There is a lot to consider when it comes to cryptocurrency investment and trading, and crypto exchanges are a great way to start. It is a good platform for beginners to familiarize themselves with the market as well as for experienced traders to make use of the various products the exchanges offer.
There are hundreds of crypto exchanges, and everyone is asking. “which crypto exchange is the best?” Everyone wants to get the best bang for their buck, whether it be low trading fees or lucrative products. We will be comparing two of the top and most talked about crypto exchanges in the world: Binance and FTX Exchange.
FTX EXCHANGE (INCLUDING FTX INTERNATIONAL AND FTX.US) ARE NO LONGER IN OPERATION
Both exchanges have filed for bankruptcy. Subsequently, the exchange was “hacked” and more than US$600 million worth of cryptocurrencies drained. The hacker is strongly rumoured to be a former FTX employee. For more about how this story unfolded and the latest news, check out these articles:
Founded in 2019, FTX Exchange is a cryptocurrency trading platform that was built by Alameda Research, a quantitative trading firm that develops specialized algorithms for trading crypto. It has topped many trading charts by volume and is responsible for 30% of the market trading volume on major exchanges.
The strong trading background of FTX shows that they live up to their claim of being an exchange “built by traders, for traders.”
FTX is largely focused on the derivative and prediction market, offering a wide array of futures, options, and volatility products with competitive trading rates and discounts for specific users.
FTX Exchange has been growing significantly over the past year, exploding past the likes of KuCoin and Kraken. They even managed to take market share away from Coinbase as well, which is the number one crypto exchange in the U.S. This is in part thanks to huge venture capital funding that is backing FTX.
Check out FTX Exchange Guide for a full review and tutorial on how to use FTX Exchange.
What is Binance Exchange?
Binance was founded in 2017 by Chengpeng Zhao (CZ), former Chief Technology Officer of OKCoin who has years of experience developing high-frequency trading software.
Binance is, by a large margin, the world’s most popular cryptocurrency exchange. It has more than than $25 billion in organic trading volume per day and millions of users worldwide.
Binance is largely focused on the spot market and has one of the most cryptocurrencies available to trade. It also has powerful trading tools such as leveraged trading, options trading and lending platform.
For the longest time, the trading platform scene is dominated by Binance, and is held in high regard for being smart and proactive in their planning and actions, not only for themselves but also for developing the crypto industry as a whole.
This is a significant step since it enables both exchanges to function in accordance with international standards, and meet the criteria of major regulators like the Financial Action Task Force.
Binance vs FTX Exchange Overview
In this section, we will take a closer look at what Binance and FTX have to offer and compare them based on these features:
Products
Supported cryptocurrencies
Fees
Security
Products
Binance and FTX have quite a lot of similarities based on their general offering. But the major difference is that Binance is more focused on the spot market and has more cryptocurrencies to offer, whereas FTX is more focused on the derivative and prediction market and has more volatility products. Therefore, FTX is usually seen as the preferred choice for experienced traders who want a wider (and potentially higher risk/reward) range of products.
Both exchanges offer products that are exclusive to them. Binance offers Crypto Loans, a P2P market, and Binance Earn, while FTX offers volatility and prediction markets. The addition of FTX stocks makes it the first domestic crypto exchange to provide stocks on its platform, enabling trading of stocks and ETFs by U.S. users.
FTX’s crypto card is exclusively accessible to US residents via the FTX US platform, whereas Binance’s crypto debit card has gained enormous popularity. While FTX places a greater emphasis on specialized trading products, Binance has more to offer in terms of their Binance Earn, allowing users to earn passive income.
Both Binance and FTX offers a mobile app for iPhone and Android so users can trade cryptocurrencies on the go.
Supported cryptocurrencies
Binance has the highest number of cryptocurrencies that any exchange offers to its users. It currently has 1,300 cryptocurrencies including its own native crypto, Binance Coin (BNB).
Nevertheless, FTX offers a lot of cryptocurrencies for users to trade, though not as large as Binance’s. FTX supports over 460 cryptocurrencies including its own native crypto, FTX Token (FTT).
Both exchanges however, are consistently adding to their lists of supported cryptocurrencies, including newly launched tokens.
Fees
The rates on both exchanges’ spot trade markets are extremely low, and they continue to decline as volume rises. However, FTX wins out since it assesses 0.02% as a maker fee and 0.07% as a taker fee for tier one accounts.
This is significantly lower than Binance fees, i.e. 0.1% maker and taker fee. Even after using BNB for trading fees, the user will have to pay a 0.075% fee, which is higher than FTX.
We can see that FTX is better for trading, and is clearly a winner in this category.
Security
One of the most important considerations when choosing an exchange is security. It’s safe to say that Binance and FTX are two of the most secure exchanges in the world.
Both exchanges use two factor authentication, and they store account funds and data away from online platforms so that they cannot be hacked. They also insure their funds by putting a certain amount of fee away as an insurance fraud.
Both platforms also employ round-the-clock monitoring and analysis, and in the case of a theft, user funds are protected by the reserves that both firms have in their treasuries.
FTX is one of the few exchanges that have never been hacked, and while Binance has seen some hacking incidents in the past, both exchanges adhere to the strictest industry security guidelines, with the majority of funds being kept in cold storage. FTX also does third party transaction audits via Chainalysis, giving them a slight edge over Binance.
However, we must also consider the fact that Binance has been around longer and has a much larger trading volume than FTX, making them a more attractive target to hackers. But Binance has managed to hold their ground and plan for the worst, and is still one of the top performing exchanges despite the bear market.
Conclusion
Binance and FTX have quite a lot of similarities based on their general offering. But the major difference is that Binance is more focused on the spot market and has more cryptocurrencies to offer, whereas FTX is more focused on the derivative and prediction market and has more volatility products.
Binance offers the most cryptocurrencies to trade including new projects such as DeFi, NFT or metaverse gaming. If you are a beginner or looking for new tokens to trade, or even an experienced investor who prefers passive earnings, Binance would be a better option for you.
If you are an experienced trader who strictly does day trading or skilled at volatility products, FTX would be the go-to for you as it offers all the products traders need, with significantly low fees.
Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.
Alfacash is a simple and easy-to-use platform for buying and selling cryptocurrencies, perfect for those who don’t need advanced order books or charting tools. In this Alfacash review, we will look at the platform’s pros and cons, as well as the exchange’s usability.
Alfacash is a crypto platform registered in Estonia, formerly known as AlfaCashier. Established in 2012, the platform offers a straightforward and easy-to-use experience for buying and selling crypto. It is a reliable and secure platform, with a wide range of payment options, including bank transfers, credit cards, and other payment methods. The platform also offers a variety of features, such as instant exchange, low fees, and 24/7 customer support. With its simple and intuitive interface, Alfacash makes it easy for users to buy and sell crypto quickly and securely.
Key Features of Alfacash
Noncustodial services. Alfacash serves as an intermediary and never keeps any of your money.
You can buy crypto with a Bank Card (VISA, MasterCard, and Qiwi virtual wallet) but more fiat on and off ramps are coming soon), that it is “fully automatic” (meaning that it is an instant “one-click exchange”), that it is an instant non-custodial crypto exchange (meaning that the exchange itself never holds user assets) and that they offer APIs for crypto exchange integration.
This particular platform offers you the opportunity to swiftly and securely buy or sell crypto. This means that there are no charting tools, no order books, or anything like that. The trading view is the purchase interface included above in this review.
Alfacash doesn’t charge any additional fees to withdraw coins. However, there are always network fees involved with transferring crypto, which is why we have listed the network fees under the withdrawal fee section of this exchange.
Some users’ Alfacash reviews will tell you that the platform allows you to trade 28 different cryptocurrency assets on their site.
Key Advantages of Alfacash
So, let’s start with some of the more positive aspects of the discussion.
A Trustworthy But Little-Known Cryptocurrency Exchange
Alfacash is a legitimate cryptocurrency exchange that has been around since 2012. With over half-a-million orders processed, it is a reliable platform for buying, selling, and exchanging cryptocurrencies. Despite its long history, many people still have questions about the platform’s legitimacy. To help answer these questions, there are numerous Alfacash reviews online that can provide insight into the platform’s security and reliability. With its long history and high number of orders processed, Alfacash is a safe and secure platform for trading cryptocurrencies.
A Non-Custodial Crypto Exchange
Decentralization is a key concept in the cryptocurrency world, and it is a point of controversy. Cryptocurrencies were designed to be decentralized, meaning no central authority would have control over them. However, there are custodial exchanges that hold cryptocurrency during the exchange process or in the form of a wallet. This goes against the purpose of decentralization and makes it difficult for people to trade with each other in a peer-to-peer manner. Custodial exchanges also raise security concerns, as they are vulnerable to hacks and other malicious activities. Ultimately, it is important to understand the risks associated with custodial exchanges and to be aware of the potential drawbacks of using them.
Alfacash is a non-custodial crypto exchange that allows users to trade a wide range of digital assets. The platform is easy to use and provides a secure environment for users to trade their cryptos. It also offers a variety of features such as margin trading, advanced order types, and a mobile app. However, the biggest potential issue is that, in the event of a hack or breach of security, all of your cryptos could be stolen since they’re located on the exchange platform. Fortunately, Alfacash is a non-custodial platform, meaning that users retain sole responsibility for their security.
28 Cryptocurrencies Available
Alfacash is a cryptocurrency exchange platform that allows users to trade 28 different cryptocurrency assets. This is great news for crypto enthusiasts, as it means they can purchase, hold, and trade a bigger variety of cryptocurrencies than ever before. The platform is easy to use and provides a secure environment for users to make trades. It also offers competitive fees and a wide range of payment methods. With its wide selection of coins and features, Alfacash is a great choice for anyone looking to trade cryptocurrencies.
Purchasing Cryptocurrency with a Credit Card is Now Possible!
Alfacash is a legitimate cryptocurrency exchange that allows users to purchase crypto assets with a credit or debit card, or via a bank transfer. It is one of the top-tier crypto exchanges, and it is known for its ease of use and straightforward purchasing process. Users can also benefit from the exchange’s low fees and fast transaction times. Reviews of Alfacash are generally positive, with many users praising its user-friendly interface and secure platform. All in all, Alfacash is a great choice for those looking to invest in crypto.
A Completely Automated Exchange with No Significant Waiting Times
Alfacash is a cryptocurrency exchange that offers users the ability to trade cryptocurrencies automatically. This means that the platform is fully-automatic and there is no manual involvement in the exchange process. This feature is beneficial to users as it allows for instantaneous trades, meaning they can take advantage of potential profits without having to wait for a human to intervene and confirm or reject their transaction request. This is an important feature to consider when choosing a cryptocurrency exchange, as it can be the deciding factor between making a profit or losing out.
Key Disadvantages of Alfacash
There are a few notable issues and cons that are needed to be addressed, before you can truly make up your mind.
Investors from the United States are Not Welcome
Alfacash is a crypto exchange platform based in Estonia. Unfortunately, US crypto traders and investors are not able to use the platform due to the Securities Exchange Commission (SEC). The SEC regulates crypto trading platforms located within the US and reacts to anything that may solicit US investors to utilize off-shore crypto exchanges that are not affiliated with the SEC. As Alfacash is an Estonia-based brand, it falls under the SEC’s jurisdiction and US customers are not able to use the platform. However, there are many other crypto exchanges on the market that US customers can use instead.
Lackluster Fees
Alfacash is a non-custodial crypto exchange that offers a range of cryptocurrencies for trading. However, the fees for both makers and takers are quite high, ranging from 1% to 5%. This is much higher than the fees charged by most top-rated crypto exchanges, which usually range from 0.1% to 0.5%. Some user Alfacash reviews point out that the non-custodial nature of Alfacash might have something to do with this, but even if that’s the case, it still is of small condolence.
Lack of Clear Information About Security Features
Alfacash is a legitimate cryptocurrency trading platform that complies with GDPR security regulations. They are in partnership with Sumsub and Chainalysis to ensure that no money laundering activities take place and that personal data is processed fairly. Although there is not much information available regarding their security features, user reviews suggest that they are a secure platform. However, some additional transparency would be appreciated. With time, Alfacash will likely offer a clear and concise list of the security features they employ.
How to Use Alfacash?
Alfacash is a great choice for those looking for a reliable and secure cryptocurrency exchange platform. It offers a wide range of services, low fees, and a user-friendly interface, making it an ideal choice for both beginners and experienced traders.
Step 2: Press the Sign-Up button at the top-right corner of the screen.
