Ask somebody British or Irish about what IRA means and you may come away feeling a little bruised. Depending on their point of view, your British or Irish friend will describe it as either a terrorist organization or a band of freedom fighters. The Irish Republican Army, to put it mildly, unnerved Britain during the 1970s and 1980s. To this day, it casts a giant shadow over politics in both countries.

As cultural differences often go, mentioning IRA to an American will return a completely different reaction.

Like its terrorist or freedom fighting namesake, the American IRA, or Individual Retirement Plan, came to prominence in the 1970s. Introducedin theEmployee Retirement Income Security Actof 1974 (better known as ERISA), it allowed contributions from workers outside of their employment. The IRA became a portable retirement account, in which employees can accumulate savings from each job they work over the span of their career.

The basic idea was to shelter a certain amount of investment into a specified savings vehicle and give tax advantages and protection to these funds until retirement.

As usually happens with any government-funded plan, this one became entangled in bureaucracy. However, the IRA remains a uniquely American solution to foster self-sufficiency.

Even back in the 1970s, the government recognized that unfunded liabilities would be impossible to meet for the whole working population. There was a glaring need to actively encourage people to make provision for themselves.

Each year, the IRS sets a maximum IRA contribution limit based on inflation. These limits are for individual contributions and there is also an age 50+ catch-up contribution. Since 1998, spouses who are not working can also make contributions up to the level of the main contributor.

What is unique about the IRA for U.S. workers is the ability to put different asset classes into a self-directed IRA.

These can range from real estate properties and art to precious metals and classic cars the only criteria being that the IRS classifies and recognizes the asset.

The exact criteria to determine whether an IRA is deductible or not can be found on theIRS website.

Adding to this complexity even if you are above the IRS limits is that you can still make contributions to a non-deductible IRA.

One of the major assets historically used for self-directed IRAs are precious metals.

Gold, silver, platinum and palladium are all eligible for inclusion as long as they are of an approved purity and kept in storage until retirement.

A more recent addition to the approved assets are cryptocurrencies. Bitcoin, Ethereum, Ripple and Litecoin are among the most popular digital currencies. The IRS approved these as an alternative investment back in 2014.

Although initially perceived to be far more risky than precious metals, using cryptos as a tax-deferred investment entity within an IRA has gained popularity in the last couple of years. This is especially true with younger investors, who can ride the volatility out.

There are two main differences between precious metals and crypto:risk and time.

Gold, particularly, is seen as a safe-haven investment in the times we are experiencing. Its enticing because of its stable track record and more than 5,000 years of history as a valuable entity.

Because of this, it is viewed as a more suitable tool to preserve the value of wealth, preferred over a speculative, high-return investment.

Silver, platinum and palladium also fit into this narrative although their returns are less predictable than gold, as all three are seen more as industrial metals than they are investment vehicles.

Of the three, silver is more popular because it is cheaper to invest in than gold and is currently enjoying a resurgence of interest and of results.

Cryptos, by contrast, are a recent addition to the asset arsenal. Relatively untried, especially in the current crisis, cryptos are still trying to find their way in the world of assets.

Crypto is steadily becoming accepted on the world stage, with banks, government and financial institutions recognizing their value and potential. More and more interest is increasing not just in the exchange of goods and services, but as an alternate currency, like Bitcoin. Cryptos known as altcoins, which use blockchain technology and encryption to facilitate the secure transfer of information and smart contracts, are becoming mainstream.

This makes them valuable for different reasons. While Bitcoins price and value are tied to its ultimate scarcity, Ethereum is promising because of its ultimate utility.

IRAs are driving an increasing amount of investment in cryptos with corporations, smaller companies and their employees becoming aware of the tax advantages behind an investment that has the potential increase by thousands of percent into the future.

The IRA has come a long way since 1974 and has enabled millions of Americans to enjoy happy and comfortable retirements. It is not often that a government initiative has proved both long-lasting and popular, but the IRA is a bright and shining example.

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Are precious metals and cryptocurrency transforming IRAs? - FXStreet

Courtesy of Matt Sauer, MWSWNB Investments:

Is it a derivative, an asset or a currency? Look at its effect on the efficient frontier. Confidence is the key in any currency.

The advent of crypto assets and specifically cryptocurrency has garnered a significant amount of attention from investors. Is this the dawning of a new asset class or tulip bulbs? While there is diverse opinion on the subject, we observe cryptocurrency from three vantage points:

Asset Allocation

Modern Portfolio Theory constitutes the prevailing wisdom on selecting assets based on forecasted returns of each asset together with the correlation to the others to determine the mix of the allocation. The risk measurement is introduced through the volatility of the returns and is utilized to determine the weights of the assets in the portfolio. The introduction of uncorrelated assets has been labeled a free lunch because of the potential of return not being solely driven by correlated risk. Investors have observed the traditional asset classes of bonds, stocks and cash increase in correlation especially since the correction that occurred in the early 2000s.

The goal of asset allocation is to generate a return pattern for different risk profiles that minimize the drawdown. The more correlated the assets, the increase in difficulty of achieving the goal. The factor that MPT left out is how path dependent asset returns are. Additionally, because financial asset prices are lognormally distributed rather than normally distributed, the tails are fatter than occurs in normal distributions.

One of the fallacies that occurs in asset allocation is the belief that the investors are arbitraging time so short-term volatility is not a concern. This ignores the path dependency of the returns because geometric averages are non-ergodic. The result of the differences in return pattern is labeled the volatility tax which is simply the difference between arithmetic and geometric averages. While the arithmetic averages are simply the average of the returns the geometric returns are the average of the logarithms of the average price changes. A logarithm is a concave function so the bigger the loss the steeper the curve and the greater the penalty paid by the portfolio.

So how does an investor mitigate the volatility tax? We will explore the costs of hedging versus the introduction of non-traditional assets in the portfolio to obtain the objective of maximizing the compounded annual growth rate.

