Category: Coin Guide

There are several thousands of cryptocurrencies out there, known also as altcoins. These coins and tokens all have their own unique features and uses, for example, some are used to help decide the direction the creator company should take, others give you discounts or access to special features. The Coin Guide is a concise summary of the aims and technology behind a certain cryptocurrencies. Insight is crucial in this field. Many projects disguise their progress through complicated jargon, making it hard to distinguish those who are building something meaningful from those who are not.

What is Compound Finance ($COMP)? A guide to hacks and tips on the latest DeFi platform
Compound Finance is a leading decentralised finance (DeFi) protocol which allows users to deposit and borrow cryptocurrencies, and earn interest whilst doing so. How Compound does this is by creating liquid money markets for cryptocurrencies by setting interest rates with the use of algorithms. They are popular mainly because they are cryptocurrency exchange Coinbase‘s first ever investment into a crypto project and prices for their $COMP token had more than doubled in the past week. In this Compound guide we cover topics such as what is Compound, how to use the platform profitably and how to earn more of their $COMP token.

For an overview, check out our explainer video on DeFi and Compound:

What is Decentralised Finance (DeFi)?

Decentralised Finance (DeFi) was designed to “cut out the middle man” i.e. banks and reduce the cost of traditional financial operations such as taking out a loan or buying property. The aim of DeFi is so that people, particularly the unbanked can have open access to every financial service on the internet with their smartphones, without needing the banking system. Smart contract platforms such as Ethereum opened the door to DeFi, whereby programs running on the blockchain can self-execute when certain conditions are met. Developers can make use of these smart contract platforms to build decentralised apps (Dapps) with various functions. Developers brought the concepts of Dapps and DeFi together by bringing functions traditionally served by banks onto smart contract platforms. Compound is an example of a DiFi app, it is a blockchain-based Dapp which allows deposits and taking out loans of cryptocurrencies on its platform.

How does Compound work?

Compound operates similar to a bank. You can deposit various cryptocurrencies and earn an annual interest on your deposits, similar to depositing your money into the bank. However, Compound’s main difference is that it does not have custody of your cryptocurrency deposits. Instead, you are actually sending your crypto to and interact with a smart contract, rather than another company or user. This feature is important because it means that no person or authority can control or take your funds.

What makes all of this so interesting is that since Compound is a DeFi platform, it does not have to follow the Federal Funds Rate. It can do something completely different and cannot be shut down since there is no central authority.

How to supply (deposit) cryptocurrencies onto Compound and earn interest

On Compound’s website you can earn interest when you deposit (Compound refers to this as “supply”) cryptocurrencies onto their platform. To do this, first load an Ethereum account with any of the cryptocurrencies supported by Compound. Then on the Dashboard, choose which cryptocurrency you wish to supply to the platform by clicking on it.

Choose which cryptocurrency you wish to supply to the platform

In the below image you can see that we will be depositing USD Coin (USDC) which generates an Annual Percentage Yield (APY) of 0.12%. So you can earn 0.12% per year if you supply USDC to the platform. Input the amount you wish to supply and confirm by clicking “SUPPLY”. A metamask window will pop up where you will interact with the smart contract and confirm the transaction. You will be charged gas fees for interacting with the smart contract. In our case we were charged USD$1.

Supplying cryptocurrencies to the platform generates interest

Once you have supplied cryptocurrencies onto the platform, you would be able to use Compound’s other features such as using these supplied cryptocurrencies as collateral to take out loans.

An important point to note is that Compound has floating interest rates which are subject to change. How Compound determines the interest rate is similar to the Federal Reserve, Compound would analyse the supply and demand for a particular cryptocurrency and then set a floating interest rate that will adjust based on market conditions. Compound also takes a 10% cut off your earned interest. Users can take back their cryptocurrencies at any time with a 15 second lag between executing the instruction and receiving their crypto.

How do I take out loans/ borrow cryptocurrencies on Compound?

You can use your deposited cryptocurrencies as collateral to borrow other cryptocurrencies. Compound requires users to put up 100% of the value of your intended loan. There are risks of doing this though which will be explained below where we look at Compound’s liquidation clause.

Borrowing cryptocurrencies does also require you to pay fees. For example in the below image you can see that taking out a loan of BAT will cost you a whopping 29.4% per year.

Borrowing cryptocurrencies requires you to put up collateral and pay fees

You can also see from the above image how Compound makes money, since there is a spread between the amount of interest generated from depositing, say BAT and the amount of fees you need to pay for borrowing the same.

What is $COMP token? How can I earn $COMP?

Since May 2020, Compound has transitioned to community governance. This means holders of Compound’s token, $COMP can make proposals and vote on decisions relating to how Compound is to be developed or run, e.g. what kind of collateral should Compound support, or what the interest rates should be.

There is a total supply of 10 million $COMP, of which 42.3% is reserved for distribution to users to earn when they use Compound e.g. by supplying or borrowing cryptocurrencies. For every Ethereum block, 0.5 $COMP is distributed across Compound’s 9 markets in proportion to the interest accrued in the market. And within each of these markets, the amount of distributed $COMP is divided 50:50 between suppliers and borrowers of that particular cryptocurrency. Hence the cryptocurrency which is earning the most COMP per day is always changing. Users should check Compound’s User Distribution page, where they can see the amount of interest paid per day as well as the amount of $COMP distributed to suppliers and borrowers.

You can also earn $COMP by voting on various governance proposals concerning how Compound should be run.

$COMP can be traded on various exchanges, such as Coinbase or FTX Exchange. And there was certainly a lot of attention focused on $COMP since prices for the token recently shot up from USD$60 to over USD$300 in a matter of days.

$COMP prices

How are people using the Compound platform to earn 100%+ APR?

Users earn COMP when they supply or borrow cryptocurrencies on the platform. So in the below image we deposited 500 USDC and borrowed 300 USDT to get a net effective interest of -12.27% which on the face of it does not look profitable.

