Proof of Work (PoW) Explained

What is Proof of Work?

Proof of Work, also known as PoW, is the consensus mechanism to secure the network by using an algorithm. That, while also creating new blocks and issuing coins as compensation. In simple terms, miners try to solve really complex mathematical equations through a process that is energy-intensive. The goal is to create blocks and to receive Bitcoin rewards in return. The technology of the blockchain in charge of powering Bitcoin, just as many other cryptos, is simply a decentralized database. It is driven by nodes that are distributed all over the globe; there are no authorities to supervise, call the shots, or establish the rules. 

Then, how is it possible for everyone to agree on the substance of the ledger? Well, that’s when the proof of work consensus algorithm plays its part. It secures the ledger and the network from attacks of “double-spend,” simultaneously, it adds blocks of transactions to the chain while it generates rewards. This kind of mechanism needs the miners to compete in solving complicated math equations using their equipment. It’s a highly complex process, it’s meant to be that way, but the results, the rewards are potentially precious.

The Environmental Impact

Proof of work is needed in order to keep Bitcoin’s operation going. The consumption of energy required has suffered great scrutiny, and that’s the reason why other cryptos have chosen the proof of stake mechanism instead. We can compare the carbon footprint of Bitcoin to the one of whole Morocco. Tesla, the carmaker, pointed out the problem when it decided that it wouldn’t take Bitcoin payments anymore. They made this public in May 2021, claiming that the impact of mining was too significant, and they didn’t want to take part in it. Constantly, BTC supporters claim that the estimates of the use of energy mentioned frequently are misleading. 

PoW or PoS?

Another mechanism that has taken a stronghold in the industry of blockchain is proof of stake. It all started from the concerns of finding a new way around the elevated consumption of energy than proof of work generates. The proof of stake system is based on validators to hold a big amount of crypto in the network and for them to validate transactions while earning rewards. Some other coins also use the PoS model, such as Algorand, Binance Coin, Cosmos, and Cardano. Soon, Ethereum will be transitioning to the same when the Ethereum 2.0 upgrade gets wholly implemented. This improvement will significantly reduce the amount of energy consumption; experts estimate that it will be reduced up to 99.95%.

Since PoS doesn’t need sophisticated high-powered equipment for mining, reducing said consumption is possible. Although, some claim that this model will only help rich people get richer because validators have to take an enormous amount of coins to participate. At the same time, this encourages users to hold on to their coins instead of spending them.

A Quick Guide to Stablecoins

What Exactly Are They?

Stablecoins, as we know them, are the cryptocurrencies backed up by the currencies issued by the government, also known as fiat currencies. Stablecoins are different from other cryptos because, unlike them, the price of stablecoins is constantly steady. They’re usually used as a value store or account’s units due to their stability. Since creating cryptocurrencies, they’ve been known as volatile assets when we talk about their price. It’s common for the prices to crash or jump, which prevents them from being valuable as everyday services or goods since it implies a high risk for merchants and vendors. 

In theory, a stablecoin has a stable price because it has a fiat currency such as the USD backing it up. In simple terms, their prices are regular because of the fiat currency itself. The most common currencies backing up stablecoins are the US dollar, British pound, Russian ruble,  Israeli shekel, etc. Some can be decentralized, others centralized, and they all can have diverse strategies to reach price stability. 

Examples of Stablecoins

A few examples of stablecoins are Tether (USDT), one of the first and probably the most famous ones. It claims to be backed up by USD called collateral. Other examples can be Gemini Dollar, oneFIL, and CACHE.

The Most Popular

In the crypto space, the most common stablecoins are pegged to the US dollar, such as Tether, True USD, USD Coin, and Binance USD. Although, there are other cryptos backed by different fiat currencies that are also popular. Such is the case of GBP-pegged crypto Binance GBP Stable Coin, EUR- pegged Stasis Euro and backed by gold CACHE.

How Can You Use Them?

Like the majority of the assets in the crypto space, stablecoins are used mainly as a value store or a way of exchange. Because of their low volatility nature, they provide a “safe haven” when the markets are shaky.

