What Is the MetaMask Token ?

The popular MetaMask Web3 wallet is entirely under the control of its creators, a group working under the ConsenSys Software Inc. banner. With a strong focus on Ethereum-based tools and the related infrastructure, ConsenSys has been at the forefront of Web3 and blockchain development for many years. MetaMask reports having thousands of users worldwide and is the most widely used browser-based Web3 wallet.

The ConsenSys team does admit that it’s time to move on from this, though. To carry out that objective, MetaMask will establish a Decentralized Autonomous Organization (DAO). It will act as a fresh source of funding for the expansion of this wallet service in the future. Although they can fulfil a wide range of needs and objectives, DAOs are typically perceived as alternative governance models. It is essential to realise that the MetaMask DAO will act as a funding mechanism and not as a censor of project development.

Such a funding-focused strategy is not brand-new in the DAO sector. Endaoment, Charity Blockchain DAO, and other DAOs have emerged that are dedicated to fundraising through donations. Additionally, MetaMask DAO hopes to obtain outside funding through its DAO, though no additional specifics have been disclosed.

How to Contribute in the MetaMask DAO?

On the precise workings of the MetaMask DAO, no information has been released. Apart from monetary contributions, user participation will be rather restricted because it is not a traditional governance-oriented DAO. Despite the fact that there are many unknowable variables, it is commendable to see ConsenSys pursue decentralisation for the project and increase its utility.

Users can traditionally make contributions to a DAO through voting and proposals. It appears that neither of those features will be present in the MetaMask DAO. The team decides to use a DAO to fund “novel new pieces of MetaMask” instead.

What Is The MetaMask Token ?

Native token development is a common practice for Web3 and blockchain projects. Such a Coin Exchange India token may either open up new uses or provide exposure to project dividends. The launch of MetaMask’s token is imminent, but details are still scant. The precise distribution of the token is not specified. Users have high expectations for a Uniswap-based strategy because everyone will get free tokens.

MetaMask
MetaMask

The MetaMask token won’t be used as a “cash grab,” that much is certain. It’s unclear exactly what that means, though, because recipients will start looking for ways to turn their MetaMask tokens into cash right away. The Crypto Currency Trading India of this token can also be facilitated by the numerous decentralised exchanges from the moment it is released. Because anyone can easily set up liquidity pools on these exchanges.

ConsenSys has not yet specified a launch date for the token, nor have they made any mention of the token’s potential involvement in the DAO.

Be assured that any MetaMask token you may encounter today is not a real offering. Numerous fake MetaMask tokens have been created over the years as persistent rumours about such an asset gained traction. There is no official token to speak of until the team. Or ConsenSys — provides more information on how the distribution will take place and what the token exactly entails.

How Do I Obtain a MetaMask Token?

The distribution scheme for the MetaMask token has not yet been disclosed by ConsenSys. Nevertheless, Crypto Exchange Platform given that MetaMask is an Ethereum-centric Web3 wallet solution, it is reasonable to assume that the token will function on the Ethereum network. However, the team has the option to automatically airdrop the token to MetaMask addresses that already exist, use a website for users to claim tokens, or adopt an entirely different strategy.

There is no point in stressing about where to obtain the MetaMask token until more information is released. The wallet has over 30 million active users, making distribution a logistically challenging process.

Is My MetaMask Wallet Affected?

The way people currently use MetaMask won’t change as a result of either the DAO or the token. Users will still be able to access decentralised applications (DApps) on all supported blockchains using the Web3 wallet. In which it will maintain all of its functionality. Joe Lubin, the CEO of CensenSys, has confirmed that the group will revamp the current, clumsy user interface.

The new interface has not yet received an official release date. The new interface, however, will be unlocked for users whenever the plugin receives a new update, and it will most likely be included in that update.

Is this Connected to ConsenSys’s Recent Funding Round?

Some people might compare the news about the MetaMask DAO and token to ConsenSys’s receipt of $4450 million in Series D funding. It is difficult to say if one is related to the other. But the funding will undoubtedly help ConsenSys reach its objectives and improve its entire product lineup. ConsenSys’ valuation has increased to $7 billion thanks to the $450 million in Series D funding.

At that price, the MetaMask token can’t be a “cash grab.” ConsenSys may also look into some extremely unusual options to create the token and distribute it as necessary. Stakes have recently been raised, and the token will reflect on the business and vice versa.

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What Is Stagflation? What Causes it ?

An old buzzword has resurfaced: stagflation. In today’s article, we’ll go over the concept of stagflation in depth and examine its economic impact. To gain a better understanding, we will look at the factors that distinguish inflation from recessions and stagflation.

What Exactly Is Stagflation?

Stagflation is the most difficult situation in which an economist can find themselves. Interest rates are typically used to control inflation in an economy. This is fine as long as economic growth continues — which is usually the case, because unemployment tends to slow inflation while inflation tends to spur economic growth. The stagflation scenario forces economists to deal with a number of issues at once. When there is unemployment, inflation rises while economic growth slows down. When one problem solves, it makes the other one worse. This occurs in Trading Platform For Cryptocurrency In India.

While raising interest rates slows inflation, it also has a negative impact on employment and economic expansion. On the other hand, increasing the amount of money in the economy increases growth and employment while escalating inflation. Stagflation was a major issue in the 1970s, and it persisted the entire decade. Prior to that, economists concurred that escalating prices and a sluggish job market didn’t mix. Time revealed their error. However, given that it is still extremely rare, their conclusions were not without merit.

Stagflation – currently being warned about by economists. This makes sense, as we are witnessing a confluence of the three issues. Federal Reserve Chair Jerome Powell could raise interest rates to slow inflation, but this would harm employment and economic growth even more. He could inject capital into the economy to stimulate it, but this would raise inflation. Doesn’t that sound terrific?

What Does Economic Stagflation Mean?

It can be disastrous for the economy. The combination of an economic slowdown, high inflation, and rising unemployment puts the squeeze on almost everyone at the same time.

The commoner earns the same amount of money, but the roof over his head and food he consumes become significantly more expensive. This means he can afford less, and thus business revenues will remain stagnant (due to low purchasing power in the economy). Investment is also drying up as uncertainty kills the buzz in stock markets. A downturn in the economy frequently leads to less-than-ideal market conditions. We’ve all seen Crypto Currency Exchange In India and stock market indices fall in recent months, just when we’d all like to have access to supposed inflation hedges.

Stagflation
Stagflation

Let us see how it differs from inflation and recession!

Stagflation Vs Inflation

Inflation occurs when the general price level of goods and services rises, as we are currently experiencing. Bread, gas, housing, and healthcare are all more expensive. As previously discussed, stagflation is a confluence of issues in which inflation, rising unemployment, and stagnant economic growth are all referred to as stagflation.

While some inflation is considered normal, stagflation (the combination of high inflation and multiple other issues) is extremely rare. A good way to distinguish between the two is to remember that inflation can occur without fear of stagflation, whereas stagflation cannot occur without inflation.

The main distinction between inflation and stagflation is that the former frequently results from an economy that is growing quickly. It means that as the economy expands, inflation increases. Stagflation, on the other hand, is an uncommon occurrence of rising inflation and slow economic growth.

Stagflation Vs Recession

Another economic occurrence that is regarded as normal is a recession. The consensus among economists regarding what constitutes a recession is “a significant decline in economic activity that’s spread across the economy and lasts for more than a few months” (US National Bureau of Economic Research).

