Cryptocurrency and Innovation

One of the greatest innovations to have appeared in recent times has been the ascent of the digital asset, The Cryptocurrency. Based on the blockchain technology, cryptocurrencies have transformed the way asset transactions take place. It, in one stroke, removed pesky third party presence, made peer to peer transactions faster and cheaper and since digital assets did not have any form, eliminated the fear of fraud. As the technology evolved, newer additions appeared. Some of the notable ones were smart contracts, DApps et al.

Also, with the passage of time, Bitcoin, the original one, spawned an entire universe of new-age cryptocurrencies. These new cryptos became the epitome of innovation, providing services ranging from automated digital wallets to platforms where developers can create new services and tokens as well.

However, the greatest innovation that cryptocurrencies really brought was to create a decentralized peer to peer environment and yet remain safe and secure. This was partly because it was based on the blockchain technology and partly because the world needed a change.

Let us quickly look at some of the key characteristics of cryptocurrencies:

Borderless

Drastically reduces fees and processing times due to a lack of cross-border restrictions

Censorship-free

Prevents governments or major institutions from blocking financial activities at the whim

Greater financial control

Individuals can have total control of their funds

Greater security

Prevents fraudulent alterations from third parties

Lower costs

Lower transaction fees thanks to fewer third parties

Greater Accessibility

Reduces or eliminates traditional barriers to capital markets

The current role of crypto goes beyond simply replacing cash. The new token-based economy is evolving into a super environment whereby influencing spheres hitherto not imagined earlier. Areas like finance, security, identification, social engagement, and ownership. Cryptocurrency, through its frontier innovation model, has transformed the way things can be done. Future models indicate that this innovation spree would be relentless.

  • Payments

Digital cash can be used for both eCommerce and brick-and-mortar retailers

  • Store of value

A new form of scarce native currency and a means of settlement

  • Programmable money

Borderless money that enables easy conversion between currencies

  • Stablecoins

Crypto version of fiat which is tied to the value of resources like gold or the U.S. dollar

And because if the above uses, cryptocurrencies are slowly but surely becoming one of the rages in the financial world.

Cryptocurrencies are adding both value and utility to the digital economy, and to the global financial market as a whole.

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Transformation of the Banking Sector and the rise of the crypto

Financial markets are abuzz with questions regarding the nature and viability of digital currencies. As far as rated financial institutions’ risk exposure is concerned, however, S&P Global Ratings believes that it is much ado about nothing. In our opinion, in its current version, a cryptocurrency is a speculative instrument, and a collapse in its market value would be just a ripple across the financial services industry, still too small to disturb stability or affect the creditworthiness of banks we rate.

Cryptocurrencies are digital currencies that use encryption techniques to regulate the generation of units of currency and verify the transfer of funds. They have attracted a significant amount of attention from the market over the past 12 months. Cryptocurrencies are independent of central banks, and the risk of them infiltrating the traditional financial systems, exposing them to a possible bubble burst, is raising eyebrows at regulators.

However, in spite of the difference in their scale of operations, it is imperative to know that Bitcoin, taking into account the upheavals, is worth almost $250 billion. That is worth more than 50% of the entire market cap of the Altcoins, taken together.

This raises questions about the nature of doubt one might have regarding the viability of cryptocurrencies. However, some concerns are logical.

Cryptocurrencies, in their current version, have many characteristics of a speculative instrument. Hence, retail investors would be the first to bear the brunt in the event of a collapse in their market value.

If cryptocurrencies become an asset class, the impact on financial services firms will be more gradual. That is because there is a possibility that their future success will largely depend on the coordinated approach of global regulators and policymakers to regulate and enhance market participants’ confidence in these instruments. More importantly, blockchain technology–which is what upholds cryptocurrencies, enabling the creation of a shared digital transaction ledger–could be a positive disrupter for various financial value-chains. If widely adopted, blockchain could have a meaningful and lasting impact on the celerity, traceability, and cost of financial transactions. The financial market infrastructure segment might also see medium-term benefits from cryptocurrencies and blockchain through the launch of new income-generating products, such as futures or exchanges based on cryptocurrencies, or the replacement of current practices by new ones based on blockchain.

