Key to cryptocurrency accumulation

Apart from pure speculation, many invest in cryptocurrencies as a geopolitical hedge. During times of political uncertainty, the price of Bitcoin tends to increase. The supply of Bitcoin is limited by code in the Bitcoin blockchain.

The rate of increase of the supply of Bitcoin decreases until the number of Bitcoin reaches 21 million, which is expected to take place in the year As Bitcoin adoption increases, the slowing growth in the number of Bitcoin all but assures that the price of Bitcoin will continue to grow. Bitcoin is not the only cryptocurrency with limits on issuance. The supply of Litecoin will be capped at 84 million units.

The purpose of the limit is to provide increased transparency in the money supply, in contrast to government-backed currencies. With the major currencies being created on open source codes, any given individual can determine the supply of the currency and make a judgment about its value accordingly.

Applications of the Cryptocurrency. Cryptocurrencies require a use case to have any value. The same dynamic applies to cryptocurrencies. Bitcoin has value as a means of exchange; alternate cryptocurrencies can either improve on the Bitcoin model, or have another usage that creates value, such as Ether.

As uses for cryptocurrencies increase, corresponding demand and value also increase. Regulatory Changes. Because the regulation of cryptocurrencies has yet to be determined, value is strongly influenced by expectations of future regulation. In an extreme case, for example, the United States government could prohibit citizens from holding cryptocurrencies, much as the ownership of gold in the US was outlawed in the s. Technology Changes. Unlike physical commodities, changes in technology affect cryptocurrency prices.

July and August saw the price of Bitcoin negatively impacted by controversy about altering the underlying technology to improve transaction times. Conversely, news reports of hacking often lead to price decreases. Still, given the volatility of this emerging phenomenon, there is a risk of a crash. Many experts have noted that in the event of a cryptocurrency market collapse, that retail investors would suffer the most.

ICOs help firms raise cash for the development of new blockchain and cryptocurrency technologies. Startups are able to raise money without diluting from private investors or venture capitalists. Bankers are increasingly abandoning their lucrative positions for their slice of the ICO pie. Not convinced of the craze? Outstanding Issues around the Cryptocurrency Market With cryptocurrencies still in the early innings, there are many issues surrounding its development.

According to this theory, members of society implicitly agree to cede some of their freedoms to the government in exchange for order, stability, and the protection of their other rights. By creating a decentralized form of wealth, cryptocurrencies are governed by code alone. The following section will discuss these tangible aspects of cryptocurrency development. Accounting Treatment of Cryptocurrencies Under current accounting guidelines, cryptocurrencies are most likely not cash or cash equivalents since they lack the liquidity of cash and the stable value of cash equivalents.

The value of cryptocurrency holdings on balance sheets would be at cost or fair market value at the time of receipt. The ruling left many questions unanswered. These rules exclude certain investment assets, but do not explicitly exclude cryptocurrencies, so their applicability is unclear. In the EU, a decision of the European Court of Justice rules that cryptocurrencies should be treated like government-backed currencies, and that holders should not be taxed on purchases or sales.

Regulation of Cryptocurrencies Regulatory treatment of cryptocurrencies continues to evolve, but because the technology transcends global boundaries, the influence of national regulators is limited. Japan Is the First to Take an Unambiguous, Encouraging Regulatory Approach Japan has not only legally recognized Bitcoin, but also created a regulatory framework to help the industry flourish. This is considered a major step forward for legitimizing cryptocurrencies. The media has generally praised the new regulatory scheme, though the Japanese Bitcoin community has criticized the system as hampering innovation.

The move follows the major fraud and investor losses from the Mt. Gox Bitcoin exchange scandal. The retail investor— Mrs. She wants something regulated and trustworthy. On the other hand, US regulators have been less than keen about the rise of virtual currencies. Take initial coin offerings ICOs for example. Despite their popularity, many ICOs are for new cryptocurrencies with speculative business models, and have been widely criticized as scams.

Since ICOs can be sold across national borders, it remains to be seen whether ICO issuers will choose to comply or simply move transactions outside of the US. Due to the pseudonymous nature of ICO transactions, it may be difficult for national governments to significantly limit cryptocurrency sales or trading. Regulation is also expanding beyond ICOs. This move is a result of concern that cryptocurrency investors believe they are receiving the protections and benefits of a registered exchange when they, in fact, are not.

To date, compared to securities brokers, cryptocurrency exchanges have had no capital rules and have been largely unregulated other than for anti-money laundering—something that seems to be subject to change. Exchanges registered with the SEC will be subject to inspections, required to police their markets, and mandated to follow rules aimed at ensuring fair trading.