Why Are They So Popular?

As the best example of how popular they have become, we have Tether, the second most traded crypto after Bitcoin. Tether has a volume of trading of more than $70 billion every 24 hours. Once you know the principle they’re based on; it is easy to understand why someone would choose them. Their stability and backup provide investors with trust and confidence, knowing that their money is safer than in other assets. 

Disadvantages?

The proof that these coins are backed up by the reserves they claim to have, is hard to get. For example, Tether has never provided conclusive evidence that the currency is backed, which increased the rumor of it being issued out of thin air.

A Beginner’s Guide to Technical Indicators

What Are Technical Indicators?

Technical Indicators are tools employed by traders to understand the supply and demand of marketable securities. When put all together, these indicators create the base for technical analysis. They are commonly used to set buy and sell signals. These indicators help us understand the stock market’s behavior now or how it will work in the future. This can be very useful considering that our primary goal is to profit from our investments in the markets.

How Can We Classify Indicators?

There are two groups: economic indicators and technical indicators. The first are statistics measuring the growth or decline of the complete economy or a specific area within that economy. They are used for fundamental analysis since they enable us to quantify the economic and industrial conditions at the moment. These indicators are commonly used to supplying info about the future potential of public companies. The second, technical indicators, are used for predicting specific changes in price or trend patterns of an asset.

Lagged Indicators

These are a group of indicators that exhibit a factor of the economy that can be measured after an essential change in the economy has happened. These kinds of indicators can be classified within the technical indicators since they follow the price movements of an asset. That name is given because they show the results from previous actions in a determined time frame. These indicators are very convenient to track signals in the market as they confirm a trend’s strength before making any decision. This is because lagged indicators wait for basic movements within the market before they provide a signal.

On the other hand, although they can be helpful for the trend’s confirmation, there are also a couple of disadvantages. First, they cannot predict a movement in the market; they can only confirm it. Second, the signal to enter a particular position will always be delayed, which doesn’t allow traders to take advantage of the trend’s momentum.

Some Indicators With Lag

Averages – this indicator is used to recognize a specific trend of an asset in the market.

MACD – is used to interpret the trend and shows the relationship between two moving averages of the prices of a security in the market.

Double EMA – has a reduced lag, seeking to provide information more quickly to the trader.

Crossover – crosses data so that the trader can observe price characteristics and predict its movements.

Crypto Mining With Your Smartphone

If you know about the concept of crypto mining, you must understand what cryptocurrencies are and how they work. A new and innovative way to do it is through your smartphone. The most common questions about this subject are “does it even work?” and “how is this possible?” And the answer to the first one is “yes, it works”, we’ll explain next how this is possible.

How Does Crypto Mining Work?

It is possible to mine with a device that has android as an operating system. Although, using your mobile device might not be the best option. This method is far from the way the traditional mining hardware or software works. Also should be taken into account that using your smartphone for crypto mining might not deliver a good enough profit worth all the effort and time you have to put in it. The last is because of the early stage that mining with your phone is currently at. 

Let’s clarify that smartphones don’t have enough power to withstand the task. In fact, miners use more powerful tools, which make smartphones practically useless. 

What About The Environment?

Regular miners use powerful PCs that are more likely to use GPU power or computer processors, which consume significantly more energy. Based on the above-mentioned, mining crypto can be considered an industrial activity. People nowadays invest in ASIC crypto mining devices to obtain a more significant margin of profit. Pool mining aims to get more power to increase miners’ chances of solving algorithmic problems and getting rewards.

This is how crypto mining on mobile works as well but on a smaller scale. You should be able to join the pool with your device. Although, the percentage of the shared rewards will be significantly smaller, following the power of your computer.

It’s important to mention that it will take a few months before your android generates a small fraction of one bitcoin. You can easily understand that it’s not an easy process, and the popularity of bitcoin keeps increasing exponentially.