Crisis Proofing

In a recent academic study (Harvey et al. 2019), the goal of crisis proofing portfolios was analyzed. Purchasing rolling S&P 500 puts was costly at 7.4% annualized cost (thus wiping out the expected performance) while also finding the strategy of utilizing 10-year US Treasuries as unreliable. The best solution found was a long/short strategy of quality minus junk utilizing Fama and Frenchs work. This leaves a long only portfolio manager with few options to avoid the impact on the geometric averages of swift downturns.

Introducing crypto assets as a low cost non-correlated asset will provide a different return pattern. After the original transaction costs, the carrying cost of 50-100 basis points per year of the asset only accrue 10-20 basis points overall to the cost of the portfolio for a 2% position. As a diversifying asset it is the cheapest form of owning the largest sigma of returns. This strategy does not require dynamic hedging by either rolling puts or simply buying the dip. These strategies both increase the size of drawdowns while rolling options becomes more expensive as implied volatility increases during swift downturns.

Research has established that the risk-return tradeoff is distinct from stocks, currencies and macroeconomic factors (Liu and Tsyvinski 2018). Additionally, factors specific to cryptocurrency markets (momentum and investor attention) drove returns.

The cost of dynamically hedging a portfolio is too expensive so the best alternative for the portfolio manager is to introduce assets that exhibit anti-fragility. Investments that benefit from chaos are extremely valuable to a portfolio manager and as cryptocurrency exhibits these characteristics once, no portfolio manager will sit on the sidelines the second time.

Portfolio managers must acknowledge that cryptocurrency does not act as a traditional hedge, but it does raise the efficient frontier. This becomes more important if bond prices become more correlated with stock prices and flatten the efficient frontier.

We suggest a new version of MPT that has a z axis that is defined by purchasing power of the portfolio in a basket of currencies. The efficient frontier becomes a plane that is advantaged by owning diversified currencies. This is another building block in crisis proofing portfolios as the debasement of a currency held as the primary currency can be a much greater tax than the volatility.

Asset Class

Critics of cryptocurrency have stated that the growth is not based on investment factors but derivative factors such as money laundering. These attempts to undermine an emerging asset class are not new and have always been part of the growth.

The recent volatility of prices may suggest to some pundits that cryptocurrency is not an asset class but a speculative game. This is the expected reaction to volatility as common stocks were treated with the same apprehension following the 1929-32 price movement. Lawrence Chamberlains 1931 quote in Investment and Speculation was that only bonds could be bought for investment. Obviously, this quote was a result of market movements at that time rather than an attempt to protect wealth against inflation in the long run but that is the point. Todays fears over volatility are tomorrows missed returns.

High yield bonds have long been known by their pejorative title of junk bonds. Investors were lambasted in 1990 for being so foolhardy as to have invested in an asset class that was down 8.46% when high grade bonds were up 8.96%. There was a media frenzy over the death of junk bonds as an asset class. However, 1991 was a rebound year as junk was up 43.23% versus 16% for the high-grade bonds. Back to back 18% years in 1992-93 put junk back to asset class status and it has been high yield ever since.

Speculators are deemed to trade strictly on greed and fear. Invoking Keynes beauty contest analogy, they are evaluating what the other speculators will do and attempt to do it first. The coordination game they are playing involves looking for the Schelling point for the path of least resistance in the short run. Therefore, momentum and investor attention has driven the price, investors are trading short term momentum from the media coverage and have been utilizing investor attention to create liquidity both up and down. As the asset class matures, the Schelling point is not media opinion but focal point investors. This allows institutional investors to coordinate without communication. As the allocations of the new asset class are made independently, the coordination game played by market participants is utilizing their own Schelling point.

Asset classes become relevant because of recent superior performance whether it is quality stocks, gold or high-grade bonds. Institutionalization occurs after the speculator fallout as investors slowly migrate to the investment.

Currency

Currencies are the domain of countries because of taxing capability, regulation and the ability to affect supply. The idea that cryptocurrency is a true currency has been a question. The growth in government debts and obligations globally has not been perceived by the financial markets as an issue yet the risks are mounting. The dollar is no longer backed by gold or any liquid asset other than taxing ability. Bretton Woods is only a memory.

There is no risk that an investor in United States Treasury bonds will not be repaid principal. The question is what the purchasing power of that principal in terms of a basket of other currencies, oil and gold will be.

What are the experts thinking and writing about government policies and the effects on purchasing power?

International Monetary Fund viewpoint

A recent IMF working paper espoused the following thoughts on debt:Sovereign debt is a Janus-faced asset class. In the best of times it relaxes the domestic constraint on savings, smooths consumption, and finances investment. Investors see it as a safe haven, as delivering alpha, and as a means of portfolio diversification. In the worst of times it is associated with debt overhangs, banking collapses, exchange-rate crises and inflationary explosions. Investors see it unenforceable, illiquid and prone to messy debt workouts.

Currently global debt is about $244 trillion and about 318% of GDP. In January 2019, the International Monetary Fund warned governments to reign in debt and build buffers against risks. If a government can borrow at very low rates or in some cases negative rates, the path of least resistance is to increase the money supply and borrow more to keep the world economy rolling.

United States Congress viewpoint

Congressman Brad Sherman has proposed cryptocurrency be banned because it poses a threat to the dollars role as a reserve currency and the fact that the international settlement of oil is in dollars. As unworkable a policy that he suggests, there is a hint of fear among those responsible in the United States for debasing the dollar.

Our viewpoint

Developing countries have gold and currency reserves to underpin their currency. Developed countries utilize sovereign stability to create demand for their currency and then exploit the demand by increasing the amount of currency to maximize domestic asset values. As governments find it more difficult to sustain asset values necessary for tax receipts the debasement will continue. The global lack of the velocity of money supply has had governments pushing on a string since the last asset crisis of 2009. The next crisis will be led by asset price downturns but will morph into a crisis of currency value as governments try to flood the market with paper money to support asset prices. In this case the assets that rise in value will not be tied to a currency, be portable and not debasing.

What exactly is Cryptocurrency?

