Crypto News

Stablecoins – is it really that big of a problem?

Recently there have been lots of talks on governments clamping down on cryptocurrencies and more specifically stablecoins. I found it kind of strange that stablecoins have become such a thorn in the cryptomarkets so I did some research to see what all the hoohaaa is about. And I honestly don’t really think it is that big of a problem. Here are some of my thoughts on stablecoins, especially those big market cap stablecoins dominating the market. Of course I am not saying that the current big 3 stablecoins (USDT, USDC & BUSD) are in anyway really that safe or that their business practices are top notch. But if you ask me, the risk level is just the same as any major cryptocurrency.

The problem with stablecoin is that they are supposed to be pegged to a fiat currency. So it is a one-for-one “exchange rate”. The most common is the US Dollar. So assuming that you are holding one USDT, you can rightfully exchange this USDT for one US Dollar and in all intent and purposes – one USDT is one US Dollar. And the reason is simple – it is much easier for traders and investors to relate to a fiat currency when doing trading at exchanges. However if you were to trade direct fiat currency and crypto pairs, you face some major issues – how to get the fiat currency to and from exchanges? And just imagine the transactions fees that you could incur during each transaction. So someone had a bright idea and decided to create “stablecoins” to solve this issue. Hence most trades now are done via cryptocurrency-stablecoin pairs. If you look at Binance, their most active trading pairs are BTC/USDT and ETH/USDT trading pairs. So yes, stablecoins are important in the cryptosphere. Without them, I am pretty sure we will not see trading volumes like what we now.

So what is the issue now with stablecoins you might ask. Well the problem is how it is backed. I mean USDT is a cryptocurrency. Although by right, you should be able to exchange the USDT for one US Dollar. But in reality, that might not be the case. This is because the company or organization behind the stablecoin might not have the cash reserve to back it up. Just imagine that one day the cryptomarket collapses and everyone wants to convert their stablecoin back to fiat currency – does Tether (the organization behind USDT) have the fiat currency cash to exchange? It is important to note that the market cap for USDT is like 61 billion. Does Tether really hold enough cash to pay out if everyone wants to cash out? This is a typical scenario of a “bank run” – basically everyone runs to the bank to withdraw cash at around the same time causing the lack of funds/cash for the bank.

However the question remains – when will this bank run at Tether (or any other stablecoin) happen and the scenario that it will happen? For such a huge market cap like USDT, USDC or BUSD, the most probably scenario is a complete collapse of the cryptomarket (and I mean really crash big time till all the cryptocurrencies becomes worthless), nobody wants to be holding anything in cryptos and nobody believes in the technology behind crypto and blockchain. This is probably much worse than what most people would face during a “crypto-winter” scenario. And only then will this bank run happen. In fact if you look carefully, the demand of stablecoins will actually increase when the cryptomarket does down. This is because when traders sell, they usually sell for stablecoins and they are also a safer place to hold during a market downturn.

And I ask the simple question – do you trust your country’s local banks? How much cash reserve do they keep and are they able to handle a similar bank run? I wonder why government regulators are so worried about stablecoins when their own banking institutions are not able to handle such a bank run as well. If I am not wrong, US banks are required to keep only 10% of their deposits as reserve. I am not too sure about Singapore’s banks but I honestly don’t think that it is any higher. So it is kind of interesting that governments allow their local banks to keep such a small portion of deposits in reserve but are concerned about stablecoins. Yes Tether’s cash and cash equivalent (whatever that means) in reserve is about 76%, though I am not too sure how “liquid” these cash and cash equivalent are. But how often do you need to go to Tether and ask to get back your cash? Barely right? You would normally use it to exchange for other cryptocurrencies. How often do you need to go to banks to get your cash? I would gather it would be more often. And if any country’s economy were to collapse, I wonder how their banks will handle the bank run that will sure follow? Just look at the list of bank runs that happened to traditional banking institutions. Of course I am not saying that these companies and organizations should not be audited or even regulated to a certain extent. Look at Tether and their ever changing policies we can understand the need. But I am basically saying that the excuse given by our governments seem a bit farfetched to me. In my opinion, their risk level is just the same as other cryptocurrencies.

