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Understanding Bitcoin Exchange-Traded Funds (ETFs)

Bitcoin’s market capital surpassed $1 trillion on Feb 14 for the first time since November 2021. The approval of Bitcoin Spot ETFs by the US Securities and Exchange Commission (SEC) is the reason behind this bull run. To understand Bitcoin ETFs, let’s first understand what ETFs are.

ETFs are a financial product that pools money from investors to invest in a combination of assets. The fund provider owns the assets, while the investors own a part of an ETF. They give you the benefit of investment diversification and simplicity of trade.  

What is a Bitcoin ETF?

A Bitcoin ETF is an ETF where the underlying asset is Bitcoin (BTC). Bitcoin is on a bull run again. BTC’s price reached more than $52,000 on 20th Feb. As a result, everyone wants a piece of it. However, not everyone has the risk capacity, technical knowledge, and time to invest in Bitcoin.

That’s where Bitcoin ETFs come to your aid. A BTC ETF lets you invest in Bitcoin without holding the token. There are two types of Bitcoin ETFs - Bitcoin Futures ETF and Bitcoin Spot ETF. Although they both are investing in BTC, they work differently.   

Bitcoin Futures ETF

Let’s first understand what Bitcoin Futures are. Bitcoin Futures is a derivative contract between two investors. They both bet on the future price of BTC. While one investor bets that BTC will rise in the future, the other says it will fall. Whoever’s prediction is wrong pays the other party a cash settlement.

Bitcoin Futures ETFs are a type of financial product where the underlying asset is the Bitcoin Futures Contracts. The price of Bitcoin Futures and the market price of BTC tend to diverge. Say more people expect Bitcoin’s price to rise; the value of the contract could go higher than BTC’s spot price. However, the value of the contract could go lower than the spot price if more people are pessimistic about BTC’s future. 

Major Bitcoin Futures ETFs available in the US are ProShares Bitcoin Strategy ETF, VanEck, and Valkyrie. 

Advantages of Bitcoin Futures ETFs

Disadvantages of Bitcoin Futures ETFs

Bitcoin Spot ETF

Bitcoin Spot ETFs started trading on the US market on 11th January. Since then, new ETFs have added an average of $125 million worth of BTC daily. As opposed to the Bitcoin Futures ETFs, Spot ETFs offer direct exposure to Bitcoin. The underlying asset in these ETFs is BTC.

The fund manager of Spot ETFs uses the money pooled by the investors to invest in and manage actual Bitcoin. You can own a piece of Bitcoin without holding the token by investing in the Bitcoin Spot ETFs. Bitwise, BlackRock, Grayscale, and Fidelity are among the first 11 approved Bitcoin Spot ETFs.

Spot ETFs became such a big rage that BlackRock’s IBIT gained $2.7 billion of assets by the end of January.   

 

Advantages of Bitcoin Spot ETFs

Disadvantages of Bitcoin Spot ETFs

Conclusion

Approving Bitcoin ETFs by the US SEC was a monumental occasion for the Bitcoin network. Now that the world’s most powerful financial regulatory board and the largest asset management company (BlackRock) are supporting the ETFs, Bitcoin will become even more popular.

However, BTC’s price keeps fluctuating, making such ETFs risky and volatile. Hence, investors must assess their risk capacity and research the ETFs they are investing in. You can check out this list of best Bitcoin ETFs by Forbes to get a headstart.  

DHCOINX Writer

24th February 2024

 

 

P2P Trading - All You Need to Know to Get Started

 In recent years, with the emergence of the crypto boom, certain terms have become common. Quite often, we hear the term P2P trading, which is gaining significant popularity. In particular, nations with unbanked economies are more likely to benefit from this.

In this article, the core concepts of P2P trading, its benefits, how it works and more are covered. Once you reach the end of the blog post, you will be familiar with the essentials to get started.

What is P2P trading?

P2P expands to Peer-to-Peer or Person-to-Person trading. It refers to the process where users can buy, sell or trade cryptocurrencies without the need for any intermediaries. In other words, the buying and selling of cryptos is directed between the vendors and the buyers on a platform or network known as a P2P trading marketplace.

