Guide for investing in cryptocurrencies?

how to buy cryptocurrency

This is your beginner’s guide for how to invest in cryptocurrencies and what should we look before investing. I’m a big supporter of crypto currencies and I’m also a big fan of the stock market. We will also see how investing in crypto is a better choice?

Understanding the basic

You might not know how internet works but when it comes to sending an email or buying something and have it shipped to your home, you can do that with ease. The point is that, you do not need to understand the technology behind the internet, you just need to know how to use the internet. It’s the same concept with cryptocurrencies, at least when you’re investing with cryptocurrencies.

Your whole goal is to buy a cryptocurrency for a low price and then sell it later for a higher price. You’re trying to buy low, sell high and then make some money. If a five-year-old can turn on a tablet, log on to the internet, go to you tube and watch a video without understanding the technology behind the internet then you can do the same thing without understanding the technology behind cryptocurrencies.

You can set up a brokerage account buy a cryptocurrency for a low price and then sell it later for a high price. The thing is that a 5 year old, they’re not going to just wake up one day and know how to turn on a tablet, go on the internet and do all that by themselves. They need to be shown the way, so that’s what we’re here to do. We’re here to show you the way, here’s what you need to know:

Bitcoin is the largest and most famous cryptocurrency and there’s thousands of cryptocurrencies, it’s just like the stock market. In the stock market, there’s thousands of companies that are on the stock market and crypto currencies there’s good and bad cryptocurrencies just like in the stock market there’s good stocks and bad stocks. Today we are not going to talk about good or bad crypto currency but today we will focus more about getting you started investing in cryptocurrencies

How to start investing in crypto?

First step is you need to exchange your US dollars for Bitcoin, the most popular way to do this is to use a website or an app such as coinbase. If all you’re looking to do is, invest in Bitcoin then you just sign up with Coinbase and change your US dollars for the Bitcoin and then you’re good to go.

What should be done to invest in a different cryptocurrency other than Bitcoin.

If you want to invest in another cryptocurrency besides Bitcoin, this is when things get a little bit more interesting. Let’s take a different cryptocurrency as an example, let’s call it Neo coin. There actually is a neo coin, so let’s say you want to get a neo coin. You want to invest in neo, if that’s the case then you cannot go from US dollars straight into neo. What you need to do is, get US dollars swapped into Bitcoin and with that Bitcoin, you need to exchange the Bitcoin for neo. So if you want to take US dollars straight to neo, you cannot do that. You need to use Bitcoin as the intermediary. in order to do so, you’re going to need an account on a crypto exchange. Coinbase for example is a place to exchange your US dollars for Bitcoin.

Coinbase will also have other cryptocurrencies but they will be the biggest and most name-brand cryptocurrencies. If you’re going to be looking for other obscure cryptocurrencies and as we mentioned, there’s thousands of crypto currencies, then you need to head to an exchange, a crypto exchange. The way you do that is, once you have Bitcoin on your coin base account you need to send that Bitcoin to your crypto exchange and how you do that is: you simply just transfer the Bitcoin on your coinbase account to your crypto exchange accounts.

Is Investing in cryptocurrencies risky?

Cryptocurrencies can be risky but it’s a situation of high risk and high reward. If you’re looking for something more suitable with a less risky investment then please read our other article about the Crypto market and investing for beginners in the cryptocurrencies. We have reviewed some most advanced robots used in crypto trading. However, whether you’re investing the in cryptocurrencies or stock market please make sure you do your homework, your research, to decrease the chances that you’re getting yourself into bad investments.

How much capital is required to get started in crypto currencies?

To get started in cryptocurrencies , you do not need much money and I know because I’ve experience in the stock market and in the crypto markets and what I can say is that, you need less money to get started in the crypto world, that you do in the stock market world . I’ll give you an example: there’s some cryptos that are very high quality, crypto project script of companies that are $0.10. If you’re going to put that into perspective with the stock market, if you’re looking for a stock that’s 10 cents in the stock market, it’s most likely going to be a bad risky investment. Therefore I would say from my opinion that you need less capital to get started in the cryptocurrency investing scene. Also you can even get started with as little as$25 in the crypto world. If you try to get your stock market investing career with $25, that just sounds impractical but with cryptos that actually is possible.

Which Coin Should I buy?

This is a scenario of risk versus reward. Bitcoin is the most famous and the most stable cryptocurrency in general. If you’re looking for a high risk and high reward then you would be better off looking for smaller and more obscure cryptocurrencies. But if you’re looking for more stability the Bitcoin would probably be your best bet. But just like, as it is in the stock market world you might want to consider diversification, to have a more stable portfolio. But regardless, if you are going to be looking for other cryptocurrencies, please make sure, you do your homework because unfortunately there’s a lot of scam projects, a lot of scam cryptocurrencies out there. So please be careful.

bitcoin: the stable crypto

How do I research which coins to buy?

When you’re doing your homework on what cryptocurrency to invest in, you should look for the white paper. The white paper is a summary of the cryptocurrencies project, how it functions, who the management is and the mission. It’s basically a mission statement that tells you the goals and objectives of that cryptocurrency. So please look and read the white paper.

Where can I get started?

To get started let’s see what you’re trying to achieve first. So if you’re only trying to get Bitcoin or the more popular cryptocurrencies then all you need is an account with coinbase and then you’re good to go but if you want a wider selection of cryptos then you need a crypto exchange accounts.