In our case, depositing USDC and borrowing USDT generated a net interest of -12.27%

BUT at the same time we are also earning $COMP. This calculator shows you how much $COMP would be distributed depending on the type and amount of tokens supplied or borrowed. So as seen in the below image, whilst the net interest was -12.27% per annum, we EARNED 13.94% APY of $COMP. Basically, you are being PAID to take out a loan.

$COMP mining: Another way to potentially earn more $COMP

$COMP mining goes beyond simply supplying cryptocurrencies and profiting off the interest rates on Compound. Rather it is about getting as much $COMP rewards as possible in the shortest amount of time. Some methods even allow you to multiply your earnings by folding your position 4x.

In a nutshell, people have have been finding ways to do this by first depositing USDC, borrowing USDT and then converting the USDT to USDC. Then depositing the USDC onto the platform, leveraging it, withdrawing USDT and depositing it onto the Compound platform several times over.

What cryptocurrencies does Compound support?

Compound currently supports 9 cryptocurrencies, namely: Ether (ETH), USD Coin (USDC), Basic Attention Token (BAT), Tether (USDT), 0x (ZRX), Wrapped BTC (WBTC), Dai (DAI), Augur (Rep) and Sai (Legacy DAI) (SAI).

Available markets on Compound

What are the risks of DeFi platforms?

DeFi, and any such platforms such as Compound has the main feature of being decentralised. Yet, it is decentralisation that brings associated risks. This is because instead of trusting a central authority to supervise the transactions, we are trusting the code which the smart platform was built upon. If there is a mistake in the smart contract e.g. the conditions for release of funds are set incorrectly, there is no overriding body which can correct this mistake or any customer service representative that can help. And the biggest risk of all is if the developer did not code the contract correctly making it vulnerable to hackers. An example of this was the dForce hack where hackers exploited a well-known exploit of an Ethereum token, resulting in losses of USD $25 million worth of customers’ cryptocurrencies.

Risks of using Compound: Compound’s liquidation clause

For Compound, there are risks associated with trying to earn $COMP through borrowing on the platform. Compound has a liquidation clause that kicks in when borrowing on the platform. For instance if the cryptocurrency you are borrowing increases in value and exceeds the value of your collateral, your borrowing account will become insolvent. In such case, other users can step in and repay a portion of your outstanding loan in exchange for a portion of your collateral at a liquidation incentive. This liquidation incentive is the discount at which other users can receive your collateral. So if the liquidation incentive at the time is 8% (subject to change through voting on Compound’s governance system), then other users can receive your collateral at 8% off the market price when they help repay your loan. Hence there are serious incentives for users on Compound to liquidate others and this will result in the person being liquidated to potentially suffer huge losses.

What is Compound’s aim for the future?

Currently, Compound only deals in cryptocurrencies on the Ethereum blockchain. However the Company eventually wants to expand and move into carrying tokenised versions of real-world assets, for example the US Dollar, Japanese Yen or stocks in companies such as Google.

Decentralised Finance (DeFi) series: tutorials, guides and more

With content for both beginners and more advanced users, check out our YouTube DeFi series containing tutorials on the ESSENTIAL TOOLS you need for trading in the DeFi space e.g. MetaMask and Uniswap. As well as a deep dive into popular DeFi topics such as decentralized exchanges, borrowing-lending platforms and NFT marketplaces

The DeFi series on this website also covers topics not explored on YouTube. For an introduction on what is DeFi, check out Decentralized Finance (DeFi) Overview: A guide to the HOTTEST trend in cryptocurrency

Tutorials and guides for the ESSENTIAL DEFI TOOLS:
More videos and articles are coming soon as part of our DeFi series, so be sure to SUBSCRIBE to our Youtube channel so you can be notified as soon as they come out!

Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.
July 22, 2020

Coinbase Fees- How to avoid them

Coinbase, like most exchanges charges withdrawal fees. However there is a neat trick allows you to avoid withdrawal fees. Coinbase is the most popular cryptocurrency exchanges in the US and UK due to the ability to directly purchase cryptocurrencies with fiat, as well as being one of the few exchanges that allow US citizens to trade. Many not only use Coinbase to buy cryptocurrencies, but also to store their cryptocurrencies. So with frequent usage of the Exchange, withdrawal fees can certainly add up. (https://atelierdetroupe.com/) Here are some top tips and hacks to avoid or reduce Coinbase Fees.

To find out more about the best Cryptocurrency Exchanges in our Guide.

Reduce Coinbase Fees when sending Bitcoin

Coinbase and Coinbase Pro (previously known as GDAX are two of the more popular platforms around the world where people can buy, sell, and trade cryptocurrencies. Coinbase and Coinbase Pro currently operate in the US, Europe, UK, Canada, Australia, and Singapore. Users can trade cryptocurrencies such as Bitcoin, Ethereum, and Litecoin.

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Coinbase

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Coinbase vs Coinbase Pro: What are the differences?

Coinbase and Coinbase Pro are actually two separate but related products. Coinbase was launched first in 2012 and aimed to provide a user friendly platform for people with no experience to buy and sell bitcoin through bank transfers. In 2015, with the growing interest and popularity in cryptocurrencies, the Company expanded to create Coinbase Exchange- a US based Bitcoin exchange to allow for Bitcoin and cryptocurrency trading. Because Coinbase Exchange was beyond the original scope for their more “casual” users, they decided to rebrand it to GDAX – Global Digital Asset Exchange (which is now known as Coinbase Pro).

Coinbase – a place where customers can buy, sell, send, receive and store your cryptocurrencies.

Coinbase Pro (formerly GDAX or Coinbase Exchange) – an exchange for professional traders. Aside from having the same functions as Coinbase, Coinbase pro also allows users to do the following:

Trade between different cryptocurrencies;
place market, limit and stop orders; and
have more detailed trading charts to analyse short term trends (e.g. order book, volume etc).

Most importantly, Coinbase Pro has lower fees and in some limited transactions, zero fees.

What are the fees on Coinbase and Coinbase Pro?