It is quite similar to retail marketplaces, which serve as links connecting buyers and sellers. On the P2P trading platform, sellers and buyers register. Following registration, sellers can post information (like ads) about the cryptos they are selling, their prices, etc., for the buyers to contact. Thus, P2P trading is a highly useful instrument for crypto enthusiasts and those residing in unbanked or low-banked economies such as Nigeria, Kenya, etc.

How does it work?

A P2P trading platform is based on the direct transaction between the two parties. So, when the parties have agreed to trade on the marketplace, the platform sends an escrow for the crypto to be sold. In crypto parlance, escrow is a smart contract that holds digital assets and transfers them only when both parties agree that the trading conditions are met.

Smart contracts are computer programs that are executed automatically when certain specified conditions are satisfied.

P2P trading marketplaces let you exchange crypto assets for cryptos. Let's say you are looking for someone with whom you could exchange ETH for BTC. All you need is to register on the crypto website that offers P2P trading. Search for relevant users who fulfill your criteria. Once you get a suitable party, you need to send them a trading request via the platform.

Next, the platform creates an escrow, which is a smart contract that protects both you and the other party against any fraud. Once the other party confirms the receipt of the exact amount of BTC in their wallet, then only the platform sends the ETH amount that you requested to your wallet.

These conditions are validated by the escrow smart contract - the set of software programs that underpin the network. The Buyer and Seller are in total control of the transaction.

Commonly used terminologies in P2P trading

Get yourself acquainted with some basic terminologies or jargon used.

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Users post the price of the crypto they want to trade and publish it on the marketplace through this feature.

Release

Once the buyer pays the seller and the seller confirms the receipt of the payment, the seller releases the crypto from escrow to the buyer’s wallet.

Order Limit

This refers to the minimum and maximum amount of fiat or crypto assets that can be sold or purchased in a particular advertisement. In other words, the price range.

Payment Method

In order to receive payments from the buyer, the user must fill in their payment details from one of the options available on the P2P website. The seller has the freedom to choose the fiat and payment method. The Seller might want to be paid in USA, AUD, Euro, or other currency.

Appeal

In case the buyers and sellers dispute, they can file an appeal to the platform for arbitration. The crypto assets are locked in the Escrow wallet until the dispute is settled. The Escrow wallet is a temporary holding place for the crypto assets whilst trading is going on. 

Benefits of P2P Trading

There are several benefits that these networks offer compared to regular exchanges. Some of them include:

Lower transaction fee

It is a known fact that exchanges charge a low transaction fee from users. However, this is nil or very low in the case of the P2P trading exchange. The primary reason is the absence of any intermediaries or third parties between the vendor and the buyer. At DHCOINX the Seller and Buyer fee is 0.05% per transaction. 

Protection to seller

In the case of a regular exchange, you, as a seller, remain unaware of whom you are trading with. While it serves anonymity and privacy, there are also chances of fraud. These platforms offer the background and history of either party to the other so that it's up to them to decide whether to proceed with the trade.

 

In addition, these networks offer a public rating system that lets both parties take a call. In other cases, P2P exchanges may also arrange face-to-face meetings between the buyer and seller if they wish to.

Escrow Implementation

Some P2P trading platforms offer escrow services that safeguard the interests of both buyers and sellers. An Escrow wallet is a safe holding place for crypto assets. It ensures that cryptocurrencies are transferred only when both parties have confirmed the transaction.

Variety of Payment Methods

The platform offers a plethora of payment methods that widen the choices for users and thus make it accessible for crypto traders worldwide.

Secure transactions

P2P crypto trading ensures that the transaction takes place directly between the buyer and seller with no involvement of any third parties. This provides stronger control to the parties and thus makes the process more secure.

Points to consider while selecting a P2P trading marketplace.

You must check out the below parameters before selecting a marketplace.

Transaction fee

While there are some marketplaces that don’t charge fees for transactions, others do. It is imperative to check and understand the pricing strategies of various P2P networks before getting into one.

Limit

Limits refer to the minimum and maximum values in terms of the number of transactions or the amount that a platform permits the users in a day. Do check out these data and ensure that it works for you.

Histories

In P2P, as you directly trade the cryptos with a party, you must be well aware of their transaction history, etc. so that you can decide if they can be trusted. Check with the platform if they provide adequate data on the history of the other party.

Halts

Some of these websites use halts which refers to the time during which you cannot transfer or transact. It’s advisable to opt for networks that do not halt trading quite often.