Cryptocurrencys strength is that it can solve several fundamental problems in the global marketplace. Like having the transient properties of being a solid, liquid and gas; crypto assets can function in as a derivative, an asset and a currency. The investment holding that reconstitutes Modern Portfolio Theory and adds a z axis of currency risk also allows for a solution that is the new efficient frontier as it progresses into an asset class that is anti-fragile. Inflation protection is the tangible outcome of rethinking risk as defined by purchasing power across all currencies rather than the loss of it in one.

--Matt Sauer, MWSWNB Investments. Originally published here.

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What Really Is Cryptocurrency? - TheStreet

Ethereum has dethroned Bitcoin as the top cryptocurrency, according to Weiss Ratings.

The ratings agency has updated its overall crypto rankings which consider adoption, technology, market momentum and investment risk. Weiss now places Ethereum (ETH) in the number one spot, followed by Bitcoin (BTC), Cardano (ADA), Litecoin (LTC), and Stellar (XLM).

In addition, the crypto ratings agency names Cardano as the coin with the best technology. With the Shelley hard fork a success, Weiss analyst Juan Villaverde says his firm has already factored in the blockchains long-awaited upgrade in the coin rankings.

Shelley is already reflected in our technology model because we had full confidence that it would come out with this (fork). Were also reflecting on that same model that Cardano is capable of running smart contracts and dApps because we think these things will come out eventually so when Cardano pushes a code update, it doesnt really reflect on our ratings, unless its something new on the roadmap that wasnt there beforeAs the fundamentals for the blockchain, that is Cardano, improve over time, it will be reflected in our ratings.

Weiss also considers Cosmos (ATOM), Fantom (FTM), Tezos (XTZ), and Ethereum as the top coins in terms of technology.

As for the state of the crypto market, Juan Villaverde says the bull rally appears to have more legs as investors continue to focus on large-cap names.

The second story looks at the small-cap perspective. Weve seen small caps post stellar gains when a true crypto bull run is underway. This weeks pattern suggests to us that the crypto markets arent frothy yet and that higher prices await us still. We usually see the smaller altcoins outperform the broad crypto market once the rally enters its later stages.

The fact that the rally weve seen so far as remarkable as its been has been concentrated mostly in high-quality names tells us that caution still remains high among crypto market participants.

Weiss Ratings has provided financial market research and analysis for more than 30 years, and published its first crypto rankings in early 2018.

Featured Image: Shutterstock/Sergey Nivens

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Weiss Ratings Places Ethereum Ahead of Bitcoin As Top Cryptocurrency, Says Cardano Has the Best Technology - The Daily Hodl

When it comes to cryptocurrency-related crime, every year seems to have its own particular flavor. 2018 was the year of massive exchange hacks (remember Coincheck?); 2019 was seasoned with an air of massive ponzi schemes (PlusToken, OneCoin) with a few scandals thrown in the mix (QuadrigaCX, anyone?)

So far in 2020, however, the most memorable crypto-related criminal moments seem to be taking a new shape. As cryptocurrency exchanges have continued to beef up their security measures, and global regulators and law enforcement are learning how to curb crypto crime, criminals are increasingly attacking from a new angle: socially-engineered cyber attacks.

The Most Diverse Audience to Date at FMLS 2020 Where Finance Meets Innovation

Of course, these kinds of manipulative tactics have been a part of the cryptosphere since its inception: even outside of the cryptosphere, cyberattacks that exploit human trust are as old as time (or at least as old as the internet). Phishing, stolen identity scams, and many other kinds of exploitative scams are, unfortunately, very popular.

So far this year, socially-engineered attacks appear to be playing an outsized role in cryptos scam landscape. Is 2020 cryptos Year of the Phish?

After all, it certainly seems that the most memorable crypto-related cybercrime story of the year so far was based on multiple angles of trust exploitation.

On July 15th, the Twitter accounts of dozens of high-profile individuals across political and celebrity spheres tweeted out messages saying that they would double the amount of Bitcoin that was sent to their wallet addresses and send it back. This is called a Giveaway scam.

Dozens, or even hundreds, of unsuspecting users sent a total of more than $100,000 to the bitcoin addresses they believed to be associated with Barack Obama, Elon Musk, Joe Biden, and many others.

How did this happen?

Legend has it that a vampire cant enter your house unless they are invited inand, sure enough, when 17-year-old Graham Ivan Clark was able to access and post from the Twitter accounts in questoin, it was because an unsuspecting Twitter employee accidentally handed him the keys to the kingdom.

Indeed, Clarks attack was designed to manipulate and exploit human trust from beginning to end: he reportedly used phishing email tactics to convince a Twitter employee that he was a coworker in the companys IT department. He then got the employee to provide their credentials, allowing him to access Twitters God mode.

However, Graham Ivan Clarks attack on Twitterwhile it may be the most famous crypto-related cyberattack this yearis only one of many socially-engineered cyberattacks in the crypto space.

In fact, just this week, attacks that closely resembled Clarks attack on Twitter have rocked the world of Youtube.

Specifically, hackers appear to systematically be taking over prominent Youtube channels. They hackers then change the names of the channels, and then post videos urging viewers to send Bitcoin with the same promise that Clark offered victims on Twitter: that their coins would be doubled and sent back to them.

Business Insider reported that unlike the Twitter scams, the exploited Youtube accounts dont appear to have been compromised through a widespread security breach of Youtubes internal operations. Rather, hackers appear to have only gotten ahold of the credentials for the specific accounts theyre interested in hacking.

The hackers also appeared to take advantage of the SpaceX landing that occurred last week as a means of getting more clicks on their videos: the names of the compromised channels were changed to terms like SpaceX or Elon Musk to exploit the increased interest in SpaceXs collaboration with NASA.

Esports commentator Rod Breslau also pointed out that some of the channels livestreamed Bitcoin scam videos may have used viewbotsbots that artificially inflate the number of views that a channel hasto heighten their visibility.

Youtubes crypto hack problem isnt just limited to last weeks events.

In mid-July, Finance Magnates reported that a number of Youtube accounts were co-opting the identities of a number of prominent figures within the cryptosphere to make the same kinds of fraudulent promises: send us your crypto, and well double it and send it back.

