Blockchain technology is broach and encompasses a diverse range of capabilities. It enables the existence of various digital and virtual currencies known as cryptocurrencies. Currently, there is a variety of cryptocurrencies that differ in terms of construct and functionality, even though they all serve the same purpose. One such cryptocurrency or just crypto is known as Cardano.
Cardano, abbreviated as ADA, has become one of the fastest-growing blockchain assets in the crypto industry. It is currently among the ten largest digital currencies by market capitalization even though it was released less than five years ago. Its uniqueness from other cryptos in terms of flexibility, sustainability, and a scalable blockchain platform has generated huge hype around it in recent years.
Let’s take a look at what Cardano is, its history, and why it’s drawing much attention.
Cardano (ADA) is a digital coin, similar to other cryptos, that can be used to store value and/or send and receive funds. It operates on the Cardano blockchain, a first-of-its-kind open-source and decentralized proof-of-stake (PoS) platform designed to be more efficient than the alternative proof-of-work (PoW) networks. The blockchain platform is designed to be flexible, sustainable, and scalable for running smart contracts. As such, it facilitates the development of various decentralized finance apps, crypto tokens, games, and much more.
ADA is entirely based on scientific and mathematical principles and designed by experienced experts in the fields of cryptography and engineering. That being the case, ADA boasts of the ability to send and receive funds instantly and at minimal fees.
The digital coin seeks to revolutionize cryptocurrency in the world of business and finance. For instance, unlike other cryptos that attempt to thwart regulations, ADA is built on a blockchain platform with global regulators in mind. It seeks to resolve the following problems currently faced by the blockchain industry:
- Leveraging mathematics to guarantee a secure blockchain less susceptible to attacks.
- Creating a secure voting mechanism for token holders.
- Separating accounting and computational layers.
- An infinitely scalable consensus mechanism.
It was created by Charles Hoskinson, who is also the co-founder of Ethereum. Its development was overseen and supervised by the Cardano Foundation based in Zug, Switzerland.
ADA was launched in September 2017. Hoskinson began working on Cardano in 2015 after realizing the limitations of Ethereum blockchain (PoW). He built the crypto on top of technology pioneered by Bitcoin (first gen) and Ethereum (second-gen) to make it a highly scalable and energy-efficient smart contract platform. It was built in five stages—foundation, decentralization, smart contracts, scaling, and governance.
Before delving into how it works, let’s first look at the blockchain architecture under which ADA is built. The blockchain consists of two core components—Cardano Settlement Layer (CSL) and Cardano Computational Layer (CCL).CCL, the backbone of the blockchain, is also a set of protocols that serves a diverse range of roles. It helps run smart contracts, ensure security as well as compliance, and allow for other advanced functionalities including blacklisting and identity recognition.
ADA seeks to be a sustainable blockchain platform. As such, it uses PoS consensus mechanisms known as Ouroboros as opposed to the energy-intensive PoW system used by Bitcoin and Ethereum. Instead of using a network of miners racing to solve a puzzle, PoS uses a network of invested participants called validators. While miners in other cryptos contribute processing power to secure the network and verify transactions, validators stake their own ADA.
The ouroboros process works in the following four steps. Firstly, the network selects a few nodes, called slot leaders, randomly to have the opportunity for mining new blocks. Secondly, the blockchain is split into slot known as an epochs. Thirdly, slot leaders can mine their specific epochs or subpartition of an epoch. A participant who helps mine an epoch or part of it receives a reward for their services. Lastly, an epoch can be partitioned numerous times because the Cardano blockchain is infinitely scalable, making it possible to run multiple transactions without hitting a bottleneck.
ADA has its own wallet known as Daedalus wallet, unlike other cryptocurrencies. With this wallet, Cardano users run a full blockchain node, enabling them to have total control over their funds and the ability to ensure transparency over the Cardano blockchain.
Even though the Cardano coin is built on a unique blockchain to guarantee the security of its users, it is still susceptible to thefts and unauthorized transfers. The first strategy involves safely storing your Cardano in a hardware wallet such as IOHK’s Daedalus after acquiring the coin. Secondly, keep your recovery phrase and private key offline at all times. Thirdly, only trust official websites and communication channels.
We do not provide investment advice. However, we objectively present factual data and information on various cryptos so you can make an informed decision. In this case, Cardano has numerous advantages. It is built on a superior blockchain compared to Bitcoin and Ethereum. It is also more energy-efficient and fast when it comes to facilitating transactions and smart contracts. It is also safe and acknowledges the existence of regulators. Because of the many advantages, Cardano is becoming a digital currency of choice among investors in the cryptocurrency industry.