Oh by the way, I am not a financial advisor. Please do your own research when it comes to investing your own money.

Crypto Investments

Nexo adding DOGECOIN – my shock and thoughts

Yes it finally happened – Nexo has listed DOGECOIN. And it sadly happened to my most trusted lending platforms – Nexo. You guys should know by now that I am someone who dislikes meme coins and all these tokens that will probably get investors and traders into trouble. But yet, it seems that even my trusted lending platform is falling for the trap. I tell you, DOGECOIN and whatever nonsense token out there will be the ruin of the cryptocurrencies. These coins and token will bring the wrath of those government regulators hard down and this will almost certainly let to the centralization of a lot of cryptocurrencies. Or even mistrust of the technology behind cryptocurrencies. And what will happen to the rest us? All of us will pay dearly for this folly.

Just imagine the losses for retail traders who went in during the crypto boom just last month. The highest DOGECOIN went was 0.74USD somewhere in early May. It is now trading (after a the recent pump) at 0.19 USD. It had went down to 0.15 USD at one point. I even know a few investors that had threw in a significant amount of money into DOGE because some car celebrity was spending all his time trying to promote it to the moon. It didn’t happen. And following the crash, DOGECOIN was one of the biggest loser. And those whales manipulating the market are the biggest winner. Remember unlike Bitcoin which has at least a limited supply (21 million) and hence value in the long term, DOGECOIN do not have a limited supply. And if you have something with an endless supply, do you think that it will have a value, especially in the long term? Almost certainly not right? And yet, the price of DOGECOIN went up 26,000% at one point. There is simply no fundamentals behind the coin. Just full of hype and nothing more. And the saddest thing is that Nexo is listing them. Yes there are definitely some diehard fans of DOGE out there. But bowing to such people and listing such a meme coin is not something which I would consider a sound business decision. Furthermore there are plenty of coins and tokens out there with even better technology and use cases. And of these hundreds of coins and tokens, Nexo chose DOGE? Very very strange decision in my opinion. Especially when we are talking about a business tasked with keeping my funds safe and making money out of them.

So yes, I might be moving my crypto out of Nexo soon. This listing of DOGE has actually woken me up to the fact that just because a platform gives high interest returns might not always make good business decisions. But as you guys know, I am often the “wait and see” kind of investor. I will be watching Nexo’s upcoming moves and also plan for the worse. There are a number of other good lending platforms out there as well.

Oh by the way, Blockfolio has been renamed to FTX. But seems that Blockfolio is actually owned by FTX anyway. I thought this would be interesting to note.

Crypto Investments News

Crypto markets turn bull again?

Maybe. Judging from the last few days, it does seem that the crypto market is looking north again. I mean BTC did rise to nearly 40K for a short period of time yesterday. But as to whether this slight spike is due to bullish sentiments in general or just another quick bounce, I am not too sure. And it is kind of hard to tell from what is currently happening in the crypto markets. This recent upturn does not seem to be that enthusiastic if you ask me, especially considering that the gains themselves are not that impressive (in terms of the crypto markets where before it was possible to see a 50%-60% raise within a day). A few of my fellow traders seem to be sitting this recent upturn as well. Perhaps they were very much jaded by the late June and early July dump? I know I was too. But could this be the start of a reverse trend we are seeing? And will the rally be able to be sustained or will it lose steam?