On July 12th, Charles Hoskinson, the founder of the Cardano (ADA) cryptocurrency network, posted publicly on Twitter about the scams: it has come to my attention that a scam has been floating around using my conference keynote to promote a giveawaythis is a scam. Please report it to YouTube. We will take legal action if we can against those responsible.

Around the same time, however, CoinDesk reported that a number of other fake videos and accounts had sprung up under the identities of Ethereum founder Vitalik Buterin, Gemini founders Tyler and Cameron Winklevoss, and others.

Other than removing reported videos, its still unclear what Youtube is doing to try and curb these scams. A Twitter user alleged that the fraudsters behind the fake Youtube videos are also putting [their videos] in youtube ads which is insane, he asked. Is youtube ignoring this for revenue? How are they not vetting the ads?

Finance Magnates reached out to Youtube, but didnt immediately receive a response. Comments will be added as they are received.

In addition to co-opting the identities of individuals within the cryptocurrency sphere, however, hackers also seem to be increasingly taking on the identities of platforms.

Specifically, blockchain trading and analytics firm Whale Alert published a study in July with findings that crypto scammers are increasingly building fake cryptocurrency exchanges.

Some of these fake exchanges may take on the appearance of existing, legitimate crypto exchanges, while others may set up shop on their own before disappearing with users funds. The fake exchanges are also a convenient way for hackers to rack up large amounts of users personal data: identity records, credit card numbers, bank account information, and more.

In its report, Whale Alert commented that the change in method and the increase in quality and scale suggests that entire professional teams are now behind some of the most successful of these fake exchanges, and that it is just a matter of time before they start using deepfakes, a technique that will surely revolutionize the scam market.

And indeed, on the whole, Whale Alert noted a trend in cryptocurrency fraud after the mid-July Twitter attack: the scale and the boldness of the attack confirm our fears that the scammers are becoming more professional and dangerous.

Specifically, what started with mostly bulk sent sextortion emails and malware has now evolved into fake enterprises offering round-the-clock customer support with dozens of websites and thousands of fake social media accounts used for promotion.

This apparent increase in professionally built, socially-engineered cyberattacks appears to also have dramatically increased the amount of money that hackers have managed to abscond with.

Indeed, Whale Alerts report found that scammers BTC income appears to have surged throughout the first six months of this year.

So far we have been able to confirm 38 million US dollar in bitcoin alone stolen by scammers over the past 4 years (excluding Ponzi schemes, which are a billion-dollar industry on their own), the report said, $24 million of which [were stolen] during the first 6 months of 2020.

At the moment, Whale Alert seems to believe that this will only get worse: by the end of 2020, we predict [the crypto scam market] will have grown over twenty-fold since 2017 to an annual revenue of at least 50 million US dollars.

Can anything be done to stop the growth of the cryptocurrency scam market?

It seems that yes, falling victim to these kinds of scams is certainly preventable: the social media platforms that are being used to spread these scams are certainly taking action.

Twitter, for example, told users that were accelerating several of our pre-existing security workstreams and improvements to our tools. We are also improving our methods for detecting and preventing inappropriate access to our internal systems and prioritizing security work across many of our teams.

Other platformsincluding Youtubeappear to have taken an approach to quick response and removal of fraudulent cryptocurrency-related accounts and videos.

Additionally, regulators and law enforcement agencies around the world seem to be continuously learning and developing strategies for dealing with crypto-related fraud.

However, Whale Alert alleges that the primary responsibility of fraud prevention at the moment lies on the cryptocurrency community.

For example, while crypto giveaway scams may seem like they may only affect the most gullible among us, legitimate blockchain and cryptocurrency platforms often hold legitimate crypto giveaways.

Therefore, established blockchain companies play a big role in normalizing the idea of free money through giveaways and should be more thoughtful about what message they carry outwards and stop with these kinds of promotions altogether, Whale Alert argues.

Additionally, crypto companies should use their power and presence to effectively communicate the risks of the fraudulent crypto world to their users: as the gateway between fiat and cryptocurrencies, exchanges especially should be actively educating newcomers on the dangers in blockchain and prevent them from sending anything to known or suspected scam addresses.

Continue reading here:
Year of the Phish? Socially-Engineered Attacks Populate Crypto in 2020 - Finance Magnates

By: Steven Hay | Last updated: 4/24/20

Cryptocurrencies are the latest evolution of digital money. But what exactly is a cryptocurrency and what are its characteristics? This post explains it all, simply.

Cryptocurrencies are digital coins that arent controlled by a central authority but through a network of equally privileged participants that follow an agreed set of rules. The three ingredients that make a cryptocurrency are: A peer-to-peer (p2p) network, cryptography, and a consensus mechanism.

Thats the definition of a cryptocurrency in a nutshell. For a more detailed definition keep on reading, heres what Ill cover:

The term cryptocurrency is a contraction of cryptographic currency. While a cryptocurrency is a form of digital currency, there are many digital currencies today that arent cryptocurrencies.

For example PayPal, Zynga chip and even our traditional fiat currencies (USD, EUR, etc.) are mostly digital.

In March 2018, Merriam-Webster announced that they would include this term in their dictionary. Their definition is as follows:

cryptocurrency noun cryptocurrency krip-t-kr-n(t)-s , -k-rn(t)-s : any form of currency that only exists digitally, that usually has no central issuing or regulating authority but instead uses a decentralized system to record transactions and manage the issuance of new units, and that relies on cryptography to prevent counterfeiting and fraudulent transactions. First Known Use: 1990

Lets try to break this confusing sentence down to the 3 main ingredients that constitute a cryptocurrency.

Unlike traditional digital currencies, cryptocurrencies dont rely on any central authority to validate or facilitate transactions.

Instead, theres a network of equally privileged participants that validate and update transactions in a shared ledger called a blockchain.

Cryptography is the art of secure communication in a hostile environment. Cryptography is used in cryptocurrencies so peers can communicate securely without the need of a central authority to validate their messages.