This downward trend can be seen in rising unemployment and falling industrial production, GDP, and even personal income. As you can see, recessions are not uncommon, though they have been a while. Today, unemployment is on the rise once more, and tech companies (both in and out of the crypto space like Crypto Indian Exchange) have announced hiring freezes and even layoffs.

Conclusion

In a nutshell, recessions occur when economic growth slows and a period of economic shrinkage occurs. Economists disagree on how long this period must last before we can talk about recession, but the majority agrees on two consecutive quarters.

The key distinction between inflation, recessions, and stagflation is that inflation occurs alongside a rapidly growing economy, whereas a recession slows both inflation and economic growth. Stagflation is a type of recession in which inflation rises in tandem with slowing economic growth.

For good reason, the world is concerned about the threat of stagflation in this decade. The pandemic’s effects are being felt, and recovery may have to wait a little longer.

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How Do Rug Pull Work in Cryptocurrency

In the cryptocurrency industry, rug pulls are a type of exit scam in which the creators of a new project abandon it and flee with the money of unwary investors. Rug pulls occur frequently in the DeFi world but are almost unheard of on centralized exchanges. Cryptocurrency has a bad reputation for scams due to the lack of regulation compared to other financial markets. There are many examples of fake tokens, exit scams, Ponzi schemes, and pump and dumps.

What is a Rug Pull ?

In the Cryptocurrency Trading Platform In India, rug pulls are a type of exit scam in which the creators of a new project abandon it and flee with the money of unwary investors. Rug pulls occur frequently in the DeFi world but are almost unheard of centralized exchanges.

Developers create a new token and list it on a decentralised Coin Exchange India to carry out their scam. Through organic content and (typically undisclosed) sponsored content on prominent accounts, they generate buzz about the token on social media. The developers remove all liquidity from the pool once sufficient numbers of users have Crypto Exchange Platform their Ethereum for the new token. In which at the point the token’s value quickly falls to zero.

Unaware investors are left holding worthless tokens, and the development team flees with the Ethereum (or BNB, SOL, AVAX). These scams prosper on DEXes because they let any developer list a token for free without any scrutiny. The responsibility falls of proof rests with the token purchaser. In general, centralized Crypto Indian Exchange take great precautions to safeguard their customer base.

Rug Pull
Rug Pull

How to Avoid Rug Pulls

By checking the liquidity in the pool of a token they are purchasing and making sure the liquidity is locked for a specific amount of time. Users can safeguard themselves against these rug pulls.

There are two additional strategies for “pulling the rug out from under people.” A team can first rug pull a project by putting all of their tokens up for sale on the open market. If there is not enough demand for purchases, this could also quickly bring the token to zero. As an alternative, a group can programme the token contract so that you can only buy and never sell. Similar to the Squid Game token saga. In this manner, a team could easily sell their tokens to unwary purchasers who would never be able to get their money back.

A rug pull, is when the team behind a project quickly brings it to a standstill by selling all of its tokens on the open market. Or else withdrawing all liquidity. Rug pulls can occur when a token codes in a way that prevents it from ever being sold.

Past Examples of Rug Pulls

Unfortunately, there are too many examples to list, but to give just a few well-known examples:

SnowDog – Prior to the project’s decision to use an automated market maker instead of the DEX it had initially traded on. SnowDog was a well-liked project on social media. Two wallets had already sold SnowDog worth more than $10 million. It was by the time the investors were able to access the AMM. Due to the fact that these transactions occurred before the AMM was made available to the public. The community later came to the conclusion that the project had dragged under the rug.

Squid Game Token – When the Netflix series Squid Game was all the rage, malicious Crypto Trading Platform India developers used the DEXes to introduce a token with the same name. The token’s price rose from just a few cents to an astounding $3,000 per token in a matter of days. Then the developers made the decision to reverse course, quickly bringing the prices back to zero. The website has since taken down, and the team escaped with millions of dollars.

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What Is Dark Pool Trading in Crypto

A significant portion of cryptocurrency trading occurs in so-called dark pools, even though the majority of us trade on centralized and decentralised exchanges. Although it has been used for years in conventional markets, this idea is also becoming more common in the cryptocurrency space. In this article, we go over the definition of dark pool trading, the rules that surround it, and how to recognize them.

What Is Dark Pool Trading?

In order to lessen the impact that large trades have on the price of a stock, dark pool trading developed. Institutional investors needed a way to Buy And Sell Cryptocurrency In India and frequently without significantly changing their market value.

As a result, the dark pool serves as a marketplace where wealthy individuals with connections to institutional investors can carry out private trades. Dark pools can occasionally be accessed by the general public through retail brokers. Large orders may cause excitement or panic in the markets before the trade even fills on regular Best Cryptocurrency Exchange Platform because the order book makes available to the public.

Without this transparency, dark pools function, enabling users to covertly (and anonymously) find a counterparty for the trade. Dark pools only require the bare minimum amount of information regarding these trades to report to the authorities. As a result, the price of the traded underlying instrument rarely affects by these trades.

This raises concerns about the legitimacy of dark pool trading given the way it operates. Naturally, participants in the dark pool have access to more information than the typical trader on the open market, who doesn’t learn about the order until it reports. Although many people believe that the Crypto Trading Exchange In India is transparent, this particular area of the market is most definitely not. Nevertheless, despite some restrictions, it is entirely legal.

Trading
Trading

Why Is Dark Pool Trades Legal?

We have a hard time coming up with a clear-cut response to this query. But there are a few reasons that come to mind. The institutional investor benefits from the dark pool first. Whether we like it or not, this group of people has significant influence over market regulation and policy. To ensure that new regulations do not harm the bottom line of powerful players, entire lobbying groups and campaign donations used. Dark pool trading will never become illegal as long as these powerful players continue to profit from it.

However, I do not believe that the wealthy are the only ones who benefit. The consequences in some cases would be enormous when you consider the impact some of these large orders would have if they were to carry out in the open market. That one order could wipe out the accounts of numerous traders. In that regard, the dark pool serves as a safeguard against unneeded volatility. The markets frequently overreact to news. But some of this effect reduces after a trade has already executed.

To prevent abuse, there are nevertheless stringent guidelines and rules for dark pool India Cryptocurrency Trading Platform. In the past, some operators of dark pools took advantage of the data made available by the pools. Stricter laws were put in place to stop this unfair advantage from being used again after they were found out, fined, and caught.

Dark pool trading is a good way to give wealthy players a location to handle sizable transactions. And minimizing the impact on the open market. The transactions should made unlawful as long as they disclose in full after the fact.

How Can Dark Pool Trading Be Verified?

Secrecy is used by dark pools for a reason. As a result, it can be challenging for the average trader to identify dark pool trades. But there are a few things to remember that might make it easier for you to spot dark pool trades.

First of all, do not anticipate that every dark pool trade will be identical. Dark pools all have different sets of rules and conditions. Despite the fact that they all share the trait of secrecy. As a result, it is more challenging to identify the trades because a dark-pool trade lacks a definite fingerprint.

Dark pools are no longer as much of a closed-door society club as they once were. Now that smaller trade sizes are permitted, the majority of people can participate in the dark pool. Because more players have access to what refers to as “inside” the dark pool. The disparity in the information that is currently available is changing. Furthermore, arbitrage is becoming more and more popular. Bots and frontrunners quickly identify the orders that are available to find ways to take advantage of that liquidity. Dark pool operators have previously received fines for engaging in such behavior. But other participants are free to use the information however they see fit.