Can Bitcoin Break $10000 Level by Halving|Explanation

Bitcoin is struggling to break key lines of resistance at $10,000, what does it mean for Bitcoin?

Looking at the charts, turning first to the weekly, since we have just had our weekly close for Bitcoin, that bullish MACD crossover that we were talking about last week, it is forming up very nice layout.

bitcoin MACD Chart

This indicator signaled, the start of the last two big runs for Bitcoin, but with the Bitcoin having looming and a possible post halving correction, this does run the risk of potentially being a false bullish signal in the short term.

That being said, any correction after the halving is likely to be quite short-lived, at least was it happened in the last Bitcoin halving, less of course a wider economic downturn, really just kicks off and drags Bitcoin under with it and while the MACD crossover is definitely a good bullish sign, the real line that we need to break is that line of resistance on the weekly charts around $10,000.

This level shown as line in the chart, has been acting as a barrier for more than two years. $10,000 mark is not only important technical barrier for Bitcoin but also a powerful psychological barrier for Bitcoin. It is not going to be easy for us to achieve it,and if we can cross $10,000 before the halving event then 10,500 dollars has been big resistance from the two most previous big runs for Bitcoin.

If we do get a break higher before the halving and seeing, Bitcoin really test and reject, around 10,500 Dollars that would not be surprising, so keep that in mind. However, if the price fails to hold then we should be watching for areas of support around 8400 dollars and if that should fail, the 200-day moving average around $8,000 is the line in the sand, and if that breaks, bad news for the Bitcoin bulls. A retest and a bounce from either of these key zones a support that would actually pretty bullish, so let’s keep an eye for that play out or not.


Also Read:Bitcoin Evolution Review


What’s driving the Rally

In spite of the bullish momentum we have been having recently, there is of course this big shadow over the market right now which is the equity markets and the potential for a wider economic downturn, so stay frosty out there everyone.

Some very fascinating insights for you from recent Bitcoin exchange balances. It appears that a significant portion of the retail investors who have been helping drive this rally which by the way is a fact that has been supported by a lot of things like lots of new exchange signups have been happening over the last six weeks. New address metrics showing continual all-time highs for low account value 0.1 or just even 0.01 Bitcoin.

 

Many new people are taking an interest in Bitcoin over the last few weeks, these people have been buying Bitcoin and then wisely getting it off of exchanges which is a good move. This chart here from glass nodes shows that balance on exchanges have gone down in this rally, This means investors are are investing in Bitcoin for longer term.

These people are not speculators and are investing keeping in mind the longer term. They’re buying and they are getting it off of the exchange. These people are buying with the expectation that big run will happen in coming few months, they’re thinking longer-term. Also if you are one of those people who are new to crypto but you still have your bitcoins sitting on in exchange then you need to get yourself a hardware wallet and take control of your private keys and of your Bitcoin.

Decentralized Exchanges are the Future.

In data news, so far in 2020 decentralized exchanges have done more than two billion dollars in volume. We compare that to a total volume of around 2.4 billion dollars from 2019, all of 2019 combined and you realized then that we’re still in the first half of 2020 decentralized exchange volume. It is expanding big time and I think this is a really good thing for crypto overall. Decentralized exchanges are the future, you stay in control of your keys and they are way quicker to use than a centralized exchange, so great to see that this is expanding.

Returns of ERC 20 tokens over the last year.

Now  looking at returns of ERC 20 tokens over the last year it seemed that the market is also giving a lot of value to decentralized marketplaces. Only 30 ERC 20 tokens actually outperformed Ethereum in the last year. On top of that list is synthetics, which fuels the decentralized futures exchange. We have Khyber which fuels decentralized exchanging across many different providers, Eastland which of course is working with Defi loans and Chainlink which obviously is the blockchains equivalent of a data pipeline, but picking the right crypto it is a tough task because while these 30 cryptos outperformed Ethereum, a 150 different ERC 20 tokens saw either zero gains, means completely failed.

Now this just serves as a reminder that many tokens remain wildly speculative at this moment and that you have a greater chance of losing everything than making those sweet gains but if you can find the right ones then you will make some truly epic gains but fighting them is the hard part.

Is it Right Time to Buy Bitcoin & Gold – Massive Crash in Oil Markets

Today a massive crash has taken place in the oil markets and even if you don’t care at all about the oil markets this news is an important one because it really serves as a stark warning about how dangerously fragile the global economy is right now. This could spread panic to other markets and of course what does all of this mean for Bitcoin.

The big news today is that the oil markets have been absolutely savaged. It’s been crazy the West Texas Intermediate which in case you don’t know is the benchmark price for US oil. It fell to -40 today minus 40 yes you heard that right- $40 totally negative.

This is the first time in history that prices have gone negative for oil. This means that producers were paying buyers to take the oil off their hands because storage facilities are completely full and they can’t cope anymore because obviously oil going under zero.

Factors responsible for the Oil Crash

It doesn’t go in minus in a functional economy. This is because wild demand for oil has been crushed with the global economic downturn that is no surprise to anyone who’s been paying attention, but oil producers continued pumping oil out of the ground leading to an oversupply of historic proportions.

Do understand that this is just one oil market, the US oil market is the one that got savaged today. Internationally prices have been battered big-time over the last few weeks but nothing like that happened, that’s crazy although the fierce contest currently taking place between Saudi Arabia and Russia has actually done very little to support prices with both of these countries really committing to pumping more oil into the markets, of course, this negative US oil price it’s really only a specific reference to the price for crude delivered in May so this is the month in which oil demand is expected to be the lowest and supplies are expected to be the highest so it’s a very specific thing but still incredibly significant when you consider the overall implications of what this means.