The last few days we did see a number of positive news coming out – like Amazon seeming hiring crypto experts, that “B-word” conference or whatever and of course BTC hashrate starting to creep up. Perhaps investors and traders are starting to see things looking up for cryptocurrencies in general? Plus the upcoming Etherum London upgrade and Cardano starting their smart contracts upgrade as well. Very very positive news. But honestly I was caught by surprised that there was such a rally the last few days. Even though there were plenty of good news, there were still some very gloomy news too. Regulatory authorities around the world are still not convinced about cryptocurrencies and many are starting to clamp down in centralized exchanges (the biggest being Binance) and even decentralized exchanges (just look at Uniswap recent delisting of certain tokens). There was even an article by some government advisor saying that it is time for governments to ban cryptocurrencies for good. No, not kidding here. Someone without much understanding of cryptocurrencies telling governments around the world to ban cryptocurrencies is pretty interesting to say the least. And China seems to be going even stronger against miners in the country. More and more provinces have shut down or started shutting down the miners. With that and governmental regulations, I am sure lots of Chinese investors and traders will not be so willing to invest in cryptocurrencies either. Could we see an outright ban from China? It is a scary thought seeing that there are quite a lot of Chinese investors in the cryptomarket. That would surely have an impact of the market on the whole.

So should you start going into the cryptomarket right now? I have no idea. Too many negative indicators in my opinion. I would be doing a wait and see approach for the time being. However the dollar cost averaging investment strategy still works for me. And I did and will continue to put a portion of my salary into crypto investing every month. And when the prices are low (relatively speaking of course), it is always a good time to invest. Especially if you are going in for the long term.

I am no financial advisor. So please always do your own research when it comes to investing and trading. It is your money and you should be careful on where to invest them in.

Crypto Investments News

Avoid crypto scams – general advise

I have been doing a lot of research on such scams these few days and honestly speaking, the range of scams is so huge, it is impossible to list them all down. I mean when we are talking about “magic internet money” and all sorts of scammers will come out to try and trick you out of your hard earned cryptos. Even on Youtube comments and Youtube advertisements, there are plenty of scams. I even had one with the Chinese Digital Yuan and it comes with a well designed video as well. I although believed that you could buy Digital Yuan online and its value will surely rise if it is sold at exchanges. No bros, the Digital Yuan is not a cryptocurrency and even if it does have “smart contracts built-in”, it cannot be easily traded and its value should not raise that much at all. It is impossible for a CDBC to be so volatile. Defeats the purpose of being a CDBC.

Anyway here are some ways you can spot crypto scams and what you can to do avoid them.