Having access to dark pool information will likely become less valuable as a result of its rising popularity sooner rather than later. I have to wonder if you actually require trades from the dark pool to be visible. After all, it successfully prevents market movements when it intends to do so. The advantage to the typical trader is minimal if there is no move to take advantage of.

Obviously, the regulatory environment for Crypto Currency Exchange In India is less strict, but this will change over time. Keep things simple and avoiding oversimplifying systems.

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Crypto Vs Stocks: Differences Traders Should Know

Choosing where to begin can be very challenging for those who are new to investing. There are so many different instruments to pick from. Which market is best for you: forex, index funds, bonds, stocks, or crypto? Over the past year, an increasing number of individuals have begun to include cryptocurrency as a component of a serious long-term portfolio. We will compare cryptocurrencies with conventional financial markets in this current article.

Prior to comparing Crypto Indian Exchange to the S&P 500, Nasdaq, and FTSE 100, three important stock market indices, we will first examine the returns in the stock and cryptocurrency markets. Let’s analyze some returns now!

Crypto Vs. the Stock Market

It can be challenging to compare the returns of stocks and cryptocurrencies. Over the past ten years, the S&P 500 has generated an average annual return of 10.9% while the Nasdaq has generated an average annual return of 14.4%. The average return for the FTSE 100 was 7.4%. It appears that the winner is obvious when comparing these numbers to Bitcoin (195%) and Ethereum (663%) since their inception.

This contrasts apples and oranges, though, we are, after all, contrasting individual crypto assets with much lower market caps with baskets of companies. Even then, Amazon (28.5%), Google (19.7%), Tesla (62.9%), and Microsoft (26.4%) don’t even come close to matching the returns of the two main crypto assets. A more accurate comparison would be to compare the returns of some tech stocks to cryptocurrency.

However, stocks have performed better over the past year. Compared to this time last year, the S&P 500 is up 5.4% while Bitcoin is down more than 30%. On the midterm, it appears that the two classes perform very differently. Best Trading App For Cryptocurrency In India has, nevertheless, grown more closely associated with stock market returns despite these distinctions. The S&P and Bitcoin have a strong 0.58 90-day correlation, according to recent data from Arcane Research.

Crypto Vs Stocks
Crypto Vs Stocks

Cryptocurrency Vs S&P 500

As previously stated, Bitcoin and Ethereum are down significantly this year compared to the S&P 500, which is up 5.4%. But over the last ten years, cryptocurrencies have significantly outperformed. Will crypto hold up over time is the question. It is clear that the S&P has merit in the real world. A more secure investment than Cryptocurrency Indian Exchange, which is still in its infancy, would be a basket of 500 well-established businesses that make money and add value in the real world.

Crypto Vs NASDAQ

An index of 101 (non-financial) stocks traded on the Nasdaq exchange is known as Nasdaq (Nasdaq-100). We reached exact break even at the time of writing after a 28% rally over the previous year, which was followed by a 24% correction. Strong moves made over a year ago have only served to reset the situation. Very impressive. The market cap of all cryptocurrencies has increased by 22% over the same time period, but you can only trade that by creating your own cryptocurrency index. The Largest Crypto Exchange In India have lost value over the past 365 days, as was discussed.

Again, the Nasdaq is a collection of well-established companies, so while contrasting its performance with that of a developing asset class is intriguing, it is important to remember that there are other factors to take into account when making an investment. For example, risk and investment size should be taken into account equally.

Crypto Vs. the FTSE 100

The less well-known British counterpart of the Nasdaq 100 is the FTSE 100 (also known as the Footsie). The British stock market has experienced fewer issues recently than its American rivals. And as a result, has maintained its strength. In the last year, the index has increased 10%. So, in this comparison, the FTSE 100 outperformed all other assets and the 10-year average. The Footsie wins in terms of pure reward and possibly risk to reward as well. The FTSE 100 is depicted in the chart below since 2019.

Can These Asset Classes Actually Be Comparable?

We always have a really hard time comparing any asset to cryptocurrency. Unlike cryptocurrency, which is a much more speculative investment, stock market indices (or individual stocks, for that matter) have revenue streams, annual reports, and dividend payments to support the value.

Although this is acceptable, it puts the two assets in entirely different divisions. You’re contrasting apples and oranges, in other words. If you ask me, stocks and Crypto Currency Trading In India are complementary components of a diversified portfolio in a risk-on environment. It is counterproductive to compare investments based solely on returns without taking into account the risks, investment size, and time horizon involved.

Personally, I believe that every asset class has a purpose and that diversification can significantly increase a portfolio’s returns.

I strongly advise you to try something new if you are currently only investing in one market, whether it be stocks, cryptocurrency, or anything else. Even experimenting with forex can encourage you to learn something new that will probably apply to what you are already doing. By dipping our toes into the stock may teach us a lot. While experimenting may initially be intimidating or challenging, the effort is ultimately worthwhile. Try new things, do your research, and let’s keep making money!

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How to Use Moving Averages in Trading

In the past, we have covered a wide range of technical indicators and tools to help traders. You can check them out in our trading analysis sections. And now, it is time to cover one of the most popular indicators on TradingView, moving averages (MA).

In today’s article, we will discuss what moving averages are, and how to use them in trading. Let’s get into it! But before that, you may wanna learn how to use Cryptocurrency Trading In India and how to view it.

What Are Moving Averages?

A moving average (MA) is a technical indicator that displays the average price over a predetermined number of candles. The 50-day moving average, for example, computes the average price for the last 25 daily candles. The closing price of each candle is used to do this.

The chart below depicts World’S Largest Cryptocurrency Exchange Bitcoin’s daily 50-day moving average. As you can see, it depicts the entire Crypto India Exchange direction in a straightforward manner. The chart does this with a tiny delay because the moving average tracks the price movement. As a result, it only slopes downward when the price begins to fall. This so-called latency should never be overlooked! To reduce lag, lower timeframe charts might be utilized.

Moving Averages
Moving Averages

Why Do We Need MA?

Since, previously established, depict the overall direction of a trend. Shorting is often favored over yearning when the chart is moving down.

MA are curved upwards in uptrends, and the price is often trading above the MA. Short-term moving averages, such as the 15-day moving average, are higher than long-term moving averages, such as the 50-day MA.

The stronger the trend, the further the price deviates from the moving average. This condition, however, can be interpreted as a warning sign because the price frequently returns to the mean. Price trades below the MAs during downtrends. Short-term MA fall below long-term moving averages in this scenario.

The chart depicts Bitcoin’s price behavior over the previous year as well as its 50-day moving average.

MA
MA

It clearly demonstrates the function of moving averages and how prices revert to the average line. The grey-circled areas are instances of price attempts that failed to reverse the trend. These failures frequently lead to trend acceleration.

Moving Averages
Moving Averages

Can I Combine MA?

Using several moving averages might assist you in anticipating the shift between uptrends and downtrends. Long-term moving averages flatline during these transitional periods, whereas short-term moving averages cross the long-term ones. These crosses are commonly known as the golden cross and the dying cross.

How Can I Trade With Moving Averages?

MA can be used in a variety of ways in Crypto Currency Trading Platform. These are viewed as a type of dynamic support or resistance level in the first way. Traders use this approach to buy or sell retests of the moving average after it has been breached.