Step 3: Now enter some of your personal information (name, email address, etc.) as well as the type of account you want to create.
Step 4: You will then be prompted to confirm your email address.
Step 5: After verifying your email, the next step is to create a new password.
Step 6: After you create your password, that’s it – you’re now set, and should be able to start using your account!
How to Purchase Cryptocurrency on Alfacash?
Step 1: From your homepage, go to the Buy option at the top of the page and choose the cryptocurrency you want to buy.
Step 2: Now, pick the Buy With Credit Card option on the top of the screen.
Step 3: You will then be redirected to a separate Simplex-powered page. Simplex is a well-known and widely used crypto exchange payment solution that is trusted by many exchanges worldwide.
Step 4: Here, you will have to put in your credit card details. Once you do that, you will also need to verify your identity
Conclusion
Alfacash is a cryptocurrency exchange platform that offers a wide variety of digital currencies for purchase. It allows users to buy crypto with a credit or debit card, or via wire transfer. While the platform has higher fees and doesn’t serve US-based investors, it is simple to use and can be a viable option for those outside the US. If Alfacash isn’t the right fit, there are other crypto exchanges available that may be a better fit. Be sure to read reviews and compare fees and features to find the best option for you.
Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.
Algorand is a high-performance next-generation blockchain whose goal is to create a transparent system in which everyone can achieve success through decentralized projects and applications. Many have called this project “Blockchain 3.0”, as it solves Bitcoin’s well-known scalability problems whilst maintaining security and decentralization. Algorand has the native token $ALGO, which will be used as a transfer of value on the network. In terms of technology backbone, Algorand uses a Pure Proof of Stake (PPOs) and pseudorandom functions to prevent malicious attackers from colluding on the network.
Algorand stands out from other high-performance blockchains by the credibility of its founder, MIT professor Silvio Micali. Professor Micali has is the recipient of the prestigious Turing Award for computer science and many of his inventions have directly impacted the cryptocurrency scene.
Founder of Algorand: Silvio Micali
Silvio Micali is the recipient of the Turning award (the highest award from computer scientists) with innovations built around his research in cryptography, zero-knowledge, pseudorandom generation, secure protocols and mechanism design. On top of this, Dr. Micali is the co-inventor of probabilistic encryption, Zero-Knowledge Proofs, Verifiable Random Functions and many of the protocols that are the foundations of modern cryptography
Algorand Foundation
The Algorand Foundation makes use of the Algorand protocol and software developed by Silvio Micali and his team. Their aim is to create an ecosystem that everyone can use to build a borderless digital economy on Algorand.
Specifically, the Algorand foundation holds one-quarter of the total supply of ALGO (i.e. 500 million ALGO), and manages the Algorand blockchain.
Algorand attempts to overcome the Blockchain Trilemma
Vitalik Buterin proposed that a Blockchain can only have a maximum of 2 of these properties
Currently, transactions on the blockchain are very slow because of the “Blockchain Trilemma”. This is a term coined by Vitalik Buterin, the founder of Ethereum.
According to this idea, a blockchain has three major features: decentralization, scalability and security.
However, the Blockchain Trilemma proposes that it is very hard for a project to have all three features to a satisfactory condition. A network that is decentralized and has a tough security would not be scalable. Similarly, a blockchain that is decentralized and scalable will have little security etc.
Buterin believes at a fundamental level, a blockchain network can only achieve two of the three features at any time. The Blockchain Trilemma could be the source of scalability issues on most cryptocurrency blockchains. Most cryptocurrency projects cannot handle high numbers of transactions while ensuring network decentralization and security.
What is Algorand- Is it really a Next Generation blockchain?
To attempt to overcome this, Algorand opted for a Pure Proof of Stake (Pure PoS) consensus mechanism. Interestingly, the mechanism employs a different approach compared to other alterations of the PoS mechanism.
For instance, instead of requiring 100% consensus from all the validating parties, Algorand is comfortable with a two-thirds majority consensus. This means that in order to attack Algorand, you will need to purchase more than one third of the total supply of Algorand. This will anyway be uneconomical and holding such a large volume of the supply means that you have a large stake and would not want to see it fail.
Algorand’s secret sauce: Cryptographic sortition
Since today’s blockchain platforms require speed as an integral component, Algorand has a fast transaction time by enabling fast transaction finality through cryptographic sortition.
“All transactions are final in Algorand. Once a block appears, users can rely on the transactions it contains immediately, as they can be confident that the block will forever be part of the chain. Even if the Internet is split into multiple pools of users, only one safe and consistent Algorand chain will exist. [Additionally], Neither a few delegated users nor a fixed committee is responsible for proposing blocks in Algorand. Instead, all users are randomly, secretly, and continuously selected to participate in the Algorand consensus protocol.”
The process of confirming blocks on the platform involves two stages; the proposal and voting stage. During the proposal stage, a token is randomly selected, and its owner suggests the next block to be confirmed. At the voting stage, 1000 random token owners are selected to form a committee that approves the proposed block.
How to Stake Algorand?
An Algorand transaction in action
Anyone can participate in the Algorand platform as a block proposer by merely switching their address from offline to online on the Algoexplorer. Luckily, this option does not depend on the amount of Algo tokens staked. Mining is not required, all you need is to stake its ALGO token and have the nodes online.
The Algorand platform supports two types of nodes; relay and participation. An important point to note is that the relay nodes don’t participate in voting or decision making. Instead, they facilitate communication between participation nodes. Relay nodes are also hardware intensive compared to participant nodes.
Although Algorand is designed around being fully decentralized, the Algorand Foundation holds a lot of ALGO tokens and hence control. However, the platform is anticipated to be more decentralized in coming months as the foundation continues to liquidate its position.
You can also stake Algorand using your Ledger cryptocurrency hardware wallet. Check out our Ledger Nano X review.
Algorand 2.0 Protocol Upgrade
On 22nd of November 2019, the Algorand foundation announced the next huge leap for Algorand – dubbed Algorand 2.0. This release brings about 3 major features: Native token issuance (Algorand Standard Asset), Atomic swaps for interoperability and smart contract support via the TEAL scripting language.
Algorand Standard Asset (ASA) brings about easy token creation and issuance directly on the Algorand main chain. ASA supports a wide range of tokens, such as fungible tokens (similar to Ethereum’s ERC-20, and also non-fungible tokens (used for digital collectibles). Algorand’s implementation of tokenised assets is directly on the protocol layer (“Layer 1”), allowing for direct access to assets with maximum security. This is a significant advantage over Layer 2 Scaling which requires payment channels in order to operate.
“Algorand is delivering that innovation with this new set of features that brings an impressive amount of opportunity to decentralized finance.
Shay Finkelstein (CTO of Securitize)
Algorand listed on Coinbase, price surges over 30% in one day
In a complete surprise to cryptocurrency enthusiasts, Algorand was listed on Coinbase on 17th July 2020. People found out only when they saw the announcement on Coinbase’s blog, whereby the Exchange said that their customers can now buy, sell, convert, send, receive or store $ALGO in all Coinbase supported regions. Be sure to check out our Coinbase exchange review and some hacks and tips to avoid Coinbase fees.
People were completely caught off guard by this announcement since in the few weeks prior Coinbase had talked about 18 other cryptocurrencies they might consider listing. Yet Coinbase was not one of those 18 cryptocurrencies.
This listing created a whole flurry of activity for $ALGO, especially in terms of its prices. Since the listing, prices for $ALGO shot up 30% since the announcement and was even trading at $0.367 at its peak.
Algorand becomes the official blockchain platform of FIFA
FIFA, the world football governing body has announced its partnership with Algorand. This sponsorship and technical partnership will see Algorand becoming the official blockchain platform for FIFA, providing blockchain-supported wallet solutions as well as helping FIFA develop its digital assets strategy.
Algorand will also be a FIFA World Cup Qatar 2022 Regional supporter in North America and Europe, and a FIFA Women’s World Cup Australia and New Zealand 2023 official sponsor.
The future of ALGO token: Algorand’s 10-year plan
When the Algorand blockchain was first launched, 10 billion ALGO was minted, which represents the fixed and unchangeable maximum supply of AGLO.
Since then, only 16% of this total supply has been injected into circulation via an auction in June 2019 and subsequent community rewards. Auction proceeds have been used to finance various community, academic, and industry projects which ultimately support the development of economic infrastructure and business opportunities on the Algorand blockchain.
After consideration by the Algoradnd team and based on their analysis and feedback received, the Algorand team have decided that the remainder of the initial 10 billion ALGO tokens would be gradually distributed over a period of 10 years from 2020, i.e. by 2030, the entire supply of ALGO would be distributed. This is much longer than the initial 4 years from 2020 as originally planned by the Algorand team.
In order to implement Founder Silvio Micali’s vision of innovative community governance, the Algorand team are moving towards a new reward system that rewards existing and future participants who are committed to participating in the governance of the Algorand ecosystem and prove their loyalty by locking up their ALGO for the long term. Resources i.e. 3 billion ALGO will be correspondingly distributed to reward long-term holders, and economic and business activity on the Algorand blockchain. The aim of this is to achieve a rate of growth of chain loyalty and economic adoption which would be more than enough to compensate for the gradual release of tokens over 10 years.
Furthermore, the funds initially allocated for sales will now be diverted to other areas such as community incentives, governance participation and ecosystem support.
FAQ
How do you mine Algorand?
It is currently not possible to mine Algorand using computer hardware. Algorand uses a proof-of-stake consensus, so it is possible to earn ALGO rewards by simply staking Algorand in the wallet.
Where is Algorand located?
Algorand is a decentralized project founded by MIT professor Silvio Micali. The foundation responsible for maintaining Algorand, the Algorand Foundation is incorporated in Singapore and is located at 1 George Street, #10-01, One George Street, Singapore (049145).
How do I buy an Algorand?
You can Buy Algorand on popular exchanges such as Binance or Coinbase with the ticker $ALGO
How do you stake algorand
Algorand can be directly staked via the mobile wallet application which can be installed on both Android and iOS devices. To stake the coin, deposit ALGO directly into the wallet. The wallet will automatically accumulate ALGO over time.
What is Algorand’s community governance?
Algorand started its community governance program on 1st October 2020, it gives ALGO holders the power to make decisions regarding the direction and future of Algorand. People can participate in governance i.e. become Governors by committing their ALGO for the duration of the 90 day voting period and then voting on the proposals. After the 90-day voting period, participants can claim their governance rewards.
Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.
These regulations are not yet enacted. The FSTB says it welcomes written comments from the public on the Legislative Proposals on or before 31st January 2021.
Current state of regulation of VASPs and Virtual Assets (“VAs”) in Hong Kong
Current regulatory requirements for VASPs and VAs in Hong Kong
The FTSB notes that VAs are not considered as legal tender and are not generally accepted as a means of payment in Hong Kong. However, they are aware that there are some VA trading activities operating locally. In light of this, Hong Kong’s Securities and Futures Commission (“SFC”) issued a position paper in November 2019 (“SFC Position Paper”). The SFC Position Paper outlined some regulatory standards similar to those applicable to licensed securities brokers and automated trading venues, for licensing of VA trading platforms. Notably, this was only an opt-in and voluntary regime and ONLY applied to those platforms which enabled clients to trade VAs with securities feature. Those platforms which solely traded non-securities VAs are not covered.
Hong Kong as a member jurisdiction of the Financial Action Task Force (“FATF”)
The FATF comprises of 39 major worldwide economies and oversees the implementation of the FATF Standards, which are comprised of 40 Recommendations and 11 Immediate Outcomes (“Standards”). Member jurisdictions do mutual evaluations to see if they comply with these Standards which are updated from time to time. One of the more recent additions to the Standards was in February 2019, where jurisdictions were required to subject VASPs to the same range of anti-money laundering (“AML”)/counter-terrorist financing (“CTF”) obligations applicable to financial institutions and designated non-financial businesses and professions.
Hong Kong was subject to a mutual evaluation and a Report on Hong Kong was published in September 2019, where the FATF will specify recommendations on areas for improvement. Hong Kong is scheduled to undergo a regular technical compliance assessment in February 2023 and an effectiveness assessment in June 2024. The Legislative Proposals are specific in that they “…will be expected to have introduced AML/CTF regulation for the VASP…sectors…” So it is quite apparent their intention that the Legislative Proposals will be passed into law in time for June 2024.
The Legislative Proposals specifically notes that other FATF member economies have either set up or are setting up their own regulatory and supervisory regimes for VASPs.