Coinbase buy/sell transaction fees

Coinbase has the most expensive fees compared to other what we consider as Tier 1 Cryptocurrency Exchanges. Coinbase charges a 0.50% fee for cryptocurrency purchases and sales. On top of this, Coinbase also charges a Coinbase Fee. The Coinbase Fee is the greater of (1) a flat fee depending on order size; (2) a variable percentage depending on your region and payment type.

Here are the flat fees charged by Coinbase:

Total Transaction Amount	Transaction Fee (USD, EUR, GBP)
Less than $10	$0.99, €0,99, £0,99
More than $10, Less than $25	$1.49, €1,49, £1,49
More than $25, Less than $50	$1.99, €1,99, £1,99
More than $50, Less than $200	$2.99, €2,99, £2,99

Flat fee

Below is the variable percentage for users in the US. Check here for the variable percentages for other countries.

Here’s an illustration of how to calculate your buy/sell transaction fee. For example, I’m in the United States and want to purchase USD $20 worth of Bitcoin using my debit card. My flat fee would be USD$1.49 because total transaction amount more than USD$10 but less than USD$25. Whilst the variable percentage would be 3.99% because I am paying with debit card. In this case, Coinbase would charge me USD1.49 because the flat fee is higher than the variable percentage.

Coinbase crypto to crypto conversion fees

For crypto to crypto conversions e.g. USDC to BTC, or BTC to ETH, Coinbase charges a spread margin of up to 2%. The exact margin would depend on the market fluctuations at the time.

Coinbase Pro trading fees

Coinbase Pro on the other hand operates on a maker-taker fee model. You would be considered a “taker” if you place an order at the market price, and this order is filled immediately. On the other hand, you are a “maker” if the order you placed is not immediately matched by an existing order. In the case where only part of your order is matched immediately, you would pay the taker fee for that portion only. You would then pay the maker fee for the remainder of the total order when it is matched.

Coinbase Pro’s fees are charged as a percentage of the transaction in question. As to the percentage, it would depend on the total amount traded by users in 1 month as follows:

Based on the above, for small volume users, e.g. those that trade less than USD$10,000 a month, their fees would be 0.50% of each transaction.

Of course, one possible method to reduce trading fees is to work towards a higher tier by increasing your monthly trade volume. For example, if more than $10,000 USD is traded in a month, the Maker and Taker fees drop to 0.35%, this means 15% a reduction on trading fees.

Coinbase hack: use Coinbase Pro (GDAX) to avoid withdrawal fees from Coinbase

Coinbase withdrawal fees can be very high. When users withdraw their coins off the Coinbase platform, Coinbase will charge users a fee based on their estimation of the network transaction fees they anticipate they will pay. Coinbase has stated that in some circumstances, the fee that Coinbase pays may be different from the estimate. So there is a possibility that the estimated fee that users have to pay are HIGHER than the network transaction fee actually paid by Coinbase.

However, there may be a way to avoid Coinbase withdrawal fees. According to Coinbase, they do not charge for transferring cryptocurrency from one Coinbase wallet to another. Since Coinbase and Coinbase Pro (GDAX) are owned by the same company, sending your funds from Coinbase to Coinbase Pro would be instant and free since it is a transfer from one Coinbase wallet to another.

The key here is that Coinbase Pro does not charge any withdrawal fees. You can then send your cryptocurrencies from Coinbase Pro to any other wallet outside of the Coinbase platform without paying any network transfer fees.

Withdraw in another cryptocurrency

Bitcoin has the most expensive transfer fees on Coinbase. One way to reduce transfer fees is to exchange Bitcoin to another cryptocurrency such as Litecoin or Bitcoin Cash. These coins will be cheaper to transfer, and could be exchanged back to Bitcoin once the transfer is complete on the receiving exchange.

Use another Exchange

If Coinbase fees are too expensive for you, you can always use another exchange such as Binance or FTX Exchange. These exchanges offer more competitive withdraw rates and also have more types of cryptocurrency options. To find out more about the best Cryptocurrency Exchanges in our Guide.

Is Coinbase expensive to use?

Coinbase fees are in line with other cryptocurrency exchanges, with $2.99 being charged for transactions between $50-200 dollars. However for larger transactions, Coinbase charges a variable percentage fee of 1.49%. For anything over $10,000 USD, we recommend using Over The Counter (OTC) trading desks which are better at handling large volumes with more flexible rates. Here’s a list of the top 5 OTC desks.

Bitcoin Halving Explained

Bitcoin Halving is expected to happen at 12 May 2020 07:07:39 UTC

What is the Bitcoin Halving Event?

The Bitcoin Halving event which marks the point where Bitcoin mining rewards will be cut precisely in half. Many view this as a turning point for the price of Bitcoin because it will drastically reduce the new supply of Bitcoin, creating scarcity. Currently the Bitcoin Halving is expected to happen at 12 May 2020 11:04:30 UTC – the exact time and date may vary due to fluctuations in Bitcoin block creation time. Once the halving takes place, the amount of Bitcoin mined per day will decrease from 1,800 BTC to 900 BTC. It is important to remember this event is permanent and will affect all the Bitcoin mined in the future as well (until the next halving event). From an economics standpoint, the less Bitcoin there is being produced the more scare and less accessible Bitcoin will become.

Check out my video on what the Bitcoin halving is, and what opportunities it can mean for Bitcoin.

Reduced Sell Pressure on Bitcoin

There will be substantially less sell pressure from Bitcoin miners as they’re income of Bitcoin will half. Currently, miners will mint $13 million USD worth of Bitcoin per day. This is no small figure – and one of the reasons why mining is such a trillion dollar industry (Check out our Bitcoin mining guide for how to be part of it).

Will Miners shut down / got bankrupt?

After the Halving, miners will receive half of their regular income. This will drastically alter the dynamics and profitability of Bitcoin Mining. For miners who are using older machines (ASICs), the drop in income might spell certain doom. Some miners will yield negative profits and be forced to retire the older less efficient units. This is a common practice in mining – renewing hardware is part of the profitability cycle for miners. This is similar to other tech hardware businesses like server farms which require annual upgrades to hardware.