Now that we have a group of equally privileged participants that can communicate securely, we need to establish rules for our cryptocurrency. These rules are known as a protocol and they also include a consensus mechanism.

The consensus mechanism is a rule regarding who gets to update our shared ledger of transactions. In Bitcoins case, the mechanism used is called Proof of Work. Different cryptocurrencies use different consensus mechanisms.

If we visit Websters definition again after understanding these core ingredients, you can see that it makes much more sense.

While all cryptocurrencies claim to be decentralized, the truth is far from it. In reality, you have completely decentralized currencies like Bitcoin and centralized cryptocurrencies like stablecoins and Ripple.

Centralized cryptocurrencies are usually issued by a for-profit company that established the cryptocurrencys protocol and also determines who can participate in the network.

A good example would be the upcoming Facebook Libra a coin to be issued by Facebook, that while all participants in the network are equal, the network itself isnt open to everyone.

Centralized cryptocurrencies can be looked upon as an upgraded version of traditional fiat currencies, as they are still prone to all of the risks of centralized management (fraud, negligence, control).

Decentralized cryptocurrencies are usually issued by a non-profit organization. With decentralized cryptocurrencies, the playing grounds are leveled for all to participate.

The classic example for this would be Bitcoin. Anyone in the world can participate in the Bitcoin network, receive funds or become a Bitcoin miner, without the need to request permission.

Truly decentralized cryptocurrencies are completely transparent, open to all and censorship resistant.

Its important to note that while some cryptocurrencies are indeed built as decentralized, they are in fact centralized since not enough people are participating in their network. This makes the decentralized platform effectively controlled by a small number of participants.

The main takeaway here is that true decentralization is a matter of both design and adoption.

One important distinction that needs to be made is the difference between cryptocurrencies and tokens.

Cryptocurrencies are coins that have all of the three ingredients Ive mentioned above, hence creating their own blockchain of transactions.

Token, on the other hand, are a representation of an asset that resides on an already existing blockchain. For example, Tether is an ERC-20 token that uses the Ethereum blockchain to operate.

So tokens can be considered as a sub coin of a certain cryptocurrency that has its own blockchain and has the ability to run code that creates tokens (also known as the ability for smart contracts).

Tokens can start as part of an already existing blockchain and then convert to their own cryptocurrency. For example, EOS started as an ERC-20 token and later on became an independent cryptocurrency.

Tokens can be divided into two main categories utility tokens and security tokens.

Utility tokens are tokens that promise the future use of a product or service. They arent meant to be an investment, they have a utility.

Security tokens, on the other hand, are tokens that represent tradable financial assets, a share or a bond from a company, for example. They are meant to be a form of investment.

Cryptocurrencies use blockchains in order to operate in a decentralized manner. Cryptocurrency is the coin and blockchain is the ledger of transactions that documents the coins transactions.

Another way to describe this is that blockchain is the technology behind cryptocurrencies.

Having said that, a blockchain is, in fact, the cryptocurrency itself as cryptocurrencies are just a record on a ledger (theres no actual physical coin). But for the sake of distinction, people use cryptocurrency to describe the end and blockchain to describe the means to that end.

Cryptocurrencies are the next evolution in digital currencies. Money has come a long way from commodities to coins, paper and finally digital information controlled by a central authority. Today, in its next phase of evolution, money is becoming decentralized through the use of cryptocurrencies.

Its important to distinguish between centralized cryptocurrencies, decentralized cryptocurrencies, and tokens. Hopefully, this guide made the difference clearer.

What are your thoughts about cryptocurrencies? Are they indeed the future of money? Let me know in the comment section below.

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What is Cryptocurrency? A Short Beginner's Explanation ...

This article analyses the top 10 cryptocurrencies by market capitalisation.

Beginning with the largest, the top 10 are currently Bitcoin ($BTC), Ethereum ($ETH), XRP ($XRP), Tether ($USDT), Bitcoin Cash ($BCH) , Litecoin ($LTC), EOS ($EOS), Binance Coin ($BNB), Bitcoin SV ($BSV) and Tezos ($XTZ).

There are approximately 5,392 cryptocurrencies being traded with a total market capitalisation of $201bn (as of April 22, 2020).

Our site is packed full of free guides, crypto news, jobs, news about jobs in blockchain technology, cryptocurrency analysis, and lots of features such as women in blockchain. Please take a look at our site and use the search bar at the top of this page to make use of our resources. We have a real passion for helping people understand the world of cryptocurrencies and blockchain technology.

As a starting point, here are a few facts about the top 10 cryptocurrencies and some latest news for each one.

In August 2008, the domain name bitcoin.orgwas registered. On October 31st 2008, a paper was published called Bitcoin: A Peer-to-Peer Electronic Cash System. This was authored by Satoshi Nakamoto, the inventor of Bitcoin. To date, no one knows who this person, or people, are.

The paper outlined a method of using a peer-to-peer network for electronic transactions without relying on trust. On January 3rd 2009, the Bitcoin network came into existence. Nakamoto mined block number 0 (or the genesis block), which had a reward of 50 Bitcoins.

Ethereum was launched by Vitalik Buterin on July 30th 2015. He was a researcher and programmer working on Bitcoin Magazine, and he initially wrote a white paper in 2013 describing Ethereum. Buterin had proposed that Bitcoin needed a scripting language. He decided to develop a new platform with a more general scripting language when he couldnt get buy-in to his proposal.

The development was funded by an online crowdsale between July and August 2014. The system went live with 11.9 million coins already mined for the crowd sale (about 13% of the total supply in circulation). Following the collapse of The DAO project in 2016, Ethereum was split into two blockchains. The new version became Ethereum and the original blockchain continues as Ethereum Classic.

Ripple is a real-time gross settlement system (RTGS) developed by the Ripple company. It is also referred to as the Ripple Transaction Protocol (RTXP) or Ripple protocol. It can trace its roots to 2004 when a web developer called Ryan Fugger had the idea to create a monetary system that was decentralised and could effectively allow individuals to create their own money.