Proposals put forward in the Consultation Paper
Specifically, the Legislative Proposals suggest amending the current Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615 of the Laws of Hong Kong) (“AMLO”). Here’s A summary of the Legislative Proposals:
Expanding the scope of the AMLO to cover VASPs (currently VASPs are not included).
Implement a licensing regime for VASPs where any person intending to conduct the regulated business of a virtual asset trading platform in Hong Kong will be required to apply for a licence from the SFC and also need to meet a “fit and proper test” similar to that required of other financial sectors. Licensed VASPs will then be subject to the AML/CTF requirements under Schedule 2 of the AMLO and “…other regulatory requirements for investor protection purposes”. Schedule 2 of the AMLO basically sets out requirements relating to customer due diligence and record-keeping, and special circumstances. Examples of this include identification checks and to continuously monitor business relationships.
Give the SFC powers to supervise a VASPs’ compliance of the AMLO requirements.
Then the question is, what are VASPs or VAs?
Scope of the Legislative Proposals
The Legislative Proposals specifically covers VASPs and VAs, so it is important to know their definition. This is set out in the Legislative Proposals.
Virtual Asset Services Providers
The Legislative Proposals takes the definition of VASPs from that of the FATF and is defined as, “…a VASP is a person who, as a business, engages in specified activities involving VAs. The specified activities cover (i) exchange between VAs and fiat currencies; (ii) exchange between one or more forms of VAs; (iii) transfer of VAs; (iv) safekeeping and/or administration of VAs or instruments enabling control over VAs; and (v) participation in and provision of financial services related to an issuer’s offer and/or sale of a VA.”
Virtual asset exchanges
The Legislative Proposals proposes to designate the business of operating a VA exchange as a “regulated VA activity” under the AMLO and require a VASP licence from the SFC and subject to passing the “fit and proper” person test and other regulatory requirements.
Specifically a VA exchange is proposed to be defined as “…any trading platform which is operated for the purpose of allowing an offer or invitation to be made to buy or sell any VA in exchange for any money or any VA…”
The Legislative Proposals, however mention that “peer-to-peer trading platforms” will not be considered as a VA exchange and thus not subject to the licensing requirements. According to the Legislative Proposals, peer-to-peer trading platforms are platforms that only provide a forum where buyers and sellers post their bids and offers, with or without automatic matching mechanisms, for the parties themselves to trade at an outside venue. However, the actual transaction must be conducted outside the platform, and the platform is not involved in the underlying transaction. If for example the platform comes into possession of any money or any VA at any point in time, they would still be considered a “VA exchange”.
VA activities outside of exchanges (OTC desks etc): Are they covered?
However there are other businesses dealing with VAs that aren’t exchanges. For example VA payment systems, VA custodian services and over the counter trading and crypto ATMs (Genesis Block Hong Kong comes to mind).
According to the Legislative Proposals, they already have interface with financial institutions (e.g. when converting into fiat). This means that their money flow is already traceable for AML/CTF purposes and are already subject to the statutory obligations of reporting suspicious transactions etc. Hence the FSTB says they will nevertheless keep in mind the evolving landscape in relation to these activities and the licensing regime will be kept flexible so it may be expanded to cover other VA activities if the need arises in the future.
Virtual Assets
The FSTB also intends to adopt the definition of a VA as provided by the FATF but in more specific terms. The proposed definition is that a VA is, “…a digital representation of value that is expressed as a unit of account or a store of economic value; functions (or is intended to function) as a medium of exchange accepted by the public as payment for goods or services or for the discharge of a debt, or for investment purposes; and can be transferred, stored or traded electronically.”
What is not covered under the scope of a VA would be central bank digital currencies (China’s DCEP comes to mind), financial assets (e.g. securities) which are already regulated by the SFO, and closed-loop limited purpose items that are non-transferable, non-exchangeable and non-fungible (e.g. gaming coins).
However stablecoins (i.e. VAs purportedly backed by some form of asset to stabilise their value) are covered by the definition of VAs.
Regulatory requirements: are retail investors banned from trading cryptocurrencies?
If the VA business falls under the definition of a VASP and are not other VA activities which are excluded, they will be subject to the licensing regime. With reference to the existing opt-in regime, the Legislative Proposals proposes to empower the SFC to impose licensing conditions on licensed VASPs and regulatory requirements. One such requirement that is particularly concerning to cryptocurrency enthusiasts is the requirement that VASPs should only offer services to “professional investors”. However the Legislative Proposals suggest that this restriction should only be required at the “initial stage” and note that the SFC will continue to monitor the market and reconsider this position as the market matures in the future.
Hong Kong’s crypto community reacts to the Legislative Proposals
Sam Bankman-Fried, CEO of FTX Exchange gave his thoughts on the Legislative Proposals. He noted that it is still in the consultation stages and that whether or not an exchange “is” in Hong Kong so as to be covered by the Legislative Proposals are subtle and non-obvious.
Bitmex of course is also in a bit of hot water, as civil and criminal proceedings have been respectively issued by the US DOJ and CFTC against BitMEX, its CEO Arthur Hayes, together with other key personnel and affiliates. Their CTO was also arrested in the US.
Meanwhile, Leo Weese, Co-founder at The Bitcoin Association of Hong Kong gives his take in a blog post. He notes that whilst he is not opposed to regulation per se, the Legislative Proposals “…a massive overreach of the SFC’s mandate and a de facto ban of Bitcoin in Hong Kong”. In particular, Weese criticises the Legislative Proposals as confusing and unclear, noting also that it is the most restrictive proposal compared to any other FATF member economies. However, it can also be considered that it is merely the SFC’s initiative to implement FATF decisions rather a conspiracy to ban Bitcoin. Finally, Weese expects significant push back against the Legislative Proposals given previous resistance against previous initiatives aimed at money laundering.
Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.
After our 2020 Roundup article where we reviewed this year’s biggest trends, let’s now dive deeper into what happened in the world of crypto exchanges.
The surge of Defi and its DEXs (decentralized exchanges) has collapsed CEXs’ (centralized exchanges) volumes drastically. If Uniswap is the clear King of DEXs, the same we can probably say for Binance among CEXs, where it leads on both rankings for spot and derivatives. But the fight against decentralized exchanges has just started and new ideas and concepts are needed to keep up with the competition.
As we shall see, the CEXs that managed to better keep up against Defi are the ones that tried and innovated the most, sometimes directly inspired by DEXs.
Table of Contents
Uniswap
Uniswap is the clear winner among all kinds of exchanges in 2020.
Uniswap TVL in 2020
Its TVL (total value locked) has literally skyrocketed in the second half of the year, reaching more than $3 billion in November before dropping when $UNI pools ended giving rewards to Liquidity Providers.
Uniswap has constantly been the most used Dex in crypto and has terribly helped Defi’s growth. It is “The” place where to find new listings and the deepest liquidity on Ethereum. If you are looking for an existing ERC-20 token, you can be sure it is there. Anyone can open a new pool, it is as simple as providing some tokens plus some Ethereum on the platform, and it’s done.
Uniswap doesn’t have a order book: the platform relies on an AMM (Automatic Market Maker) system to provide for trading liquidity. Although purists may miss order books, AMM has proven to be a new and successful way to swap tokens.
In September, the platform distributed 150 million $UNI (their new governance token) to anyone who came in touch with the website, whether just swapping or pooling liquidity. A minimum of 400 tokens were sent to each user, for a value of around $1500 in the first hours of its existence (for patient holders, the value tripled in during the day).
This airdrop attracted so much attention to the platform that other protocols did or are planning to do the same thing in the next future. With Uniswap V3 and all of its innovations expected to be released pretty soon, some can only wonder where $UNI can go!
If any of you has been sleeping throughout the last months and still hasn’t claimed his tokens, you can follow our video guide here!
How to claim free $UNI on Uniswap
Binance
Binance succeded at remaining the biggest Cex for volumes, with a daily ATH of $15 billion in spot trading and of $37 billion in futures (up by 34 billion compared to 2019!). It retains the first position on both rankings. (Ativan)
Part of their success is due to numerous initiatives that they introduced throughout 2020.
In April, Binance presented their Card (later on Binance also acquired Swipe, a multi-asset digital wallet and Visa debit card platform), which is now supported in more than 180 countries.
One of the most important innovation on the year is “Launchpool”, which lets users farm new tokens like in Defi. Stakers can accumulate rewards prior to a listing that will happen directly on Binance after a few weeks (usually). Moreover, Launchpool offers single-token staking so users don’t even have to be wary of Impermanent Loss. Projects like Bella Protocol ($BEL), Flamingo ($FLN) and $WING have were presented via Launchpool.
September has been a great month for Binance. They firstly launched Binance Smart Chain, a blockchain created to run parallel to Binance Chain where devs can create Smart Contracts and Defi solutions. The exchange then immediately introduced “Liquid Swap”, a new trading platform that allows users to reap the benefits of Defi, with the first AMM product in any CEX ever. Users can pool their funds on Liquid Swap earning trading fees like on a AMM DEX.
Simultaneously Binance Labs, the venture arm of the exchange, has continued investing in new projects to empower crypto. They helped, among others, 1inch, Dodo and Math.
On a side note, after the launch of Binance U.S. in 2019, the “.com” platform has now slowly been giving a 14 days notice to U.S. customers (both those who went through KYC and those who simply access the website from within the country) advising to withdraw funds before the account is blocked. It appears that customers who use VPNs are “safe” for the moment.
FTX
Ftx, the known derivatives exchange led by the omnipresent Sam Bankman–Fried, has surely been on the cutting edge among CEXs this year. The team worked very hard trying to anticipate trends and they seem really good at giving their customers what they have been hoping for.
“Why should we trade crypto and stocks on separate exchanges?” That’s probably what Sam asked himself at a certain point. So, no sooner said than done, the answer arised: tokenized stocks. Two partnerships with CM-Equity (Germany) and Digital Assets AG, DAAG (Switzerland), were decisive for the accomplishment. Although trading stocks on FTX looks similar to trading crypto, it is important to notice the difference.
“CM-Equity is fully regulated in Germany, and is a licensed financial institution permitted to offer these products. All FTX users who trade tokenized stocks may also have to become customers of CM-Equity, and pass through CM-Equity’s KYC and compliance. Furthermore, all trading activity may be monitored for compliance by CM-Equity. CM-Equity custodies the equities at a third party brokerage firm. CM-Equity (not FTX Trading LTD) provides the brokerage services”.
Unlike in traditional markets, FTX’s Tokenized stocks will be tradable 24/7, and as of now they are more than 50, among which Netflix, Facebook, Apple and Amazon.
FTX.US (the american arm) also put themselves (and the legitimacy of cryptocurrency) in the public eye as one of the top donors of the Biden’s Democratic Presidential Campaign. In particular, Sam donated $5,22M. While the real reasons remain probably unknown, we hope it will mark a step towards crypto recognition by authorities.
Last but not least, we can’t forget to mention that the same team behind FTX is responsible for the creation of Project Serum, one of the most successful non-ETH order-book based Dex, running on the Solana chain (which handles around 50,000 tps).
Get the latest insider dig on the happenings of the crypto world with Sam Bankman-Fried (FTX, Alameda, Serum)
Sushiswap
Sushiswap launched in August as a fork of Uniswap with added rewards by the anonymous founder Chef Nomi. We were then at the peak of the “Defi bull summer” and the success was sudden. Its TVL gained great traction but some drama was due to happen. A week after, the anonymous dev removed its liquidity and sold $14 million worth of $ETH, starting a 50%+ drop in price. At that point, an offer was made by Sam Bankman-Fried to step in and remove Chef Nomi from the project.
Highs and lows have followed since then, but Sushiswap is still the second DEX for TVL (around 33% less than Uniswap) and one of the most successful. Many are the partnerships and its advisors are among the best that crypto can offer. Even though some will neve forget that Sushiswap literally “stole” liquidity from Uniswap, migrating pools to their platform and thus reducing Uniswap’s TVL dramatically, many are ready to bet that this project is here to stay.
Mt.Gox
December the 15th was the due date for Mt.Gox exchange creditors to finally receive part of their loss funds after years. The exchange repeatedly lost cryptocurrencies between 2011 and 2014, when it filed for bankruptcy. 140,000 $BTC (almost $4 billion dollar worth as of now) have since then been found and should be sent to users as partial refunds.
As suspected by many, it looks like the deadline has not been respected and creditors are still waiting for their money. A few days ago, someone noted a transaction from a Mt.Gox wallet, something which led many believe that the distribution had actually started.