There is no risk that Bitcoin be without miners – till is still 900 BTC to be mined each day (~$7.5 Million USD). Miners will be looking to be more competitive and source cheaper and cheaper electricity. In addition, Bitcoin difficulty can drop if there is less hashrate on the network, meaning it will be easier to mine Bitcoin.

Hype and Expectations

The Bitcoin Halving comes with a lot of hype and optimism for the future of Bitcoin. Several memes have emerged with charts pointing to “pump” in the price of Bitcoin. The chart above shows the LOG price of Bitcoin over time, with a ascending trend indicating potential prices of $250,000 and even $2,000,000 for the price of Bitcoin. It is important to remember that with cryptocurrencies prices are high volatile and past trends don’t always indicate future trends.

Stats

Total Bitcoins in circulation:	18,367,900
Total Bitcoins to ever be produced:	21,000,000
Percentage of total Bitcoins mined:	87.47%
Total Bitcoins left to mine:	2,632,100
Total Bitcoins left to mine until next blockhalf:	7,100
Bitcoin price (USD):	$9,987.70
Market capitalization (USD):	$183,453,074,830.00
Bitcoins generated per day:	1,800
Bitcoin inflation rate per annum:	3.64%
Bitcoin inflation rate per annum at next block halving event:	1.80%
Bitcoin inflation per day (USD):	$17,977,860
Bitcoin inflation until next blockhalf event based on current price (USD):	$70,912,670
Bitcoin block reward (USD):	$124,846.25
Total blocks:	629,432
Blocks until mining reward is halved:	568
Total number of block reward halvings:	2
Approximate block generation time:	10.00 minutes
Approximate blocks generated per day:	144
Difficulty:	16,104,807,485,529
Hash rate:	117.64 Exahashes/s
Current activated soft forks	bip34,bip66,bip65,csv,segwit
Current pending soft forks
Next retarget period block height	631008
Blocks to mine until next difficulty retarget	1576
Next difficulty retarget ETA	10 days, 22 hours, 40 minutes

May 9, 2020

Central Bank Digital Currencies (CBDC) Explained – New Revolution for Finance?

What are Central Bank Digital Currencies (CBDC) – will they mark the start of a revolution to change the financial system forever? CBDCs are digital currencies issued by central banks that function as National Currencies (fiat). They are a direct replacement of paper money, with the exact same value and issuance policies. CBDCs are state-sanctioned and governed by the monetary authority and regulatory law.

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Banks around the world are racing to issue out Central Bank Digital Currencies (CBDC). China has already deployed the test trial for Digital Currency Electronic Payment (DCEP), a digital version of the RenMinBi based on cryptographic technology. Japan immediately countered this announcement by plans to release a Digital Yen in “2 to 3” years. One of the key motivations behind CBDC is to drastically improve the way money is transferred around the world. Instead of relying on decade-old technologies like SWIFT, Digital Currencies can be transferred directly without friction. This will drastic impacts on all levels of banking, from the m0 reserve system to the unbanked.

Major newspaper outlets like The Guardian and the Economist began writing opinion pieces, calling the advancement from China a big step and one that could pose a threat to US economic hegemony. On the other side, commentators in China heralded their country’s fast work and implementation. Although the US and its state banks have been slow to announce any research plans and have seemingly stopped Facebook’s Libra (a privatized answer to a CBDC) in its tracks, other western nations have quickly begun research.

Global effort to deploy Central Bank Digital Currencies

Earlier this year, banks from the UK, EU, Japan Canada, Switzerland, and Sweden all began joint research on a CBDC. France has announced intentions to test a pilot CBDC in 2020.

In Asia, the Japanese immediately announced their intentions to create a CBDC to match China’s as soon as the news began to break. The Bank of Korea is also looking at its own digital currency. Smaller national banks like Thailand, the Philippines, and Singapore are also looking into creating their own. Projects such as Singapore’s Ubin work with the Monetary Authority of Singapore are already in Phase 5 of development.

The world is moving towards CBDC and is in agreement that this will be the currency of the future. But, what makes them so special and alluring to banks and governments?

Digital Currencies as a weapon to combat economic change

The main reason is its cost-effectiveness and control. CBDCs are not subject to long processing times and costly fees. As you can see from the stable coin market, sending and receiving cryptocurrencies can be done quickly and easily, with just a phone and internet connection required. Not only that, but digital currencies are far easier to track making money laundering tracking much easier.

Another factor is CBDC’s resilience to political or economic changes. Often citizens from emerging economies are subject to a large disparity in their currency’s health in the market when compared to exchange rates, however, stable coins rarely have major shifts. Not only that, but big banking shutdowns, like seen in Greece and Iceland might well have had a solution if they held a financial alternative to store their money. This benefit of digital currencies could well be important as the world stares recession in the face following the economic stresses of the Coronavirus effort.

However, there is one major detail that is propelling some nations’ research. The threat which CBDC’s pose to the US dollar domination. ChinaDaily called the People’s Bank of China’s DCEP a “functional alternative to the dollar settlement system.” This is something politicians in Beijing want as US sanctions are made effective namely due to the dollar being the reserve currency. This means often international transfers to sanctioned states are prohibited and banks shut down, as they are using the US dollar in the exchange.

Challenging US sanctions

The theoretical ability of CBDC’s to circumvent US dominance is something numerous embattled nations have looked to pounce on. Other countries who hold national digital currencies include Iran- a country ravaged by US sanctions and Venezuala- a similarly hit nation. Other US adversaries that have begun research into their own CBDC include Cuba, North Korea, and Palestine.

Clearly, the race is on between the various competing nations to launch their own digital currencies and make a new economic framework. Who will lead the charge remains to be seen, but the answer could have major consequences for the future.

May 8, 2020
Private Keys: What are they and why are they important?
Private keys are made of numbers and letters, they are used to uniquely identify users which will allow them to perform secure transactions.

A cryptocurrency private key uniquely identifies, authenticates, and grants you access to your account, enabling you to spend or send the cryptocurrencies in your wallet. This means that you will lose your assets if you lose your private key. Fortunately, there are methods to help store your private keys as will be seen later.

Private Key vs Public Key- What’s the difference?