The moving average should ideally line up with a horizontal level, as shown in the figure below. Confluence is not needed, although it frequently enhances the possibility that the level will operate as support. Cryptocurrency Trading Sites In India allows traders to get out of these bets when the price reaches another moving average or another horizontal level.

Conclusion

Overall, a moving average is an excellent indicator for developing a deeper knowledge of trends. It can assist you in optimizing your deals. Finally, it is not a good idea to jump in when the price reaches a moving average. Your best bet is to see how it acts after it arrives and then determine whether or not to take the transaction. Wicks through a moving average, for example, can indicate whether or not the level is being met.

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What Is Risk Management and Why Should I Use It in Trading

We discussed typical mistakes that novices should avoid in order to succeed in the long run. In that spirit, today’s post delves deeper into risk management and identifies the ideal risk-reward ratio for cryptocurrency traders.

You must be prepared to overcome any predicament when trading in Crypto Platform India. Although your trading ideas (what you anticipate will happen) are crucial, you should also have contingency plans in place in case the trade goes against you. New traders frequently fail to account for this and wind up improvising when the trade swings the other way.

Most experienced traders are prepared for this circumstance. When they realise they were wrong, they close their position. Manually closing failed trades can be difficult on your emotions; consequently, many traders utilise stop loss to accomplish it automatically.

What Exactly Is Risk Management?

Risk management is a technique, or combination of procedures, for reducing losses and protecting traders like Jake from fully losing their accounts and having to return to work at McDonald’s. Jake is a 24-year-old beginner trader who is attempting to establish his risk management strategy.

Sometimes trading is for survival rather than profit. You protect yourself from adverse market situations by managing your losses. A smaller risk will also limit the quantity of your wins, but if you gradually increase your account, the compounding benefits will ultimately kick in.

How Can I Put Risk Management into Action?

Risk management is built on three pillars:

How much money are you willing to put on the line in a single trade? (Explain risk)

What amount of money are you willing to trade? (Portfolio Dimensions)

How much do you spend on a single trade? (risk-reward)

Let’s go through them one by one.

Risk Management
Risk Management

Defined Risk: How Much Money Can You Lose on a Single Trade?

Choosing how much of your portfolio to risk on a single trade is an important step in risk management. You want to be able to sustain numerous losing trades in a row.

As a result, many traders choose to restrict their risk to a single percent of their whole trading portfolio in order to avoid losing too much of their stack during losing streaks. It is important to determine how much money you are willing to risk. We frequently use the following example: a losing trade should be equivalent to the cost of a dinner out in your town for you and your significant other.

Portfolio Size: How Much Money Will You Trade?

The second step in the risk management path is determining the size of the portfolio you will trade. Most experienced traders maintain their long-term assets separate from the Crypto Exchange Platform trading stack. This helps you to see your portfolio objectively: you can leave your long-term bags alone while focusing on active transactions.

Choosing how much money to trade is a difficult task. This author feels that the approach outlined in the previous section should be used to establish the size of your initial portfolio.

We can readily calculate Jake’s portfolio size by looking at his decisions. He determines that he will need to fund his portfolio by $10,000 by multiplying his maximum losses by 100.

Because he limits his risk to 1%, we multiply it by hundred. For a 0.5% risk, multiply that by 200. You can adjust the account size by modifying the risk figures. Just remember to keep your emotions in check!

How Much Money Do You Put Into a Single Trade?

Let’s talk about risk-reward and position sizing now that we know Jake’s portfolio size and maximum risk capacity per transaction.

To begin, risk-reward is the ratio of Jake’s prospective gains (reward) to the $100 he is willing to risk. Given your average win rate, your risk-reward ratio should ensure that you trade profitably. Jake should take trades with a risk-reward ratio of at least 1:1 if he has a 50% win record. Higher risk-reward ratios will make him profitable.

Because different methods may have varied win rates, alter your risk/reward ratio and position sizes accordingly. Trading view includes long and short position tools to help you locate trades that match your risk profile. As you can see, the risk-to-reward ratio for the India Top Cryptocurrency Exchanges Ethereum trade above is exactly two.

This tool can also assist you in determining the size of your position. We can provide all of the essential inputs to the tool by double-clicking the deal we just drew. As you can see, we’ve entered Jake’s account amount of $10,000 and set the risk at 1%.

Following these inputs, the tool will calculate the position size (in units or shares) for the trade you’ve drawn. You will be able to see the impact of both winning and losing. In this situation, Jake can accept the deal for 14.38 Ethereum. If he is correct, he will get $200. He will, however, only lose $100 if he is incorrect.

Crypto Currency Trading Platform becomes easier when you set clear winning and losing goals based on your performance from the start. Your account will grow as long as you stick to your plan and keep fine-tuning it based on changing win rates and account sizes.

Final Thoughts

Risk management shields you from negative market developments and secures your survival. It enables you to trade in a methodical manner and develop your trading account.

Remember that in order to accurately manage risk, you must track your performance over time. Journaling your trades is a wonderful practice that can greatly benefit you.

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What Are the 4Ws of Investing in Cryptocurrency

Before delving into the cryptocurrency market, you can use the 4Ws as a framework to assist you construct a better approach. The framework is built on four pillars: WHY, WHAT, WHICH, and WHERE. Let’s get started!

But first, this article is about investing. There is a significant distinction between trading and investing. Although the concept can be extended to trading, the information provided gears toward investing. Keep that in mind when you read this through your trading goggles.

W1: WHY are you Interested in Investing in Cryptocurrency?

This is a vital question to answer. Many traders enter the market expecting to make a fortune in a matter of months. During bull markets, cryptocurrency might feel like a gold mine in the late 1840s, when everyone was clamoring to get their hands on the gleaming nuggets.

It is critical to have a compelling answer for why you want to invest in Best Platform To Invest In Cryptocurrency In India, especially beyond purely financial reasons. This will help you keep on to your investments over time, even if the rewards are slow to appear.

Many investors believe that Cryptocurrency Trading In India has a future as a payment system or as a hedge against future inflation. Others utilise cryptocurrency to escape the financial system’s ever-tightening grip. If you research what cryptocurrency is before investing in it, one of these responses will almost certainly come to mind.

Finally, keep in mind that everyone invests to make money, but the stronger your response to this question, the better off you will be.

W2: WHAT Is Your Tolerance To Risk?

Investing entails some risk. In contrast to savings accounts with guaranteed interest, your investment may increase in value. But at the same time it may also decrease in value. In exchange, the earnings (when the investment pays off) are often more than the savings account.

Various types of hazards has found , in which some avoidable, while others inescapable. A global recession, for example, will effect practically all of your assets, whereas a single crypto project that fails will have a far lower impact on a well-diversified portfolio.

Diversification is a tool used by investors to protect themselves from individual risks such as “rug pull.” By putting your figurative eggs in numerous baskets, the impact of a single project failing is minimized. Diversification works best when investments are unrelated to one another and dispersed over several markets, such as stocks and Crypto Exchange India.

To answer the WHAT, you must first choose how much risk you are willing to take and how much money you are willing to risk (and hence potentially lose!).

4 Ws
4 Ws

W3: WHICH coins are you Interested in purchasing?

You already know you want to invest in cryptocurrency and how much risk you are willing to face. The next stage is to decide which Cryptocurrency Buy And Sell App In India based on your investment theory. Find initiatives that align with your motivation for entering the crypto space, as well as a few speculative ventures where you can take a little more risk in exchange for higher benefits.