Conclusion 

To start crypto mining is relatively easy. The only thing you need is to get a smartphone and an app that will help with the process of mining. You should be able to make use of your phone meanwhile the app is working in the background. On the other hand, the wrong side of it is that all these applications can affect the performance of your phone overall. It could cost you the money you intend to make from this operation in the long run. 

Blockchain Technology Helps Businesses Grow

Blockchain technology has become one of the most used technologies today since it became famous for making bitcoin possible. But, besides bitcoin, it can be helpful for any company. Such is the case of websites for sports betting and, in general, all kinds of websites. When talking about betting, it allows payments in crypto. That enables a system of trust for the user to feel comfortable using the websites. Also, it provides security and total anonymity for the users.

Besides this sector, the truth is that the Internet is being revolutionized by blockchain technology. That can yield a lot of benefits for all kinds of companies. If you have a business and you wish to implement blockchain to be one of its engines, here are some advantages to consider.

More Secure Financial Transactions 

The main advantages of blockchain technology are safety, trustworthiness, and irreversibility since it enables the transactions from user to user. The goal is eliminate the need for intermediaries to facilitate financial relationships that are reliable and permit to decrease costs.

Data Can’t Be Faked With Blockchain Technology

Among these significant advantages that blockchain can bring to your business is that, when financial transaction data has been uploaded, it will be impossible to falsify and, in turn, cannot be erased.

No Loss Of Information

Thanks to the blockchain technology, the information or the service will not be lost and will continue functioning in case the Network falls.

Cost Saving

For your business, implementing blockchain technology will cost less. This is because it is a cost-effective technology. That is possible by eliminating intermediaries as it offers the possibility of streamlining communications and processes.

Speed

Another advantage is that it doesn’t have a central authority or intermediaries, as mentioned before. It makes all the information always within reach to all Internet participants at the moment. What this causes is that the process of transmitting data becomes more straightforward. It yields data to be sent at a higher speed and also managed faster. 

Recently, blockchain technology has been a significant technological disruption for all types of sectors. Above all, thanks to the evolution of software and devices, it is possible to link transactions through a global distribution system.

Of course, there are still some challenges regarding security, legality, adaptability, privacy management, and intellectual property. But companies will be preparing to fight against these challenges and make blockchain the technology of the future.

Mining Restrictions in China Open Possibilities to the Rest of the World

How It Started

Back in May, the Chinese government tried to end all the economy involved with mining bitcoin. Big bitcoin miners felt as if they had just won the jackpot. The government in China implemented restrictions that caused the cessation of the majority of bitcoin miners in China. They represent about half of the production of this crypto in the world.

The regions where the miners settled are Xinjiang in the north of the country, in the south Sichuan and Yunnan. Now they are looking for a new place to establish their extraction base. One of the countries considered is Kazakhstan, which seems to be the most convenient option due to its proximity. The last, making it an appealing option for many.

What Does It Mean for the Rest of the Miners In The World?

According to Forbes, the rest of the miners in the world, instead of having only about 2,500 million euros of gross profit, gained access overnight to more than 8,000 million euros. The profit calculated is the result of subtracting half of the world’s income minus electricity costs. The amount is equivalent, for example, to the 8,000 million euros that all listed companies in the United Kingdom have declared in dividends during the first half of 2021.

These are indeed theoretical accounts, approximate and, above all, projected over a whole year when the summer has not yet passed. We should also remember that the Chinese restrictions were announced in May and, although the People’s Bank of China, for the moment, seems willing to maintain regulatory pressure on bitcoin, it is clear that the Government of Xi Jinping has not yet said the latest word.

However, this access to higher-income is already being noticed in some large miners, as analyzed by Forbes magazine itself. One of them is Bitfarm, a Canadian large-scale bitcoin mining company. According to company reports, Bitfarms generated some 6.6 million euros in mining profits in February. But the lack of Chinese competition has skyrocketed the company’s numbers. In July, Bitfarm mined about 391 coins, double the number in February. That amounts to 13.5 coins a day, compared to 7 five months earlier. Even with an average price of bitcoin set at 30,000 euros, Bitfarms has gone to 11.7 million euros in revenue, almost double.