Some people were predicting Bitcoin Price towards zero and not oil but all those mainstream talking heads were wrong again I’m not surprised actually but anyway, in fact, one of the largest market just completely imploded in Bitcoin it really just finished the day, only down around 5% which is not bad, considering what happened to the oil markets today although oil prices did see a bit of a recovery after Trump announced that the US will be buying up 75 million barrels of oil which is a pretty good decision to buy that oil fill-up the US strategic reserves on the cheap but collapse of the oil derivatives markets could be bad news for the wider markets as it really creates a strong risk that panic could spread to other assets in fact other markets might already look like the oil market did today.

It wasn’t for the fact that you had the Federal Reserve dumping trillions upon trillions into the economy, buying up junk bonds, putting in money for the repo markets for Wall Street but now that oil has led the way there is, of course, a massive risk for carry on effects to start playing out commodities across the board could get crushed potentially with the exception of gold of course a real domino effect of destruction could be underway what has happened

We’ve seen consumer demand just go right through the floor, basically the jobless rate in the USA at top twenty. Two million last week and the nail in the coffin for the economy is likely coming very soon negative rates in the world’s biggest economy. The USA is likely to be the next to join Japan and the EU and a few others in the negative rates game whereby you lose money if you leave it sitting in the bank. Thanks to bad rates cool stuff

Interest rates and deflation

that is what, is likely in store for the world’s biggest economy the simple definition of deflation in case you are not aware is that this is what happens to an economy that experiences declining prices for goods and services. Intense deflation was also a prominent feature of the Great Depression that fault of course the 1929stock market crash very famous in case don’t know about it and of course it means that businesses will face lower profitability and hire fewer workers while investing in less expansion of productive capital basically a massive economic slowdown.

How does a central bank fight against the forces of deflation?

By expanding the money supply which the Federal Reserve has already been doing quite aggressively for the last few months really but I mean we’re talking decades here of massive quantitative easing and of course by cutting interest rates to incentivize spending versus saving. To cut long story short, the economy is not doing super well in case you hadn’t noticed now in terms of investing. The place for a deflationary scenario are of course the classics by dollars yes I know the dollar is in big trouble long term you have trillions upon trillions being put upon the sacrificial altar of Wall Street. The stimulus package is one of the biggest handouts to corporate America ever.

Stimulus Package

The stimulus package involves companies that have spent the last decade soaring up corporate profits with stock buybacks, they now all have their hands out to get some of that free money. The dollar is supporting a broken system, the Wall Street banks are getting a trillion dollars a day and liquidity, it’s not trillion new dollars every day. It is just a trillion dollars put up for the overnight lending markets and total available daily. The small business bailout fund yeah I remember that was rated by hedge funds on hundreds of billions of dollars of a ride and internationally as well, to keep the dollar forex markets afloat but the pockets of the US. they are very deep and the ability of the US to manipulate the dollar and for the dollar to remain powerful, largely thanks to its status as the global reserve currency should not be underestimated in the short term.

Long term I remain bearish on the dollar, right now it is a flight to safety and a good portfolio will have a decent amount of readily available dollars sitting in it. The second play is, of course, to buy gold as a hedge against all of this insanity that you’re seeing going on right now at the global economy. Gold is one of the few things that I personally wish I had a bit of, in my portfolio because it is that relatively stable store of value that classic thing that’s been here for thousands of years and of course physical gold is far better than paper gold if you are going to be doing some gold investing because as oil just proved a run on the markets it is very possible and due to all the trickery that goes on in the gold markets things like there may not be enough physical gold for futures investors to take delivery,

Should a run on gold happen?

avoid the counter party risk and hold the real stuff in your hand if you can

What does all of this mean for Bitcoin?

Bitcoin represents in terms of digital scarcity but do understand that there does remain a strong risk that Bitcoin could be drugged lower with wider market moves but perhaps enough of the short term speculators have moved aside for the moment and Bitcoin can get on to doing what bitcoin was designed to do and have that really shining breakaway moment from the traditional markets one thing remains sure for me though having Bitcoin in my portfolio makes me sleep well at night even if the dollar value goes up and down long-term I know that I’ve got a portion of a very scarce asset in the world’s strongest computer network, so that to me holds an incredible amount of value and I think it’s something that a lot of investors are waking up to and the more the Bitcoin gains interest the long-term picture for Bitcoin remains very positive. Robots too are helpful in trading Bitcoin if you are new. This is why personally I keep up my usual play of just dollar cost averaging into Bitcoin into a theory. I do a little trading all stuff on the side but really it’s mostly just stacking stats stacking way and then chill in with an eye on that long-term game.

Are you ready for Digital Dollar?| Digital currency is coming!

Digital dollar

What I’m talking about is the Digital Currency, are you ready for the digital dollar. Read on to know more about the latest development on digital currency and how block-chain projects are most likely connected right back to the USD’s next transformation. In mid-March, the treasury department announced the hiring of Brian Brooks, Coinbase’s Chief Legal Officer, who was highly involved in the legal red tape of getting USDC the Ok from the mix of US regulators. And this was before the stimulus bill was announced, by March 23rd….there were draft Stimulus Bills, with digital dollar language in them. So there are many layers of this onion to peel back on digital currency….of course, there’s the Federal Reserve including the treasury department, but there is also the layer of the clearinghouse, and finally, something called ISO20022.