This is an important step in your approach since the decisions you make here will determine the direction of your portfolio in the months or even years to come. Keep your thesis and risk tolerance in mind when putting together a portfolio. It does not have to be rigid, but an investment portfolio performs best when it is left alone.

W4: WHERE — and HOW — Do You Want to Buy Cryptocurrency?

You’ve determined your WHY and WHAT, and you know which tokens you want to purchase. It’s time to decide WHERE (and HOW) you want to buy your cryptocurrency.

First, determine your investment’s time horizon. Do you intend to maintain your investments for several years, or is your thesis only valid for the next few months?

Then you must select at what price point you wish to buy your portfolio. You can buy at market value or wait for prices to fall to a level that you deem a decent entry point. Do you want to buy everything all at once or utilise dollar-cost averaging? Either is OK as long as your explanation is sound.

You’ll also need to decide what you want to receive out of the investment. Where do you draw the line between profit and loss? All of the decisions we’ve just covered will have an impact on the following:

Determine whether you want to get on the chain or use a centralized platform. Centralized exchanges (CEXs) store your cryptocurrency for you and go to considerable efforts to make it safe. Decentralized exchanges (DEXes) are locations where people may transact without revealing their private keys. Which means you, the user, are responsible for keeping your currencies safe. Both have advantages and disadvantages.

Once you’ve restricted your search to DEXes or CEXes, it’s time to start comparing Best Platform To Trade Cryptocurrency In India to discover one that meets your needs. Each exchange has its own set of advantages and coin selection. You can then choose whether to keep your coins on the exchange or move them to a cold wallet. If you choose the latter, be sure you know what you’re doing because boating catastrophes are never far away.

The strategy is Complete!

We discussed your motivation for Trading Platform For Cryptocurrency In India. And also the level of risk you are willing to accept (and how to reduce it). You’ve determined what your portfolio should look like and devised a strategy for purchasing and storing that portfolio. It’s time to get things moving!

Stick to your plans from here on out. You made decisions for a reason, and there’s no point in planning if you don’t stick to it. Best wishes!

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What Is IPFS, Is It a Blockchain

You’ve probably seen some web pages marked with “IPFS” if you’ve been around the crypto community for a while or even if you’re new to this decentralised world. However, just because you see IPFS and crypto together doesn’t mean that they are connected. IPFS actually has nothing to do with cryptocurrencies, tokens, or blockchain directly. It so happens that there are many parallels between the motivations for IPFS formation and the motivations for the development of Cryptocurrency India.

Let’s step back and consider what IPFS is specifically. The InterPlanetary File System, or IPFS for short, is a distributed and decentralised network for hosting, accessing, and exchanging documents, websites, programmes, and data.

Although the two fundamental terms, distributed and decentralised, might make you think of blockchain (and they should! ), IPFS is actually a completely different animal, as we noted above. Although blockchain is a distributed and decentralised system as well, IPFS has much more expansive objectives. Its founders intended to build a fully decentralised system that could function across locations that were as far or dispersed as planets, as is evident from the term itself.

Juan Benet, a computer engineer, created IPFS in 2015 to speed up, secure, and open up the web. Benet is also the CEO and creator of Protocol Labs, a research and development company that created the blockchain-based digital storage and data retrieval system IPFS and the Cryptocurrency Platforms In India Filecoin.

Simply expressed, IPFS’s bold goals are to re-decentralize the web, protect our data, and enhance utility apps.

How Does IPFS Function and What Is It?

Consider a library where you can locate a book using a certain location identified by a quick-to-recognize code. Similar things are possible on the internet; simply enter any search word into Wikipedia, and presto, a page of material about, say, Agatha Christie is available. Your computer has to ask one of Wikipedia’s computers to prepare that page for you in order to provide you with the information on Britain’s greatest female detective writer.

You can still discover the same page of information on Ms. Christie on IPFS (and sure, Wikipedia has its pages mirrored on IPFS), but the page locates not by its location but rather by its content, which is found by asking many computers, all over the world (or the planet), through the InterPlanetary File System.

How we identify and retrieve data—by location or by content—is one of the key distinctions between the centralized and the decentralised web. The centralized web employs location-based URLs to access our data and relies on reliable authority to host it.

The web address we enter into our browser to identify and locate the website we’re looking for is called a Uniform Resource Locator (URL). With the InterPlanetary File System, the content has a responsibility to direct you to your search results known as content-addressing.

Identification of Content-Addressing

Instead of focusing on geography, IPFS looks for our information based on content. In contrast to BitTorrent, IPFS is based on a peer-to-peer (p2p) decentralised network. This enables users to host and receive material. In addition to helping with file distribution, your computer uses IPFS to locate files that host by other computers.

Users of the InterPlanetary File System, can save and retrieve content using a “fingerprint” of the content. A “content identifier,” or CID, is a cryptographic hash that serves as an InterPlanetary File System fingerprint.

To put it simply, when you use IPFS to look for anything specific, you ask the network to locate a certain hash rather than an IP address. In more technical terms, IPFS -an additional layer above data storage that enables anyone to request a CID. And receives back the pertinent material that is specifically matched to that CID as long as it is being broadcast to the network.

We can all host one other’s material on a decentralised and distributed web using this content “fingerprinting” technique. This uses cryptographic hashing as security.

IPFS
IPFS

What Distinctions Does IPFS Make From the Current Internet?

The internet depends on centralized servers to run. Despite the fact that it is decentralised by nature because no one or any company owns it. Most of the time, these servers employ a variety of Internet Protocol Suites. One of which is HTTP (Hypertext Transfer Protocol), which manages communication.

The internet makes it simple to distribute, manage, secure, and increase the capacity of both servers and clients. Because data is stored in these decentralised servers and found by location.

What Distinguishes IPFS from HTTP?

Centralized servers create a single point of failure since they are an easier target for attacks. In which it compromises security and privacy, as you are aware if you have studied cryptography. In order to address these problems and improve the efficiency, privacy, and security of the web, IPFS was developed.

Another term you’ll hear frequently is “scalability.” IPFS intends to build a more scalable system than HTTP. It enables big data transfers (such songs and movies) using a P2P system. (Does Torrent come to mind?

IPFS—is it a Blockchain?

The answer is No. Due to its decentralised and distributed structure, IPFS frequently links to blockchain technology. Additionally, it uses some of the same technology as blockchain, such as the Merkle Trees architecture. Due of the difference in their purview, they are not equivalent.

Blockchain allows network nodes to hash transactions and share a ledger. Users will be able to search for files based on their hashes thanks to IPFS. This will hash files (not transactions) in the P2P file-sharing system. Similar to blockchain hashes, IPFS allows you to modify a file without really changing it. Instead, a new copy of the file is made, which is great for maintaining a record of changes over time.

But there’s no denying that IPFS and blockchain are a good fit for collaboration. You can store files with enormous amounts of data using the InterPlanetary File System. Hashes have a relatively small amount of storage space with blockchain. Why not combine IPFS’s public database with blockchain to make it publicly verifiable, thereby making the most of both protocols?

What is the Purpose of IPFS?

With the InterPlanetary File System, you can accomplish a lot with data. It includes like distributing content to websites, storing files internationally, enabling secure file sharing, and encrypting communications.

IPFS can be utilized with blockchain technology as a supplemental file system for public networks and other P2P applications. Ethereum’s scalability for decentralised applications may considerably enhance via IPFS (DApps). Its compatibility with one of Top 10 Indian Crypto Exchanges, Ethereum’s smart contracts can expand the ecosystem of the Crypto Exchange Platform with cost-effective and secure storage capacity.