🚨 600 #BTC (13,818,232 USD) transferred from #MtGox Cold Wallet to unknown wallet
Unfortunately that was not the Mt.Gox rehabilitation plan wallet, but the F2Pool cold wallet. There has been no confirmation that the creditors had received any fund yet.
BTC Markets accidentally exposed their users’ names and email addresses
BTC Markets, an australian crypto exchange, has mistakenly send out a compromised marketing round of emails. During a routine operation, instead of individually sending out email to their customers, personal data was exposed in the “to” field. The emails were sent in batches so that each user data had been potentially seen by 999 other people.
The mistake didn’t directly compromise sensible info such as passwords so funds remained safe, but this type of error is something that can definitely worry crypto adopters and possibly make them change platform. Users don’t want strangers to know they own crypto, and we hope that this kind of mistake won’t happen again.
Kraken, the first to win Bank Charter Approval in the U.S.
Kraken is the world’s first Cryptocurrency Exchange to get approved as Special Purpose Depository Institution (SPDI) by the State of Wyoming. “Kraken Financial”, this the name, is the “first digital asset company in U.S. history to receive a bank charter recognized under federal and state law, and will be the first regulated, U.S. bank to provide comprehensive deposit-taking, custody and fiduciary services for digital assets”.
The exchange will enable its clients to bank seamlessly between digital assets and national currencies and will be regulated in similar manners to other U.S. banks. The SPDI is a “custody bank” but for digital assets (such as cryptocurrencies) and it’s required by law to always maintain 100% reserves of its FIAT deposits.
Huobi exchange
It all started with big $USDT (and other currencies) transactions spotted moving in and out of the exchange, the largest in China, on November the 2nd. At the same time, rumors of one of the Chairman being arrested increased the FUD which led to a sharp dump in price of $HT, the Huobi token, and to a rush in withdrawing $USD out of the platform. The exchange then denied all the allegations and the situation returned back to normal in the next days.
The dip is caused by some fresh China FUD. Apparently rumors swirling that some core members from Huobi are out of contact.
China FUD always happens, and we always bounce back.
We have extensively covered the Okex story in our developing article.
On October the 16th, all the withdrawals were suddenly halted on the platform and the suspension has lasted until November the 27th when all operations were reopened without restrictions. As confirmed later on, the original cause was one of the exchange’s private key holders cooperating with the authorities. He was therefore unable to complete the authorization processes needed to allow external transactions.
Star Xu, the person held in custody by the police, has been investigated for matters that have nothing to do with the exchange. Xu was allegedly assisting the authorities (he is now back to normal business activity) about funds he borrowed from a Shanxi-based underground bank in 2019.
Kucoin
Kucoin, one of the leading crypto exchanges based in Hong Kong, suffered a security breach on September the 26th. The total amount stolen, a whopping $281 million in $BTC,$BSV $LTC and other coins, is one of the largest in crypto history. The hacker (or hackers) was somehow able to take possession of the centralized exchange’s hot wallets private keys, achieving the ability to move funds around. He then withdrew and started dumping them on DEXs. Kucoin immediately transferred the rest of the funds to new wallets and suspended all deposits and withdrawals.
It appears that Kucoin hot wallets’ private keys hadn’t been changed for over 3 years at the moment of the breach, which is another confirmation that the famous saying “not your keys, not your crypto!” is an evergreen.
We must hope that all these attacks will be helpful in the long run, enabling stricter security procedures by exchanges and platforms, necessary if crypto final goal is mainstream adoption!
Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.
Paralink Network is a platform built on Polkadot sourcing crucial real-world data for decentralised finance (DeFi) applications.
Blockchain technology has huge potential, but blockchain applications are limited by what real-world data they can access. Without this crucial real-world data, blockchain cannot be used in areas like prediction markets, insurance, litigation, or other coordination problems that rely on social institutions and corporations. This is commonly known as the oracle problem.
While several solutions, like Chainlink’s decentralized oracles, are already being used, Paralink has made its own headway through the development of a cheap and efficient solution.
Background
Jan Knezevic, Founder and CEO of Paralink, is a Slovenian auditor who had previously worked in financial units, such as KPMG, one of the Big Four accounting organizations, in 2018.
During his time there, he developed an appreciation of blockchain technology. Like many other cryptocurrency enthusiasts, he was able to recognize the restrictions of blockchain applications when exchanging real-world information.
He saw that for such applications to be useful for complex industries like the stock market, they had to have verified information flow from the real world. Realizing that the gambling industry also needed reliable data flow, especially for platforms like casino utan svensk licens, he set out to bring a scalable cost-effective solution to the problem. This led to the development of the project now known as Paralink.
What is Paralink?
Paralink is an oracle platform that provides real-world data ingress across multi-chain networks. The platform makes it possible for applications built on blockchain networks like Ethereum and Polkadotto interact with traditional web interfaces.
It is developed to help distributed systems communicate effectively with each other as well as the outside world. With Polkadot providing the supporting architecture and framework for its integration, Paralink functions as a substrate.
In addition to collecting and organizing real-world data for Blockchain application, the platform also confirms their validity. The data could be anything from sports, weather, elections to financial data, stock, foreign exchange, etc.
It can carry out all these functions through an open-source software called the ‘Paralink node’. The platform is currently designed with a focus on financial applications like the stock market and insurance.
How the Paralink Node Works
The Paralink node is the center of the platform. As stated, the node is open-source software. It is built to access and collect real-world data that channels back to smart contracts via callbacks.
The node can be run independently as a centralized medium for real-world data into blockchain applications. That way, the solution is much cheaper. However, it is more practical for a node to be operated by self-organizing quorums to provide a strong, sustainable data ingress service.
The node is compatible with different data protocols including JSON, HTML, XML, SQL and Grpc. The creators are working to improve its interaction on different APIs actively.
Developers can then query data from sources outside of the Blockchain using Paralink Query Language (PQL).
Currently, the Paralink node is built to support just the Ethereum and Polkadot blockchain network. However, the long term goal is to build a flexible node compatible with any public chain, thanks to the node’s architecture and open-source model.
How Paralink is Secured
To achieve the goal described in its whitepaper, Paralink has to be effectively flexible enough to be compatible with a wide range of Blockchain applications and protocols. To this end, the platform is offered in three different security models, each with varying characteristics concerning cost, convenience, and security.
Simple Ingress
This is the most cost-effective model available. Here, Paralink nodes are available for use on multi-chain networks via any third-party data source. The model is simple to implement through PQL definition. It is also fast and can certify the authenticity of multiple data sources.
It has a major drawback, however, in that it requires trust in a centralized node operator. Furthermore, it is also ineffective for complex financial applications.
Trusted Ingress
This model is an upgrade to the first-described simple ingress, which utilizes encrypting PQL results with cryptography. The results are accompanied by private decryption keys from reputable data providers.
As a step-up from the rudimentary model, it is highly functional for financial applications. Other types of applications like prediction markets and gambling platforms can be also covered.
Trusted ingress is also cheap and effortless to implement. Moreover, callback support is also available to all chains without the need for a bridge. However, it is susceptible to being breached due to a single point of failure.
On-chain Security
On-chain security is the last security model available, which does not depend on a single source for verification. Hence, it is almost impossible to break. This is especially useful for money markets, derivatives, and other financial applications that involve high-stakes.
On the other hand, the model needs linking networks (bridges) like Ethereum and Polkadot, hence, requires more chain coordination to pull off.
Para Token ($PARA)
PARA is the native governance token of the Paralink platform. Users are incentivized to hold PARA tokens in order to enjoy governance rights and earn APY based on the amount they hold (which in turn must be staked).
PARA tokenomics
There is a maximum supply of 10 billion PARA tokens. The allocation and distribution of PARA tokens are as follows:
The distribution system is quite similar to other crypto protocols. 13.5% of the total would be shared among the developing team after a vesting period of two years. About 18% would be kept as reserve to as a buffer. 20% would be disbursed as nominator rewards, another 20% for Validator rewards.
10% would be deployed for the ecosystem. This will serve as incentives for early Paralink adopters and relayers.
Paralink Network ($PARA) token public sale?
In an update on 1 February 2021, Paralink have confirmed that they will not be holding a public sale of the PARA token. Their reason for this is due to the inherent unfairness of the auction process, and difficulties in completing the KYC process for purchasers.
However, Paralink still wants its eventual token holders (who can purchase the token when it is listed on exchanges) to have more incentives. So the tokens that were initially reserved for the public sale will now go into the lockup rewards pool.
Conclusion
Without a doubt, the cryptocurrency industry’s future depends on how well its application can integrate with the real world. To elaborate, financial applications need to be able to exchange real-time information with real-world entities to ensure an accurate, reliable evaluation of assets for buyers and sellers — which is the basis for Paralink nodes’ development.
Blockchain networks would require secure and cost-effective solutions like this for seamless communication among the various chains, as well as the outside world before it can unleash its latent potentials.
Decentralised Finance (DeFi) series: tutorials, guides and more
With content for both beginners and more advanced users, check out our YouTube DeFi series containing tutorials on the ESSENTIAL TOOLS you need for trading in the DeFi space e.g. MetaMask and Uniswap. As well as a deep dive into popular DeFi topics such as decentralized exchanges, borrowing-lending platforms and NFT marketplaces
More videos and articles are coming soon as part of our DeFi series, so be sure to SUBSCRIBE to our Youtube channel so you can be notified as soon as they come out!
Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.
Lepricon is a decentralised autonomous organisation (DAO) trying to realise the potential of gaming and non-fungible tokens (NFTs) in blockchain by giving users a platform for gamified decentralized finance (DeFi) dApps focusing on user experience.
Background
Founded in October 2020, the project is led by Joshua Galloway (Founder & CEO), Stephen Browne (COO), and Phil Ingram (CMO). The CEO has vast experience in the digital currency scene.
For example, he served as the executive director of business development at Sors Digital Assets and as a Venture Builder for Plutus Venture Capital.
Apart from the virtual currency space, Galloway held a co-chair position on the board of directors at the International Game Developers Association (Hong Kong Chapter).
Key Lepricon partners include RioDeFi, Hex Trust, Blockwell, and Plutus VC.
What is Lepricon?
Lepricon is a layered distributed platform for developers to create DeFi-based decentralized applications (dApps) with a gaming basis. Lepricon’s mission is to incorporate optimal community involvement in dApps. Therefore, the project presents developers with an open book to decide how far they want to take NFT-themed games.
Lepricon has undergone thorough security audits, and the code is available for public review. Notably, the project moves a step further to include bug bounties on all its contracts to weed out even the smallest code malfunction.
To help with their mission are FOUR critical features. They include:
A native token – Dubbed L3P, the coin allows holders to participate in governance issues such as upgrades and fees charged.
Staking – L3P has staking functionalities that enable holders to earn rewards by participating in securing the network.
Loyalty protocol – Called Shamrock, it tracks community reputation and loyalty. The feature helps Lepricon reward faithful members by measuring positive contributions on the platform. Some events with a higher reputation score are staking, voting or submitting a proposal, and inviting friends to the platform.
dApp store – It houses and allows access to fun game content initially created around the prediction market.
The Connection Between Lepricon, Ethereum, and Polkadot
Lepricon came to life on the main Ethereum blockchain before it operated as a parachain on Polkadot.
The advantage of leveraging the Polkadot network is that it facilitates and makes it easy to interact with other decentralized protocols. For instance, it makes it easy to move data across blockchains.
Apart from the two blockchains, the network seeks to replicate the traditional gaming landscape by making Lepricon available on other leading protocols such as EOS and Cardano.
Lepricon token (L3P)
L3P is the protocol’s native currency.
The token generation event saw the creation of 777,777,777 tokens. Their distribution is as follows:
28% token sale via presale, private and public crowd sale;
25% community and staking rewards;
24.5% ecosystem ans partnership funds;
18.5% team and advisors, to be locked and released over time; and
4% development teams of bitpool, KQJ and fanspredict;
Others Ways to Earn L3P Tokens
Apart from buying the L3P tokens, Lepricon has incorporated other ways to mine the native token, which include:
Community Building
Exactly 2.5% of L3P tokens are set aside for mining through community building. This type of mining targets to bring more people on board the Lepricon train by distributing tokens to diverse yet relevant participants. Programs categorized in this group include bounties and airdrops. It also encompasses dispute resolution.
Yield Farming
This accounts for up to 20% of all coins in circulation.
Adoption, Prediction, and Referral
Note that mining using these methods has a promotional element. As such, Lepricon locks earned coins but with unlocking capabilities. The protocol allocates 2.5% of all minted coins to mining through prediction, referral, and adoption.