What is ISO20022?

It’s the new global standard for payment messaging, that isn’t new, it was created and first published back in 2004 by the international organization for standardization, the group, that makes sure things are ISO certified, in industries across the globe. So, in 2012, the FED created a stakeholder group whose goal was to assess the value of adopting the new ISO standard. This lead to the publishing of a paper in 2015, titled Strategies for improving the US payment system. And in it, with stakeholders including the clearinghouse, they assessed ISO20022 in a business case, and from the recommendations.

Also Read: How Ruja Ignatova Scripted Onecoin Scam?

The study concluded that a phased approach to ISO 20022 adoption should be employed in the United States to reduce risk and cost. This includes 3 phases.

Phase 1: Education

Phase2: Adoption for cross border payments

Phase 3: for domestic payments.

Almost 3 years went by since that paper, and in July of 2018 when the New York FED board of governors released the statement that they were looking to adopt the ISO20022 message format for the Fed wire Funds service as it would be an international standard that would replace Fed wires current payment messaging format. And as we can see, the transition to ISO would take place in 3 phases with the FED, beginning in 2020 and ending in 2023. Now here is where things start to accelerate.

November of 2019, Jerome Powell, head of Federal Reserve sent this letter to Congress, and it said that they were exploring whether it makes sense to issue its own digital currency that could be used by households and businesses a central bank digital currency, or CBDC. In the letter, Jerome Says

 

“The Federal Reserve is not currently developing a US dollar CBDC. but continues to carefully evaluate the costs and benefits of issuing a general purpose CBDC, defined as a new type of Fed liability that could be held directly by households and business”

 

So no actual work in November, but like I said, things accelerate fast. February 5th of 2020, Fed Governor, Lael Brainard gave a speech at the Stanford Graduate School of Business in California. No recording, but the FED has a transcript of the speech. In it, she talks about Digital players in the payment space, from technology firms, and increased competition…thus the FED needs Real-time infrastructure Lael says

 

“We are committed to closing the gap between the transaction capabilities in the digital economy and the underlying payment and settlement capabilities. Recognizing that consumers and businesses across the country want and expect real-time payments, and the banks they trust should be able to provide this service securely, this summer, the Federal Reserve announced that it is building its first new payments retail in more than forty years—the Fed Now Service. Fed Now will facilitate end-to-end faster payment services, increase competition, and ensure equitable and ubiquitous access to banks of all sizes nationwide. Together, the Clearing House’s RTP and Fed Now are moving the U.S. banking system to real-time retail payments. These systems will enable consumers and businesses to settle retail transactions in real-time, at any time, and allow them to manage their money with greater flexibility. RTP and Fed Now should significantly increase the speed and efficiency of the U.S. payment system.”

She then goes on to talk about Central Bank Digital Currencies, how private banks, and other countries like China, are rapidly moving with plans for digital currency. She explains “Given the dollar’s important role, it is essential that we remain on the frontier of research and policy development regarding CBDC. Like other central banks, we are conducting research and experimentation related to distributed ledger technologies and their potential use case for digital currencies, including the potential for a CBDC. We are collaborating with other central banks as we advance our understanding of central bank digital currencies. So the way money is going to move, is going to rapidly change. FED now and Clearinghouse RTP, are in the works…..and there is potential for a US central bank digital currency to move through these systems.

Well, as we know, just a month later, in March we had Brian Brooks brought onto the Treasury department Team specifically to the office of comptroller, reuniting with his old friends from One west bank. And we know, what Brian thinks, private companies should build the tech, while the government sets monetary policy on digital currency.

What private payment organization does the Federal government and regulators love? SWIFT, or the society for worldwide interbank financial telecommunication. And you know Swift, they are the transfer powerhouse…according to the treasury, they handle 5 trillion dollars….per day. And what has SWIFT recently said? Well just last month, they announced their new approach to ISO 20022 adoption, which, gives banks a little leeway to full adopt, pushing out requirements for banks from 2021to 2022 but still sticking to their original roadmap, of a complete overhaul by 2025.

So now we know, the FED is getting an overhaul, FED wire, the Clearinghouse is getting an overhaul through RTP, and their favourite private system is getting redone.

What blockchain projects are involved with this?

we zeroed in on Coinbase and their USDC. It’s built, and Brian Brooks was a big part of it. It’s something that the Federal Reserve likes, a coin backed by their greenbacks. So this is definitely suspect number one! And as we know, USDC is an erc20 asset built on Ethereum, so that is big news for the Ether crowd if so. But in my personal opinion, the stable coin isn’t what we should be worried about, as I foresee many private organizations, attempting to create their own version.

As just 3 days ago, another company Netcents declared their readiness for the expected Federal Reserve Digital Dollar. The competition will be fierce, and there will be many stable options. But how those stable coins are transferred, is a much different story. So this goes back to Swift, the FEDs favourite private transfer system.

Swift is conforming to the ISO20022 standard through SWIFT GPI, which they say will digitally transform cross border payments. Well in January of 2019, SWIFT announced swift GPI link, a gateway that would enable GPI to E-commerce and DLT platforms. And the proof of concept would launch with the firm R3. Well almost a year ago, in March of 2019 we got a very informative webinar between SWIFT and R3, Swift GPI link is an oracle service. It’s an ORACLE that is system agnostic because they plan on working with a multitude of services blockchain/DLT and the new traditional ones like Fed Wire. And it’s easy to see, just going to smart contract.com, of which is chain link, you see their first partner.