  1. Too good to be true. Yes I have seen yield farms that can generate like 30-40% APY. Pretty common in the cryptosphere, especially for newer platforms or ones offering new token or coins. There are even smaller and riskier farms that can generate up to 50-60% APY but these are still very sketchy. If you are going for these farms, you might want to think twice. Or at least you should only go in for the short term. And for those with like 100% APY, you should never go for them unless you want to have a taste of something called a “rug pull”. Investors should always read reviews (note that some reviews can be fake) and do some research on the background of the platform they are using as well. Generally a good platform should have at least a good number of years behind the company or technology.
  2. Fake websites. This is actually a pretty common one. I have seen a few that is very well done and actually looks like the genuine website. Always check the URL and avoid clicking on links in advertisements or in emails or through social media. Some could even fool users by having slight typos in the domain name or have sub domains that look like the real thing. Or they could use redirectors. If you are not too tech savvy or just plain lazy, I would advise to only go for the big name platforms instead and type in the domain name directly in your browser and bookmark them afterwards.
  3. Shitcoins / Shit-tokens. I have never been a fan of these small cap tokens. Most of such tokens are useless and basically just for speculation only. If you are thinking of investing your money into such coins, I would advise you to think twice. MOST of these coins are destined to fail and history have shown this to be true. And quite a lot of them have been rug pulled as well. Just read about this token ironically named “My Big Coin“. And also the infamous Onecoin. The Onecoin project did not even have a cryptocurrency. They basically use some database to store their transactions! So if you are thinking that you can make a fortune by buying tokens on the cheap and then selling them for millions when they go to the moon, think again. It is highly unlikely that this would actually happen. Even if the intent of the creator of the token is not to scam you, what are the chances of a shit token going to the moon? So if you want to keep your hard earned money in your hands, avoid these ICOs or pre-sale coins or some Shiba Inu/Floki projects like the plague. And for god’s sake, do some research instead of relying on some fancy website or video.
  4. Stealing of accounts. Stealing accounts (userids, passwords and /or keys) dates back to when computers were created. And it is still happening now. There are tons of scams out there with the intent to steal your account and drain everything from your account. From websites that claim to automate trading for you, to helping your trade better, to phishing sites, to fake technical support staff, to fake government tax men..And remember most technical support staff will never ask you for your account password. And never give anyone your private keys to your crypto wallet. If you give them your private key, it is like handing them full control of your wallet and you can say goodbye to your cryptocurrencies in that wallet. For website accounts like trading exchange account, make sure you have 2FA enabled and periodically change your password. I know it can be very troublesome to do and update but that is what you have to do to ensure that your funds remain in your hands.
  5. Guaranteed. There is no such thing in the cryptomarket. If a project tells you that they can guarantee a big return within a small period of time I will tell you that it is most likely a scam. Just look at how volatile the cryptomarket is. Unless someone has a crystal ball, how is it possible to have a guaranteed return? And if someone can see in the future, why do they need to share the generated wealth? I was checking with my financial advisor the other day regarding my “savings plan” and the first thing she told me is that there is no such thing as a guaranteed amount in returns. All the figures she showed me was the estimated based on past history. So please be aware of such scams.
  6. Social Media Influencer scams. This is starting to get ridiculous as well. Even the social media sites are starting to ban influencers from promoting cryptocurrencies. Just read about the Save the Kids scam. Apparently this clan (some of whom might be innocent though) have been promoting this Save the Kids coin and then when the time is right, did a pump and dump resulting in quite a significant loss for those who bought the coin. I think this probably did a lot of damage to the image of cryptocurrencies in general. People will tend to link crypto to scammers. And I don’t think this is a one off incident as well. So bros, don’t believe everything you hear from that one cool kid with a Youtube channel or that Instagram page where he seem to spend all his time driving expensive cars and date beautiful women.
  7. Fake social media sites & accounts. This is getting very commonplace as crypto projects start leveraging on social media to promote their projects out to the public. Especially for successful projects, bad actors are imitating the official social media groups and sites to trick users into believing they are the genuine thing, in order to steal passwords or even funds within wallets. Some of these scams have even fake “official” accounts that look just like the real thing. Again if you find yourself being messaged by someone out of the blue, double check whether they are the official representatives of the project. In most cases, real official accounts for the project will not initiate any conversation with you, especially via private message.

This is just the tip of the iceberg. There are way more scams out there than just these few. The Internet is indeed a scary place. So I would like to end this post by telling my readers to be careful and take everything with a pinch of salt. So take care and may fortune go your way!

Crypto Investments News

Binance under attack – should we be worried?

Seems like the world’s governments are taking turns whacking on poor Binance. But I mean it is the largest crypto exchange out there so it makes sense that if the governments want to send a message, they will totally go against Binance right? But what is the hidden message these governments and their supposed “regulators” are trying to send across? From Japan to UK to the US to Italy and plenty of other countries seem to be targeting Binance and it seems for various reasons. Some of which are not even related to the Binance Exchange website (where most of us do the trading at)! And how about the banks starting to block transfers to Binance for their users. Out of nowhere, banks have suddenly become “concerned” about the welfare of their customers and it seems that it is very particular in the UK. I mean we will never know what is exactly going on behind the scenes but all these seems very well planned and well timed, don’t you think so? I wonder what kind of “watchdog” these authorities are but it smells very fishy to me.

So the most important question would be how would it affect us – the retail users? For me, I am going for the wait and see approach. The Singapore authorities although very curious, do not seem to be taking any action against Binance for the time being. For those in the UK and other countries might want to think of transferring at least a portion of their portfolio off Binance. Especially those cryptocurrencies which you do not think you will be trading that often. The Binance trading fees are probably the lowest out there. However it looks like even institutional investors are a bit hesitant to do trading in Binance. Take a look at this article by FT. There are several relatively safer exchanges like Kucoin and Coinbase. There doesn’t seem to be any regulatory bodies targeting these crypto exchanges as of yet. And there is always if you a mobile user. Note that I do not have any experience using so please do your own research on this platform. But I have heard good things though. And their online presence rather big so I am sure they have at least some standing in the crypto markets.