RipplePay.comwas launched in 2005 to provide a secure payment system for members of an online community via a global network. Jed McCaleb began developing a digital currency system in 2011 in which transactions were verified by consensus among members of the network, rather than by the mining process used by Bitcoin which relies on blockchain ledgers. This new version of the Ripple system was designed to eliminate Bitcoins centralised exchanges, use less electricity than Bitcoin, and perform transactions much more quickly.

Story continues

Ripple was launched in 2012 to facilitate secure, instant global transactions supporting tokens representing fiat currency, cryptocurrency or any unit of value.

The EOS.IO platform was developed by private company block.oneand released as open-source software on June 2nd 2018. One billion tokens were distributed on the Ethereum blockchain by block.one. EOS is based on a white paper published in 2017.

Litecoin was released in October 2011 by Charlie Lee, a former Google employee. It was a fork of Bitcoin with the main difference being a smaller block generation time, increased maximum number of coins and a different script-based algorithm.

Bitcoin Cash was born out of the idea of making Bitcoin more practical for small, day-to-day payments. In May 2017, Bitcoin payments took about four days unless a fee was paid, which was proportionately too large for small transactions. A change to the code was implemented and Bitcoin Cash was born on 1st August 2017.

Tether was issued on the Bitcoin blockchain. In their own words Tether converts cash into digital currency, to anchor or tether the value of the coin to the price of national currencies. So, the value is meant to mirror that of the US dollar and each unit of Tether is backed by $1 held in reserve.

One of the main uses of Tether is to facilitate trading between cryptocurrencies with a rate fixed to the US$ allowing traders to take advantage of trading opportunities.

Stellar was founded in 2014 by Jed McCaleb and Joyce Kim. At launch it was based on the Ripple protocol but the network eventually forked. Stellar is an open source protocol for exchanging money where servers use the internet to connect to and communicate with other Stellar servers, forming a global value exchange network.

The TRON Protocol is pitched as one of the largest blockchain-based operating systems in the world, offering scalable, high availability and high throughput support that underlies all the decentralised applications in the TRON ecosystem.

An ICO campaign took place in September 2017 and raised US$70 million. The coin is called the TRONix (TRX).

To kick the month off weve had an extra $19B enter the market allowing Bitcoin to break past the previous resistance weve seen in 2019 and see all new highs. Bitcoin now is trying to break through major resistance of $6,000 which held for many months during 2018. Weve also seen a large premium on the exchange Bitfinex due to the news around Tether and reserve funds.

To kick the month off weve had an extra $16B enter the market allowing Bitcoin to break past the previous resistance weve seen in 2019. Tron ($TRX) has left the top ten leaderboard and has been replaced with Cardano ($ADA). Tether has dropped a few places this month as the sentiment is generally more bullish and people are taking cash out of Tether to buy back into the market.

This month we see a new entry in the top 10 as Binance Coin enters for the first time ever. Bitcoin SV drops out into the number 11 spot. The remaining top 10 are the same with some changes Ripple and Ethereum have traded positions once again and TRON has dropped two places.

The value of cryptocurrencies has grown this month with the value of the top 10 pushing back over $100bn following last months drop to $97bn.

The top 10 remains unchanged from last month in terms of the cryptocurrencies present, but there has been extensive jockeying for positions. Apart from the ever-present Bitcoin in the number-one spot, all the other cryptos have moved. TRON improved by two positions in the rankings, Stellar Lumens moved down three, and the remaining coins have seen a slight move up or down.

There has been a prolonged bear market in crypto, and the story this month is that from a market cap of $187bn on November 7th, the top 10 cryptocurrencies now have a combined market cap of $97bn. That is a remarkable drop in value over three months.

TRON reenters the top 10 at the expense of Cardano. This months big story is Ethereum regaining the number two spot from Ripple. It was a big story when Ripple became the second largest cryptocurrency by market capitalisation during November:

Ethereums rally is due to the anticipation of a series of upcoming hard forks. Ethereum Classic Vision will be airdropped to Ethereum holders at a ratio of 3:1 on January 11th. The Ethereum Nowa fork, meanwhile, is planned on January 12th:

There has been some minor movement up and down for the remaining top 10.

This month has seen a dramatic fall in values, and there has been a lot of movement in the top 10. Bitcoin SV appears as a new currency and is a new entrant following the Bitcoin Cash fork. Ripple makes it into the number two slot at the expense of Ethereum as the flippening happens. The price crash of the last month has led to changes in the rest of the top 10 with various currencies moving position.

These last two weeks have seen the biggest change in the Top 10 this year. Bitcoin Cash drops out following the Bitcoin Cash fork. Ripple makes it into the number two slot at the expense of Ethereum as the flippening happens. Prices have crashed over the last two weeks. This has led to dramatic changes in the rest of the Top 10 with Tether gaining the most places. TRON makes it back into the Top 10. It has been in the Top 10 this year and is always close but the removal of BCH makes room for it to take the last spot in the Top 10. There is frequent movement in the top 10 as values fluctuate, so expect older currencies to drop out and re-enter the list regularly.

This month sees all the cryptocurrencies remaining fairly stable in terms of market capitalisation. The only currency that has changed significantly is Tether which sees its market cap fall by $1.04bn. This has dropped it from eight to ten in the rankings allowing Cardano and Monero to move up one place each.

This month sees all the cryptocurrencies remaining in the same position in the Top 10. Whilst there is no change in rankings to report, its interesting to note that Ripple actually gained approximately $10bn during the month. Every other currency (except Tether) lost value.

The total value of the top 10 cryptocurrencies (as of 3rd September 2018) is $200.79bn. This is a drop of $27bn compared to the previous month (August). This is a dramatic fall of $80bn since June where the total value stood at the $281bn mark.

This month sees Monero as a new entrant to the Top 10. Tether moves up to number eight whilst IOTA drops out of the Top 10 altogether. All the other cryptocurrencies are in the same spot as last month.

The Top 10 remained the same as Julys. Litecoin dropped from the number six spot to number seven; Stellar Lumens rose from the number eight spot to number six and Cardano dropped one place to number eight.

Themarket capitalisation of the Top 10 cryptocurrencies grew by$4.34bn in a month (August 2018 vs July 2018).