“We’re proud to be working with SWIFT on their own SWIFT Smart Oracle. Allowing smart contracts on various networks to make payments, send governance instructions, and release collateral with over 11,000 banks”

Sergey, the flagman himself, has clearly explained…..but that was back in the day during the proof of concept phase, well just 6 months ago back in September, at a chainlink meet up in Paris, something went quietly under the radar. So from my research, we should be keeping a keen eye on a couple of projects, USDC. I mean, just look at the explosion in supply, once news of the digital dollar started circulating, a growth of 62% in just a month, and USDC supply is at about 700 million. Something is bubbling regarding this stable coin.

Learn the Economics of Market

Find yourself as the head of state of some country during an impending economic crash share markets are down businesses are closing, unemployment is rising and everybody is looking to you to provide economic guidance on how to weather this turmoil, there is so much to consider every economic downturn is similar but always very different at the same time what worked last time may not work this time. It’s hard to know where to start monetary policy fiscal policy mass toilet paper subsidies well lucky for you Mr. hypothetical president you have come to the right place to find a symbol to follow guide and how-to on your economy but there, unfortunately, isn’t a magic bullet.

 Economic Downturn.

You are still going to have to ask some serious questions about trade-offs that you will need to make amidst the chaos of these tumultuous times the first big decision is what to do with those interest rates. An important point to know about interest rates or cash rates is that they are set by central banks and then passed along to average consumers by regular banks the government of a nation and even the head of state doesn’t actually get a say in the decision making the process of the central bank because they are technically an independent entity in a strange sort of way ignoring that most central banks try to work with their local governments to achieve two main themes stable inflation and economic growth. In that order economic downturns are bad and it normally leads to people spending less money when people save more of their income because they are hypothetically let’s say stuck at home or they are a little bit more uncertain about their future or even potentially because they have been made redundant that means that there is less money exchanging hands out there in the economy this does a few things, of course, it means that businesses will make less money which means that they won’t be able to employ as many people which means that more people get made unemployed which means those unemployed people won’t be able to go out and spend money and so the vicious cycle continues and this is really bad.

Also Read: Bitcoin Revolution Review

How to Combat the Problem of Deflation.

To combat this, businesses will normally react to this lack of demand with large price drops. They will put their stock on a sale or offer discounted airfares, lower the price of their services, but regardless, the net result will be that the general price level of things is lower. The price of goods falling is called Deflation and Deflation is horrifying to a central bank remember they care about stable inflation far more than they actually care about economic growth because central banks are there to look after the well-being of their currency, not necessarily the whole economy, so they need to do something to fix this. The go-to reaction is to lower interest rates, mean that people can access credit more easily and banks are more willing to lend more money. It also gets more money out into the system as people are able to borrow money at cheaper rates to buy things like cars or phones or houses. In recent years, we have seen the rise of zero interest instalment style lines that let consumers break their purchase down into Four easy payments of a 150 dollars over four months rather than paying 600 dollars upfront these sorts of services have been made possible by cheap interest rate and the other thing is, this type of borrowing does create demand for goods so suddenly maybe your local hardware store can hold off those flash sales and solve the problem of Deflation.

A happy little side effect of inflation is that it means sure people’s money is worthless and every year that actually encourages them to go out and actually use it to invest or consume and hence it’s also good for the economy overall. so it sounds like a pretty easy decision if you see a big scary economic downturn coming to drop those interest rates or at least ask your central bank very nicely to drop those interest rates and hope they do and then hope the consumer banks of the market also drop their rates and then hope the consumers of the market actually see the difference in their interest rate payments and therein lies the problem of monetary policy it can be really slow to take effect and oftentimes by the time that it has it’s already too late if only there was something that you as the head of state of made up land controlled directly

Fiscal policy

Fiscal policy is basically the policy of the government around how much it will tax who and what it will spend, where in general

Contractionary Fiscal Policy

Contractionary fiscal policy is when a government decides to tax its citizens and its businesses more than it will spend in its budget. This is normally a good idea during a period of strong economic prosperity in the same way that it’s normally a good idea for you to not spend every penny you make and set aside some money to build up a savings account or even invest into a portfolio the same general rule is true for entire nation but the good times are over and so it is time to turn everything around and enact expansionary fiscal policy now this is the good stuff

Expansionary Fiscal Policy

An expansionary fiscal policy basically means that you tax less than what you spend but that is a very basic way of looking at it what really makes fiscal policy fantastic is that it is very precise and fast-acting there are often hundreds of types of different taxes in most modern nations from general stuff like income tax business tax land tax sales tax to really specific things like liquor taxes. If you are a government playing around with fiscal policy you get to pick and choose what taxes to lower, you might say businesses are doing it tough right now so maybe we will just lower their business taxes for this year or whatever works for that specific scenario. The other thing is it is really fast-acting if you were to lower income taxes effective immediately people will feel that from their very next pay-check and trust me if people feel, even just a little bit richer, you better believe that they are going to go out and spend that little bit of extra cash hitting their account on a Friday night.

Fiscal stimulus

On the other side of the fiscal policy equation, you also get to splash some cash during the 2008 financial crisis. The Government of Australia gave $900 to every taxpaying resident of the country this is called fiscal stimulus. The hope of this policy is again that it will get people to go out and spend some money on a new TV or a new couch or whatever this spending means more people have jobs and those people with jobs can go out and spend a salary. They might not have otherwise had and so the cycle repeats itself this. The overall impact of money being spent leading to more money being spent is called the multiplier effect and it works both ways.