The decentralised storage technique we previously mentioned, IPFS and FileCoin, incentivize data storage and have a significant impact on the development of NFTs as immutable records. Simply inserting an IPFS CID into an NFT will allow it to reference the data directly and more effectively than using an unsafe HTTP link. You got everything, right?

Is IPFS Hackable?

The CID data hashes will only save on your machine. Making IPFS one of the most secure choices available today for storing digital assets like NFTs. Additionally, the nodes search the digital asset and the local data store for the same hash when data from InterPlanetary File System, needs..

We already discussed the problems with a centralized server’s single point of failure. The InterPlanetary File System, seeks to provide a more secure substitute.

What Is an IPFS Node?

We’ve made clear that IPFS is a peer-to-peer (P2P) system for content storage and sharing. In which users run own node (server). The best way to think of IPFS nodes is that they can exchange files and communicate with one another, if you don’t want to go too technical. Simple, the more experienced users should read the next explanation.

Distributed hash tables (DHT), a form of decentralised storage that offers search and storage for mapping keys to values, are used by IPFS nodes. Each node in a DHT is in charge of keys and mapped values. And it is capable of quickly retrieving the value connected to a certain key.

But there’s no denying that IPFS and blockchain are a good fit for collaboration. You can store files with enormous amounts of data using IPFS. Hashes have a relatively small amount of storage space with blockchain. Why not combine IPFS’s public database with blockchain to make it publicly verifiable, thereby making the most of both protocols?

Challenges with IPFS


The decentralisation and data discovery of the internet can be greatly enhanced via IPFS. It does, however, have its own difficulties.

The largest difficulty is that Web2.0 applications, which are widely used, must compete with IPFS.

Although IPFS is more secure and private due to its distributed and decentralised architecture, updating it is more difficult. Because modifications cannot be made inside. The completion of upgrades requires the methodical and regular release of new versions.

The availability of files is an additional significant issue. In centralized servers, files kept and managed by one party who receives compensation for keeping the server online. It primarily depends on data files supplied by different nodes. If these nodes go down for any reason, the data files won’t be available.
But solutions are already starting to materialize. Increased node involvement in IPFS allows the content to supply from the closest peer node that has a copy of it. Relieving the burden on a single node and enhancing user experience. Similar to Crypto Platform In India, IPFS will advance and prosper as more people utilise it.

What Does IPFS’s Future Hold?

It is still relatively young. Although it’s objectives are grandiose—offering an alternative to the current internet and facilitating data discovery across the globe. Its use cases may expand in the future due to rising interest in decentralisation and privacy as well as the size of data that needs to store online.

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What is Soulbound Tokens (SBT), What Are They

The topic of soulbound tokens was very briefly touched upon in our article on potential Web3 use cases. One of the more interesting developments to come out of blockchain technology may be soulbound tokens. This article examines soulbound tokens (SBTs), their applications, advantages, and disadvantages.

What Do SBTs Do?

Vitalik Buterin, the creator of Ethereum, one of the Most Trusted Cryptocurrency Exchange In India, first proposed the idea for Soulbound Tokens (SBTs) in a blog post. He says they are a method to avoid Web3’s “current hyper-financialization.” They will serve as a foundation for a decentralised society, or desoc for short, which will transform how individuals interact with one another, manage their reputations, and create and run communities.

Soulbound tokens are technically non-transferable NFTs, or exclusive and publicly verifiable tokens. They will help society transition to a decentralised one by “encoding social ties of trust,” according to Buterin. These tokens could, for instance, serve as tokenized representations of a resume or stand in for affiliations, credentials, accomplishments, and memberships.

SBTs are not exact replicas of people. Instead, they are connected to a person, group, or other entity. They are specifically committed to a wallet for its whole life. SBTs, for instance, can display a person’s background, including past work. The same person (or entity) could, however, have a different SBT symbolize their non-professional associations. As a result, a person may possess multiple “Souls.”

SBTs have also been referred to as non-transferrable NFTs, as we said before. These are unique recordings of data that belong to a specific entity, as opposed to non-fungible tokens, which are unique assets that belong to an unknown wallet. SBTs cannot be traded because their owner is known, in contrast to NFTs, which can be freely exchanged for monetary gain.

What Soulbound Tokens Offer ?

The advantages of soulbound tokens are numerous. They may, first and foremost, boost trust in the Web3 market. For the time being, Web3 still uses Web2 tools to address representation and trust issues. For instance, in order to use NFTs to their full potential, you’ll need OpenSea, Twitter, or Instagram to display your profile photographs (to trade them). Other examples include DeFi credit markets that rely on over-collateralization to ensure counterparty confidence or DAOs that rely on Discord voting to prevent Sybil attacks.

With SBTs, though, you might support someone or something after doing business with them. Additionally, they would link a loan to a verified entity, enabling undercollateralized loans and unlocking a social side of credit.

As a result, soulbound tokens provide a more accurate portrayal of loyalty, credibility, and alliances. They would nudge Web3 away from a profit-driven framework and toward cooperative, reputation-based frameworks. They basically operate on the same concepts, which are composability, cooperation, trust, and reputation management controlled and owned by network users.

Soulbound Tokens
Soulbound Tokens

How Are SBTs Useful?

There are several intriguing use cases for SBTs.

Owners of NFT Art still require centralized sites, such as OpenSea, to advertise their possession of digital assets. A non-fungible token’s provenance could establish with SBTs by connecting it to the Soul of its owner (aka their unique wallet).

DAOs

It would be able to “soul-back” themselves, greatly enhancing their social coordination capabilities. DAOs are susceptible to Sybil attacks, which are spam assaults that let attackers create several wallets to increase their voting power. DAOs would be able to identify between genuine Souls and fraudulent wallets with the aid of soulbound tokens.

Furthermore, because of their greater track record of trust, Souls with many SBTs might be awarded more voting power.

Loans Made Without Collateral

There is no social credit component to obtaining a loan thanks to the privacy-focused nature of Crypto Currency Trading In India. Trust is therefore enforced monetarily, i.e., through excessive collateralization. Such a social credit feature would be made available with SBTs. “Loans and credit lines could be represented as non-transferable but revocable SBTs, so they are nested among a Soul’s other SBTs—a kind of non-seizable reputational collateral—until they are repaid and subsequently burned, or better yet, replaced with proof of repayment,” Vitalik Buterin wrote .

SBTs offer useful security properties: non-transferability prevents transferring or hiding outstanding loans, while a rich ecosystem of SBTs ensures that borrowers who try to escape their loans (perhaps by spinning up a fresh Soul) will lack SBTs to meaningfully stake their reputation.”

Thus, soulbound tokens could enable a tokenized, transparent and decentralized version of credit scores.

Certifications and Documentations

Another potentially promising field is certifications and documentation currently collected on centralized ledgers “behind closed doors.” For example, academic records or certifications not applying to a universal standard would record by SBTs, creating a “proof of history” that cannot be tampered with.

Proof-of-Presence

Proof of attendance records for physical or virtual events and gatherings would be equally fascinating. A soulbound token, for example, may be used to track academic attendance and link it to a student’s academic record and, eventually, their employment record.

Digital CV

Finally, SBTs could improve openness and streamline employment records. Even today, it might be challenging to verify the accuracy of a candidate’s career history. If you consider records from various businesses or nations, this is even more the case. An applicant’s reputation would improve by a verifiable digital CV made possible by soulbound tokens.