China has banned ICOs, called on local exchanges to stop trading in cryptocurrencies, and limited mining. Bitcoin and other cryptocurrency trading are still permitted to be traded, but only via over-the-counter OTC markets, which is a slower process that may increase credit risk. China also recently cracked down on a cryptocurrency loophole that allowed Chinese investors to trade crypto assets on overseas exchanges.

Overall, China has taken a tough stance on cryptocurrencies, looking to cleanse the financial markets for years now and viewing cryptocurrencies as a potential shadow banking sector and a way to move money out of the country. The Chinese government believes its benefits include decreased transaction costs, enhanced access to financial services for rural areas, and increased efficacy of monetary policies.

However, it wants to maintain full control of these transactions. South Korea. South Korea has become a hub for crypto trading , for housewives and students alike. However, South Korea banned ICOs in September , and since then regulators have been contemplating shutting down local crypto exchanges, outlawing deposits into anonymous virtual accounts at banks, even instituting a capital gains tax on crypto-trading.

It remains to be seen how regulation will shake out. In contrast, Vermont and Arizona have embraced the new technology. Both states passed laws providing legal standing to facts or records tied to a Blockchain, including smart contracts. Arizona also passed a second law prohibiting blockchain technology from being used to track the location or control of a firearm.

Security and Privacy Issues Computer hacking and theft continue to be impediments to widespread acceptance. These issues have continued to rise in tandem with the popularity of cryptocurrencies. In July , one of the five largest Bitcoin and Ethereum exchanges Bithumb was hacked, resulting in the theft of user information as well as hundreds of millions of Korean Won.

The pseudonymous nature of blockchain and Bitcoin transactions also raises other concerns. In a typical centralized transaction, if the good or service is defective, the transaction can be cancelled and the funds returned to the buyer. Parting Thoughts Despite advancements since their inception, cryptocurrencies rouse both ire and admiration from the public.

The challenge proponents must solve for is advancing the technology to its full potential while building the public confidence necessary for mainstream adoption. After all, critics are not entirely wrong. Bitcoin and its investors could end up like brick and mortar stores, eclipsed by the next big thing. New cryptocurrency advancements are often accompanied by a slew of risks: theft of cryptocurrency wallets is on the rise, and fraud continues to cast an ominous shadow on the industry.

Still, cryptocurrencies and blockchain could be truly transformative. The only limit is your imagination. Cryptocurrencies are primarily used to buy and sell goods and services, though some newer cryptocurrencies also function to provide a set of rules or obligations for its holders. What is a crypto wallet? Cryptocurrency wallets are necessary for users to send and receive digital currency and monitor their balance.

What is a crypto miner? During mining, two things occur: Cryptocurrency transactions are verified and new units are created. Effective mining requires powerful hardware and software. Miners often join pools to increase collective computing power, splitting profits between participants.

Groups of miners compete to verify transactions. What is a hardware wallet? Cryptocurrency wallets help users send and receive digital currency and monitor their balance. Wallets can be hardware or software, though hardware wallets are considered more secure. Transactions and balances are recorded directly on the wallet, which cannot be accessed without the device. How does Bitcoin work?

Released in by Satoshi Nakamoto alias , Bitcoin is the most well known of all cryptocurrencies. In a Bitcoin transaction, the buyer and seller utilize mobile wallets to send and receive payments. Although Bitcoin is recognized as pioneering, it is it can only process seven transactions a second. How are new Bitcoins created?

The Bitcoin supply is limited by code in the Bitcoin blockchain. The rate of increase of the supply of Bitcoin decreases until Bitcoin reaches 21 million, expected to happen in And that's exactly what's happening with Bitcoin and the accumulation of it. But, the headline reasons placed on Bitcoin moves have proven weak at best and foolish in hindsight at worst. For example, for years, we've heard Bitcoin moves can be tied to China's banning of exchanges and mining.

So stop trying to make sense of the moves based on political or firm-driven news cycles. Headlines are suitable for selling trading products and commissions. Full stop. I have to sell it on the Nasdaq via my broker. My neighbor isn't going to wind up with my shares, necessarily, either when they buy. With Bitcoin, when I own it, I can use it to purchase things directly, send it to someone without anything in return , or use it as a way to pay a friend for a new computer component.

It works differently than owning a share of a company; it transacts. But, I can also trade it like an equity. Many folks don't agree Bitcoin is a currency but saying it isn't over and over again doesn't change its properties. I'll hear about it in the comments, but it doesn't change the fact. I make a quick explanation to this end to show why accumulation is all the more important for Bitcoin. If one understands accumulation of the coin is growing, it opens up a window into its trading principles.