Understanding the multiplying effect

The multiplier effect is different for every type of spending, for example, the easiest to understand the multiplying effect of giving money directly to an average citizen is pretty high because let’s be honest with ourselves, most people spend a good majority of the money that hits their bank account pretty much straightaway potentially a more reasonable type of fiscal stimulus is infrastructure spending this is using government money to build a new bridge or a highway or an airport or whatever this still gets money into people’s pockets to be spent because it normally takes a big workforce. To make these sorts of projects happen and you get the added benefit on top of this but actually having a piece of infrastructure after all that spending is done the drawbacks of this is that the multiplying effects are not quite that strong, sure there will be labourers and tradespeople and engineers to construct these projects but a good portion of that money will also go into construction companies that tend to hold their profits, a little bit more tightly during these trying times.

The other thing with infrastructure spending stimulus is that it is slow by the time a new highway is planned and zoned and engineered, the economic downturn might have already been and gone with the damage done that being said infrastructure spending is still worth considering because it potentially does two things, First, it helps your economy now by employing people and two it helps your economy in the future by providing something of value. So all of these solutions are great tax policy can be used target people or institutions that could catch a break and fiscal spending can get people that much needed cash injection to boost their spending during these more trying time but there is one problem with all of these measures everything we have explored so far has been about getting people out there spending money during an economic downturn.

Read: Bitcoin Billionaire

Economic crisis on the supply side

But what if your economic crisis is on the supply side, what if hypothetically something has caused factories to shutdown airplanes to stop flying and ships to stop shipping this is something that doesn’t necessarily cause problems on the demand side of the equation but rather it means even if people did want to go out and shop for things they may not have anything to shop for this is a much harder problem to deal with as a government. If supplies dry up it increases the price of goods which is OK in moderation but too much causes runaway inflation as people desperately outbid each other for that last roll of toilet paper or whatever this all but makes monetary policy useless because if there is already inflation you are not going to solve any problems by causing more inflation which means the attention turns exclusively to how governments keep business alive which causes problems in and of itself major corporations are one of the largest influences on modern economies today they often employ tens of thousands of people and provide services that are all but crucial to our modern way of life and the thing is, they know it.

Mega Corporation CEO Role.

CEOs of these mega corporations really have one primary goal, maximize the return for shareholders of the company and more specifically maximize the return of shareholders in the short term. The ways corporate CEO bonuses are normally structured so let’s say that such a CEO is presented with a choice, they have a record year of profits complemented by a very generous reduction in corporate taxes so they find themselves with a lot of cash. Now they can save this money into a corporate equivalent of an emergency fund, they could reinvest it in growing the firm or they could use this wealth to issue share buybacks and massively inflate the value of the company shares on the public market. Share buybacks actually achieve the goal of a corporate CEO to increase the returns of shareholders so it’s really the only logical choice they may also reinvest, of course in the hope that be sorry investment into the company pays off in even bigger profits than next year but the last thing that they are going to do is invest that into an emergency fund and here’s why money sitting around is money not working, to increase the returns of shareholders and that means no big bonuses from Mr. CEO

Emergency Fund OR Bail Out Package

The other thing is that these days they don’t need an emergency fund because they can count on the government bailing them out. In 2008 the big banks were for the most part bailed out by governments around the world and today airline companies, with little to no contingency plans are likely to be bailed out again by governments around the world. If you are a huge corporation that provides an essential service to our nation, it just makes sense to over leveraged yourself during the good times to deliver huge returns, make huge bonuses and then wait for Uncle Sam to bail you out during the bad times. In fact even companies that try to be more responsible and save cash may actually fall into the trap of being uncompetitive compared to their more reckless rival and so they kind of forced and the same pattern of bad behaviour

Moral Hazard

This assumption by large and essential institutions that they are pretty much immune from bankruptcy is called moral hazard and it is one of the most difficult things to workaround if you are the leader of a country during a time of crisis on one hand it may feel really good to be very vindictive and give them a big fat welcome to the free market that they lobbied so hard to maintain but if you do that you may find your nation without a working airline or operating grocery stores or functioning banks so then the alternative is just to give in and be there to prop them, backup again all over but this is risky too. If you show corporations that you will be there to support them through thick and thin they are gonna go right back to taking crazy risks which are going to get you back to where you started a decade or so.

What is the Solution?

Later the real secret is, you have to find a way to maintain the services that these institutions provide while also punishing the shareholders and executives that facilitated this type of reckless behaviour but you also have to do that without sounding like some crazy commie out, better seize the means of production so you know best of luck with that economic downturns can be scary times for all members of society. People can lose jobs and homes and livelihoods and governments can lose power there are tools in place to steer an economy but at the end of the day, no market can be controlled completely, only managed. All you can do, if you ever find yourself as the head of state of a nation in the midst of a crisis is to understand the tools at your disposal and how they work trying to use the wrong thing in the right way, maybe just as devastating as doing nothing at all.

Conclusion

Monetary policy, discretionary spending, taxation they all do different things to achieve the same result, a good economy that works productively to provide for the well-being of the participants within that economy, of course it wouldn’t be economics explained article if I didn’t mention stability and confidence but it’s just such an important thing during these times at the end of the day if you have a nice stable economy with confident participants you are going to be just fine. Your job is to maintain that and don’t let those pesky corporations work too hard to undo all that stability you just made.