Interestingly, these tasks are very simple. For example, by opening a wallet on the protocol, you kick start mining through adoption, while when you invite friends over, you are already mining through referral. Encouraging invited friends to stake their L3P holding boosts your rewards in this category.
L3P Token Features
Liquidity mining – Lepricon buys back the tokens and recycles them to provide liquidity, thus safeguarding against bottlenecks in incentives.
Interoperability – L3P tokens are interoperable with other decentralized systems. Consequently, it improves scalability and customization.
Increased interaction – Lepricon’s mission is to drive interaction through gamified DeFi. The protocol’s native asset sits at the center of it all. It allows holders to play against themselves or directly connect to liquidity pools.
L3P token features
Other Crucial Components of the Lepricon ecosystem
Lepricon Launchpad
Launchpad provides a crowdfunding platform specially optimized for game artists and developers. The platform enables the Lepricon community to invest in projects that have their interests at heart. In addition, the Lepricon Launchpad enables its users to get lead access to rare virtual assets residing on the decentralized network as NFTs.
Examples of projects that can use the platform to raise funds include NFT art projects, prediction games, virtual collectible trading card games, and gamified NFTs.
Lepricon Economy
The project needs to make profits. One way it does this is by dividing dApps into individual teams and their own set of fees. For instance, a prediction dApp has a distinct development team and a fee rate. The fees can be set depending on a single prediction pool event, user transaction, etc. However, a DAO can adjust the fee parameter accordingly.
Conclusion
By incorporating gaming in NFTs, the DeFi-NFT ecosystem is bound to reach new heights. Although such an interaction seemed impossible, Lepricon is getting everything right.
From operating on the Polkadot space to launching on different blockchains, the project is keen on making dApps available and easily accessible.
Additionally, Lepricon’s focus on user experience and interface, coupled with decentralized governance, increases the playability and adoption of NFTs in the DeFi space.
Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.
Covalent is a multichain protocol that provides easy and quick access to deep, granular, and historical blockchain data.
So far, the blockchain has had an irrevocable impact on modern technology. The spread of decentralized architectures and frameworks has given birth to numerous technological innovations. Despite the technological freedom the blockchain has brought, granular and historical blockchain data is almost impossible to access. Blockchain product users and developers often have no way to explore data on the blockchain; data that are highly unstructured and unstandardized in most cases.
Through its special algorithm, Covalent resolves this issue and guarantees mass adoption for Decentralized ledger technologies (DLT), powered by a rich data infrastructure.
Founded in 2018, Covalent prides itself as a new frontier of development for enterprises, consumers, and software developers. The very first version of the protocol was built at a distributed systems hackathon back in 2017.
After winning the hackathon, co-founders Ganesh Swami and Levi Aul decided to turn the ambitious blockchain implementation into a highly secure, reliable, and easy-to-use decentralized solution. Covalent technology strives to resolve the huge infrastructure problems slowing down blockchain adoption and acceptance worldwide.
The team behind Covalent is a diverse 30-persons group of financial, marketing, and blockchain experts and engineers all with rich experience in decentralized finance (DeFi).
What Is Covalent?
Covalent is a multichain API that provides easy and quick access to deep, granular, and historical blockchain data. This efficient blockchain protocol has managed to index the whole blockchain space to empower blockchain pioneers and leaders of the future. Additionally, the solution bridges the entrenched world of centralized databases with the new world of distributed blockchain technologies.
Covalent’s unified API enables access to the richest and most secure data infrastructure within the decentralized ecosystem. Additionally, through its immense data infrastructure, The API allows users to scrutinize numerous well-known and specific blockchain protocols. This gives endless possibilities to participants in terms of transparency and total visibility throughout decentralized networks.
The covalent network’s unique API implementation offers incredible access to historical transaction activity, positions, and token balances to many top Defi and NFT projects. Currently, the protocol is working with the likes of Ethereum, Polygon, Binance Smart Chain, and Avalanche to provide substantial, granular, and accessible data.
Covalent Use Cases
Overall, the full extent of the protocol’s use cases is relatively unknown. However, developers and partners within the platforms have come up with multiple ways to leverage data provided by the protocol.
Wallets
There are over 200,000 ERC-20 tokens on Ethereum and growing all thanks to the composability of DeFi Solutions. Under the Covalent algorithm, wallets are well structured, as they show real-time and historical balances, positions, and most importantly, portfolio value for all of their assets.
Taxes
All DeFi actions are taxable, and having easy access to such data facilitates blockchain transactions and makes firms compliant. Covalent is the only protocol in the market that provides this service for decentralized exchanges (DEXs).
NFT Dashboards
Mainstream blockchain products like Chainguardians and NFTX rely heavily on the platform’s Investor tools to show price trends, liquidity, and ROI of collectibles to educate their clients.
It is no doubt that Covalent is special in regards to other solutions within the market. The platform’s incredible algorithm is rooted in 4 main features, which allows Covalent to provide clients with the best transparency and visibility tool in the blockchain sphere. The features are:
Data availability
Covalent’s infrastructure is responsible for every transaction, contract, and wallet address under its ecosystem. Hence, this blockchain solution is accountable for billions of rows of data and terabytes of data, unlike most projects on the market that provide smaller or minuscule amounts only.
Composability
Composability is viewed as an important tool for DeFI implementations, as it grants users the ability to build financial solutions leveraging building blocks from a multitude of projects. Therefore, Covalent’s immense multichain API ultimately enables developers to instantly construct scalable and data-rich applications powered by a granular data infrastructure. (Xanax)
Multi-blockchain Support
One of the platform’s greatest strengths is its multichain support, as the covalent team is currently working with customers on 7 different well-known blockchain networks, with many more set to join and rely on the protocol soon.
In general, the Covalent team works closely with technical and business teams of their customers across the blockchains networks to ideate, plan, and execute a turn-key solution for developers building on top of their blockchains.
No code solution
The multichain API firmly believes in no-code solutions for clients and participants. Therefore, no overpriced and complicated SQL queries, no subgraph development and maintenance, and no need to invest in highly-skilled developers to simply retrieve blockchain data, which can be a huge waste of engineering time. With one fast and secured API, customers are sure to be satisfied.
Covalent Query Token (CQT)
CQT is the platform utility token and is primarily a proof-of-stake governance token powering Covalent’s rich and robust network. Additionally, the token facilitates the democratization of the multichain solution and enables the creation of blockchain data apps in Covalent’s vast marketplace.
CQT will primarily serve as a governance token, giving voting rights to holders concerning the system’s parameters such as new data sources, specific geolocations, and data modeling requirements. CQT will also be used as a staking asset within the multichain API.
Conclusion
The Multichain API aims to organize the world’s blockchain information, enabling more transparent blockchain actions and transactions. Covalent has successfully managed to resolve issues concerning transparency and visibility within the blockchain.
The platform’s unified API has indexed billions of blockchain data points in the scope of empowering blockchain leaders of tomorrow. It is fair to conclude that Covalent is ahead of its competition, as more than 7 prominent blockchain networks rely on the services of this protocol.
The team’s continuous drive to elevate and scale blockchain technologies is a testimony of the platform’s innovative ecosystem built to bring forward key attributes of decentralization in complete transparency and visibility. Overall, Covenant is set to impact the blockchain space positively, thereby contributing to the worldwide adoption of decentralized technologies.
Decentralised Finance (DeFi) series: tutorials, guides and more
With content for both beginners and more advanced users, check out our YouTube DeFi series containing tutorials on the ESSENTIAL TOOLS you need for trading in the DeFi space e.g. MetaMask and Uniswap. As well as a deep dive into popular DeFi topics such as decentralized exchanges, borrowing-lending platforms and NFT marketplaces
More videos and articles are coming soon as part of our DeFi series, so be sure to SUBSCRIBE to our Youtube channel so you can be notified as soon as they come out!
Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.
Recently, the news has been flooded with talks about crypto regulation and exchange investigations by the SEC. This has raised a lot of problems among investors as particular crypto exchanges they use might one day become restricted by international regulators. Therefore, one of the safest long-term solutions is to find yourself a fully regulated crypto exchange.
In this article, we will be comparing two of the top regulated crypto exchanges in the world: SwissBorg and eToro.
After having raised USD $53 million, SwissBorg was launched in 2017 by Anthony Lesoismier (CSO) and Cyrus Fazel (CEO). SwissBorg is based in Switzerland and is fully compliant with Swiss Law, making it a popular European crypto exchange. It is the first blockchain-based secure wealth management platform, aimed at simplifying the process of crypto investments. It integrates with major crypto exchanges, DeFi protocols, and features a community-based ownership model.
SwissBorg is available in over 115 countries, and they have plans to include many more in the future. However, as of now, SwissBorg is not supported in the U.S. If you want to see if your country is included, you can visit their Supported Countries page.
SwissBorg Team
Prior to founding the exchange, Lesoismier was Head of Financial Market Digital-Advisory at JFD Brokers, and Fazel was a multicultural FinTech professional with decades of experience in asset management and algorithmic trading.
The Wealth App is the smart command-and-control centre of SwissBorg. It lets users build, manage, and monitor their crypto portfolios, enabling easy and secure wealth management. Users can fund their accounts with 16 different fiat currencies, including USD, EUR, GBP, and CHZ. Additionally, similar to Coinbase, a limited number of high-cap digital assets are supported to ensure quality.
The biggest advantage that SwissBorg has is their Smart Engine. It ensures zero spreads and no inflated exchange rates or hidden fees, allowing users to trade at the best rates and lowest slippage. Moreover, the Smart Engine analyzes hundreds of live trading pairs in seconds by connecting to major crypto exchanges such as Binance or Kraken. As a result, SwissBorg finds the best route to execute customer orders in milliseconds, saving investors time to find the best exchange rates.
Smart Yield Account
SwissBorg’s Smart Yield is a feature on its app which allows users to potentially earn passive income through Decentralized Finance (DeFi) protocols and Centralized Finance (CeFi) platforms. Smart Yield’s user-friendly interface allows easy access to the benefits of DeFi and CeFi, even average crypto users without much pre-requisite knowledge can stand to gain from it.
There are a lot crypto themes, and within each theme there are hundreds of different tokens to choose from. Decision fatigue really sets in when you are opting to diversify your crypto portfolio. SwissBorg’s answer to this is their “Thematics”, expert-designed bundles of different crypto themes.
They provide exposure and diversification that is important for every crypto investor. SwissBorg’s Thematics lets you choose a category you have long-term belief in. For example, if you believe in layer-one protocols, you can choose a layer-one protocol bundle containing Ethereum, Cardano, Solana, Avalanche and so on.
If you are interested in upcoming layer one protocols, you can check out our comprehensive article on Aptos or Sui.
What is eToro?
eToro
Company Overview
Based in Tel-Aviv, eToro was established in 2007 by co-founders Ronen Assia (Executive Director), Yoni Assia (CEO), and David Ring (Former CTO). The company was originally a social trading exchange offering commodities, indices, and stocks before diving headfirst into the crypto industry in 2018 with the launch of eToroX and a crypto wallet. It has since grown to one of the largest crypto exchanges, with a user base of 25 million active users worldwide.
Before eToro was established, Yoni Assia had held managerial roles in the FinTech industry and is an expert in computer science and finance. On the other hand, his brother Ronen Assia is a specialist in product design and engineering, having created products across various platforms such as medical devices, household applications, and web applications.
The biggest innovative feature of eToro is their CopyTrader, which allows you to automatically copy top-performing traders, what they invest in and when. This is great for average crypto users and beginners as they can easily leverage other crypto traders’ expertise, instead of going through the hassle of constantly monitoring the market, unsure of whether to enter or exit. As a result, you can simply replicate their trading in your own portfolio. In a way, it is similar to KuCoin’s trading bot, where trading activities are already figured out for you.
Moreover, CopyTrader is also a social trading platform, where traders are part of a collaborative community. They can with chat with other traders, discuss strategies and benefit from each other. This is a great place to start for beginners and learn from the best on how the market moves, but keep in mind that their quality is not assured. Crypto investments are always volatile.
Smart Portfolios
Similar to SwissBorg’s Thematics, eToro’s Smart Portfolios are essential a grouping of several assets bundled together based on the theme. In addition to crypto, eToro also has portfolios of stocks, ETFs, commodities and even people, as per their business model in the early 2010s before crypto became mainstream.