Private keys are NOT public keys. A public key or address allows other users to identify you and your account during a transaction.

By way of analogy, a public key is like a bank account number which others can know and they require it to transact with you. On the other hand, the private key is your PIN code which you need to access your bank account at the ATM. Only you should know that secret PIN code as anyone who knows it can withdraw funds from your account.

To learn more about how this technology came about, check out my interview with one of the pioneers of public-key cryptography-Whitfield Diffie.

Father of cryptography: Whitfield Diffie

How are private keys generated?

The platform first generates a private key using random mathematical sequences. From there, the public key is generated.

How do you access your cryptocurrency using a private key?

There are 2 ways to access your cryptocurrency once you have a cryptocurrency account and a private key:
1. Vsit a reliable Digital Ledger Technology (DLT) website using your internet browser and log onto your account using your private key. The site will confirm that the account matches the private key and allow you to view and perform transactions online. However this method of directly logging in through a browser is inconvenient as you must input all the alphanumeric characters of your private key every time you wish to transact; or
2. Use a cryptocurrency wallet. With this wallet, all your private keys will be stored and accessed with a simpler to master authentication phrase. The wallet will provide the private key when you make a transaction. There are several kinds of wallets which store your private and public keys, e.g.
•    Desktop wallet e.g. Exodus wallet

•    Mobile wallets e.g. Enjin wallet

•    Hardware wallet e.g. Ledger Nano X, Trezor Model T

•    Software wallet e.g. Electrum wallet

Cryptocurrency hardware wallets

Speaking of wallets, you’ll also hear people mentioning “hot wallets” and “cold wallets”. It may sound confusing at first, but it simply refers to whether they are connected to the internet or not. Hot wallets are connected to the internet, whilst cold wallets are not.

Click here to learn more about hot and cold wallets, and their pros and cons.

What is a seed phrase / recovery phrase? What does it have to do with your private key?

In our wallet setup tutorial videos you there will be a step where you need to write down and keep in safe custody a string of words. This is known as your seed phrase. The seed phrase is generally 12 or more English words which is used to encrypt your private key into an easier to understand format (i.e. instead of a string of letters and numbers). Therefore, anyone who has access to your seed phrase has access to your private key.

How can I keep my seed phrase safe?

Your seed phrase (or recovery phrase) is essentially your private key, but encrypted in an easier to understand format. Therefore it is crucial to keep it safe from hackers and thieves. Here’s some tips and tricks which you could consider to keep them safe.

Recording your seed phrase:
- Write down your private keys using pens with permanent ink and paper that would not smudge or cause ink to fade over time (e.g. paper which receipts are usually printed on).
- Laminating the paper which your seed phrase is recorded on to avoid water damage.
- Avoid the cards provided to you by the wallet manufacturers to write down your seed phrase i.e. do not use the recovery cards provided by say Ledger to record your Ledger seed phrase. This is to try and make it that much more difficult for thieves to piece the puzzle together.
- There may be debate on this, but some have suggested to have more than 1 copy of the seed phrase in case it gets lost.
- For those who are worried about using pen and paper. Some companies such as Cryptosteel which sells devices with metal tiles for you to record your recovery seed on.
- Some have even come up with the idea of memorising the entire phrase themselves, or having their trusted friends and family to memorise several words each.
Confirming your seed phrase: As a best practice, once you’ve copied down your seed phrase you should confirm the phrase with the following steps. Firstly to send a small amount of cryptocurrency to the public key that is generated, then to delete the account from your device. Finally to import your account to your device again. If you see the same amount of cryptocurrency in your device, then the seed phrase correctly corresponds to your account.

Storing your seed phrase: if you have several copies of your seed phrase, you can store it in several discrete locations which are ideally safe from the elements and not obvious to find. Another best practice is also to keep your seed phrase in a separate location from your hardware wallet.

What happens if you lose your private key?

If you lose your private key, you will not be able to access any funds in your account. Because of the secure nature and random mathematical sequences used to generate the private key, nobody will be able to recover your private key and consequently the cryptocurrencies.

It is therefore advisable that you keep your private key very safely.

Using a cryptocurrency hardware wallet can prevent loss of your private key.

When setting up the wallet and syncing with the accounts, users must set an 18 to 24-word recovery phrase. This recovery phrase is then used to restore your device and consequently your private key.

Cryptocurrency private keys and cybersecurity

Anyone that has access to your private key can access your funds. This is the same for the recovery phrase.

Therefore, be careful not to reveal your private key to anyone. You should also be careful not to inadvertently give thieves access to your funds by saving your recovery phrase online or taking photos of it.

To prevent theft, one option that some people use is to save the private key offline on a paper wallet.

Conclusion

A cryptocurrency private key is a unique identifier that distinguishes your cryptocurrency account from others. It generates the public key that your trading partners will use to transact with you, and allows you to log in and transact with them.

Therefore you should ensure your seed phrase/ recovery phrase and thus your private keys remain safe.

Updated 30th March 2020: Added 2 new sections “What is a seed phrase / recovery phrase? What does it have to do with your private key?” and “How can I keep my seed phrase safe?”
March 29, 2020
Why the PUMP? Reasons for why Bitcoin prices always move in short bursts and how can we benefit from it?

Why does Bitcoin always “pump” in short periods of time? Can we benefit on this type of price action. Are OTC Bitcoin trading volume flows responsible for this type of price action and how do we learn about Over-the-Counter trading.

In this article, we’ll tackle one of the greatest mysteries in the Bitcoin and cryptocurrency investing space – namely why does Bitcoin prices have drastic price movements in short bursts of time. This type of movement is almost commonplace in Cryptocurrency investing, for example just today Bitcoin prices moved from $8150 to $8450, then to $8800 in the space of 4 hours, with two big green candles leading the charge. What’s also surprising is that there is no fundamental reason to cause these movements – they are not triggered by a single world or political event. In this article we’ll look at the must possible reason behind what’s happening.

Let’s get one thing out of the way – sudden Bitcoin pumps are not executed by a large group of people with small amounts of money. If this was the case, this group of people would have to be well organised, and information about such pumps are bound to leak out. We would know well in advance of the event happening. It would be common knowledge – especially considering how fast information spreads.