Everything You Need to Know About Binance USD
Binance USD (BUSD) is a fiat-backed stablecoin designed to address issues of accessibility, flexibility, and speed on the blockchain. A cryptocurrency exchange leader, BUSD, is currently the second-largest stablecoin on the blockchain by market cap.
This flexible cryptocurrency is stable, regulated, and can be swapped on multiple blockchains. Investors can use BUSD on the Ethereum chain, Binance Chain, and Binance Smart Chains.
Binance USD (BUSD) was created to be a safe investment for cryptocurrency investors looking to invest in a low-volatility stake. This cryptocurrency is pegged at the value of the US Dollar. The New York State Department of Financial Services regulates Paxos, the creators of this currency.
USD is a fiat-backed stablecoin backed by Paxos instead of a government. As a result, Paxos holds the equivalent of the total amount of BUSD in US dollars in its financial reserves. BUSD is a stablecoin that keeps pace with the price of the United States dollar.
When the price of the dollar rises or falls, the price of BUSD fluctuates as well. Paxos issues monthly audits to verify collateralization.
1. BUSD is regulated
2. Fiat-backed stablecoin backed by a reserve
3. 1:1 ratio price fluctuates with US Dollar
4. Operates on multiple blockchains
Paxos and Binance created Binance USD.
Binance USD (BUSD) was launched in September 2019 as a partnership between Paxos and Binance.
They first issued BUSD on the Ethereum blockchain as ERC-20 tokens. Binance USD is one of only three cryptocurrency tokens currently approved by Wall Street regulators. The New York-based financial company Paxos issues BUSD tokens.
Paxos collateralize BUSD tokens by holding equivalent dollar amounts in regulated US bank accounts. Paxos is also responsible for creating and burning BUSD tokens.
Paxos and Binance designed BUSD to be a low-volatility investment for crypto traders seeking highly liquid investments. Investors can easily convert their BUSD investment into fiat-backed currency during times of volatility.
Cryptocurrency experts recommend taking security measures like using two-factor authorization (2FA) to manage online Binance USD accounts and wallets. Serious investors use Binance USD wallet software to store, protect, and manage investments. They do this by using public and private keys to store value.
We do not provide investment advice. Cryptocurrency traders looking to invest in Binance USD should do their research on the history and performance of BUSD and choose the best options that fit their investing style and budget.
It’s important for investors to consider how much they can afford to lose on investments with downturns before committing to any investment. The creators of Binance USD designed BUSD as a low-volatility asset for crypto traders seeking high liquidity. This stablecoin’s goal is to remain stable and as close to the value of one dollar as possible. While its performance appears stable, this can change at any time.
What are Candlesticks and How to Read Them
A candlestick is a type of price chart used in technical analysis to forecast the future price direction of stocks, commodities, and cryptocurrencies. Each candlestick is a graphical representation of a price movement for a specific period. Four different price points are displayed on each candlestick. They include open, high, low, and close.
Candlesticks are one of the oldest forms of technical analysis. According to historical records, candlestick charting can be traced back to Japanese rice merchants during the 18th century. Most financial historians agree that Munehisa Homma was responsible for popularizing candlestick charting.
Candlestick formations are based on a strict set of rules which are universally accepted among all traders and investors. Let’s review a few of the most basic candlestick formations and patterns.
A solid red candlestick is displayed if the opening price is above the closing price (Chart #7).
A hollow candlestick is displayed if the closing price is above the opening price (Chart #8).
Bullish Candlestick Patterns
Big White Candle – The market opens near the low and closes near the high (Chart #9).
Doji – The opening and closing price is virtually identical (Chart #10).
Hammer – A candlestick that consists of a small body near the daily high with a long lower tail (Chart #11).
Bearish Candlestick Patterns
Big Red Candle – The market opens near the high and closes near the low (Chart #12).
Inverted Hammer – A red or white candlestick within an upside-down hammer position (Chart #13).
Shooting Star – A red or white candlestick with a small body, a long upper shadow combined with little or no upper tail (Chart #14).
Brief Summary of Candlesticks
- A candlestick is a type of price chart used in technical analysis.
- Each candlestick represents price movement for a specific period of time.
- Four different price points are displayed on each candlestick.
- The price points include open, high, low, and close.