What influences Bitcoin Price

Bitcoin is a cryptocurrency which was designed by Satoshi Nakamoto and launched in 2009, that works very differently from conventional monies or fiat. A blockchain can be used to document all of the transactions, reveal the trade history of each unit and also to establish ownership. Unlike conventional monies, trading of Bitcoin is somewhat different. The money is decentralized and can be maintained by a community of both privileged miners. The cryptocurrency has proven that an overall upside tendency with little downfalls between in its own evaluation because of its debut. However, the question arises what decides Bitcoin’s cost?’. Bitcoin’s worth is determined by multiple variables, including:

There’s a fixed number of 21 million components of Bitcoin which will be generated. With each passing year, fresh Bitcoins are being published at a lesser pace.

The complex process of cryptographic mathematics

Each Bitcoin that’s mined entails a complex process of cryptographic mathematics issues that miners all compete to fix. Once more miners join from the contest of solving the issue first, the issue gets harder and thus more costly. This general raises the hash speed of this blockchain that resultantly needs high hash electricity for quicker computing that overall increases the odds of including a block whilst raising the mining price. This price of mining a Bitcoin also affects the value of Bitcoin from the marketplace.

The invention of cryptocurrency has resulted in a lot of cryptocurrencies being traded on the industry. The widespread contest has split the shareholders and helps to keep down the prices. Bitcoin has had an advantage over its rivals as a result of high visibility. Following a quick growth in the prevalence of cryptocurrencies, there’s confusion over which ruler will set the principles for cryptocurrencies which have generated doubt. Bringing at law impacts prices in two manners. It raises demand as it gives a guarantee of safety to retail investors that are insecure about bitcoin. Secondly, it can decrease price volatility by enabling institutional investors that consider bitcoin stocks are either overvalued or undervalued, to utilize their large resources to make bets which bitcoin’s price will move in the opposite direction.

The press influence has a specific effect on Bitcoin’s worth too. Promotion of this Bitcoin can draw more investors consequently increasing the purchase price of it. To the contrary, negative marketing on social media can dissuade investors from diminishing the value of their Bitcoin.

Overall, unlike fiat and conventional stocks, bitcoin works on another airplane that’s influenced by the accumulation of unique facets. Even though these factors have made bitcoin volatile for a very long period now, it’s called the core principles of bitcoin i.e. adoption tends to kick volatility from the marketplace and present stability in the last.

How Ruja Ignatova Scripted Onecoin Scam?

Cryptocurrency prices were changing rapidly, investments were growing 2X,3X in almost every six months. This kind of return which Bitcoin was delivering attracted many people attention and people became fascinated by this currency. You might have also seen some of your friends or relatives had also started investing in these cryptocurrencies after being exited.

Period Currency Price (USD)
December(2015) 1Bitcoin 500
December(2016) 1Bitcoin 780
June(2017) 1Bitcoin 3270
December(2017) 1Bitcoin 19784

But most of the people came to know about Bitcoin when the price had rocketed high. Very few people had invested in the early days of Bitcoin as it was not so known but people who had invested in those days were rewarded with good returns. But those who joined the party late were not so lucky, there was not much left for them and few of them even suffered losses.

As this Bitcoin Boom was going on Scamsters entered the market and tried to take advantage of this ongoing boom. One such person was Amit Bhardwaj, he told people to submit One Bitcoin in his company named Gain Bitcoin and promised in return, 1.8 Bitcoin after some time. He also claimed to have his Mining Company in China, People trusted him and submitted Bitcoins in his company, but he fled away with coins but was arrested later on. Many such Scams erupted in this Boom period of Crypto.

During this period Dr Ruja Ignatova thought of a very Big Scam and how to take advantage of this ongoing Bitcoin Boom. Let’s understand how she planned the scam

Who is Dr Ruja Ignatova?

Dr Ruja Ignatova is a Bulgarian national, she Incorporated a firm in the United Kingdom and started telling people and investor that she has developed a rival of OneCoin which will have more value than Bitcoin in future.

Ruja completed her PhD from Oxford University and was formally employed by Mckinsey. She was fluent in English & several other languages. Her Impressive profile and her clear vision made people believe her words and people started investing in Onecoin. She told that One coin is a safe currency based on Blockchain technology & they also do KYC to make sure that this is not used in any illegal activity. In her words “the first cryptocurrency with a monthly audit of its blockchain.”

Promotion of Onecoin:  To promote Onecoin Ruja started organising Events and conferences and different places. She started telling people that Onecoin will be bigger than Bitcoin and in future, it will be the biggest in the World and next two years no one will talk about Bitcoin and the only crypto which will be in peoples mind will be Onecoin. People can use Onecoin for payments. she asked investors to join the revolution and invest.

In her words “In two years, nobody will speak about Bitcoin any more!” “OneCoin is easy to use, OneCoin is for everyone […] since we mined our first coin in January 2015, our growth exploded,”

What made People Believe her

Ruja Focused on four important things:-  

Hype: She created hype around Cryptocurrency and Onecoin and told people how popular Onecoin would be in future and the only crypto which people will use. People have witnessed bitcoin revolution so they believed her Hype.

Fear of Missing out: Most of the people heard about Bitcoin when the prices were too high so the people who entered late were not able to get good returns. Ruja told investors to join early to gain maximum

Saftey: Ruja Told People that Onecoin is very safe and it uses Blockchain Technology, which is very safe so no has to worry about the safety According to Ruja this was “platform for innovation that will change the financial system.”

Fortune: She kept telling people how much money they can make in a short period.