This leads to the next conclusion – Bitcoin pumps are executed by small groups of people with access to the OTC market. We already know the world has high wealth concentration – 1% of the world has 99% of the wealth. The 1% can easily transact enough fiat to cause these sudden shifts in the price intentionally or otherwise.

This theory is validated by reports of strong OTC volume flow in the past few weeks. This is across all trading desks around the world, especially with strong volume coming out of China and Southeast Asia. Recently reports have surfaced that OTC desks such as Genesis Block are expanding and opening new offices in Thailand to deal with the extra volume.

January 15, 2020
ThunderCore (TT) Explained: Will this Blockchain overtake Ethereum?
What is Thundercore?

ThunderCore (TT) is a high-performance smart contract platform which allows for the running of decentralized applications (Dapps) and Decentralized Finance (DeFi). Thundercore promises low fees and compatibility with any app written for the popular Ethereum Platform. The underlying currency on Thundercore Network is TT, which is used as a transfer of value and for related gas fees on the platform.

Thundercore attempts to Solve Scalability, allowing For Under One Second Confirmations. In the last couple of years, many blockchain projects have been working on scaling and improving network speeds. Until recently, it seemed nearly impossible to scale blockchains with big projects like Ethereum failing to do so. ThunderCore seems to have cracked it and may be on track to beating giants like Ethereum in scaling their platform.

What is the aim of ThunderCore?

ThunderCore aims to be a high-performance blockchain that enables mass adoption of dApps. It promises comparatively lesser transaction fees (low gas cost), compatibility, security and speed.

Currently, transactions on the blockchain are very slow. This is because of the “Blockchain Trilemma” a term coined by Vitalik Buterin, the founder of Ethereum.

Solving the Blockchain Trilemma

Vitalik Buterin proposed that a Blockchain can only have a maximum of 2 of these properties

According to the “Blockchain Trilemma“, a blockchain has three major features: decentralization, scalability and security.

However, the blockchain trilemma proposes that it is very hard for a project to have all three features to a satisfactory condition. A network that is decentralized and has a tough security would not be scalable. Similarly, a blockchain that is decentralized and scalable will have little security etc.

Buterin believes at a fundamental level, a blockchain network can only achieve two of the three features at any time. The blockchain trilemma could be the source of scalability issues on most cryptocurrency blockchains. Most crypto projects cannot handle high numbers of transactions while ensuring network decentralization and security.

However, ThunderCore has found a solution for this problem.

How does ThunderCore solve the Blockchain Trilemma?

Many projects have tried and failed to continue their emphasis on decentralization and security while incorporating scalability. ThunderCore, however attempts to do this in a unique way. They do this by creating a Fast Path and a Slow Path. The Fast Path is for optimistic conditions. Whilst the Slow Path is for worst-case situations.

What is the Fast Path and the Slow Path?

The Fast Path is like a highway, allowing for instant confirmations on the network. However, if anything goes wrong on the Fast Path, ThunderCore users can resort to a Slow Path. The Slow Path is similar to a network of smaller roads. It isn’t very fast, but it will be reliable.

For the Fast Path, ThunderCore facilitates fast and easy confirmation by 2 ways. The “Committee”, which is executed by a committee of stakeholders. And the “Accelerator” to linearize transactions and data.

ThunderCore uses Ethereum as the Slow Path as it is one of the most stable networks in the industry. The slow path will take over when the network condition is bad and /or if there is an attack. It also acts as a check to see if the Accelerator is working.

How to Stake Thundercore?

Thundercore cannot be mined as a way to generate new TT or gain passive income, hence there is no thundercore mining. Instead to passively generate Thundercore, TT is staked by locking up TT in a particular wallet. The amount of rewards depends on the lockup duration, which can be 7 days, 30 days, 3 months, 6 months or 1 year. Staking Thundercore is easy, you can do this using the mobile wallet and joining a staking pool.

What is the ThunderCore (TT) used for?

The ThunderCore (also known was ThunderToken or TT) is the native cryptocurrency of the ThunderCore network. Analogous to ETH on the Ethereum network, ThunderToken is used for paying gas fees and value transfers.

The ThunderCore Team

ThunderCore Team: Chris Wang (CEO), Elaine Shi and Rafael Pass

The team comprises of engineers, scientists and entrepreneurs. They previously worked in publishing academic papers relating to Bitcoin and smart contracts. They are also the founding members of the Initiative for Cryptocurrency and Contracts (IC3).

Update Aug 2019: Chief Scientist Elaine Shi has announced that she will be leaving the ThunderCore Project.

What is the Current Status of ThunderCore?

The first Thunder release will be fully EVM (Ethereum Virtual Machine) compatible. Thus, allowing for direct migration of dApps.

ThunderCore has already deployed its pre-release main-net. Therefore, developers can already start building on ThunderCore. Users can also start deploying smart contracts.

How do I connect to the ThunderCore Mainnet?

You can directly connect to Thundercore by changing the RPC settings on Metamask or changing the server on MyEtherWallet.

ThunderCore Mainnet Settings for Metamask
1. Install MetaMask: you can install the MetaMask browser extension on your browser. Create an account on the Metamask website and set up the security protocols (for a full guide check out our Metamask Tutorial);
2. Get ThunderToken (TT): You can get tokens from the Metamask browser extension. Click on the drop down menu and select “custom RPC”. Go to “new network section” and select “advanced option”.
  1. Mainnet RPC URL: https://mainnet-rpc.thundercore.com
  2. Chain ID: 108
  3. Symbol: TT
3. The TT symbol will appear on your Metamask. You can get 50 free tokens on the ThunderCore website by copying and pasting your Metamask TT address onto the appropriate field. You can also use this process to purchase tokens;
4. Copy and paste the ERC20 contract: copy smart contract source code from Github; (use mine here: https://remix.ethereum.org/#version=soljson-v0.4.24+commit.e67f0147.js&optimize=false&gist=116b51b7e5bf2cd3f29f2136dac3f08f)
5. Deploy through Remix ID; and
6. Check on https://scan.thundercore.com/ .
Pros and Cons of ThunderCore

