablecoins the safe haven of crypto?

In essence, yes. Since the advent of stablecoins (marked by the launch of Tether) in 2014, there has been a number of new stablecoins to emerge, resulting in more confidence in crypto markets. This has equated to more movement and trade volume, and a lower risk management sector.

So while one isn't going to make huge returns (if any) on stablecoins, they bring value to the market due to their stability and transaction ability. 

As stablecoins are used by traders to hedge against falling markets, they provide a safe haven for their digital funds until the markets return to normal levels. Businesses around the world use stablecoins as they provide a faster and cheaper means of settling bills, allowing them to harness the power of blockchain technology without the worry of prices rising or falling in a short space of time. 

Tap into stability

Tap can support your market entry endeavors by providing a platform to include a variety of assets in your portfolio. Whether you're considering accumulating stablecoins during market shifts or looking to engage in various transactions, Tap offers a streamlined experience. You can easily acquire, sell, trade, store, and manage widely utilized stablecoins like Tether (USDT) and USD Coin (USDC), all from a single secure platform.

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As cryptocurrencies grow in popularity and adoption, they are fast becoming a household term, a norm if you will. 2021 was a big year for digital assets, with the entire market cap exceeding $3 trillion, institutional investment at its highest, and countries like El Salvador declaring Bitcoin as a legal tender. 

On top of this financial institutions around the world are incorporating the asset class into their balance sheets and many are exploring the concept of CBDCs (central bank digital currencies). As digital assets become increasingly integrated into our daily lives and a more popular option for the customer, it's time we harness the power of this nascent technology. 

What is crypto as a service (CaaS)? 

CaaS stands for Crypto as a Service and is a white-label solution for businesses and financial institutions that want to provide cryptocurrency services to their consumers. CaaS is essentially banking as a service for digital currencies.

CaaS works as a simple plug-and-play system for businesses wanting to provide their customers with digital assets trading, brokerage and custody services. Customers can interact with the services directly, without having to go through the providing company.

This infrastructure can then be used by any platform, from fintech, bank, or financial services businesses, as well as be integrated into mobile applications.

Given that asset managers manage £6.6 trillion in the United Kingdom alone, and that listed company values reach a staggering $93 trillion overall, the potential to offer traditional institutions with crypto cloud services is huge. As banking as a service has taken off, the expectation is that CaaS is going to follow its lead.

How does CaaS work?

The Crypto as a Service solution allows businesses and financial institutions, such as neobanks, to establish new revenue streams by providing a simple means for their customers to engage in crypto payments and the digital assets market. The consumer will be able to:

• Buy and sell digital assets
• Pay for goods and services using their digital wallet
• Securely store cryptocurrencies

The companies providing these services also receive access to highly secure and compliant transaction data monitoring and risk management systems. They will also be responsible for developing the global payments user interface, as CaaS functions as a back-end-only tool.

This ensures that the crypto services are entirely aligned with the brand, and do not appear to be a third party intervention. Through this interface, users can engage in crypto payments and manage crypto funds.

The main company providing Crypto as a Service will be responsible for aspects like KYC/AML, order processing, transaction monitoring, and digital assets custody, relevant to each jurisdiction.

For example, the regulatory requirements will be different in the United States and United Kingdom. This will establish the underlying trust when it comes to new customers engaging in crypto markets and other asset classes. These innovative business models are revolutionising the way in which people around the world can engage in decentralized finance without the risk.

Who would use CaaS?

Crypto as a Service allows regulated central banks and fintech firms to enable their customers to invest, store, trade, and pay in crypto. As these businesses offer cryptocurrency services they too can open new revenue streams.

The technology provider will also allow pension funds and asset managers to invest in Bitcoin and the greater crypto ecosystem on behalf of their clients. This new technology generates increased cash flow for businesses and an increased demographic of users.

Remittance firms will be able to send cross-border payments for a fraction of the cost while gaming companies, e-retailers, and brands can all begin utilizing digital wallets to allow their clients to make purchases in cryptocurrency and an overall improved experience.

CaaS is designed to assist any business looking to innovate their global payments system and enter the global market with crypto services.

Tap's CaaS service

Tap provides businesses with a reliable Crypto as a Service service that allows the company to leverage their already existing infrastructure and incorporate cryptocurrencies. The leading plug-and-play solution easily integrates into the company's hardware and allows any business to tap into a new demographic of crypto-interested customers and level of efficiency.

As we saw a demand for businesses looking to integrate cryptocurrencies into their already established models, these collaborative services were the logical next step.

Through the on-demand Crypto as a Service service, we are able to deliver another layer of crypto services on top of our already established mobile app.

With Tap's high-performance CaaS services, businesses are able to provide their customers with instant access to the crypto sector, with a secure and convenient means of buying, selling, and trading cryptocurrencies as well as access to a yield-generating wallet (a crypto savings account).

While a crypto exchange can take a minimum of two years to build, our CaaS can be implemented in a few weeks. Tap also holds the necessary regulatory compliance and insurance required for companies offering this level of service in the crypto environment.

The integration of these services removes the workload of managing cryptocurrencies and allows your business to focus on more scalable endeavors. No blockchain expertise needed.

To learn more or for more information, please visit our website and contact us should you wish to incorporate this level of innovation into your business.

Closing Thoughts

The greatest obstacle in the path to global crypto adoption is the belief that crypto is too volatile and that it lacks regulation.

While the markets are known to engage in volatile price movements, the understanding is that once regulatory frameworks are imposed this will be curbed.

Government bodies around the world are working to achieve this, as cryptocurrencies have firmly become a permanent feature on the greater financial landscape. As banking as a service (BAAS) has taken off, in light of the rise in crypto adoption, CaaS is the next step forward.

Crypto as a Service aims to provide both access and education to those looking to incorporate this crypto-centered product into their business and lives and integrate themselves into the digital asset ecosystem. Be sure to find a reputable platform that provides CaaS services with an easy-to-integrate API and high regulatory standards.

These crypto-powered products and services will assist the general public with becoming more familiar with the technology while allowing those already interested in harnessing and leveraging their crypto portfolios. After all, cryptocurrencies and the greater asset class are here to stay.