Customer Support

Most platforms offer 24/7 support services to assist users with any issues. Make sure to check for this feature while you select your P2P trading platform.

Conclusion

With the crypto frenzy on the rise, P2P trading is becoming increasingly popular. Besides, its benefits, like low trading fees, more payment options, better protection to both parties and most importantly, escrow services, are highly beneficial to crypto enthusiasts.

At DHCOINX, we are strong advocates of Peer-to-Peer trading. We understand our customer priorities and that you need multiple choices of coins and assets to trade. In this regard, we have launched our P2P platform that would bring buyers and sellers to a common marketplace. Sellers are free to set their asset sale price, trade time limit, order limit, preferred currency, and payment method. 

Regardless of location, users can trade 24/7.   

We ensure that your transactions are highly secure and that you enjoy a hassle-free experience.

To know more, reach us here.

References:

https://www.binance.com/en/blog/p2p/binance-p2p-newbie-guide-7428324997079645557

https://www.daytrading.com/p2p-trading

https://coinmarketcap.com/alexandria/article/a-complete-guide-to-p2p-trading-on-binance

https://phemex.com/getting-started/glossary-of-p2p-trading-terms

https://blog.obiex.finance/what-is-p2p-trading/#:~:text=P2P%20trading%20offers%20a%20wide,safe%2C%20secure%20and%20flexible%20platform.

DHCOINX writer, 29th July 2023

 

Spot Trading Basics - Getting Started

In recent years, cryptocurrencies have garnered a lot of attention. And as the market gains momentum, there is a stupendous rise in the number of traders. That said, while everyone is intent on buying and selling cryptos, the philosophy or trading approach that they adopt might differ.

An example of a common crypto trading strategy is spot trading. If you are someone looking to get into this, this page is just for you.

Read on to delve into what spot trading is, its advantages, how it works, its types, and more.

What Is Spot Trading? Understanding “Spot Trade”

In simple terminology, spot trading is a fundamental trading technique wherein someone who buys a crypto keeps it in the hope that they will eventually sell it for a profit. Unlike other forms of trading like margin trading, spot trading entails lower risks. That’s because here you can invest only what you can afford. So, you eliminate the chances of looming into a crisis.

In essence, spot traders make money by buying a crypto asset at a certain time and selling it off for a profit when its price increases.

Another important aspect is that in the crypto spot trading marketplace, the transaction takes place for immediate delivery. The investors and traders buy/sell the cryptos and take ownership of the assets immediately. This is why the term “spot” is used – it means the transaction is completed on the spot with no future contract or delivery involved.

What Are The Benefits Of Crypto Spot Trading?

Some of the advantages of crypto spot trading include:

Quick Transactions

As spot trading involves immediate settlements with no future delivery, the transactions take place on the spot and are therefore quick and efficient.

Greater Flexibility

Traders can enter or exit these markets at any time. Further, they can trade in any size or quantity which offers them a lot of freedom and flexibility.

Better Transparency In Prices

As spot trading deals with forces of supply and demand in real-time, it provides increased transparency in prices compared to other trading methods.

Price Discovery

Spot trading offers great scope for price discovery as it lets you explore the prices of various crypto assets based on the supply and demand dynamics.

What Are The Types Of Cryptocurrency Spot Markets?

There are two types of crypto spot markets:

The first type is the Order Book. This involves a trading platform that provides traders with much more detailed information on the liquidity of the crypto asset in question. For example, it lets the traders gain knowledge of the current prices and demands of the digital asset.

The second type is Over-The-Counter Trading (OTC). In this type, the buyers and sellers directly transact without the involvement of a trading platform or any third party. They mutually discuss and arrive at an agreeable price to buy/sell the asset. This price can be anything they feel appropriate, whether above or below the market price of the asset.

That said, OTC is gaining momentum as it allows traders to negotiate on various aspects, apart from prices. In addition, it reduces the risk of trading in a volatile open market.

Drawbacks Of Crypto Spot Trading

Absence Of Leverage

Spot trading does not offer options of leverage. This implies that traders must have full capital and cannot borrow. This aspect puts a limit on the amount that can be traded.

Limited Trading Hours

Spot trading operates only at certain hours of the day, which poses a challenge to traders who may wish to trade at some time outside of the regular hours.