Cryptocurrencies, despite all its deficiencies, is the tech of the future.

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What is a Market Cap in Cryptocurrency?

At the end of an exhilarating bull run, the cryptocurrency market now has a capitalization of $170 billion. That is a huge number to boot. But an even bigger question that needs to be answered here is why does this figure even matter. Why is market capitalization so important?

Market capitalization is a well-known metric for traditional securities but has unique implications in cryptocurrencies too. Market capitalization is a measure of the value of security. It usually consists of multiplying the amount of outstanding stock shares by the current stock price. In crypto, it’s defined as the circulating supply of tokens multiplied by the current price. If a coin has 100 tokens outstanding and is trading for $10 a coin, it has a market cap of $1000. There are around 16.6 million bitcoins in existence, and the price is around $5600 at the time of writing. Bitcoin’s market cap, therefore, is roughly $94 billion which is almost 50% of the total market cap, currently.

Usually, stocks and bonds have been analyzed through financial metrics and ratios. Measures like price-to-earnings ratio, earnings per share, the current ratio, earnings growth, and so on are used to examine stocks. However, crypto teams generally do not publish financial statements, what metrics that do exist become all the more important Market cap provides a quick and easy check on how valuable a cryptocurrency is similar to a company. It reflects the net worth of that particular organization. Bitcoin is sitting at roughly $94 billion. Ethereum is the second-biggest, at $32 billion. Ripple ($10 billion, Bitcoin Cash ($5 billion), and Litecoin ($3 billion) round out the top 5. Bitcoin, by virtue of its size, constitutes more than 50% of the market cap of the entire crypto universe. A high or low market cap can reveal a coin that is resistant to volatility, or vulnerable. Coins with small market caps consequently rock more when big news hits the market, or large buyers take positions. That isn’t inherently surprising – the crypto markets are among the most volatile in the world. But holders of tokens with small market caps are at risk of being crushed by larger traders. If several large buyers team together to sell at the same time, the price of a token can crash to nothing instantly. This would be much tougher with Bitcoin and Ethereum, which have large market caps and are not easily manipulated.

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How to stake Cardano?

Cardano is slowly transforming itself. It is currently on the road to Shelley which will allow it to introduce staking for the first time. It’s

Oroborous Genesis consensus mechanism will lead the way. The development arm of Cardano, IOHK, has been hard at work and all we can do right now is to wait with bated breath. However, before that comes on board let us quickly have a look at all the features that will come up once the integration is done.

In quite a few ways, Cardano’s staking system will be similar to any other staking system. If you use Cardano (ADA) and decide to stake it, you’ll definitely be earning a return on your investment. This in the long run, helps the network as well: staking is basically the process by which validators are selected to create a new block. The other option is in case if you don’t want to validate, you can go ahead and delegate your tokens to a staking pool, which, I must say, is a much simpler process.

However, this is where the similarities end. Unlike Ethereum, Cardano won’t offer solo staking. Individuals must either run their own pool or join an already existing pool.

And here comes the whammy from the developers. Cardano will not just be addressing support staking but it will have a unique way to do it too, unlike any other crypto. They intend to have separate keys for spending and staking. In layman terms, if you decide to stake your ADA tokens, they will never leave your wallet. Amazingly, Cardano will not lick your tokens for any length of time. You can unstake it at any given time. This is what will set Cardano apart from any one else.

However, the prevailing fear of getting too much power which would be centralised is also doing the rounds. A way though has been found.

Firstly, Cardano’s stake pools will subsequently offer lower rewards as they gradually get larger. This will encourage users to travel between pools on a regular basis, and this will in turn theoretically prevent any pool from gaining prominence. Meanwhile, there will also be a sorting tool which will help users find the most profitable pools at any given time.

Secondly, since the development of Cardano is community-driven, no individual staking pool will be given centralised power. That is to say, stake pools won’t vote.