Smart Portfolios leverages machine learning algorithms and data science to group the best performing bundles, taking into account factors such as balance, exposure, potential yield, risk, and more. Moreover, there are no management fees or commission, other than those applied with assets comprising each portfolio.
eToroX
eToroX is the company’s product specifically designed for professional crypto traders and institutional investors. It is not available to retail investors. It offers a suite of advanced trading tools, 30+ crypto assets including 17 unique stablecoins and 80+ tokenized asset pairs. eToroX has a highly competitive fee structure and is renowned for having deep liquidity for stabilizing large-volume trades.
SwissBorg vs eToro Overview
Cryptocurrencies and Products
Both SwissBorg and eToro only offer a limited number of cryptocurrencies, around 30-40. Most of these assets have large market cap like Bitcoin, Ethereum, XRP (Ripple), BNB, and Polkadot. This is done to ensure quality, reducing exposure to high risk/high reward assets or degen projects that could incur a lot of loss. Both exchanges strictly adhere to standards set by financial regulatory agencies to protect the securities of investors.
In terms of trading, both exchanges offer a wide array of trading tools for all crypto users as well as deep liquidity to support large volume trades with zero spreads. However, trading on eToro only benefits whales and institutional investors as eToroX unlocks them the full benefit and is inaccessible to retail investors. In contrast, SwissBorg’s Wealth App, optimized with Smart Engine, performs just as well as eToroX and is accessible to everyone.
Furthermore, SwissBorg offers much more than crypto trading. Their Smart Yield feature works with numerous DeFi protocols and CeFi platforms, simplifying the process of earning and allowing users to stake and receive passive income. On the other hand, eToro also has their own staking reward programs, but is only limited to Cardano, Tron, and Ethereum. Although their monthly staking yield is high, only UK and US users have access to it.
Fees
Thanks to their Smart Engine, SwissBorg users do not have to worry about inflated exchange rates, floating spreads, and hidden fees. In other words, you will never end up with less crypto than what you paid for. There are no deposit fees, but crypto withdrawals are subject to an execution fee of at least 0.10%, which is relatively low compared to other exchanges. In terms of exchange fees, SwissBorg fees are among the lowest in the crypto industry, but vary greatly depending on loyalty tier and which fiat or crypto asset is being used. Moreover, 20% of their profits generated from the fees are reinvested back into the SwissBorg ecosystem.
On the other hand, eToro charges a 1% fee on crypto transactions plus a spread. Although this is still considered lower compared to other exchanges, it is not as competitive as SwissBorg. If you are planning to trade a lot of cryptocurrencies, paying more than 1% can eat into your profits. Unlike SwissBorg, eToro charges foreign transaction (FX) fees for non-USD deposits, and USD $5 for withdrawals. Furthermore, if you are planning to HODL assets long-term, it is important to note that eToro charges an inactivity fee for accounts that have not been online for a year. You can simply log in each day to negate that.
Overall, SwissBorg is the clear winner in terms of lower and transparent fees.
Security
As leading trading platforms, both SwissBorg and eToro have successfully ensured compliance with top regulatory authorities, placing the security of their platform and the safety of their clients’ funds as a top priority.
Both exchanges adhere to Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations, protecting traders from fraudulent and criminal activities. Much like all other major crypto exchanges, SwissBorg and eToro uses two-factor authentication (2FA), data encryption, network monitoring and other standard security protocols.
Both companies also store account funds in cold storage so that they cannot be hacked online. However, their methodology of cold storage security is different but impenetrable nevertheless.
eToro deploys a cold storage Custody as a Service (CaaS) solution in partnership with leading cybersecurity firm GK8. It is essentially the application of secure institutional model of custody and cryptographic security in crypto. The funds are also insured by Aon PLC against theft, loss, damage or destruction of assets.
On the other hand, instead of custody mechanism, SwissBorg addresses and enhances cold wallet security by implementing multi-party computation (MPC) keyless technology. It does not require a private key to be created, eliminating a single point of failure. MPC works by multiple parties jointly performing mathematical computations, without one party revealing its information to the others. SwissBorg achieves this in collaboration with Fireblocks as their security partner. Fireblocks is renowned for being the most secure and adaptable platform that leverages MPC technology to secure digital assets.
Crediting to their advanced security protocols and regulation compliances, there have been no known successful hacks on both SwissBorg and eToro to date.
Key Takeaways
Both SwissBorg and eToro are great crypto exchanges for investors to manage and expand their portfolio. While eToro’s CopyTrader feature is great for beginners to learn how expert traders maneuver the market, it is important to note that their quality is not assured. Crypto investments are always volatile, and no one can predict the market.
Overall, SwissBorg is relatively better than eToro in terms of trading efficiency, fees, and product variety. SwissBorg’s Smart Engine allows users of all levels to trade without inflated exchange rates, spread and hidden fees. Their exchange fees are also much lower than eToro’s, and have no deposit fees. Moreover, the company also brings DeFi benefits to its users, letting them earn high APY rewards in a simple process.
Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.
Plus500 is a CFD brokerage that allows users to bet on the prices of cryptocurrencies without actually purchasing them. Discover the features of Plus500 and make an informed decision about your online trading.
Plus500 is a CFD brokerage, meaning that users cannot actually purchase cryptocurrencies on this platform. Instead, users can bet on the prices of cryptocurrencies, and make a profit or loss depending on the outcome. What’s more, Plus500 reviews show that this platform is a great way to make money without actually buying cryptocurrencies, and is a great option for those who want to make money from the cryptocurrency market without actually owning any.
It is a great option for those who want to make money from the cryptocurrency market without actually owning any.
Key Features and Advantages of Plus500
Supports the Main Cryptocurrencies
Plus500 offers CFD trading on 12 different cryptocurrencies. These cryptocurrencies are the following:
Bitcoin
Ethereum
Litecoin
Neo
Ripple
IOTA
Stellar
EOS
Bitcoin Cash ABC
Cardano
Tron
Monero
Plus500 offers a wide range of cryptocurrencies for trading, including the most popular ones such as Bitcoin, Ethereum, Ripple, as well as some lesser-known coins like IOTA, EOS, and Stellar.
Good for People Who Just Want to Trade Crypto CFDs
Plus500 is a CFD trading broker, which means that traders do not need to buy any asset to speculate on prices. What’s more, this can be beneficial for those who want to keep things simple and then are not interested in owning the assets themselves. Furthermore, CFD trading can result in either full profit or a loss, with no assets to the trader’s name at the end of the day.
It’s reviews from crypto enthusiasts often highlight the benefits of owning cryptocurrency, but the process of setting up a wallet, ensuring security, and storing codes can be time-consuming. Fortunately, Plus500 offers an alternative solution – CFDs and margin trading – which allows users to stay up-to-date with the crypto world without the hassle of managing their coins.
A Demo Account to “Test the Waters”
Plus500 reviews are a great way to get started with cryptocurrency trading. They provide users with the opportunity to create a demo account and learn the basics of the process. Plus500’s demo account allows users to get familiar with the trading interface and terminology, so they can start trading with confidence.
A demo account is a great way to test the waters of cryptocurrency CFD trading in a safe and risk-free environment. Plus500 offers users the opportunity to try out CFD trading on demo accounts. It makes it a great choice for those looking to get into this potentially volatile activity.
Key Disadvantages of Plus500
CFD Trading – You Don’t Actually Receive any Cryptocurrency
Some people prefer to trade cryptocurrencies using CFD trading, especially in the short term, as it allows them to bet on a price prediction of a certain asset without actually receiving any cryptocurrency. However, there are also those who disagree with this approach.
If you’re a passionate cryptocurrency enthusiast, the idea of trading crypto coins without actually owning them may not be particularly appealing. In that case, Plus500 may not be the best choice for your cryptocurrency trading needs.
CFD platforms are ideal for short-term trading, or “flipping” an asset for profit. However, long-term trading or hodling is not possible on these sites, as you do not own the asset. While it is possible to do long-term trading on a CFD platform, the risk is always substantial.
Lack of Cryptocurrency Variety
Plus500 offers a limited selection of 12 cryptocurrencies for CFD-trading, including the most popular and common coins. Furthermore, this selection is ideal for most users, as it is not overwhelming and provides access to the most sought-after cryptos.
For traditional cryptocurrency enthusiasts, the limited variety of coins available on the platform may be a surprise. However, there are still a wide range of coins and tokens available, including those based on the Ethereum blockchain.
If you’re looking to invest in a niche cryptocurrency, you may be limited to the 12 options currently available. What’s more, unless something unexpected happens in the market, it’s unlikely that you’ll be able to find a new, profitable cryptocurrency to invest in.
Plus500 Fees
Plus500 offers a straightforward fee structure, with a market spread ranging from 0.02% to 2%, depending on certain variables. However, this makes it a great choice for traders looking for competitive fees and a reliable trading platform.
Plus500’s fees are competitive when compared to other crypto-exclusive platforms, with fees ranging from 0.02% to 2%.
How to Register and Verify Account on Plus500?
Register your Account on Plus500:
Start trading with Plus500 by visiting their website and clicking “Start Trading”.
You can either create a real money account or opt for a demo account to get a feel for the game before you start playing for real.
Create an account by entering your email address and creating a secure password.
Once you have followed the steps above, you will be directed to the dashboard of the platform. You are now ready to start trading cryptocurrencies – simply navigate to the cryptocurrency tab and begin!
Verify your Account on Plus500:
To purchase any of the cryptocurrencies listed, click the “Buy” button and you will be directed to the verification page.
Fill out your personal information including your name, surname and date of birth in the form provided.
Once you do that, you’ll be asked to select your country of residence and tick the boxes that apply to you.
Verification of your residential address is a necessary step when using a stock trading platform. Enter your address now to complete the process.
Plus500 is looking for information about your knowledge and experience with CFD trading, your employment status, income, and more. This information is necessary to verify that you are eligible to trade on the Plus500 platform.
Once you have completed the verification process, your profile will be submitted for review. After this, you can make a deposit and start trading CFDs!
Based on the user reviews of Plus500 found online, the registration and verification processes appear to be quick and easy.
Conclusion
Plus500 is certainly worth considering for those looking to trade cryptocurrencies. However, there are many other platforms that offer better features and services.
It is a great choice for those interested in CFD trading, as it offers a wide range of cryptocurrency options. With Plus500, you can make predictions on the price of cryptocurrencies without actually owning them.
If you’re looking for a reliable cryptocurrency trading platform, there are many great options to choose from. Kucoin, Binance, Kraken, and more are all excellent choices for trading digital currencies. Make sure to do your research and find the platform that best suits your needs.
Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.
China’s national digital currency DCEP (Digital Currency Electronic Payment, DC/EP) will be built with Blockchain and Cryptographic technology. This revolutionary cryptocurrency could become the world’s first Central Bank Digital Currency (CBDC) as it is issued by the state bank People’s Bank of China (PBoC). The goal and objectives of the currency are to increase the circulation of the RMB and its international reach – with eventual hopes that the RMB will a global currency like the US Dollar. China has recently established an initiative to push forward Blockchain adoption, with the goal of beating competitors like Facebook Libra – a currency that Facebook CEO Mark Zuckerberg claims will become the next big FinTech innovation. China has made explicit that Facebook Libra poses a threat to the sovereignty of China, insisting that digital currencies should only be issued by governments and central banks. DCEP is not listed on cryptocurrency exchanges and will not be for speculation of value.
The significance of DCEP is that it’s designed as a replacement for the Reserve Money (M0) system, cutting back the cost and friction of bank transfers. It is suggested that DCEP will alleviate the risks of offline paper money transactions such as anonymous counterfeiting, money laundering and illegal financing. This is because regulators can better monitor digital currency transactions, which some consider will greatly improve financial and monetary supervision. DCEP can also reduce the costs involved in maintaining and recycling banknotes and coins.
Basically, DCEP is poised to become a digital version of the RMB.
Furthermore, the issuance of DCEP is conducive to promoting the internationalization of the RMB and reshaping the current cross-border payment system. This is because prior to the RMB Cross-Border Inter-Bank Payments System (CIPS) going live in early October 2015, RMB cross-border clearing and settlement was mainly done through CHIPS (Clearing House Interbank Payments System) or SWIFT (Society for Worldwide Interbank Financial Telecommunication). However, some consider that both the CHIPS and SWIFT systems have fatal flaws. Firstly, CHIPS is a US company. Whilst SWIFT, in particular, is seen as a cause for concern to the Chinese because due to its foothold in the international banking system, it is almost essential to use SWIFT for inter-bank transfers across countries. Thus whoever controls SWIFT’s data center will have access to information on almost every cross-border remittance, which some in China posit is the US. This is because whilst SWIFT claims to be a neutral international organization, 12 of the 25 directors are either from the US and her allies. Also, its transactional data were found to have been supplied to the US. Hence it is thought that China is being held back by the US via the SWIFT system, and so, in internationalizing the RMB- China requires its own worldwide banking system- i.e. DCEP.
