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What is Defi Crypto or decentralized finance?

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What is Defi Crypto

Everything you need to know

The world is evolving at breakneck speed. Cryptocurrencies have overtaken the likes of paper books, video cassettes, and DVDs as the preferred method of storing and watching content. The newest financial fad is virtual currency!

Cryptocurrency trading, purchases, and sales are becoming so popular that it is almost impossible to keep up with the influx of new investors. Numerous new Cryptocurrencies are being developed on the basis of the rapidly evolving blockchain technology. DeFi, or decentralized finance, is at the heart of them all.

In contrast to traditional financial services, DeFi offers a risk-free, open, and efficient alternative. Centralized banks and traditional financial institutions are no longer able to fulfill the needs of today’s tech-savvy clients because of their sluggish operations, constraints, and expensive transaction costs.

How does DeFi Crypto differ from other Cryptocurrencies?

Financial goods and services that can be used by everyone who has access to the Ethereum Blockchain, i.e. anyone who can go online and access the WWW, are referred to as “DeFi.” It is impossible for centralized authorities to halt payments or restrict your access to financial markets using DeFi.

Services that were previously sluggish and prone to human mistakes in a traditional bank or financial institution are now executed automatically, and they are very safe since the code that anybody can examine and polish is responsible for the processing.

Popularity in the cryptosphere is skyrocketing, and for good reason. You may earn money on your Cryptocurrencies via lending, borrowing, investing, and staking your digital assets in this new economy. Even if you don’t have a bank account or personal identity, you can still get a loan and pay it back using DeFi.

How does DeFi Crypto operate?

Cryptocurrencies and smart contracts are used by DeFi initiatives to supply financial services or goods that do not require any external mediators (such as a local bank). Financial institutions manage transactions in the modern financial world. Along with facilitating international money transfers, they also gain control over the personal funds of their customers. Many people in the facility still lack access to financial services and cannot open a bank account because of the company’s remote location.

A smart contract will serve as a transaction controller and guarantee in a decentralized financial system. To put it another way, a contract acts as an Ethereum account for the funds of its owner, and it may also be used to initiate transactions and provide reimbursements when necessary. Contracts like this cannot be altered in the middle of execution; they will always function exactly as they were intended to.

For example, if the smart account is set up to move funds from Account A to Account B on the last Friday of each month in order to pay an employee’s salary, this may be programmed. For as long as Account A has adequate cash, the smart contract will continue to do this function. You can’t add Account C as a transfer destination while it’s live and take money from it.

Also Read: What Does the Future of Cryptocurrency Look Like? – Crypto Bite

The link between DeFi and Ethereum Blockchain

Ethereum is the ideal platform for the creation of DeFi applications and platforms because of a number of important factors.

Because Ethereum and the smart contracts it hosts are owned by no one, anybody can use DeFi. As a result, no one may modify the terms of a contract to your disadvantage.

Ethereum is the underplaying level for all DeFi protocols, services, and apps. As a result, the vast majority of Ethereum-based DeFi solutions will function together seamlessly. Staking tokens on one platform, then exchanging the interest collected on another, is possible. All DeFi projects are now under the umbrella of Ethereum, allowing you to spend your crypto assets in a variety of ways and places.

Ethereum is the foundation for tokens and virtual currencies, while the blockchain provides a way to document transactions and the history of crypto ownership.

Most DeFi devices will never take custody of your electronic monies, allowing you full management of your virtual money. Ethereum enables perfect financial independence.

Must Read: It’s An Ape, It’s A Blockchain, It’s A Meme-Crazed Crypto Gang! | Blockster

How has the financial sector reacted to DeFi Crypto?

Traditional financial institutions have a lot of difficulties, while DeFi has a lot of promise.

Because too many people are unable to get a bank account or use competent financial services, this problem persists. People are unable to find work because they lack proper access to banking goods and services. When you have poor financial services, it might be difficult to be paid. In order to benefit themselves, central banking systems have access to your personal information.

Markets can be shut down at any time by governments and centralized banks. Trading hours are frequently restricted to coincide with the working hours of a certain time zone. Transactions can take many days to complete because of the inefficiency of the system and the possibility of human mistakes. In order to make a profit off of your necessities, financial institutions charge exorbitant fees.

What people can do with DeFi Crypto?

Many traditional financial services offered by banks and other financial organizations can be replaced by DeFi. Among the various ways you may use digital money, here are just a few examples.

With Ethereum, you can safely and worldwide send transactions. Ethereum, like Bitcoin, enables global money transfers to be as simple as sending an email.

You may transmit various tokens to other Crypterium users throughout the world using only their phone number, even if they have never held crypto before and have no digital wallet. Crypterium, for example.

In certain cases, all you have to do is input the recipient’s phone number from your phonebook, and your money is sent directly to them (usually). A link to a newly constructed hot wallet will be sent to them, containing the tokens that have been transferred.

Ethereum may also be used to send money through the network. Your employees will be able to get the money they need when they need it with this method. Also, stablecoins on Ethereum are a good option if you’re worried about the volatility of crypto and don’t want to transfer or stream it.

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Everything You Need to Know About Binance USD

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binance usd coin

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.

What Is Binance USD?

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.

Key Features of BUSD

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

Who Created Binance USD?

Paxos and Binance created Binance USD.

When was Binance USD launched?

Binance USD (BUSD) was launched in September 2019 as a partnership between Paxos and Binance.

How Does Binance USD Work?

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.

How To Keep Your Binance USD Safe?

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.

Is Binance USD A Good Investment?

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.

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What are Candlesticks and How to Read Them

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what is a candlestick in stocks and crypto

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.

Candlestick Formations

A solid red candlestick is displayed if the opening price is above the closing price (Chart #7).

how to read candlesticks

A hollow candlestick is displayed if the closing price is above the opening price (Chart #8).

what is a candlestick

Bullish Candlestick Patterns

Big White Candle – The market opens near the low and closes near the high (Chart #9).

big white candlestick

Doji – The opening and closing price is virtually identical (Chart #10).

doji bullish candlestick

Hammer – A candlestick that consists of a small body near the daily high with a long lower tail (Chart #11).

hammer bullish candlestick

Bearish Candlestick Patterns

Big Red Candle – The market opens near the high and closes near the low (Chart #12).

big red bearish candlestick

Inverted Hammer – A red or white candlestick within an upside-down hammer position (Chart #13).

inverted hammer bearish candlestick

Shooting Star – A red or white candlestick with a small body, a long upper shadow combined with little or no upper tail (Chart #14).

shooting start bearish candlestick

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.
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What Is an IEO?

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initial exchange offering

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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