How Do SBTs Operate in Web3?

SBTs are relatively uncommon on a large basis. Though theoretically they would be non-transferable and linked to a single crypto wallet. They would essentially be NFTs with the absence of transferability and financial aspects.

SBTs Vs NFTs

NFTs – transferable and include a verifiably one-of-a-kind piece of data that stores on the blockchain, like the information for a digital work of art. They don’t tie to a particular owner or wallet.

SBTs have verifiably unique information about their unique owner (their Soul), such as employment or medical records, certifications, and other information, and are not transferable. They link to one Soul only. Multiple SBTs with qualitatively different pieces of information can exist for one Soul.

What Are Examples of SBTs in Action?

Examples of future uses of soulbound tokens are:

Proof of NFT provenance

DAO voting

Digital employment records

Undercollateralized lending in DeFi

Proof of attendance

Digital proof of certifications, documentation, badges, and others

Airdrops bound to Souls

Digital medical history

What Are SBTs’ Drawbacks?

One of the primary criticisms is that SBTs can pave the way for a dystopian future with increased surveillance. The parties with access to such information would have a lot of power over the entity the data belongs to if they could link a person’s employment or health history to a token. SBTs aren’t supposed to be connected to the government, but that doesn’t mean their features can’t be abused.

Second, standardising and recording off-chain data sounds interesting, but connecting to an on-chain record is probably challenging. Furthermore, the absence of a common standard for SBTs would unavoidably result in each blockchain creating its own soulbound tokens, similar to how various chains produce related NFT sets. Once more, identifying the “real” Soul would require an off-chain societal consensus rather than a uniqueness that could be independently verified by technology.

Final Thoughts

The video game “World of Warcraft,” where some goods are soulbound, is where soulbound tokens first appeared. Their on-chain implementation might aid in solving a number of critical Web3 representation and trust issues. As a result, they might be just as popular as the metaverse in terms of igniting the next bull run in cryptocurrencies.

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Is DeFi on Bitcoin the Next Big Thing

Today, the decentralised finance (DeFi) landscape is brimming with opportunity, with well over 200 DeFi applications running on the top ten smart contract platforms.

Despite its success as a digital currency, Bitcoin (BTC) was not even considered as a decentralised finance platform until recently. This was largely due to its limited programmability, which made complex DeFi applications like those found on smart contract platforms difficult to develop.

However, in November 2021, Bitcoin received an upgrade that may make DeFi on Bitcoin a more viable and appealing prospect.

The Taproot upgrade changed the way transactions are verified and allowed DeFi to be used on the platform. It increases platform efficiency by condensing complex transactions, lowering memory utilization and fees, and increasing scalability.

The platform is now part of the DeFi ecosystem. This expects to grow significantly in the coming months and years.

Bitcoin’s DeFi Landscape

Bitcoin’s DeFi ecosystem is still in its early stages of development. Only a few projects are currently using its smart contract capabilities, and even fewer can consider true DeFi applications.

Despite the recent Taproot upgrade, Bitcoin’s native programmability is rather limited. Its scripting capabilities limit to the Bitcoin script’s more than 100 opcodes. Each of these opcodes performs a specific function. And this can combine to form more complex scripts — or rudimentary smart contracts.

As a result, the majority of Bitcoin DeFi platforms host their smart contracts on a different chain. Such as the Bitcoin side chain or layer 2. This connects to the Bitcoin blockchain in order to settle transactions. Or to use Bitcoin for data  availability, storage or security layer.

DeFi

Some of the most popular Bitcoin DeFi applications include:

Wrapped Bitcoin  (WBTC)

Wrapped Bitcoin, the most well-known Bitcoin DeFi application, allows users to move their native BTC from the Bitcoin blockchain to another platform via a simple wrapping process.

Users interact with a merchant and deposit their Bitcoin (BTC) with a custodian, who mints an equivalent amount of Wrapped Bitcoin (WBTC) on a separate blockchain. This WBTC can then be used in the DeFi ecosystem of the chain on which it was minted, such as Ethereum or BNB Chain.

To redeem their original BTC (a process known as unwrapping), they must once again interact with a merchant who verifies the user . And communicates with a custodian who burns the WBTC and returns the user’s original BTC.

Stacks

Stacks is a blockchain network that is open source and supports smart contracts and decentralised applications. It intends to significantly improve the capabilities of the Bitcoin network and open up new use cases by providing a parallel execution layer.

The Stacks blockchain ecosystem has been gradually expanding since its launch in January 2021. Today, the chain hosts dozens of DApps, including NFT marketplaces, digital identity solutions, DAOs, and DeFi applications.

Perhaps most notably, Stacks is powering NOVA Miningverse, an ecosystem of play-to-earn games that pay out in Bitcoin.

The platform connects to the original Bitcoin blockchain via a Proof-of-Transfer consensus system (PoX). This enables Stacks dApps to benefit from Bitcoin’s state and security.

Portal

Portal, billed as the “gateway to uncensorable applications,” is a new platform designed to power DeFi on Bitcoin.

In order to bring Bitcoin to the world’s first blockchain, the platform recently raised $8.5 million. It intends to accomplish this through the use of a multi-layered architecture that layers a decentralised exchange. And DeFi ecosystem on top of Bitcoin’s base layer.

Portal, which will build on the Fabric framework, will provide multiple censorship-resistant layers on top of Bitcoin. It allows general-purpose computation for decentralised applications, atomic swaps, new financial primitives, and more.

Rootstock

It also known as RSK. This is one of the first Bitcoin smart contract platforms, and was first launched in 2018. It has been in development since 2015.

Rootstock, as a two-way pegged virtual machine platform for Bitcoin, enables developers to create Turing complete Bitcoin smart contracts. To gain access to the Rootstock ecosystem, users must exchange their native BTC for an equivalent amount of RSK Smart Bitcoin (RBTC).

This RBTC can be used in the Rootstock DeFi ecosystem in the same way that WBTC can be used in the Ethereum dApp landscape.

Rootstock, now used to create a wide range of Bitcoin dApps. Sovryn is arguably one of the most popular, as it aims to bring DeFi to Bitcoin by leveraging RSK’s technology.

The Future of Bitcoin DeFi

According to DeFi Llama data, Bitcoin currently has a TVL of $111.58 million with the vast majority of that value associated with the layer-2 payments platform, Lightning. The total TVL of current Bitcoin DeFi platforms is unknown.

To put this in context, Ethereum’s DeFi TVL grew from $100 million to $100 billion in just three years. If Bitcoin follows suit, it could see significant growth in its DeFi ecosystem . And TVL over the next few years, reach $100 billion by 2025.

Most blockchain innovations began with rudimentary versions on Bitcoin. This includes the first non-fungible tokens (also known as coloured coins) and basic smart contracts.

However, Bitcoin on DeFi does not function the same way it does on Ethereum and other smart contract platforms. Instead, most Bitcoin DeFi platforms are either independent layer-1s connected to Bitcoin via a bridge-like system or simply settle/record transaction receipts on Bitcoin in the same way that a regular layer 2 does.

Developers who choose to build on these platforms must navigate the technical challenges that come with the territory. Aside from RSK, many of these have a custom virtual machine implementation (rather than the standard EVM) and frequently only support obscure programming languages, such as Stack’s Clarity.