However if you ask me, I think the main reason why Binance was targeted is because they are the biggest crypto exchange out there. And not because of any major wrong-doing on their part. I mean if you compare Robin Hood and Binance, I say Binance is a much safer platform than Robin Hood. And with even better fundamentals as well. Even the 2019 Binance hack, Binance had covered all those affected in full. And till now, all these government regulatory bodies have no given a reason on why they are targeting Binance. The UK side was that like false advertising or something along that line and it is not even the exchange platform. The worse are the banks if you ask me. They have not even given any legit reason as to why they are blocking fund transfers (or limiting the amount) to Binance. Their excuse was that they discovered a number of scams related to crypto exchanges. Again very fishy indeed. But I am guessing this is all expected. When you are the top dog you will surely get a few target crosses on the back of your head.

And as it is currently a bear market, moving some of your cryptos out of Binance and to lending platforms is also a good idea too. You can earn better interest rates on your cryptocurrencies. However I still believe Binance will survive all these and maybe come out even stronger.

Crypto Investments

Dollar Cost Averaging – best strat for a bear market

The idea behind dollar cost averaging is a very sound one. If you are investing in either the stock market or the crypto market, dollar cost averaging is probably one of the safest investment strategy (especially for the crypto market where it is so volatile) out there. And it just doesn’t take up too much of your time. Very good for busy the investors who don’t want to spend all their available time in front of the monitor or mobile device. And yes, especially now as we are going into a bear market, investors should consider using the dollar cost averaging strat now. There are quite a few traders I know who are thinking of leaving the crypto market during this bear period. But if you ask me, I think it is not a good idea. They tell me that they are cutting their losses and will only come back during the bull market. But then I ask them, when is the bull market and when will you come back in? “Timing” is kind of difficult to get it right and there is no way to be certain.

I know I know, everybody is also keen to jump in when everything is pumping. I am one of those who used to think that when you see the marketing is green, it is the best time to go in and see it raise to the moon. The price will “definitely” rise and it will never drop back to a certain level anymore. It is the “last chance” to get the coin or token at this price. Does that sound familiar? It happened to me like just one month ago. But as you can see from the recent price action, that is just not true. This is called Fear of Missing Out or FOMO. That is how whales and big investors earn from retail investors. Investors should consider putting in a portion of their funds during a bear market simply because it is a bear market and prices are low. If you enter during a bull market, chances are the prices are already pretty high. And if you buy high, how are you going to make money then?

If you don’t know what Dollar Cost Averaging does, it is pretty simple. Lets assume you have 10K to invest into the crypto markets. But instead of dumping everything all at once (eg. throwing all 10K at once to buy cryptocurrencies), you divide the amount and perhaps buy in once per month. The core idea is that if you buy periodically, there are less chances of a complete burn when things go south. Of course you will probably not gain as much if something moons right? But lets be honest here, what are the chances of that happening? And what are the chances of a retail investor knowing exactly when to sell to maximize the profits? I know of traders with a good sense of discipline who would every month without fail buy a certain amount of cryptos when they receive their paychecks. And the end result is that they did pretty well. It might not be as exciting but I think it works. Furthermore these traders don’t need to spend all their time in front of their computers. Just once they have the pay in the bank, they withdraw and buy some cryptos and then forget all about it. And it is way less stressful as well.

So if you have always wanted to enter the cryptosphere, I believe now is the time. Don’t go all in but spread the risk out by dividing your funds over a longer period. Not just during a bear market, this strategy works even during a bull market. But not only should you spread out your funds for a longer period, you should also get into a variety of cryptos as well. Don’t just stick with one crypto. You should read my post about HODL and spreading risks.