- Candlesticks are one of the oldest forms of technical analysis.
- Candlestick charting was first used by Japanese rice merchants during the 18th century.
- Munehisa Homma was responsible for popularizing candlestick charting.
- Candlestick formations are based on a strict set of rules.
- These rules are universally accepted among all traders and investors.
What Is an IEO?
An Initial Exchange Offering (IEO) is a type of token sale administered by a cryptocurrency exchange. The entire process is controlled and managed by the exchange on behalf of the crypto company. Both parties have a vested interest in the success of the IEO. Neither party receives a payout unless investors purchase the token through the participating exchange. Therefore, it’s not uncommon for the exchange and the token issuer to join forces to help with marketing, promotions, and advertising.
Before launching the IEO, the crypto exchange and token issuer sign an agreement outlining the payout structure. Typically, the token issuing company is required to pay a listing fee along with a percentage of tokens sold through the crypto exchange. The majority of IEO agreements stipulate that the new token must be listed on the exchange for a predetermined amount of time following the initial sale of the token.
Investors who participate in the IEO are required to open an account with the participating crypto exchange. Instead of sending money to the token issuer through a smart contract, the investor deposits funds into his/her crypto account. Funds are dispersed by the crypto exchange to the crypto company.
IEO Versus ICO
As you may recall from our ICO discussion, the first ICO was launched in 2013. However, the ICO explosion did not occur until 2017, followed by its peak in 2018. Without question, the chief complaint within the crypto community concerning ICOs was a large number of failures and outright scams. In fact, the failure rate approached 90% in 2018.
As we have discussed several times, the cryptocurrency community is incredibly innovative. This community is filled with some of the brightest minds in global finance. Not surprisingly, a small group of young men and women were quick to replace problematic ICOs with IEOs in early 2019. The first major crypto exchanges to join the IEO wave occurred in January 2019. IEO activity continues to flourish in 2020.
The main difference between IEO and ICO is the level of success. In a typical ICO, the crypto company received funding immediately upon issuance of the token. Investors had very little recourse once the tokens were dispersed. They were trapped in a vulnerable position. Sadly, many unscrupulous start-up firms basically disappeared upon receipt of the funds commonly known as a ‘rug pull’.
IEOs solve this problem by preventing the token issuer from receiving funds immediately upon the distribution of the tokens. As we discussed earlier, both parties work together to ensure the success of the project, which increases the likelihood of a rising token price.
Although IEOs have only been in existence for two years, the popularity of this new fund-raising method has increased substantially. The success rate of projects launched on IEO is much higher compared to ICOs. Most likely, this trend will continue.
IEO Regulatory Environment
As you may recall from our ICO discussion, crypto companies struggled to clear all of the regulatory hurdles to satisfy financial regulators. Unfortunately, IEO participants, are experiencing the same type of regulatory problems that plagued the ICO marketplace. This by and large means that regulators dissuade people from taking part in IEOs.
A positive to this is that IEOs are largely unregulated and don’t have to satisfy bureaucracy that can stifle innovative projects.
Financial regulators, particularly in the United States, claim that an initial exchange offering is similar to an initial coin offering, even though the token issuer is not directly involved in the sale of the token. An ongoing problem with regulation is whether or not any particular token counts as security and needs regulation, or whether they are utility tokens. Exchanges will typically avoid listing securities on an IEO as it means they have to submit to regulation.
To avoid the strict regulation requirements around securities, crypto exchanges may even opt not to offer tokens in countries like the United States where there is ambiguity about regulation. As long as the IEO is not soliciting in a particular country, registration is not required.
Due to the overwhelming success of IEOs, many of the world’s largest crypto exchanges are becoming heavily involved in IEOs by offering tokens on behalf of start-up companies. Most likely, this trend will continue.
Brief Summary of IEO
- An initial Exchange Offering is a token sale administered by a crypto exchange.
- The entire process is overseen by the crypto exchange.
- Neither party receives a payout unless investors purchase the token.
- The exchange and token issuer will often collaborate with marketing and advertising.
- Both parties sign an agreement outlining the payout structure of the IEO.
- The new token will be listed on the exchange for a predetermined time period.
- Participating IEO investors are required to open an account with the exchange.
- Investors pay for the token by depositing funds into their crypto account.
- IEOs have proven to be safer than ICOs.
- Many crypto exchanges are not participating in heavily regulated countries.
- IEOs have become very popular in the crypto universe.
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