Market Volatility

Spot markets for cryptos could be highly dynamic, causing the prices to rise and fall dramatically. This in turn could make short-term losses more frequent.

How Does Crypto Spot Trading Work?

Spot trading exchanges handle a variety of cryptocurrencies and there are various methods to trade. Traders use techniques like technical analysis to evaluate the position of a crypto asset and make an informed decision.

There are centralized exchanges, decentralized exchanges (DEX) such as DHCOINX, and Over the Counter (OTC) spot markets that enable spot trading. In case of a centralized exchange, you must fill your account with some crypto to be able to trade. Further, some fees are charged for listings and other trading activities.

In the case of decentralized spot exchanges, blockchain technology works which lets the trades occur directly from the trader’s wallets using smart contracts.  Over-the-counter trades happen through direct negotiations between the buyer and seller in the absence of any third parties.

Wrapping Up

To sum up, spot trading lets you invest only what you can afford, thus reducing the possibility of incurring huge losses. It comes with benefits including price transparency, and price discovery, and offers more flexibility. Essentially, it is of two types - Order Book and Over-the-counter (OTC). With careful planning and good knowledge of the basics, you can become a proficient spot trader.

References:

https://cointelegraph.com/news/what-is-spot-trading-in-crypto-and-how-does-it-work

https://www.linkedin.com/pulse/understanding-crypto-spot-trading-comprehensive-guide-s4clc

https://www.binance.com/en/support/faq/spot-margin-trading?c=3&navId=3

DHCOINX writer, 26th Dec 2023

 

The Growth of Blockchain Technology in Zimbabwe

The Rise of the Blockchain Market in Africa

In recent times the adoption of blockchain and cryptocurrencies has been high in the African continent. According to several forums, Africa is one of the fastest-growing markets in the world for cryptocurrencies.

The CV VC published The African Blockchain Report 2022, which suggested that the venture funding is increased by 429%, indicating a growth of 12.5x compared to the previous year. Numerous projects and ventures driven by blockchain technology are emerging, and several nations are leveraging this new space as the basis of their socioeconomic foundation.

An Overview of Blockchain Utility in Africa

Countries such as Kenya, Nigeria, and South Africa are home to the largest crypto users in the region. Projects such as Akon City, Battle Infinity, Yellow Card, and more have enabled Africans around the globe to play, get employed, trade, earn, create new blockchain projects, and conduct transactions, to name a few.

Evidently, blockchain is not only seen as an alternate source of income or entertainment but also as a replacement for traditional financial institutions and regular income. The projects help people conduct the most basic financial operations, thus offering accessibility to much-needed avenues that help people build wealth and security.

Blockchain in Zimbabwe

In the last few years, the Zimbabwean government has progressed in terms of its views on blockchain and cryptocurrencies. In fact, in April 2023, the government announced plans to launch a gold-backed digital currency. The Zimbabwean currency’s value was depreciating against the US dollar. This was causing economic instability in the nation. At first, the government issued gold coins to stabilize the currency.

Currently, the government is planning to launch digital currencies backed by gold. This way, the volatility of the native currency can be stabilized. About a year ago, the US Dollar was worth 150 Zimbabwean Dollars. However, currently, it’s worth approximately 1000 Zimbabwean Dollars. The government is encouraging people to exchange the Zimbabwean dollars for digital tokens, thus using them to hedge against the currency’s volatility.

Several other countries are planning to launch a Central Bank Digital Currency in their nation to leverage for different purposes. Zimbabwe also has other plans to drive the country’s economy up. These plans include the adoption of blockchain technology and cryptocurrencies. One of its most anticipated and massive projects is the Zim Cyber City.

Zimbabwe’s Zim Cyber City - A Massive Avenue for Blockchain

Zim Cyber City is a smart city project that will reside in the suburbs of the country’s capital city, Harare. The project, approximately worth $500 million, is being developed by United Arab Emirates (UAE) based company called Mulk International. The vision is to build a township with a Dubai-like aesthetic, functionalities, and features which can generate revenue and employment for the locals and helps the country build its financial status.

The 2.5 million square meters of land will include 250 townhouses, more than 80 luxury villas, a number of apartment blocks, high-tech office facilities, a 15-story commercial tower, and landscaped gardens. However, the most intriguing addition to this mammoth project is Blockchain & Cyber Oasis.