Pros
- ThunderCore is compatible with the Ethereum network;
- The network has a faster transaction speed compared to Ethereum;
- ERC20 smart contracts can be deployed on this network;
- The team are working on new features that would allow dApp interaction without gas;
- ThunderCore allows users and developers to utilize existing tools such as Metamask and Truffle etc.; and
- Developers can use familiar programming languages (e.g. Solidity) while carrying out smart contracts on the network.
Cons
- There is currently only one “Accelerator” on this network. This raises questions over how much power will be centralized. (Note the accelerator cannot freeze accounts or pause transactions indefinitely as this would lead to a re-election)
Token metrics & Circulating supply

The Thundercore is currently listed and trading on Huobi. The coin is listed as Thunder Token on CoinMarketCap.

Huobi has released the Token metrics of ThunderToken (TT):

Total Raised: $50M USD
Angel round: $0.01 USD/token (2 years lock- till March 2020)
Seed round: $0.02 USD/token (1 year lock – till Apr-May 2019)
Final round: $0.10 USD/token(20% released on Feb 28, 40% to be released on May 28, 40% on Aug 28)
Huobi Lite round: $0.015 USD/token, only $500,000 USD worth of tokens sold

What we can deduce from this is that ThunderCore valuation dropped from the final Private sale time – from $0.1 to $0.15. Admittedly, the Huobi Lite tokens could also be considered to be sold at a discount to encourage more players to get in. There is controversy over the Huobi Lite sale of TT, as the token price was much lower than the Final Round – upsetting a lot of the initial investors and supporters (such as ThunderFans).

ThunderCore Hub (Games and Thundercore Giveaways)

ThunderCore Hub is a wallet and Dapp hub for mobile phones

Currently ThunderCore Hub is doing a 150 TT giveaway to test out their new Android app. To quality, visit the ThunderCore Hub website and install the beta APK, register for an account and play dApp games to get the free TT.

Conclusion

ThunderCore is different because it scales both transactions and smart contracts. This could mean that blockchains can have thousands of transactions per second without compromising on security and decentralization.

Update (May 1 2019): Mainnet RCP address and Team members & Linkedin Profiles
Update (May 10 2019): Added listing information on Huobi
Update (May 14 2019): Added ThunderCore Hub and TT Giveaway
October 25, 2019
Binance Token (BNB): What is it?

Binance Token (BNB) is a cryptocurrency created by cryptocurrency exchange Binance. It’s main function is as a form of value transfer on Binance Chain, trading pair on Binance DEX and as a utility token on Binance exchange.

Learn more about BNB and Binance as well with our video- What is Binance (BNB) in a nutshell.

What is Binance Coin (BNB)?

History

BNB was launched through an Initial Coin Offering (ICO) on 14th July 2017 as an ERC-20 token before the Exchange was launched.

A total of 15 Million USD dollars were raised during the event.

Investors were compensated with BNB tokens during the ICO. At the time, each token was exchanging hands at US$0.10. The token’s price has since tremendously appreciated and is now one of the top 10 cryptocurrencies with the highest market capitalisation according to CoinMarketCap.

The token initially ran on the Ethereum network but was later swapped 1:1 with BEP2 BNB tokens. This is so the tokens can instead run on their own Binance Chain.

Uses for BNB on Binance Exchange

1. Exchange Fees: Binance tokens can be used to reduce trading fees. Currently, Binance has a 0.1% trade fee and 50% of this fee can be paid in BNB. You are eligible for a 25% discount when paying for trading fees using the token.

2. GAS: Binance will eventually feature advanced features that require GAS. The tokens can be used as GAS to power these advanced features.

3. Binance Launchpad: BNB is used to participating in the Binance Launchpad. This is an Initial Exchange Offering platform where cryptocurrency projects will publicly issue tokens on the exchange to participants.

4. Binance DEX: The Binance DEX (Decentralised Exchange) runs on the Exchange’s Binance Chain.

5. Staking: Binance eventually wants to develop a decentralised exchange. The tokens will be used on the Exchange to stake transactions.

Learn more with our Binance Exchange review.

Other uses for BNB

BNB can be used in other areas. For example:

1. Paying for goods and services: The token can also be used to pay for goods and services at different establishments. For instance, Binance invested in TravelbyBit to enable users to pay for services at entire Brisbane Airport. TravelbyBit is an Australian startup that enables establishments to accept cryptocurrencies for goods or services. (https://woodlees.com) Currently, the startup has over 150 establishments.

2. Accessing loans and cash: Holders of the Binance exchange token can withdraw cash from crypto ATMs. Additionally, they can access loans on the Nexo platform.

3. Accessing services on social media platforms: For example, it can act as a gift token on Uplive, a live streaming platform.

4. Trading and holding: The token can be traded just as a normal altcoin. Additionally, some people hold and speculate on the token in the hopes of profiting when the price appreciates.

September 30, 2019
Stellar Lumens (XLM) in a Nutshell
Stellar is a platform that connects banks, payments systems, and people. Lauched in 2014, Stellar uses blockchain technology to allow for quick currency exchange and money transfer. Stellar was originally based on Ripple Lab’s protocol, but due to key philosophical differences Stellar eventually rewrote the code entirely. It is built on a semi-decentralized consensus platform and is designed to support any type of currency such as the US dollar, RMB or Yen. Stellar platform’s native currency is the Stellar Lumens (XLM).

Stellar Lumens (XLM) can be traded on Binance Exchange.

Features and Specifications
- Transaction speed: 3-5 second confirmation time
- Total Supply: 100B XLM created initially
- Supports thousands of transactions per second
- Uses Stellar Consensus Protocol (SCP) rather than Proof of Work
- Simple, clean API
- Multisig and smart contracts
- Decentralized distributed database
- 1% fixed annual inflation
How fast is Stellar?