Crypto Mobile Crypto

Analysing Eagle Mining Token price?

No no, I don’t have a crystal ball. And if I did, I would probably not be telling everyone on the Internet now would I? But I am kind of curious to know how much would the price of these type of tokens would be. I am talking about Eagle Mining Network’s Eagle Token. They are not available to trade publicly on exchanges yet, so there is no real way to know how much they are worth at the moment. However recently, Eagle Mining Network just released their “bulk” purchase which simply means that instead of slowly mining for the Eagle Tokens, you can buy a huge ton of them wholesale and at a supposedly discount. Think of it like those ICOs you get during the 2017/2018 crypto craze. You get a bunch of them at a discount.

So it seems that they are selling those bulk at the following prices:

5 BUSD = 21,000 EAGLE, 25 BUSD = 101,000 EAGLE, 50 BUSD = 201,000 EAGLE & 100 BUSD = 501,000 EAGLE.

Yes, seems like they have a slight typo for the 25BUSD & 50 BUSD plan, which seems to net you less than what you paid if you had purchased a smaller amount. Anyway, at the most expensive price point, it looks like 1 EAGLE = 0.000238 USD, since BUSD is pegged to the USD. BUSD is the stablecoin for Binance. So if we were to consider that this “bulk” plan was sold at a significant discount, then would mean that the price could (potenitally) be much higher than that. So assuming that the actual EAGLE token is about 10x what was in the Bulk purchase price, then 1 EAGLE = 0.00238 USD. Of course we will not know until the token is publicly tradeable but this is a “very extremely” generous estimation. I honestly doubt that the price will go that high. And as I have been mining for over 3 months and have made about 5,000++ EAGLE tokens, that would mean for the past 3 months, I have made about 11.90 USD. And this I would say is the higher end of the estimate.

So is it really worth it to do mining with the Eagle Mining Network? Well it surely does not look like it is worth mining right? You need to tab a button everyday (which I have been doing quite diligently daily) and maybe even spin a wheel for the faucet and get approximately 4 USD per month for the effort. I think even the electricity to charge the phone will be higher than 4 USD per month. And we don’t even know that the project will even succeed. Sure the Eagle Token might go to the moon when it officially launches but looking at the market right now, it is not very likely. And they do have a lot of competition with Pi Network and Bee Network. These are more established than Eagle Network.

I don’t know. The project did seem to be going along just fine. But when they announce the “bulk” plan with that kind of pricing, I am a bit worried. I am not expecting that each EAGLE token to be like 1 USD but at these rough estimates, honestly it does not seem worth it to do any sort of mobile mining on their application. And as usual, I would never recommend anyone to pay for these bulk purchases either. Unless you have a lot of confidence in the project, most of these projects will usually fall on the wayside. But all is not lost though. It seems like Eagle has a number of projects in their pipeline though. Staking is come to the Eagle Network! They claimed that it should be available next month, so that is something to watch out for. And they are working on several decentralized applications like web based decentralized exchange (swap) and a crypto wallet for swaps. So yes, I am currently doing a wait and see approach.

Crypto Mobile Crypto

Alpha Network – fixed cap mobile mining?

As you guys should know by now I am somewhat of a fan of mobile “mining”. Well not actually doing any real mining mostly though. These applications simply connects to their servers to sync your “mining” with the mobile application. So yes, there is no actual mining going on. And the Alpha Network [invitation code:blong1234] basically does the same thing as Pi Network or Bee network. These do not take up too much of your mobile device’s resources nor do they take up too much bandwidth. And most of them just require you to tab a button or two to get the daily rewards. For users like me who loves to fiddle with my phone, it is not at all a chore. However for anyone who just hates tapping on their mobile device, then this isn’t for you. Even though you just need to tap it once per day. And no, you are not actually mining anything on your phone. More like the application to sending information to Alpha’s own servers to “mint”.