There were 2,041 cryptocurrencies with a total market capitalisation of $253bn.

TRON dropped out of the top 10 into the number 11 spot. It was replaced by Tether.

The market capitalisation of the Top 10 cryptocurrencies fell by $57 billion in a month (July 2018 analysis compared to the June 2018 analysis).

There were 1,894 cryptocurrencies with a total market capitalisation of US$275 bn.

Bitcoin SV came into existence following the Bitcoin Cash chain split on November the 15th 2018. The chain split was caused at two competing software implementation for the Bitcoin Cash blockchain (BitcoinABC and Bitcoin SV) broke away from consensus, and was subsequentlysupported by two different groups of miners. After the time of the fork, users could claim tokens on each side of the fork if they had previouslyheld tokens on the old Bitcoin Cash chain.

Bitcoin Cash ABC is now being recognised by most exchanges as Bitcoin Cash (the name of the original pre fork currency) with a separate listing for Bitcoin Cash SV.

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Top 10 cryptocurrencies by market capitalisation

Using a trust to transfer cryptocurrencies keeps information about your coins private and out of probate.

When you have cryptocurrency, you need to consider how to include this asset in your estate plan. If you dont, your beneficiaries may not be able to access your crypto-investments after you die. One way to ensure your loved ones will inherit your cryptocurrency is to leave it through a will. Another way to pass along cryptocurrency is to leave it through a trust.

There are several advantages to using a trust. For example, a trust:

A trust is a flexible estate planning tool that can be created while youre alive or after you pass away through your will. A living trust is made by transferring some of your property to the trust during your lifetime.

Living trusts are popular because they can be revoked or changed during the trust makers lifetime. During life, trust makers usually act as trustees of their own trusts, managing trust assets just as they did before they transferred their property into the trust. When a trust maker dies, the successor trustee (named in the trust) takes over. What happens to the trust property depends on the terms of the trust. Some trusts will direct the successor trustee to distribute trust property to beneficiaries, ending the trust. Other trusts will instruct the successor trustee to continue to manage trust property for the benefit of the beneficiaries.

Putting your cryptocurrency in a trust makes it less likely that your cryptocurrency will go undiscovered after your deathbecause the existence of your cryptocurrency will be documented in the trust. This is important because, unlike other property, cryptocurrency is not an easily discoverable asset. It has little to no paper trail, so its difficult for your loved ones to discover it after you die. If they dont already know you have cryptocurrency and how to access it, this asset might be lost to them forever.

However, when your cryptocurrency is in a trust, its documented and youve made a plan for what should happen to it when youre dead. Your trust tells your successor trustee that your cryptocurrency exists, where to look for it, and what to do with it. This greatly reduces the possibility that your cryptocurrency will be lost after you die.

While your trust alerts your successor trustee to the existence of your cryptocurrency (and names who should get it), you dont have to leave all of the details of your cryptocurrency in your trust document. Instead, its wise to create a separate document that describes in detail how to find and access your cryptocurrency. You can leave this access plan for your successor trustee or whoever will need to access your coins after you die.

When you die, the law requires (most of) your property to go through a legal process called probate. During this process, your estate is submitted to the court, and your property is distributed to your loved ones either according to the terms of your will or by intestacy laws. This process can still take anywhere from a few weeks to a few months and can be quite expensive, especially if the estate must pay a lawyer or an executor, or both.

If you leave your cryptocurrency through your will (or you make no plan at all), your cryptocurrency will go through probate and your beneficiaries wont have access to your cryptocurrency until the probate process is completeweeks or months after your death. With the volatile nature of the cryptocurrency markets, your coins could lose tremendous value before your beneficiaries ever get access to your digital wallet while they wait for your estate to be probated.

Any property included in your trust wont go through the probate process when you die. Instead, your successor trustee will immediately have the right to access and distribute your cryptocurrency following the terms of your trust. Keeping your cryptocurrency out of probate will likely save your beneficiaries time and money because they will get access to your coins faster and with fewer court costs.

Another benefit of using a trust is that you can maintain more privacy for you and your beneficiaries. During the probate process, a will is filed with the court and can become part of the public record. So if you leave your cryptocurrency through your will, information about your cryptocurrency may not remain private.

This prospect is unappealing for people with large cryptocurrency assets. Any public information about your cryptocurrency will make it easier for hackers and scammers to target your loved ones.

In contrast, trust documents arent part of the public record and only your successor trustee will need to know about your cryptocurrency. This added layer of privacy will help maintain the security of your cryptocurrency for you and your beneficiaries.

Creating a trust for your cryptocurrency is a good idea if your beneficiaries are very young, aren't tech savvy, or are unable to manage their own finances because a trust provides a system of management for the cryptocurrency you leave behind.

If your beneficiaries receive your cryptocurrency through a will, legally, they will have direct access to your coins. In some cases, this may not be a good ideaparticularly if your beneficiaries dont understand what cryptocurrency is or how it works. It may be overwhelming for those beneficiaries to learn about digital wallets, figure out cryptocurrency exchanges, and maintain all the security practices needed to secure the cryptocurrency they inherit.

Under a trust, your cryptocurrency will be managed by your successor trustee after you die. Your successor trustee will be responsible for accessing, maintaining, securing, and distributing your cryptocurrency according to the terms of your trust. So you can lay out exactly what should happen to your cryptocurrency and give the responsibility of managing it to a person who can be trusted to know or learn how the system works. In this way, using a trust could be a great relief to your beneficiaries, especially in the wake of your death.

One of the greatest benefits of creating a cryptocurrency trust is maintaining some control of your investment even after you die. You can use your trust to dictate how an asset is used and for what purpose. This is different from leaving cryptocurrency through a will, which gives your loved ones complete control over your cryptocurrency after they inherit it.

For example, if you want your beneficiaries to stay invested in cryptocurrency for a specific period of time, the trust can hold your coins until then. This can prevent a premature sale of your coins if you believe your cryptocurrency will get more valuable as time goes on. A trust can also allow your loved ones extra time to understand cryptocurrency before they get control of it, or you can choose to have the trust manage this asset for them indefinitely. You can tailor your trust to fit the specific needs of your loved ones.