She grandly organised her Events and conferences to create an impact on the investors also she used Forbes Magazine edited paid ad showing that she was featured by the magazine to influence the investors. People were influenced and they started investing heavily in Onecoin as they didn’t want to miss the opportunity.

What is OneCoin?

In reality, Onecoin was not a cryptocurrency. OneCoins weren’t actually mined using computer resources It was all fake, no mining was going on and no blockchain was being used. They were using SQL servers which do not support cryptocurrency. The price change was manipulated and programmed. Everything was fake. They allocated fake coins and took Money. People in their greed for quick returns never asked anything. Ruja knew this can’t go forever, so to make more money quickly she decided to market her product differently. She wanted to reach more people in less time, for this she started webinar and organized the events in different locations around the world like Dubai, London. Her events were very grand to attract investors. People were influenced and invertors from around the globe started investing in Onecoin. She had investors from countries like China, the UK, South Africa. Chinese investors invested around half a Billion Dollars around(Jan-Jun)2016.

The next weapon which Ruja used to promote her scam was MLM. She knew if she has to go fast and reach more people then MLM is the best thing. She organised the meeting with the top leaders of MLM also known as influencers and convinced them to work for her by offering them a heavy commission. These influencers then reached to their network of salespeople to promote Onecoin. This step made Onecoin more popular, everyone was talking of Onecoin and the investors in Onecoin increased to manifolds. MLM influencers also invested part of their commission in Onecoin for quick returns not knowing that they were investing in the fake product. Ruja, on the other hand, was making Billions from this scam. She had promised investors to Open an Exchange where coins can be exchanged for Cash but this Exchange opening kept on delaying which made investors suspicious. Investors were raising questions about the authenticity of Onecoin. In October 2017 Ruja announced the Event date to solve the concerns of investors and also exchange opening date. People came to the event and waited for Ruja and kept waiting but she didn’t turn up. Later it was known that she had done scam and fled, No one knows where she had gone. Investors had lost all their investments. Scam Size was around $5 Billion. Ruja had invested the money from the scam in Properties in Bulgaria, She also owned a yacht and other luxuries. While she was on a run, her brother Konstantin Ignatov was arrested at Los Angeles International Airport in March. He pleaded guilty to money laundering and fraud charges and is now facing a maximum of 90 years behind bars.FBI is also looking for Ruja Ignatova for Money Laundering, cheating and other charges.

How was she able to do such Fraud?

Cryptocurrency is a new area, People are not much aware of this field no regulator is looking after, this makes easier for scamsters like Ruja to do the fraud. Another reason is the Ponzi Scheme. People want quick money These people promise quick money in less time, so people get influenced, and in greed, they get trapped losing their hard-earned money.

 

Bitcoin Single Biggest Day Dip

Bitcoin has just taken the single biggest day dip that it’s had in years

Bitcoin has just taken the single biggest day dip that it’s had in years technically this happened over two days I guess but 51 percent to the bottom over 50 percent in 24 hours 63 percent if you’re measuring from the local top that we had about three weeks ago 63 percent you know what this looks like to me about four years ago back in August of 2016 I’m gonna make a comparison to four years ago it’s not exactly the same I get that you know the dip back here not as severe I get that but there are some similarities for instance the market structure looks similar besides that just like today in 2020 back here in 2016 this was about a year after the market had been going up for a little over a year a lot of people were suspicious back in 2016 of the this first rally right here see this first rally in 2016 was caused because a lot of people bought into a Ponzi scheme so people weren’t sure if it was leave of, if it was legitimate so this second rally the one I’m comparing it to people felt a little bit better about this one because you know they just put a little bit more of their trust and boom shakeout just like we have today yet after this Bitcoin never went that low again.

I was disheartened to see a 50% shakeout in Bitcoin of course I was disheartened did I ever think of selling did I ever think of capitulating no I honestly didn’t the fundamentals for Bitcoin are still there, you know that the better question is if Bitcoin is supposed to be this uncorrelated asset Hey bitcoins supposed to be this hedge what the hell is going on hedges are not supposed to do this and the global markets are tanking all across the world if Bitcoin was ever gonna be a hedge wouldn’t now let’s see.

Comparing 2008 global financial crisis

I want to bring you back now to twelve years ago this was before Bitcoin even existed so we need to go to traditional markets I’m talking of course about a special time in financial history and that was the 2008 global financial crisis many people consider the 2008 global financial crisis to be the worst financial crisis since the Great Depression now that’s of course before 2020 but everything in 2008 tanked including the hedge gold did you know that gold also suffered a massive dip in 2008 despite the fact that it truly is an uncorrelated hedge why did that happen gold is supposed to be the hedge well I mean Gold probably dipped for you know a multitude of reasons it’s probably most likely you know there’s fear and negativity in the air in 2008 maybe some people needed cash maybe hedge funds were managing their money overall I think it was just because there was a lot of fear and negativity in the world at this time but guess what gold is a hedge a few months passed and gold went right back up and you know the year passed and it went right back up and pretty soon gold was rallying higher than ever so the point is even hedges are susceptible to massive sell off so hopefully just like gold in 2008 hopefully we see Bitcoin rallying backup as well it’s not just me who thinks that by the way Ari Paul is the chief investment officer for an investment firm and he thinks something similar he says he says I’ve had a really simple mental model for Bitcoin in a severe equity sell-off that’s been unchanged since literally 2006 look at gold heading into during and coming out of the 2008 financial crisis I think that’s Bitcoin this time around and that’s what I think.