Blockchain & Cyber Oasis

The Cyber Oasis is a commercial zone with Cyber City Offices. These offices would be for entrepreneurs, start-ups, and visionaries, who aim to tap into the latest technology, such as blockchain and cryptocurrencies, and use them to innovate in finance. These offices would comprise cutting-edge digital infrastructure to create inventive products and attract investments from local and global entities. This would, in turn, lead to the rise of indigenous companies, further propelling the country's and its citizens' growth.

The Cyber City will provide the means to acquire licenses for blockchain tech, digital assets, and relevant bank accounts. With these, projects can be developed by highly skilled individuals in the web3 space right from conceptualization to deployment and launch. These high-tech offices will reside in a 15-story commercial tower and 3 G+4 buildings.

Conclusion

The Zim Cyber City project did receive several setbacks but is going into the execution stage, and Mulk International is helping the government build it. It would be quite interesting to see how big the role of tech, and specifically blockchain, will be in the Cyber City. Whether the infrastructures will lead to creating financial systems that are accessible and affordable to everyone remains to be seen.

DHCOINX writer,  July 2023

 

Ethereum Shanghai Upgrade

Bitcoin, the pioneer in cryptocurrency, paved the way for a financial revolution. Ethereum, the second-largest cryptocurrency by market cap, introduced us to decentralized apps, Non-fungible tokens, and more.

Last year, in September 2022, Ethereum underwent the merge, transforming its consensus protocol from the earlier Proof-of-Work to the more efficient Proof-of-Stake. Recently, Ethereum completed another major technical implementation, known as the Shanghai Upgrade, on March 12, 2023.

In this article, we delve into Ethereum Shanghai Upgrade, its salient features, its niche features, how it will affect the ETH users, its impact on ETH price, and more.

Let’s get started.

What is Ethereum Shanghai Upgrade?

The Shanghai upgrade refers to a planned hard fork of the Ethereum network. While there are two kinds of forks - hard and soft, in the case of Ethereum Shanghai Upgrade, it is the former. This means that the older version, which is non-upgraded, will not be compliant with the upgraded version anymore. In addition, it implies that the non-upgraded nodes in the Ethereum blockchain will not participate in the staking or validation activities.

This upgrade will be joined by another known as the Capella upgrade, which will make the consensus layer changes, renamed “Shapella”.

While the Shanghai upgrade is comparatively a smaller one, it is worth mentioning that the release would bring along several additional features that would make the job of deploying and executing smart contracts easier for programmers.

Salient Features of Shanghai Upgrade

Benefit for ETH Stakers

The good news is that after Shanghai and Capella upgrades, users would be able to withdraw the ETH staked by them. These upgrades will activate Ether withdrawals and allow the investors to unstake the ETH that they have locked in Ethereum’s new consensus layer, the Beacon Chain.

It offers two options for withdrawal - a partial one which allows one to withdraw only the validator’s issuance rewards. The other option is that of full withdrawal, which releases both principal deposits made and the issuance rewards.

Boosts liquidity

The core idea of Ethereum staking was to increase the liquidity of stakers and validators who need to withdraw their funds. The upgrade lets users stake some or all of the ETH to earn interest on the amount they have staked. While anyone could stake ETH on the network, you need to have 32 ETH to become a validator.

Niche features of Shanghai Upgrade

The Shanghai upgrade aims to deploy some other additional Ethereum Improvement Proposals (EIP).

Turning the Coinbase addresses warm

Coinbase addresses are initially cold under the access list introduced in the Berlin upgrade due to which accessing Coinbase becomes too pricey. Regardless of its growing popularity, this aspect always served as a deterrent. However, with the emergence of the Shanghai upgrades, Coinbase addresses are warm at the beginning of the transaction, making it convenient and less expensive for users.

Use of PUSHo instruction

Most instructions expect offsets as input parameters which in certain scenarios are zeroes. This upgrade will ensure that the constant value 0 is pushed to the stack, thereby introducing the PUSHo instruction.

Limit the initcode

An extension of EIP-170 will ensure that the cost stays proportional to the length of the initcode. This aims to simplify the EVM tool by explicit limits and introduce a cost system that can be extended in the future.

How will the Shanghai upgrade impact the price of ETH?