Stellar XLM Logo

The Stellar network can confirm transactions within 3-5 seconds with a transaction cost of less than $0.00001. This makes the network ideal for mass consumer adoption and cross border transactions. The network itself can support more than 1000+ transactions per second.

How Does Stellar Lumens work?

Decentralized network

A decentralized network consists of peers that can run independently of each other. This means that the Stellar network does not depend on any single entity. The idea is to have as many independent servers participate in the Stellar network as possible, so that the network will still run successfully even if some servers fail.

Ledger

Like a traditional ledger, the Stellar ledger records a list of all the balances and transactions belonging to every single account on the network. A complete copy of the global Stellar ledger is hosted on each server that runs the Stellar software. Any entity can run a Stellar server.

These servers form a decentralized Stellar network, allowing the ledger to be distributed as widely as possible. The servers sync and validate the ledger by a mechanism known as consensus.

Consensus

Stellar uses the Stellar Consensus Protocol (SCP) rather than Proof of Work. The Stellar Consensus Protocol (SCP) is a protocol that achieves optimal safety against ill-behaved participants. Basically, it aims to be more secure and offer better protection against malicious parties.

The Stellar servers communicate and sync with each other to ensure that transactions are valid and get applied successfully to the global ledger.

For example, if you want to send $5 to a friend on the network, a list of trusted servers will begin a process to agree on the validity of your $5 payment to your friend. The majority of these servers will have to agree that you do in fact own $5 worth of credit on the network before they will mark the transaction as valid.

This entire process of coming to consensus on the Stellar network occurs approximately every 2-5 seconds.

Anchors, trust, and credit

Anchors are simply entities that people trust to hold their deposits and issue credits into the Stellar network for those deposits. They act as a bridge between different currencies and the Stellar network. All money transactions in the Stellar network (except the native digital currency of lumens) occur in the form of credit issued by anchors.

Anchors do two simple things:
1. They take your deposit and issue the corresponding credit to your account address on the Stellar ledger. You can make a withdrawal by bringing them credit they issued.
2. You have to trust the anchor to honor your deposits and withdrawals of credit it has issued.
Anchors exist in the pre-stellar world now. For example, to use Paypal, you deposit money in from your bank account. Paypal then gives you credit in your Paypal account. You can now send that Paypal credit to anyone that trusts Paypal (anyone with a Paypal account). Someone that received your Paypal credit can convert it to real money using Paypal by withdrawing it to the bank.

Anchors perform the same function in Stellar. The difference is, all the “Paypals” and other anchors are operating on the same network so they can all transact with each other now – this makes the system way more powerful. People can now easily send and exchange all these different anchor credits with each other.

Distributed Exchange

The Stellar ledger is able to store offers that people have made to buy or sell currencies. Offers are public commitments to exchange one type of credit for another at a pre-determined rate. The ledger becomes a global marketplace for offers.

All these offers form what is called an orderbook. There is an orderbook for each currency/issuer pair. So if you are wanting to exchange Virgin Bank/EUR for bitstamp/BTC you look at that particular order book in the ledger to see what people are buying and selling it for.

This allows people to not only buy and sell currencies in a foreign exchange like manner but also to convert currencies seamlessly during transactions.

Stellar Lumens Partnerships

Stellar key aim is to help to poor and the unbanked. In 2017, IBM announced a partnership with Stellar protocol to develop a cross-border blockchain-based payment system for large banks. This would greatly improve the efficiency of cross border transactions, especially for countries in Southeast Asia where remittance costs matter and many domestic helpers cannot afford to send money back home. Currently the program works with 47 currencies and in 72 countries.

Stellar Lumens (XLM) Currency

Lumens is the name given to the token of the Stellar network. They were originally called stellars back when the Stellar network launched in 2014, but with the launch of the upgraded network in 2015, the name of the token changed from stellar to lumen.

The Stellar network’s built-in currency, the lumen, serves two purposes:
1. Acts as a small anti-spam role
  - Each transaction has a minor fee—0.00001 lumens—associated with it. This fee prevents users with malicious intentions from flooding the network (otherwise known as a DoS attack). Lumens work as a security token, mitigating DoS attacks that attempt to generate large numbers of transactions or consume large amounts of space in the ledger.
  - Similarly, the Stellar network requires all accounts to hold a minimum balance of 20 lumens. This requirement ensures that accounts are authentic, which helps the network maintain a seamless flow of transactions.
2. May facilitate multi-currency transactions
  - XLM sometimes facilitate trades between pairs of currencies between which there is not a large direct market, acting as a bridge. This function is possible when there is a liquid market between the lumen and each currency involved.
Stellar Lumen token metrics

At the genesis of the Stellar Network, 100 billion lumens (XLM) were created as specified in the protocol. As part of its custodial mandate, the Stellar Development Foundation (SDF) is entrusted to oversee that the vast majority, 95 billion, of the lumens are distributed to the world.
- 50% to be given in small increments to as many people as possible.
- 25% to be given to other businesses and non-profits to reach people that stellar.org wouldn’t otherwise be able to reach through the Direct Signup program.
- 20% to be given to bitcoin and XRP holders
- 5% to be retained by Stellar.org for operations.
The Stellar network has a built-in, fixed inflation mechanism. New lumens are added to the network at the rate of 1% each year. The network also collects a base fee for each operation in a transaction. The funds from base fees are added to the inflation pool.

As a balancing measure for the ecosystem, anyone who holds lumens can vote on where the funds in this pool go. Each week, the protocol distributes these lumens to any account that gets over .05% of the votes from other accounts on the network.

How to mine Stellar (XLM)

One question that is frequently asked is how to mine Stellar (XLM). Stellar cannot be mined in a process similar to Bitcoin because it doesn’t use Proof-of-Work. Instead Stellar relies on re-established nodes that confirm transactions via a voting system. Block rewards are given to Stellar Nodes at a 1% inflation rate per year. You can buy or sell Stellar (XLM) on the Binance Exchange.

Resources:

Stellar website https://www.stellar.org/

SCP whitepaper https://www.stellar.org/papers/stellar-consensus-protocol.pdf

Blog https://www.stellar.org/blog/
September 17, 2019