This can make development more difficult while avoiding the Cambrian explosion of DeFi apps seen on EVM platforms. They include Avalanche, Fantom, and BNB Chain as a result of developer migration and DApp porting. Similarly, developers will need to overcome the challenge of blockchain bloat by ensuring that only the necessary data stores on-chain in order to keep the network decentralised by reducing the storage requirements for full nodes.

Conclusion

To be successful, DeFi on Bitcoin must provide a clear advantage over existing DeFi solutions. And host novel DeFi applications not found elsewhere, and attract a large user base.

Given that Bitcoin is well-known for breaking boundaries and shattering expectations. This isn’t entirely out of the question. But it’s safe to say that the Bitcoin DeFi landscape is still in its early stages. However, if retail and venture capital money floods in to help add rocket fuel to the system, this may not be the case for long.

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What Exactly Are Cross-Chain Bridges?

Cross-chain bridges appear to be frequent targets for hackers, and with millions of dollars lost in these hacks, one might wonder why there is a need for blockchain bridges.

There are hundreds of blockchains, each with its own set of features and applications. While blockchain technology has grown in popularity and user base, interoperability between different siloed blockchains has remained a major challenge.

Blockchains currently exist primarily as isolated networks that cannot effectively communicate or share data with one another. For example, Ethereum users cannot deploy smart contracts on the Bitcoin network, and Bitcoin holders cannot use their tokens for Ethereum network transactions.

Simply put, cross-chain bridges connect individual blockchains, allowing assets and information to be transferred between them.

This enables cross-chain interoperability, allowing users to access protocols and decentralised applications (DApps) across multiple blockchains.

Cross-chain bridges have emerged as one of the available solutions for connecting different blockchains and ecosystems within the cryptocurrency space.

What Are Cross-chain Bridges?

A cross-chain bridge, also known as a blockchain bridge, is a protocol that connects two blockchains and allows users to transfer digital assets and information from one to the other.

It functions as a “middleman” between different blockchains, facilitating token transfers, smart contracts, data exchange, and communication between two independent chains.

For example, if you have Bitcoin and want to spend it on the Ethereum blockchain, a cross-chain bridge will allow you to do so by wrapping BTC in Ethereum.

The popularity of blockchain bridges has grown in part due to the rise of “alternative” layer-one blockchains such as Solana, Avalanche, and BNB Chain. These “Ethereum-killers” attempted to take market share and users away from the first smart-contract chain. Many users, however, had funds locked up on Ethereum. Bridges enabled them to seamlessly transfer assets to other chains.

Cross Chain Bridges
Cross Chain Bridges

In general, having access to multiple blockchains via a single network improves user experience, increases liquidity for DApps, and improves asset efficiency.

The popularity of blockchain bridges has grown in part due to the rise of “alternative” layer-one blockchains such as Solana, Avalanche, and BNB Chain. These “Ethereum-killers” attempted to take market share and users away from the first smart-contract chain. Many users, however, had funds locked up on Ethereum. Bridges enabled them to seamlessly transfer assets to other chains.

In general, having access to multiple blockchains via a single network improves user experience, increases liquidity for DApps, and improves asset efficiency.

How Does a Cross-Chain Bridge Function?

Although cross-chain bridges can be used for other cool things like smart contract conversion and data transfer, the most common utility is token transfer.

If you wanted to use a specific asset on another blockchain before blockchain bridges, you had to rely on the services of centralised exchanges (CEXs) like Binance or Coinbase.

Assume you have some BTC on the Bitcoin blockchain and wish to transfer them to the Ethereum blockchain, which has a native ETH token. To accomplish this, send your BTC to a cross-chain bridge, which will hold your coin and generate equivalents in ETH for you to use.

In reality, your BTC is not moved from the Bitcoin network to the Ethereum network. Instead, it is locked in a smart contract that grants you access to an equivalent amount in wrapped Bitcoin (wBTC) for use on the Ethereum blockchain. If you choose to convert the wBTC back to BTC, whatever remains of the wrapped token will be destroyed (burned), and you will receive an equivalent amount of BTC.

A cross-chain bridge would allow you to convert and use your BTC on the Ethereum network without having to go through the cumbersome process of converting it on a CEX. It works by enclosing tokens in a smart contract and then issuing native assets that can be used on any other blockchain.

What Is the Importance of Cross-Chain Bridges in the Crypto Ecosystem?

To comprehend the significance of cross-chain bridges in the crypto space, one must first comprehend how interoperability powers seamless transactions in traditional finance. You may not have realised it, but you can pay your Mastercard bills with your Visa. Similarly, you can use PayPal to pay for almost all online purchases, regardless of where you buy them.

These are all distinct businesses with distinct systems and protocols. Nonetheless, transactions are quick and easy.

One of the barriers to widespread cryptocurrency adoption has identified as a lack of interoperability between different blockchains. As a result, solutions such as cross-chain bridges represent a significant step toward the widespread adoption of blockchain technology.

Blockchain bridges can also help to reduce transaction costs while improving user experience. Consider having to go through multiple exchanges every time you need to swap a token. Aside from the higher fees that come with doing this every time, the process is quite time-consuming.

Cross-chain bridges, in general, enable users to benefit from the best features of two different blockchains, such as lower gas fees with higher transaction through0ut and better utility in the form of DApps.

The Best Cross-Chain Bridges

Cross-chain protocols, like blockchains, have a large number of them.

Token Bridge Portal (formerly Wormhole)

Despite the February hack, Portal has remained one of the space’s most popular cross-chain bridges. Although the multichain was initially built on the Solana Network for bidirectional crypto token transfers between Solana and Ethereum, it now connects over ten blockchains, including Solana, Ethereum, BNB Chain, Polygon, Avalanche, Oasis, and others.

To provide its users with a robust cross-chain swap experience, Portal employs special validators known as Guardians. The Guardians keep an eye on the bridge’s activity and verify user requests.

In addition to its user-friendly interface, Portal token bridge charges a low transaction fee of $0.0001 per transfer. At the time of writing, the protocol had processed over 400k transactions and had a total value locked (TVL) of $469 million.

Binance Bridge

Binance Bridge is an Ethereum-BNB Smart Chain Bridge from the world’s leading exchange that allows anyone to convert into and out of the BNB Smart Chain and other BSC-compatible formats. The Binance Bridge currently supports the conversion of ERC-20 tokens as well as coins from other networks such as XRP, LINK, ATOM, DOT, XTZ, and ONT.

It is worth noting that the bridge charges no transaction fees. Only the gas fees on the native and destination chains requires for users.

Avalanche Bridge

The Avalanche Bridge is a two-way cross-chain bridge that connects the Avalanche blockchain to the Ethereum network. It makes use of ChainSafe’s ChainBridge to enable two-way transfers of crypto tokens as well as non-fungible tokens (NFTs).

To secure the bridge, the protocol relies on Relayers. These Relayers (Protofire, Hashquark, POA Network, and Avascan) vote to approve or reject the asset swap proposal after comparing it to Avalanche’s data. Because of this additional voting process, Avalanche is one of the most secure crypto bridges in the market.

Fantom AnySwap Bridge

Fantom’s AnySwap, like the Avalanche Bridge, is a bidirectional solution that enables cross-chain transfers between the Ethereum Network and the EVM-compatible Fantom Network.

AnySwap offers a multi-chain liquidity solution and facilitates cross-chain swaps through the use of liquidity pools. Transfers to Fantom from Ethereum, Avalanche, Polygon, and the BNB Chain facilitates by liquidity pools deployed across various blockchain networks.

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