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Crypto Startup Ideas, 2019

Let’s talk about business. Big business. The year 2019 has been a good year for the cryptocurrencies. There have been no major collapses and the growth rate of most coins have stuck to expectations. This was not the picture in 2017/2018, which is being called a bloodied set of years. Bitcoin touched a euphoric $20000 a unit, only to fall, face first. It lost up to 75% of its value and it’s currently trading at INR 6000. Analysts believe that Bitcoin is poised to hit INR 10000 anytime soon. Whatever be the outcome, it is certain that cryptocurrency is here to stay and for new age investors, it is a gold mine.

With the advent of technology, blockchain is revolutionising transactions and quite a few ideas of today may well become the face of tomorrow.

Bitcoin Exchange

Let it be known that the most important action happening over a blockchain is an exchange. So if you have to make the most out of cryptocurrency, then create an exchange. And it is not tough at all.

However, a few basics first:

Cryptocurrency Exchange Platform – It is a website that executes cryptocurrency trading between any user or peer.

 Trader – Who buy or sell cryptocurrencies for Fiat currencies or for any other cryptocurrencies.

How does a Bitcoin trading work?

Bitcoin Trading is the process of transferring or exchanging bitcoins for fiat or normal currencies or for any other cryptocurrencies between two users through a fully secured exchange platform.

In the cryptocurrency exchange website, there will be three main players:

  • The Buyer
  • The Seller
  • The Admin

The admin’s role is varied. They are:

  • Connecting as we as creating a network of bitcoin buyers and sellers
  • Monitoring the Fund transactions and keeping an eye out for any fraudulent activities
  • Charging transaction fees for each successful transaction
  • Keeping the website secured by implementing set security protocols

Creating a Bitcoin Exchange is one of the best ideas of 2019.

Cryptocurrency Exchange/ Cryptocurrency Trading

Similar to a Bitcoin Exchange, the cryptocurrency exchange facilitates trading or exchange in any cryptocurrency or fiat currency. The workflow and the basics remain the same.

Bitcoin Wallet Service Startup

Cryptocurrency exchanges take place through a wallet. Every user will have a wallet with a Private Key. Creating these wallets is a prospective business with immense future growth.

Cryptocurrency is the future of the financial market and the correct time to hit the hammer is now.

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The Wallet that Holds

Cryptocurrencies deal in coins that are transacted across wallets. Each wallet has a private key which is only accessible to the owner of the wallet. However, choosing the perfect wallet, which not only safeguards your money but also is quick to respond to transactions, is a cumbersome task. This quick guide will help you overcome that confusion.

Hardware wallets

The Hardware wallets are small devices that are plugged into your electronic devices, namely,  computer or phone. The hardware wallet generates private keys securely in an offline environment. The best part about hardware wallets is that many unlike the other normal wallets which generate private keys on internet-connected devices like computers or mobile phones, they do to complete offline.

Advantages of hardware wallets

  • Private keys aren’t exposed to the outside world
  • Hardware wallets cannot get infected by computer viruses or malware
  • You must be in ownership of the hardware to confirm a transaction, thus preventing any possibility of remote hacking
  • Most hardware wallets are encrypted with a PIN or other security feature
  • If you lose your hardware wallet, you can still recover your coins

Among the most popular of hardware wallets is Ledger Nano S. Costs $95 and is built and distributed by Ledger, a France based company.

Cryptocurrency Software Wallets

Software wallets include an assortment of several wallets, but in reality, they are wallets that are downloaded or accessed digitally. These wallets are online/web wallets, desktop wallets, and mobile wallets.

Mobile Cryptocurrency Wallets

These are wallets that are downloaded from the app store in the form of an app. The said app, which you have downloaded stores the cryptocurrency.

Mobile wallets are easy to use and are safer than online ones. These are generally for those who pay for transactions.

Advantages

  • These apps are quite easy to use
  • They are safer than the online one
  • Mobile wallets are for those who use cryptocurrency regularly

Disadvantages

  • Though mobile wallets are safer than the online ones, they are still vulnerable as long as the phone is connected to the internet.
  • If the phone gets stolen, then your mobile wallet can be accessed.

One of the most popular mobile wallets is pocket 2.0. It is not just a wallet providing a safe and secure means to collect coins but also connects the user to a large number of dApps. Coinomi and Jaxx are other mobile wallets which play a similar role.