Hence the Chinese consider that it is a requirement to form a new currency clearing network.
According to Chinese media, DCEP is seen as the “3rd Wave” aimed at the US.
A mandate to adopt Blockchain
China has established a countrywide initiative to push forward Blockchain Adoption. President Xi Jinping has mandated that the ‘country’s development of blockchain technology should be sped up ‘ on Oct 24th in front of the Political Bureau. This speech has also been echoed by Li Wei, head of the People’s Bank of China. In April of 2020, China launched the Blockchain Service Network to unify all the Blockchain related projects in the Nation.
China has adopted the “Blockchain, not Cryptocurrency”, whereby the benefits of Blockchain is highlighted. On the other hand, cryptocurrencies that are native to Blockchain are suppressed as Cryptocurrency Exchanges and ICOs are banned in the country.
History and development of DCEP
Development of DCEP started in 2014 with the establishment of a research institute dedicated to digital currencies and looking at how to improve the Chinese Yuan system with blockchain technology. However during 2014 to 2018, the development process slowed down, probably because the decentralised nature of Bitcoin or blockchain is incompatible with the nature of the Renminbi as a legal national currency. Things rapidly picked up towards the end of 2019 however and this was directly attributable to Facebook preparing to launch Libra, particularly as partner members of the Libra Association and the currencies which Libra was to be backed by had consciously rejected China. Hence, feeling the heat of the competition, China’s central bank felt immense pressure to urgently speed up in the global competition towards a digital currency.
Former Vice-chair of the PBoC’s National Council for Social Security Fund announced on 22nd June 2020 that China had already completed the backend infrastructure of DCEP.
Uses for DCEP
DCEP will be the only legal digital currency in China
DCEP is a currency created and sanctioned by the Chinese Government. It is not a 3rd party stable coin such as Tether’s cryptocurrency token “CNHT” which is also pegged to the RMB in a 1:1 ratio. DCEP is the only legal digital currency in China (cryptocurrencies such as Bitcoin are not legal tender in China).
Huang Qifan (Chairman of the China International Economic Exchange Center) said they have been working on DCEP for five to six years now and is fully confident it can be introduced as the country’s financial system. It’s currently being rolled out, with the People’s Bank of China issuing the currency. According to a speech by Huang at the China Finance 40 Forum, “DCEP can achieve real-time collection of data related to money creation, bookkeeping, etc, providing useful reference for the provision of money and the implementation of monetary policies.”
DCEP is not for speculation
China has made it explicitly clear that its National Digital Currency is not for speculation. Mu Changchun, Head of the People’s Bank of China digital currency institute made it as “a digital form of the yuan” and that “The currency is not for speculation. It is different to Bitcoin or stable tokens”. This is to the disappointment of the online community in China, where some netizens commented “So there will be no fun in it” on Sina.com.
It is also not possible to mine DCEP or stake on the DCEP network.
Cross-border payments with m-CBDC Bridge
China has joined forces to explore cross-border payments for digital currencies alongside Hong Kong, Thailand, the United Arab Emirates (UAE), and the Bank of International Settlements (BIS).
According to a joint statement in February 2021, the People’s Bank of China and the UAE’s central bank are taking part in the Multiple Central Bank Digital Currency (m-CBDC) Bridge project initiated by the Hong Kong Monetary Authority and Bank of Thailand in 2019.
The m-CBDC Bridge project will explore the capabilities of distributed ledger technology, through the development of a proof-of-concept prototype. The project ultimately aims to facilitate cross-border, multi-currency, real-time transactions around the clock.
This move aligns with China’s long-term ambition to use DCEP to boost the use of RMB in international payments. While the project is currently an alliance between just Beijing, Hong Kong, Bangkok, and Abu Dhabi, it is strongly supported by the BIS, an organisation owned by 63 central banks.
The announcement also comes mere weeks after China’s joint venture with SWIFT, the dominant network facilitating international payments between banks. The new entity, Finance Gateway Information Service, was registered in Beijing on January 16 with €10 million (US$12 million) as incorporation capital, according to the National Enterprise Credit Information Publicity System, the Chinese government’s enterprise credit information agency.
Special features of DCEP
DCEP is a Centralized Currency
DCEP is a digital currency that is run on a centralized private network – the Central Bank of China has complete access and control of the currency. This is a huge contrast to Bitcoin, which has an open decentralized network where there is no centralized leader. In the case with DCEP, the Central bank of China has the ability to create or destroy DCEP.
NFC Contact based payment
According to Official Sina Blockchain, DCEP will have NFC based payment options that don’t require devices to be online during the transfer. This will be poised as a direct replacement of paper money, as DCEP will be usable in areas without internet coverage. In addition, DCEP doesn’t require the mobile device to be bound to a bank account – meaning the unbanked population will also have access to the digital currency.
With DCEP’s tap payment feature people can transfer money simply by tapping two phones together, without the use of the Internet. So DCEP is not exactly like blockchain either, rather it is their own variant.
China Construction Bank launches DCEP wallet
On 29th August 2020, China Construction Bank (CCB) had a soft launch of the DCEP wallet. Users of one of China’s big four state-owned commercial banks found a DCEP wallet feature was available inside their mobile app. Users were even able to navigate to the digital yuan wallet and activate it through registering their mobile phone numbers.
Finally, users can send/receive digital currency to others by inputting their unique wallet ID or the phone number associated with the bank account.
CCB DCEP wallet
However, CCB has disabled the DCEP wallet feature from public access, but not before it gained huge attention. Users searching for this wallet now will only get an error message saying that the function is not yet officially available to the public.
Tencent to be a major partner of DCEP
Tencent’s Meituan Dianping has been in talks with the research wing of the PBoC on real-world uses for DCEP. Meituan Dianping boasts billions of dollars in daily transactions on their mobile app platform offering services such as food delivery (similar to UberEats), B&B bookings (similar to AirBnb), ride hailing services, bike sharing, grocery shopping and more. Basically for those in China, all your daily necessities can be met on the Meituan ecosystem.
The PBoC’s research wing is also in talks with another Tencent-backed company, Bilibili Inc. which provides video streaming services. So whilst the specifics of the partnership are yet to be finalised, it is likely that such cooperation is going to be huge for the mass use of DCEP in China.
According to Caijing magazine, the pilot institutions for DCEP will be the 4 major state-owned banks i.e. China Construction Bank, the Agricultural Bank of China, Bank of China and the Industrial and Commercial Bank of China. This initial deployment will serve as an official production test for the currency system, where the network and security will be validated. In the second phase, DCEP will be distributed to large fintech companies such as Tencent and Alibaba to be used in WeChat Pay and AliPay respectively.
DCEP will operate on a two-tiered system
The issuance and distribution of DCEP will be based on a two-tiered system.
The first tier would be transactions between the PBoC and intermediaries. These intermediaries would be financial institutions (e.g. the 4 major state-owned banks i.e. China Construction Bank, the Agricultural Bank of China, Bank of China and the Industrial and Commercial Bank of China) and non-financial institutions such as Alibaba, Tencent and UnionPay. Here, the PBoC would issue DCEP to the intermediaries.
The second tier would be between the above-mentioned intermediaries and participants in the retail market such as companies (e.g. retail stores) and individuals. In this tier, the intermediaries that have received DCEP will distribute it to retail participants so that it would circulate through the market e.g. through people purchasing items at stores etc.
The main difference in the issuance and distribution of DCEP compared to traditional cash however is the fact that DCEP would be transferred through electronic wallets, rather than bank accounts.
The central government has mandated that all merchants who accepted digital payments (such as Apple Pay, AliPay and WeChat) pay must accept DCEP. This will give DCEP a large nationwide acceptance in China, with every merchant obligated to participate or face a potential loss of their business license. This will make DCEP the most accepted digital currency in the world.
DCEP red packets to be launched for Chinese New Year
China’s DCEP app has launched a red packet gifting feature in time for the Chinese New Year on 22nd January 2023. The app will allow users to send the red packets i.e. “hongbao” containing DCEP to others. This is based on the Chinese New Year tradition of gifting lucky money during the annual festival. In fact, WeChat Pay and Alipay already have this feature for gifting CNY. However, it is the first time that e-CNY will be gifted in such a way, with hopes that this will further pave the way for the mass adoption of DCEP.
DCEP can be used to pay expressway tolls
On 28th December 2022, Chongqing Expressway Group announced it has completed the installation of equipment to accept DCEP for expressway tolls. From 30th December 2022, DCEP can be accepted as payment for tolls on the Chongqing Expressway. Users will need to download the e-CNY app and then simply present the payment QR code at the toll booth.
PBoC’s financial statistics reports now include DCEP/e-CNY
On 10th January 2023, the PBoC released its annual Financial Statistics Report for 2022. What is worth noting is that for the first time, the PBoC included statistics on DCEP/e-CNY. The Report states that as of the end of December 2022, the amount of digital currency in circulation was 13.61 billion yuan. This equates to around 0.13% of the total balance of yuan (13.61 trillion yuan) in circulation at the end of 2022.
Are people in China using DCEP?
According to a report on 28th December 2022, there has been over US$14 billion worth of DCEP transactions since its launch in 2020. Meanwhile, 261 million users have already set up an e-CNY wallet. However, this is considered low adoption since around 903.6 million people use mobile payments in China, according to a 2021 UnionPay report.
DCEP scams
Mere hours after DCEP has been announced, various (potentially scam) Chinese exchanges have listed IOUs or knock-offs clones of DCEP. It’s important to know that DCEP is currently only distributed to banks working with the PBoC and will not be available for the public. If you want to find out what are reputable exchanges, check out our top cryptocurrency exchanges guide. It is strongly recommended NOT to trade DCEP until it is officially released as there is no guarantee exchanges have access to the digital currency.
Knock-off clones of DCEP are already trading in (potentially) scam exchanges.
How to buy DCEP?
Currently, DCEP is only available to other banks working with the People’s Bank of China. This will eventually open up to the general public in 2020. There are currently no cryptocurrency exchanges that trade DCEP.
Implications of DCEP?
Is DCEP a challenge to the US monetary system?
The overwhelming view appears to be yes, both from the Chinese and the US perspective. According to statistics from the World Bank, 1.7 billion adults around the world use cash because they don’t have bank accounts. However, two-thirds of this population own a mobile phone, which can be used to make monetary transactions. This is what’s been happening in China, where mobile payments such as Alipay or WeChat Pay have more than 1.7 billion customers across China. Currently, the two online payment companies handle more payments monthly than Paypal did in the whole of 2017 (i.e. USD $451 billion). It’s very common in China to see street vendors accepting Alipay or WeChat pay.
Alipay and WeChat being accepted at an ATV rental shop
With the mobile wallet payment infrastructure in place, their cooperation with the PBoC could be the answer to distributing DCEP overseas. This would fit China’s “Belt and Road Initiative”, the aim of which is to build a new trade route connecting Asia with Europe and Africa. The idea is that with DCEP being used by mobile wallets, populations along the Belt and Road can be connected, bypassing existing financial infrastructures completely and giving an opportunity for the unbanked to pay for online purchases and build their savings.
In the US, the government does not see a demand for digital currencies. In a letter from the Chairman of the Federal Reserve, Jerome Powell, he took the view that many of the challenges a digital currency intends to solve do not apply to the US. In his view, the US payments landscape is already highly competitive and innovative, with plenty of digital payments options for consumers. Powell also commented, echoing the sentiments of those US lawmakers opposing Libra, that a digital payment where you would know and be able to track each and every payment would be unattractive for the US.
Whilst the House Committee on Financial Services also sees Libra as potentially raising national security concerns, observers consider the challenge from China is not being taken seriously. Because on the other hand, China is worried that Libra will reinforce the dominance of the US Dollar and is therefore working on fast-tracking the launch of DCEP. And it is likely that China will outrun the threat from Libra.
From a wider perspective, some take the view that DCEP can be used as a weapon against the US in an economic war. This is because as DCEP becomes accepted across the Belt and Road, China will have the power of total surveillance and control over the economic activity of potentially half the world’s population. DCEP will allow China to track everyone’s spending and transactions, and can seize or lock customers’ digital assets in their mobile wallets. We’ve already seen this in China, where together with its “social credit system”, millions of individuals have already been barred from purchasing airline tickets using their mobile wallets.