Analysts Anticipate Bitcoin Fever to Be Corrected After Mining Restrictions

But what easy comes, easy goes, even if it takes a while to do so or even if external factors alter a market situation that many analysts hope will take little time to correct. That is the case of Frank Elderson, a banker who is a member of the executive board of the European Central Bank.

In March of this year, even before the Chinese government declared war on bitcoin, the ECB thought it might be interesting for Elderson, through the bank’s own official Twitter account, to chat for a while with tweeters. Elderson then compared what is happening with the price of bitcoin with the tulip crisis, one of the first mass speculative phenomena recorded in the history of the economy. At the beginning of the 17th century, the eagerness to buy, sell and resell this flower raised its price to the absurd figure of 1,000 florins when the annual salary of a well-paid craftsman was about 150.

For experts like Shawn Tully of Forbes, experience says that in markets, what goes up, goes down; what inflates, deflates; and where there are good profit margins for a few, it is finally distributed among other competitors. For now, circumstances conspire in favor of bitcoin miners. On the one hand, China remains willing to eliminate mining stations. On the other hand, we have a global lack of semiconductor materials with which the immense mining equipment is manufactured. That has prevented a good number of cryptocurrency enthusiasts from entering the market and claiming their share.

Day Trading Tips for Newbies

Basics of Day Trading 

If you’re willing to dive into the world of day trading, there are some important tips to follow to achieve your goals. It all comes down to setting the right software and equipment. Also, how much you need to start, what to trade, when to do it, risk management, and building an effective strategy.

How to Choose the Market?

The first thing to choose is the market where you want to trade. It would be best to keep in mind that one market is not better than another; it’s all about what operations you choose. For example, the market of forex requires the least amount of capital for Day Trading. Although you can start with only a few hundred dollars, it is recommended to reach at least $500. Stocks require at least a couple of thousand dollars a day, making them the most intensive option. Requiring more capital doesn’t mean that a market is better or worse than another, your decisions should depend on your capabilities.

What About the Equipment and Software?

There are some essential tools needed for Day Trading, including a computer or laptop. Although it is preferable to have two monitors, it’s not mandatory, but you must have a computer with enough memory and a fast processor to run the trading programs. A reliable and fast internet connection is also needed and a trading platform adapted to the market and style of transactions. 

The Day Trading

Your strategies as a trader must be focused on consistency to act simultaneously during the day. It is common in Day Trading to find sessions of two or three hours a day. The best hours for stocks are the first after opening and the last before closing. Trading occurs 24 hours a day for the currency market, but the highest volatility occurs between 6:00 and 17:00 GMT.

Conclusion 

Knowing a strategy does not translate into a successful implementation since no two days are the same in the market. It takes the practice of at least three months before accessing real capital. After meeting at least those three months with a good demo performance, it is advisable to switch to live trading. The focus should be on a single strategy, and you only trade in the market you chose for as long as you have decided.

Cryptocurrency 101

An Intro to Cryptocurrency

In the last few years, technology has taken a significant role in our lives, cryptocurrency is part of it. Affecting and, most of the time, improving the way we deal with problems. The main advantage is that it offers new and fresh opportunities to make a living. 

How did it Start?

We’ve all heard about this industry that has grown tremendously, especially in recent years. But how did it all begin? Well, since 2009, when Bitcoin was launched, the whole industry skyrocketed. All of this, naturally followed by the flourishing of blockchain technology, resulted in the creation of thousands of projects. Also, different varieties of blockchain, and specifications.

About the Developers

Becoming a developer can be relatively easy if you’re a tech-savvy person. If that’s the case, you could get easily involved in constructing decentralized applications or helping the development of blockchain. Even improving the specifications of assets since multiple areas can be of interest to developers.