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How to retrieve lost Bitcoin

We know how hot wallets are vulnerable to an external hacking job. Since it’s connected to the internet, hackers get ample opportunity to steal the Private Key and eventually the cryptocurrencies. In 2018 alone, cryptocurrencies worth $1.1 billion was reported to be stolen. With increasing sophistication, of the blockchain technology, hack jobs to are getting advanced. Cold wallets, the most secure of the lot does not find too many takers though. The advantage of easy access and quick turnaround, usually associated with the cloud, is a trump card no one wants to give up on.

How to retrieve the stolen Bitcoin?

Now that’s a billion-dollar question. Ideally, a stolen bitcoin or any cryptocurrency for that matter needs to accepted as lost. Forever. However, there might still be a sliver of hope. Just a sliver, that is.

Hot Wallets

In the case of hot wallets, users usually set them up with exchanges. But that would in no way ensure a foolproof environment. These are online exchanges connected to high-speed internet and enjoying all the perks, technology keeps coming up with. A hacker can easily exploit weaknesses in the security of these exchanges and break-in.

In such cases, it is the responsibility of the exchanges to retrieve the coins back. But then that would be done.

Bithumb was hacked in June 2018. However, it was later learnt that it could recover almost 50% of the lost coins.

If this is taken as a thumb rule, you are mistaken. It is more of an exception. Once lost is lost forever. That’s the maxim for hot wallets.

Cold Wallets

Cold wallets are impossible to hack.

The reason is their independence from the world wide web. However, the onus for the security of cold wallets is upon the users, themselves.

Paper

You have written all the relevant details on a piece of paper. Nobody has access to it, excepting you. And you lose it. The ideal way to keep the information safe is by making a few copies and keeping it in different safe places.

Pen Drives and Hard Drives Again, safe from hackers but not from a crash. Pen drives and hard drives are prone to get to getting corrupted. In that case, retrieval experts have to be roped in to recover lost data. An expensive affair, but if millions are at stake, worth every penny.

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The fall of the cryptocurrencies

Let me be honest at the very onset, cryptocurrency was never a straightforward gamble. It required extreme caution, judgement and in spite of sounding unreasonable, a bit of luck. Unlike conventional investments, cryptocurrencies have undergone swashbuckling ups and heartbreaking downs. For the early investors, the rise of Bitcoin is a phenomenon they would not forget in a hurry. In the summer of 2017, it got valued at $20000 and its immediate aftermath was even more breathtaking. Bitcoin crashed to below $10000 before it stabilized. It is currently lying at around $6000, a fall from the heady days of 2017.

One of the reasons why cryptocurrencies gained so much popularity was the unbridled freedom it gave to its investors. It was based on a peer to peer transaction premise with no third-party intervention. As a result, the turnaround time was quick with nil transaction fees. However, this arrangement, as per the established authorities, was dangerous. Technology reliance was good but too much if it wasn’t. Also, because of the freedom, cryptocurrencies provided, it became a playground for money laundering and fraud. The loss of freedom, analysts say, could become the death knell for cryptocurrencies.

Many view investments into cryptocurrencies as short term. One can only get a substantial return if the money poured in is locked for a substantial time. This quick-fix investment plan leads to more volatility in the market.

If you thought, cryptocurrency was above one and all, you are mistaken. There is widespread manipulation.  Several pumps and dump schemes are said to be running alongside. The Modus Operandi is simple. Pump the value of crypto and then sell-off in bulk at its peak. Because there is no third-party oversight this is quite easy to achieve.

The rise of Bitcoin is now being investigated by the Department of Justice. There is a possibility of manipulation through Tether, a stable coin issued by Bitfinex, which was responsible for Bitcoin’s meteoric rise.

Diversification doesn’t work in cryptocurrencies, the way it does conventionally. The reason being Bitcoin’s command over the overall market cap. This is because most tradings happen between Bitcoins and altcoins and the system doesn’t allow conversion of fiat or government-backed currency to crypto.