Appearance on Chinese television debate show “Tiger Talk”
On 29th August 2020, I appeared on China’s Phoenix Television show “Tiger Talk” (一虎一席談). Tiger Talk is one of Phoenix TV’s longest-running shows, each week they feature a debate on a major societal issue or event, and would invite experts, academics and guests to participate in the discussion. I was invited by Phoenix Television as an overseas analyst to discuss the topic of the week, namely, “DC/EP: China’s release of digital currency, will it shake the US Dollar’s hegemony?”. You can watch the episode here.
Guest appearance on Tiger Talk
Implications of DCEP on Bitcoin and cryptocurrencies
In the first instance, it should always be borne in mind that DCEP and Bitcoin/cryptocurrencies are vastly different. Key differences are that DCEP does not necessarily use blockchain technology and that it is a centralised currency under the control of a centralised authority. Learn more about the differences between DCEP, Libra, Bitcoin and Cash.
However, the large scale promotion of DCEP on national television in August 2020 is certainly bracing and preparing Chinese citizens for a digital version of the RMB. The gradual rollout of DCEP will also get the average citizen accustomed to the actual usage of digital currencies.
As a result, many people are excitedly speculating on the possibility of a bridge between DCEP and various existing blockchain projects- with some projects proclaiming they will be the first project to launch on DCEP. However it must be borne in mind that we do not know the full technical details of DCEP, so we do not know how this bridge between blockchain and DCEP will work, if at all. Also, the fact is that China is currently very hostile towards cryptocurrencies, this is mostly due to a number of cryptocurrency scams- such as Plus Token. As a result, the Chinese government have closed several bank accounts found to be involved in cryptocurrency transfers and banned all ICOs, several major cryptocurrency exchanges such as Binance and OKEx and some Over the Counter desks. Hence a lot of cryptocurrency circles and discussions occur underground, such as in private WeChat groups.
In a confusing twist, however, the CCP’s official media outlets 参考消息, Xinhua and CCTV have been pushing out headlines that crypto assets are the best-performing asset year to date. Dovey Wan, Founding Partner of Primitive Ventures has observed that the real intent behind this media push is difficult to interpret, but so far the Chinese cryptocurrency community see this as a signal that crypto has reached its top. Meanwhile, on the Western front on Twitter, people have been seeing this as a bull signal. Currently, without any further moves or news in China about DCEP or on the cryptocurrency front, we can only wait and see what China’s next move will be.
Hmm this is an interesting propaganda vibe from CCP’s official media outlets as “参考消息”, Xinhua and CCTV2
the headline “cryptoasset is the best performing asset YTD” was featured on all avenues, news paper, online media and TV
Will DeFi push governments to finally adopt CBDCs?
Decentralised Finance (DeFi) can be considered the cryptocurrency and blockchain star of 2020, having revived the cryptocurrency market and bringing some much-needed revival and positivity. But what is DeFi? In short, DeFi attempts to bring traditional banking to developing industries, but with a twist: it would be open-source, decentralised, cheap and will cut out the middlemen. (Xanax)
So what can central banks and government do to maintain their dominant status quo whilst benefitting from the technology that DeFi can bring? An answer could be to create a CBDC. In a Forbes article, the author suggests that CBDC would be a positive move for governments since it tokenises money whilst allowing users to enjoy the advantages of cheaper, faster transactions.
The article also touches upon our coverage of DCEP and discusses China’s progress in testing DCEP contrasted with the progress of introducing a CBDC in the US. It suggests that governments and institutions, however, will need to be quick to catch up as new DeFi solutions in payments, mortgage, insurance etc. are being created weekly, and this legion of fintech innovators are growing. These innovators challenge the status quo, and with the mounting advantages of DeFi, there may soon be a real contender vying for the attention of citizen-consumers.
FAQs
Is DCEP backed by Gold?
The simple answer is u0022Nou0022. On a recent episode of Kitco News, journalist Max Kaiser claimed that China will launch a gold-backed cryptocurrency, with the intention of destroying the USD as a reserve currency. He added that China has already amassed as much as 20,000 tons of gold. However this is mere speculation – China has no plans to return to the Gold Standard nor issue gold-backed cryptocurrencies.
Will DCEP be interoperable with other Cryptocurrencies
There are many plans to build gateways that allow the swapping of DCEP to other cryptocurrencies. Projects such as Algorand have stated they want to support DCEP and build possible bridges to swap these currencies. However, as the technical details of DCEP have not been fully revealed, such bridges have not been built yet.
Who can issue e-CNY?
There are 7 Chinese commercial banks that can provide e-CNY. They are: ICBC, Agricultural Bank of China, Postal Savings Bank of China China Construction Bank, Bank of China, Bank of Communications, and China Merchant’s Bank. There are also 2 online banks that can provide e-CNY i.e. WeBank (WeChat Pay) and MyBank (Alipay).
Which Chinese Cities can sign up and use the e-CNY app?
Currently, there are 12 cities and areas in China which can sign up and use the e-CNY app. They are Shenzhen, Suzhou, Beijing Xiong’an, Chengdu, Shanghai, Hainan, Xi’an, Changsha, Dalian, Qingdao, and Zhangjiakou.
Can tourists or non- Chinese locals use DCEP?
No, DCEP is not fully rolled out yet and is only available in select cities in China.
Is China using DCEP?
According to a report on 28th December 2022, there have been over US$14 billion in transactions since the launch of DCEP in 2020 and October 2022. Meanwhile, 261 million users have already set up an e-CNY wallet. However, this is considered low adoption since, according to a 2021 UnionPay report, around 903.6 million people use mobile payments in China.
When will China officially launch DCEP e-CNY?
Whilst there is ongoing DCEP/e-CNY testing on in increasing scale, there is no official announcement as to when and how China will fully roll out DCEP/e-CNY.
Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.
CertiK aims to provide a secure platform where blockchain infrastructure and decentralized applications can be developed. Its ecosystem consists of security layers that exist below the blockchain level, including the DeepSEA compiler, the CertiK Virtual Machine (CVM), and CertiKOS. Its native token, $CTK, has launched in Binance Launchpool on 27 October 2020. Below is a detailed overview of the CertiK ecosystem, including the CertiK chain.
The CertiK Foundation supports the CertiK platform. The organization champions trust in blockchain systems. Its efforts are displayed through the development of a secure network that can boost confidence in decentralized systems. Furthermore, the CertiK Foundation is lead by renowned computer professors.
What is CertiK?
CertiK is a decentralized smart contract platform powering Dapps. Additionally, it supports inter-chain communication and runs on the Certik Chain.
The system is primed for highly-specialized use cases. The protocol employs a PoS variation called delegated proof-of-stake (DPoS) and uses the Cosmos software development kit (SDK).
The CertiK Foundation has taken upon itself to restore the trust in distributed platforms by employing cutting-edge security technologies and techniques. A key milestone achieved by CertiK is the provision of provable trust in a decentralized platform. Apart from focusing on security, the network also addresses performance and token economics.
CertiK Token ($CTK)
The economic aspect of the platform relies on the platform’s native currency, CTK. CTK’s major offering is being a utility token. (Provigil) Therefore, it helps power the crucial aspects of the CertiK ecosystem.
For example, the token provides a mode of payment and settlement among the platform’s users.
However, the token does not give its holders the right to interact and does not act as an investment into CertiK Foundation. Being issued inside a PoS-powered system, the token carries various benefits to incentivize holders to participate in staking and securing the network.
Apart from being used on the CertiK protocol, CTK is a significant ingredient in the CertiK Chain. Here, the token is used to pay for transaction fees.
In return, the fees reward staking nodes on the chain. Also, the token is used to reward those who delegate their CTK holding to validator nodes.
The token’s first issuance was achieved through two private sales that sold a total of 38 million CTK tokens worth a cumulative $39,430,000. Apart from the private sale 1 & 2 (29.0% & 9.0% respectively), the token distribution allocated 1.5% of its total supply to Binance Launchpool, 10.0% to the CertiK team, 25% to the CertiK Foundation, 17.5% to the community pool, and 8.0% to the CertiKShield pool.
What is CertiK Chain?
CertiK Chain is a blockchain protocol powering the CertiK ecosystem. It is highly secure and has cross-chain interoperability. To effectively achieve its mission, the platform incorporates key components such as a security oracle and a CertiKShield pool.
The platform’s security oracle compresses audit reports to make them available on-chain. Basically, audit reports hold information as to the reliability of smart contracts. But, the reliability of smart contracts can be sabotaged by the data it uses to make decisions.
With these reports living outside blockchain platforms, it poses a security threat prompting CertiK to bring them on-chain through its security oracle. Consequently, the network can effectively verify the security of a smart contract.
Note that this component allocates scores depending on a smart contract’s latest audit report. The scores give an overview of a contract’s code reliability.
More than just scoring contracts, the security oracle can track and report unaudited smart contracts. A distributed security team handles such reports. Using the CertiK Oracle Combinator, results from the security team are aggregated into a single score that can be accessed online. And, of course, the security team is rewarded.
Luckily, this functionality is crucial in a decentralized finance (DeFi) setting where unaudited smart contracts are wreaking havoc. For example, by incorporating the CertiK’s security oracle, the responsibility of an audit is shifted from the contract creator to the contract users.
CertiKShield Pool
The CertiKShield pool is a unique component meant to minimize the risks emanating from the private nature of (most) cryptocurrencies. This may include losses from both avoidable and unavoidable circumstances such as house fires.
The shield works by providing a flexible pool of CTK tokens. Since the token uses on-chain governance mechanisms, it can be used to compensate losses sprouting from inaccessibility and/or theft.
In other words, this operates as an insurance platform. But, its decentralized nature allows it to receive inputs from all involved individuals before settling a claim.
The CertiKShield Pool is made up of collateral providers and shied purchasers. Collateral providers earn staking rewards while shield purchasers pay for requested protection.
CertiK Chain Architecture
The main components of the CertiK Chain are baked together in an architecture that can achieve provable trust. Apart from the security oracle and the shield pool, the network’s backbone comprises a virtual machine and the DeepSEA toolchain.
CertiK Virtual Machine (CVM)
The CVM effectively eliminates the errors that may be introduced when converting smart contract code from human-based language to machine language. Although these errors may be unknown to contract developers, they pose a severe security risk.
Being a security-first decentralized platform, the CVM relies on the output of DeepSEA, a certified compiler. The compiler’s output includes bytecode and mathematical proofs. The proofs can be used to isolate smart contracts’ code that doesn’t meet the security standards.
DeepSEA Toolchain
DeepSEA is a compiler and a programming language that’s hailed for its security. Notably, the CertiK-native tool is developed in conjunction with researchers from leading learning institutions such as Columbia and Yale University.
The toolchain can determine the complex correctness properties of smart contracts. As such, it enhances the security of the network and products built on top of it.
CertiK Governance
The CertiK protocol uses on-chain governance methods to enable community involvement in decision-making. However, to vote for proposals, CTK holders can either delegate their voting powers to validators or vote directly. Validator nodes ensure the smooth running of the platform through powering activities such as block production.
CertiK accommodates five types of proposals from its community:
Plain text: These are proposals that request modification of things like altering the number of incentives paid to validators.
Software upgrade: They lead to code modifications. They may include proposals to add new features.
Bounty: Examples of proposals in this category include those touching on creating chain artifacts and conducting security audits.
Community pool spend – They cater for the transfer of funds from a pool to an individual address, for instance, an individual developing a CertiK-specific product or upgrade.
Certifier: They are submitted by a certifier with a request to add or remove a certifier. Note that certifiers and validators vote on proposals.
Conclusion
In a space where malicious actors are always on the prowl for weaknesses in DeFi-focused smart contracts, CertiK provides the much-needed peace of mind. In addition, enabling a decentralized contract audit removes the need for DeFi users to solely rely on reports provided by the team, which, in some cases, are anonymous.
From the security oracle to the reimbursement pools, to DeepSEA, the network structurally achieves a security-first approach with provable trust.
Decentralised Finance (DeFi) series: tutorials, guides and more
With content for both beginners and more advanced users, check out our YouTube DeFi series containing tutorials on the ESSENTIAL TOOLS you need for trading in the DeFi space e.g. MetaMask and Uniswap. As well as a deep dive into popular DeFi topics such as decentralized exchanges, borrowing-lending platforms and NFT marketplaces
More videos and articles are coming soon as part of our DeFi series, so be sure to SUBSCRIBE to our Youtube channel so you can be notified as soon as they come out!
Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.