There are some challenges unique to cryptocurrency trusts, but you can cover your bases by consulting an estate planning attorney or doing the necessary research. Creating a trust isnt necessary, but it will ensure that your coins wont get lost after you pass away and help maintain a level of privacy. A trust also provides a trusted manager for your coins and relieves your loved ones from the burden of trying to figure out cryptocurrency after you die.

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Leaving Cryptocurrency in a Trust | Nolo

Would you accept cryptocurrency as a reward for watching ads? How about if you had to prove you had watched said ads by having your brain waves analyzed? It might sound a bit crazy, but its an idea Microsoft lays out in a new patent application titled Cryptocurrency System Using Body Activity Data.

Filed in September 2018, but only recently published by the United States Patent and Trademark Office (USPTO) and highlighted by PC Magazine, the application describes a method of how brain wave or body heat emitted from the user when the user performs the task provided by an information service provider, such as viewing an advertisement or using certain internet services, can be used in the mining process.

As is described by the patent application, instead of the massive computation work that is required by conventional cryptocurrency systems, Microsofts hypothesis is that data generated based on the body activity of users can help solve the computationally difficult problem unconsciously. Other than brain waves and body heat, the system could also potentially monitor body fluid flow and organ activity and movement.

All of this would, of course, require biometric reading of users, potentially via attached sensors. As a reward for wearing these, however, the system would then pay out cryptocurrency for completing certain tasks. As the application notes: The cryptocurrency system communicatively coupled to the device of the user may verify if the body activity data satisfies one or more conditions set by the cryptocurrency system, and award cryptocurrency to the user whose body activity data is verified.

In addition to watching ads for a set amount of time, the patent application also notes how it could track tasks such as social media, using search engines, sending and receiving email, visiting websites, or using chatbots.

Overall, it leaves a whole lot more questions open than it poses answers. Which cryptocurrency? Would the mining of these currencies be the main benefit for Microsoft or would it be the ability to prompt users to use certain services? And, most crucially of all, will this ever transition from a proof-of-concept to a fully fledged product? As with many patents, theres a good chance that this is a defensive patent that will never actually be turned into a user-facing product. Nonetheless, its another reminder that tech giants are always looking for new ways to keep eyes (and brain waves, organ activity, etc.) on their products.

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Mining Cryptocurrency By Reading Users' Brain Waves ...

The Indian cryptocurrency industry has been growing rapidly despite the nationwide lockdown and the coronavirus crisis. Two new cryptocurrency trading platforms are launching in India while existing crypto businesses seek clarification from the central bank, the Reserve Bank of India (RBI).

The crypto sector in India is showing significant growth with several crypto exchanges reporting a 10X increase in trading volumes and a substantial increase in new users. Despite the global coronavirus pandemic and the nationwide lockdown, new cryptocurrency trading platforms are launching in India.

Global cryptocurrency exchange aggregator Coinswitch is launching a crypto trading app for Indian users on June 1. Announcing pre-registration for Coinswitch Kuber, Coinswitch explained on Wednesday:

Coinswitch Kuber will ensure the best rates by aggregating liquidity across all Indian exchanges and will support over 100 currencies for Indian users to buy and sell easily using Indian rupees (INR).

Coinswitch aggregates the liquidity of a number of crypto exchanges in India to provide its users with the best rates for cryptocurrencies. The exchanges include Binance, Huobi, Kucoin, and Hitbtc. To access this pooled liquidity, users simply enter the INR amount and the cryptocurrency they want to buy, and the service will provide a list of offers at various exchanges that auto-refreshes every 30 seconds.

The first 25,000 users during pre-launch pay no INR trading, deposit, or withdrawal fees. Users can earn Coinswitch points, or Kuber points, as a part of the new platforms reward program, which can be redeemed from the reward section once the platform is live.

Besides Coinswitch, another cryptocurrency exchange has launched in India. The Bangalore-based Bitpolo announced on Thursday that it is now live. The exchange offers instant INR deposits and claims that withdrawals are within seconds. Chief business officer Suresh Choudhary said:

We were building through the bear market and thought the timing of our launch cannot be more apt than when the world is slowly inching back towards normalcy post a pandemic & recessionary environment.

As we foresee fragilities of traditional asset classes, crypto markets seem to offer the bigger upside and we intend to bring simplicity and solid technology to the screens of Indian traders and hodlers, Bitpolo added.

Ever since the Supreme Court of India quashed the RBI ban, the Indian crypto community has been waiting for more instruction from the central bank. The RBI has not sent any notices to banks regarding the supreme courts ruling, which has led some banks to continue denying service to crypto businesses. According to reports, the central bank is not obligated to issue any updates.

A number of crypto businesses have reportedly approached the RBI seeking clarity on the status of the banking ban and the taxation of cryptocurrency. The cryptocurrency exchanges also want clarity as to whether they are being categorized as commodity, currency, goods or service as this is set to impact the way they get taxed under goods and services tax (GST) framework, the Economic Times reported Monday.

If the digital assets are not exempted from GST, the digital currency exchanges in India are going to have a standoff with the tax authority, Praveenkumar Vijayakumar, CEO of cryptocurrency exchange Belfrics Global, was quoted by the news outlet as saying. He elaborated:

In the wake of the recent supreme court ruling, we have also approached the RBI for clarity on this, as if we pay GST on the whole transaction, then most platforms would not be able to survive.

Several Indian tax authorities have been examining how to tax bitcoin and other cryptocurrencies. The indirect tax department has been investigating whether cryptocurrency could be brought under GST and how much to tax crypto exchanges. The sales tax department and VAT authorities are also looking into cryptocurrency taxation.

What do you think about how fast the Indian crypto sector is growing? Let us know in the comments section below.

Image Credits: Shutterstock, Pixabay, Wiki Commons, Coinswitch, Bitpolo

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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New Cryptocurrency Exchanges Launch in India as Businesses ...

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