As for the application, there is nothing special about it. The interface is a bit easier to navigate compared to Pi Network mining application however with that said, the interface is very bare. All you have is a button for you to activate the mining and an option to earn more. The earn more option basically allows you to open up “lootboxes” and to click on advertisement(s) and get either flat Alpha coin or increased mining rate. Note that the increased mining rate is only valid for the mining day. However you can significantly increase your Alpha coins this way. This can be done every 30 minutes. But if you are not interested in clicking or watching advertisements or you find it too tedious, you can just do it the normal way and get better mining rates through referrals. You still need to tab the button once every 24 hours though. All these mobile mining applications work the same way. The more referrals you have, the better rates you will get. Basically they are trying to get people interested in the network. I have linked my referral code above. However if your friends have their own code, you should use theirs. And it is a good thing as well. The more people holding Alpha coins, the more valuable it becomes. Of course once the day comes when the Alpha coins can be traded on the open market, there might also be a huge dump in the market like for nearly every token or coin out there…..

It is also interesting that Alpha Coin has a fixed cap of 500 million coins. This means that there will never be more than 500 million Alpha Coins in circulation in the market. And it seems all of the coins can only be minted via their application, which means only for the users. Does not seem to have any ICO or pre-minted coins. This is a good thing right? From the total amount of coins, we can approximate the price of Alpha coins by comparing it with other such coins in the market. One of which we do need to consider is the Pi Tokens, which is one of the pioneers. But honestly speaking, this project is still in its infancy (started somewhere in April 2021) and will probably take a while for it to grow. As for the blockchain technology it will be using? I have no idea. Even its whitepaper there is no mention of their blockchain technology at all. This is a bit worrisome as the blockchain technology should be the core.

And in the whitepaper there is a section claiming that they have Virtual Mining Nodes doing the actually mining. This sounds a bit suspicious if you ask me. Why a project like this and at this stage have “Virtual Mining Nodes” when their blockchain technology is not even available? Shouldn’t these “mining nodes” be up and running ONLY after they have their blockchain up? I mean they already have a wallet so it could be up and running already. But I find it weird that they have not announced which tech they are going for. It should actually the most important thing for a cryptocurrency right? So again I would like to remind readers never to pay for anything on such applications. You will never know that one fine day after making tons of money from their users, they decide it is enough and do a rug pull and your money is gone just like that. We don’t even know which country are the developers based in. And the whois information for their website is all completely redacted for privacy. Something which I find very disconcerting. They should not have to hide such information from their users if they are doing something legit right?

Crypto Investments News

The dangers of leveraging – just don’t do it

Greed is the root of all evil. No I am not talking about making money – everyone needs to make money in order to survive right? I mean there is no way that someone in the modern world can survive without a single cent. Even those hippies understand this simple fact. You need money. And there are plenty of ways to make money. I get mine from working a regular job – 9 to 5 office job. Yes it is kind of mundane and boring and you get to mix with all sorts of idiots in the office but it is a living. I don’t cheat people of money nor do I cause problems for society. But the most important is that I do need money. And when it comes to investing, I only invest in what I can afford to lose. Sure if it makes me a healthy return, good for me. If it drops like 50%, I usually wait it out till it becomes profitable for me to sell again. That is how I invest.

However if you have read articles on investments and stock market trading, you will surely have heard of “leveraging“. Basically it is an “investment strategy” that involves a trader “borrowing” funds from someone else and using it to do trading. A simple example would be someone in an stock exchange who wants to borrow 10 times the funds he has to do trading. So as to “amplify” the returns if he bets correctly. Yes if he bets and he wins, sure he will almost certainly make way more than what he would have if he just used only his original funds. This depends on how much “leverage” there is. But if he bets the wrong stock, there is a good chance of liquidation. This is because when someone leverages, he basically trades on behalf of the one who provides this “leverage”. And if the losses exceeds the original amount, then there is a chance of liquidation. This means that the position is closed out. So the trader gets nothing back because the losses exceeds the funds put in for the leverage. And for most cases in the centralized or even de-centralized crypto exchange, there is no way to do any real credit check. So in most cases, liquidation is the only option.