Soon after the Shanghai upgrade, the price of ETH rose stupendously to break $2000 in a year. However, industry experts are concerned that the release of nearly $30 billion worth of Ethereum could result in a deluge, causing a tremendous rise in supply while the demand remains low. This in turn would cause a decline in the price.

Most traders who are dealing with ETH could face serious losses if they withdraw soon, so the experts opine that investors may not take a hasty decision.

How will the Shanghai upgrade impact Ethereum users?

Well, besides experiencing some volatility after the upgrade, it is expected that the Shanghai upgrade will not affect ETH holders in any other way. In particular, the upgrade will not have any impact on users who haven’t staked ETH on the network.

On the flip side, ETH users will have the privilege of lower fees which will make the transfer of digital assets and the use of decentralized apps more feasible and affordable.

Can everyone withdraw ETH at the same time?

One problem to ponder is what if all holders want to withdraw ETH at the same time? Is it possible? Well, not really. This is because there exists the concept of an exit queue which restricts the number of ETH that can be unstaked on any day. In addition, the continuous entry of new validators will outweigh the outflow. However, by striking off the 32ETH requirement and offering higher liquidity options to validators, the entry hindrances to investors interested to stake ETH directly to the network can be minimized.

These gestures are likely to contribute to an increase in ETH prices as interested investors would come forward and participate in staking due to the fewer entry barriers.

Wrapping up

To sum up, industry experts strongly believe that as the volatility declines in the coming future, more investors would be benefited from this upgrade as they would witness an increase in the ETH prices. In addition, another positive perspective is the fact that the upgrade would enhance the efficiency of Ethereum transactions while considerably reducing the transaction fees.

These pointers signal the growth of the network and that would in turn foster the development of more decentralized applications catering to diverse and complex business requirements.

DHCOINX Writer, April 2023

 

 

What are Ordinals?
How are They Connected to Bitcoin?

In the past week, you might have seen several headlines about Bitcoin’s price surge, the boom in Bitcoin NFTs, and more. These news articles likely had another essential word - “Ordinals.”

So, what exactly are the Ordinals? Does this mean people can now launch NFT projects of NFTs? How will the Bitcoin chain differ from the Ethereum or Solana chain for NFTs? Is Bitcoin going to be the new hub for NFTs? Well, if you are wondering about all this and more, don’t worry. We’ve got you covered. Let’s jump right in!

What is Ordinal?

Ordinal is a protocol launched in late January that enables people to inscribe NFTs directly into the Bitcoin blockchain. Usually, one Bitcoin can be divided into 100,000,000 Satoshis or Sats. According to the Ordinal protocol, any person who works with a Bitcoin node on the chain can inscribe each Satoshi with data. These data can include images, NFTs, smart contracts, and more.

The way Ordinal helps in minting NFTs is vastly different from how NFTs are minted on other chains such as Ethereum and Solana. In fact, the way Ordinal NFTs are bought, sold, and traded on the chain also differs from that of Ethereum and Solana. Here’s how:

How is Ordinal NFT Different from Ethereum/Solana NFT?

Usually, with chains such as Ethereum and Solana, the NFTs are stored on an Interplanetary File System (IPFS), a decentralized storage system that exists off the chain. It is linked to the chain; in essence, the actual image or file minted as an NFT is not present on the chain.

This is opposite to how the Ordinals function. As a result, the man behind launching the Ordinals protocol – Casey Rodarmor, believes that it enables the creation of true NFTs because by inscribing (minting) the NFTs directly on the chain process is complete.

Casey believes the NFTs on Ethereum are incomplete in many ways. One of the most critical logic behind the reasoning is that the NFT images can be uploaded on a regular basis to ensure that people get the highest quality of images when they purchase the NFT.

The above is one way to differentiate between the Ordinal NFT and the NFTs on Ethereum and Solana. But this isn’t all. On Bitcoin, Ordinal NFTs can only be bought privately in a manner similar to the peer-to-peer methodology. Unlike marketplaces on Ethereum and Solana, one cannot buy NFTs from a platform but have to buy directly from the nodes that inscribe the NFT. One of the ways to go about this is to join the Ordinal Discord channel, where people post their inscriptions (NFTs), and can choose from a wide variety of NFTs.