Just like a traditional equity market, the supply and demand at any given time determine the price. If there are more buyers willing to continue buying, the price goes higher until it finds a seller, likewise for the inverse. But underneath the covers, buying and selling can be viewed as accumulation and distribution. Therefore, when I see things on the chart like this during significant drops of the crypto, it catches my attention.

While Bitcoin was in a pronounced downward channel over the late-Spring and early-Summer time frame, not only did the MACD show bearish momentum was rapidly waning, but the accumulation of Bitcoin was increasing, not decreasing. But this was only part of the strategy; accumulating Bitcoin was the correct answer, but where is it headed, and how long should one hold? As trading broke out of the downward trend, I could see a broader pattern forming.

This pattern further proved this was a period of consolidation after a move up, and consolidation is a time to accumulate when the preceding trend is in your favor. In fact, in early August, I pounded the table on Bitcoin saying this is very obvious: After a move to all-time highs, this accumulation period has been one of the most, if not the most, structured accumulation periods I have seen in Bitcoin. This is setting up a move well past the prior highs into uncharted territory.

Today, this pattern is in the breakout stage, meaning consolidation has ended, and we're headed to the target. After consolidating for a little over four months, a handle on the right-hand side formed as a descending channel.

Will not buy funfair crypto shall afford

Expected Short fall 3. When comparing two potential stock investments, we recommend comparing similar equities with homogenous growth potential and valuation from related markets to determine which investment holds the most risk. Some cryptocurrency investors attempt to determine whether the market's mood is bullish or bearish by monitoring changes in market sentiment.

However, unlike more traditional methods such as technical analysis , investor sentiment usually refers to the aggregate attitude towards KEY in the overall investment community. So, suppose investors can accurately measure the crypto's market sentiment. In that case, they can use it for their benefit.

For example, some tools provided by cryptocurrency exchanges to gauge market sentiment could be utilized to time the market in a somewhat predictable way. Becoming a Better Investor with Macroaxis Macroaxis puts the power of mathematics on your side. We analyze your portfolios and positions such as KEY using complex mathematical models and algorithms, but make them easy to understand.

However, the wallet host is the one that really owns that crypto; they just owe you the cash equivalent of the crypto that they hold on your behalf. Crypto advocates like to say, "not your keys, not your coins. For example, PayPal offers a custodial wallet feature. If PayPal wanted to get out of the crypto game, they could theoretically refund you money equaling the crypto in the account and sell all of the coins without your approval.

Related: Custodial vs. How to Use Your Codes and Keys Public keys, private keys, seed phrases—you have all of these codes and keys for a reason. To safely and productively manage your cryptocurrency accounts, you need to use them all, and they do all work differently.

How to Manage Private Keys You have to keep your private keys safe. After all, you can't just reset your keys like you can reset a password. Some people do commit their private keys to memory, but it's a good idea to keep a copy somewhere just in case. You may also want to let someone else know where the physical copy of your private key is stored so that your tokens aren't locked away forever in the event that something happens to you.

You can keep your private keys digitally stored using a service like a password manager, but the safest thing to do is keep a physical copy. Store it somewhere safe in your home, like a firebox, or even in a safe deposit box in the bank. In fact, your public key is a lot easier to share—it might be a link that you can copy and paste or even a QR code that you can print off.

Some people put their public keys in places like social media bios so that people can simply deposit funds in their wallets. Businesses that accept crypto may also have a QR code to their wallet so that customers can quickly and easily pay with their smartphones. The only real flaw with this is that it opens the door for bad actors to deposit ill-gotten gains into your account.

That's why banks require your authorization to deposit money from someone else. Fortunately, crypto is more transparent than cash, so it's easy for you to see where the money came from if anyone does something like this. If you see money appear in your account that you weren't expecting, report it. How to Use Your Recovery Phrase How often you dust off your recovery phrase depends on how you use your crypto wallet. The most common use for a recovery phrase is signing into an account in the event that you forget your password.

Remember, though, whether you remember your password or use your recovery phrase to get in, having access to your account still won't get you access to your funds if you lose your private keys. Some wallets can connect to other platforms and services to allow you to check out from online vendors with your crypto more easily, or buy, sell, and use NFTs.

These integrations may require your recovery phrase. For example, you need your recovery phrase the first time you connect the MetaMask browser extension, which gets you into platforms like Ready Player Me and Open Sea more easily. Related: What Is MetaMask?

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