And just to show how common it is that traders get liquidated, here is an article on coinmarketcap on what happened recently. Over 82,000 positions got liquidated just on 17 July alone. And yes, there is one trade worth USD 4.86 million that got liquidated as well. Banks, institutions and exchanges are merciless machines and they will liquidate you without any hesitation. And how about in mid May when the crash started? Well this article by Coindesk shows that over USD8 billion was liquidated! When I first started trading I thought that people doing leveraging is very rare. But boy, I was so very wrong. Seems like a lot of retail investors do leveraging pretty often. I understand the desire to make money and I don’t think there is anything wrong with it. But sometimes too much greed can cause problems. And look at what happened when traders leverage – we get the huge swings especially to the downside aka major crypto market crashes. This will of course compound those traders who leverage even more.

So my advise to all retail traders is not to leverage. And only invest in what you can afford to lose. Don’t get swept away by all the FOMO and think that you can become a millionaire with that DOGECOIN Elon Musk seems to love so much. It is currently trading at USD 0.18 and its peak was at 0.72 just in May! Just imagine that massive losses that was incurred by investors!

Crypto Investments

Nexo Review – my lending platform of choice?

If you are looking for a place to park your crypto to wait out the current bear market, I do think that Nexo [referral link] is a decent choice. It offers pretty good returns (savings) and if you are looking to borrow on your crypto, the interest rates there are good as well. Of course this is assuming that you are holding a decent portion of Nexo tokens in your Nexo wallet. If you are not at all interested in holding Nexo tokens, then the interest rates are just normal throughout the various lending platforms. But I think their loyalty program is something to look at. For me, I will try to get the maximum returns, so all my savings returns are paid in Nexo and I do hold a good portion in Nexo tokens.

However do note that not all cryptocurrencies should be placed into such lending platforms. There are other options which give better returns – such as staking and yield farming. For example, some of the Binance staking of ADA gives up to 17% APY as compared to the Nexo’s up to 5% APY (or up to 8% APY if in Nexo tokens and for locked periods). Of course staking ADA rates will vary quite often and they would require you to keep logging back in to do the staking once the staking period is over. However the Nexo tokens themselves do have good returns as well. Their returns are the same as stablecoins – up to 12% APY. So you should do a little research before putting your cryptos into such lending platforms. I normally only put those tokens which do not have that much yield elsewhere into Nexo.

Just recently there were some changes to the Nexo platform. The first is that the Nexo token will give the same return savings rate as stablecoins. In the past, Nexo token holders will be given a “dividend” every month. If I am not wrong, the amount is 30% of the monthly profits shared among the holders. I guess if the issue is that there will be a sudden spike in the price of Nexo tokens every month since the company will need to purchase tokens on the open market. And with the Nexo token now available on more and more exchanges, the Nexo token might be even more volatile then before. I do think it is a good move on their part. And this will done and approved via the “governance vote”, which is kind of cool if you ask me.

The next major change was the additional of ADA and DOT into their platform. So users can put their ADA and DOT into the Nexo wallet and earn interest or borrow on these cryptocurrencies. Another win for Cardano and Polkadot! Another important change in Nexo is the “Exchange” feature. Now users can swap cryptocurrencies at any time. Is this a extremely useful feature for users. Users will no longer need to transfer cryptos to an exchange when they want to trade for another cryptocurrencies. Not only do you save time, you also save in transactions fees. As to whether their exchange rate for those cryptocurrency pairs is good….well…..

These are pretty good changes in my opinion. Hopefully it will help Nexo grow, especially seeing that the bear market is coming very soon. As for me, I will probably stick around with Nexo for the time being. I don’t see any reason for me to change. But of course I do not recommend users to just stick with one lending platforms. I do have some of my portfolio in Celsius as well. And of course a portion in Binance. And once again, I am not a financial advisor. Please do your own research to where to put your money. Take care all! If you would like a guide on how to start with Nexo, please take a look at my post here.