One of the biggest reasons why cryptocurrencies, even after gaining much traction, has not been able to take off is because of easy liquidity. Exchanges do not have enough liquidity for diversification and stability.

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Investing in Cryptocurrency-2019

2018 has not been a great year for cryptocurrencies.  However, 2019 holds promise. A whole lot of new investments have flooded the virtual currency sector. Now one might wonder the flow of money into a sector that has had a shaky previous year. To dispel such doubts, let’s rejig our memories.

Cryptocurrencies appeared first in the year 2009. That was also the year Bitcoin appeared on the scene. A blockchain-based peer to peer transaction system which totally annulled the need of a third party. No one took cognizance of it until 2013 when it finally matured and exploded. Since then, the market of cryptocurrency has seen a growth of almost 4000%. In 2017, the market cap of cryptocurrency was $21  billion while as of today, standing at the fag end of 2019, it’s a staggering $454 billion.

The best part of this story, other than it is real, is, that the cryptocurrency market has grown beyond Bitcoin. We have some outstanding currencies vying for the limelight. Litecoin, Ethereum, Zcash are all in contention for being among the most sought after.

So despite what the naysayers say, this is a market worth looking at from the investment point of view.

Now, like any investment, a bit of research is needed. A careful analysis of past trends would be beneficial to take an informed decision.  Let us quickly look at some of the cryptocurrencies one can put their monies in.

Bitcoin (BTC)

The earliest of the lot. The mother to all the other coins that eventually made their way out into the market. Such has been its popularity that more often than not, most of us have equated cryptocurrency with Bitcoin, overlooking the others. Bitcoin corners 40% of the entire cryptocurrency market share. Its crowning glory was in December 2017, when it touched a record high of $20000, after being valued at $76 in 2013. However, soon after, it crashed and went under $6000. It has since stabilized and should be a good bet for 2019.

Ethereum

The second most popular among the cryptocurrencies, Ethereum is more than just a set of coins.  Unlike Bitcoin, It is a more advanced blockchain project. This is because Ethereum offers something special — by using Ethereum’s platform, which goes by the name Ether, developers can build their own cryptocurrencies or DApps.

ETH has a current market cap of almost $70 billion and is definitely on top of the investment list of many.

Litecoin Developed in 2011 by MIT grad and former Google engineer, Charlie Lee, Litecoin has come a long way being a clone of it’s more famous predecessor, Bitcoin. Like most, it is based on an open-source global payment network but unlike most, has a faster block generation rate and hence offers a faster transaction confirmation.

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How to mine Cryptocurrency

 

You probably would have heard about mining Cryptocurrency in order to make Cryptocurrency of your own. To mine Cryptocurrency, you must need systems with good hardware. People who started bitcoin mining in 2009 are the owners of thousands of dollars today. You can easily create a small part of the income using Bitcoin mining.

Getting Started

Getting started is easy. You can easily start mining Cryptocurrency and start making money of your own. You will need the following hardware to get started

  • Graphics Processing Unit
  • Mining ASIC chip

Once, you have both of these things on your machine, you can start mining Cryptocurrency. You will need some softwares and other things as follows

  • A stable and fast internet connection
  • Coin wallet
  • Mining Software
  • Mining Pool membership

There are various free mining tools available and also you can find many online mining Pools. It is basically a community of the people where all of the users combine their usage to generate more amount of profit and to mine more Cryptocurrency.

How to mine?

Now, you might be thinking how to invest in Cryptocurrency and how to mine it and the best cryptocurrencies to invest in and finally start generating some income. First of all, makes sure you have all the following requirements as stated. You can follow the steps to get started

  • First of all, turn on your machine and make sure you have an active internet connection
  • Once done, open the mining software and enter the details of the configuration
  • You will be asked the mining pool address, coin wallet address, etc. Enter all of them and enter your miner IP address
  • Once you have done all these steps, you are all set to mine the Crypto
  • Keep the machine turned on and you will see the mining process has been started
  • At the end of the day, you will have some of the coins mined with your own machine.

Conclusion

It really depends on your hardware to mine more Cryptocurrency. Therefore, to increase the amount of the Crypto you are generating, you will need to upgrade your GPU to make more.

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