About the Traders

In many ways, trading crypto is very similar to trading stocks. The industry offers many different digital assets that change in price. The goal of cryptocurrency trading is to buy and sell a specific asset to obtain a profit at the end of the deal. This is also affected by the news; that way, they can decide based on expectations or hype. To better succeed in the cryptocurrency market, traders use price charts, follow patterns and indicators of price. Naturally, the main tool they use is technical analysis. Trading cryptocurrency may overlap the niche of the developers. Traders might like to get involved in building bots, chart indicators, or tools that could potentially improve their experience in the market.

How is this regulated?

This particular subject has attracted a lot of attention, creating controversy. This has become an area of focus as the industry keeps growing and developing for years since it first started. The classifications for many cryptocurrency assets have not been clear. For example, Ethereum and Bitcoin are seen as commodities, but many other cryptocurrencies don’t have any specific classification that makes their regulation a legal limbo. The role of social media has been key to the crypto industry. As a result, a door for people to share with the world their experiences and thoughts. They are making it all easier for anyone to understand and learn about the subject.

What is Sharding and How Does it Work?

The Reasons Behind Sharding

Sharding could help the current limitations that Ethereum’s current features create, such as requiring nodes to get transactions verified. This process makes it all slower and time-consuming, which significantly delays the transactions that can be verified simultaneously. It all comes down to having a scaling problem since the network has a hard time processing the volume of transactions being held. That could change through Sharding.

How Does Sharding Work?

Sharding is a method of splitting, distributing, and storing data among multiple databases. It is necessary when a dataset is too big to be contained in only one database. The main goal of Sharding is to break  all the nodes that work together in Ethereum into smaller groups. These mini-groups are called Shards. In their core, nodes will verify the history of the transactions contained in the shard inside. So, instead of transactions being verified by the whole network, a boundless number of shards can be created to process transactions on a smaller scale. This translates into the possibility of the network to scale without a limit.

Whose Idea Was It?

Starting from the idea of expansion, one of the co-founders of Ethereum, Vitalik Buterin, wrote an essay elaborating on the concept of Sharding at the beginning of 2018. They’re still working on more improvements. Vitalik proposed even more upgrades for Ethereum in an ambitious three to five years after it merged with PoS.

When Will All of This Come Into Action?

Since it’s been set for scalability in the long term, the most promising strategy of Ethereum must count as a separate upgrade. It must be separate from the rest due to them not wanting to do all the things that could be potentially dangerous at once. First, the merge to proof-of-stake and then the rest, so the people in charge can pay special attention to it and focus.

About the Future

Just as the internet evolved, the network’s evolutión was the result of many crucial steps. Sharding is a significant one in the growth and improvement of Ethereum. If it turns out to be triumphant, it could potentially make the process of thousands of transactions more accessible. This would help the developers of decentralized apps would have a better platform to run their projects.

Bulls and Bears in the Markets

Bull and bear concepts

When it comes to both the crypto and other markets, the terms bulls and bears or “bearish” and “bullish” are used a lot. However, the use of it usually depends on the experience. They indicate the tendency to go high or low of a certain asset or market.

What do the terms bulls and bears refer to?

These terms are used to describe the general sentiment. When we talk about a bullish tendency, it means the rise in the price of an asset is expected. On the other hand, the term bearish points to negative expectations of the price. 

Why are the bulls and bears the animals used for this terminology?

One theory is based on the way both animals approach their prey; while bulls attack by throwing their horns in an ascending movement, bears attack on the way down, starting from a higher position. Although, where these expressions come from is not clear.

How can this be applied to the markets?

Usually, traders care more about being able to do trading in both directions than whether an asset or market is optimistic or pessimistic, which indicates that neither concept is good or bad. It is more important for traders to make sure they are right in their assumption of something being bearish or bullish in order to profit on their trades. They base their conclusions on the hype, news or other factors. Traders might be assuming that the prices on a certain asset or market will go up or down to decide the position they’ll take to accomplish their goals and eventually sell it while obtaining a profit.

Conclusion

Many factors can influence a person’s view, such as opinions, events, and timeframes, still in the end each one must come to their own conclusion regarding what they think, and what’s most important, to have clear that the goal is not to have a bullish or bearish approach, but to make sure that whichever, it’s aligned with our goals.