Major Developments with the Ordinal Bitcoin NFTs

Popular NFT Projects on the Bitcoin Chain

The Future of Ordinals on Bitcoin

So far, the fascination around Ordinal NFTs seems to be unstoppable. Although Bitcoin is nowhere near Ethereum and Solana in terms of the marketplaces, the infrastructure, and the technology behind their NFT operations, it still has the advantage of being the biggest cryptocurrency in the world.

However, some people are against the Ordinals and have criticized its several aspects. First, people do not appreciate how the transactions occur privately or as Over The Counter (OTC) trades because they involve a higher risk of encountering fake pieces.

 

Second, since Ordinal NFTs can be inscribed only by nodes on the Bitcoin network, making the chain non-inclusive for others.

Third, considering the power consumption and existing traffic of Bitcoin, the usage is bound to increase with the inclusion of NFTs. Thus, it will become difficult to scale the system for a higher number of users.

Besides this, people also believe that it can be a good competitor to Ethereum and Solana. However, the protocol is truly in its nascent stages, and while some might want to double down on the emergent platform, only with time will we know how effective, scalable, and diverse it can truly be.

DHCOINX writer

----------------------------------------------------

Is Cryptocurrency on the recovery path?

Keywords - cryptocurrency, metaverse, P2P trading, digital currency, Web 3.0

Cryptocurrency, a form of digital currency, led to  P2P trading, obviating the need for third parties, which opened the gateways to a completely new realm of finance. With Web 3.0 imminent and all of us soon to embark on the metaverse odyssey, digital currency or cryptocurrency holds great significance.

While the cryptocurrency arena was continuing its rollercoaster journey since the beginning of 2009, the recent contagion of Celsius, Voyager, and 3AC, followed by the catastrophe of Sam Bankman-Fried’s FTX, led to a series of shell-shocking events throughout the crypto industry. Wall Street banks that strongly supported crypto space now see it with an eye of skepticism. The FTX collapse nearly shattered the enthusiasm and trampled upon the faith of institutional investors, sending a wave of pessimism.

While the year 2022 was certainly too rough on the crypto segment, there are certain reasons to regain faith. Industry analysts opine on some of the core aspects that suggest the cryptocurrency space will rebound in 2023.

Let’s check them out.

Crypto always exhibited volatility

While Crypto experienced a massive setback in 2022, this was not the first crypto winter. Take the case of Bitcoin, the pioneer in cryptocurrency. It faced a huge drop in prices in 2014 when the annual returns fell by nearly 58%. This situation continued until 2017, and again in 2018, its value plummeted, and by December 2018, bitcoin’s price was as low as $3100.

In December 2020, the price rose considerably and formed higher highs until it touched $68000 in November 2021. Since then, further ebbs and flows in the bitcoin journey have been witnessed.

In the case of Ethereum, the second largest cryptocurrency, the trend of steep declines was followed by a sharp rally during 2018 and 2020.

As Ross Gerber says,” Bitcoin and Ethereum are like cockroaches. They are just not going to die.” 

That said, the history of digital currencies like bitcoin and Ethereum clearly showcases the bearish and bullish patterns, which indicate that the situation of 2022 is not new and, therefore, there are majority chances that the crypto market will rebound.

Increasing Use Cases of Crypto

Crypto applications are no longer constrained merely to bitcoin payments. The growth and development of blockchain-driven systems are carving a niche in every sphere of life, with the acceleration in crypto use cases. One of the amazing examples is that of the gaming industry, which is making a paradigm shift by eliminating the need for middlemen. The modern gaming arena focuses on metaverse and Web 3.0, which all have blockchains underpinning them.

That said, they invariably are moving from the traditional modes of payment using debit and credit cards to digital currency or cryptocurrency.

Non-fungible tokens, NFTs, significantly revolutionized the ways of playing, art, and expression. They introduced us to the Play-to-Earn (P2E) mode of gameplay, which uses NFTs as in-game assets, thereby letting players trade or exchange them in real-time marketplaces like OpenSea.

DeFi Rise

Decentralized Finance, DeFi, plays a significant role in driving financial operations, including borrowing, lending, mortgages, and decentralized crypto exchanges on a P2P trading network. This realm of the crypto space has nearly remained insulated from the FTX impact. Analysts opine that investor interest will likely shift towards the Ethereum crypto, which fuels these DeFi operations.

The banking and insurance industry holds special importance when it comes to decentralized finance. As the DeFi eliminates the intermediaries in the financial processes, making them faster, more efficient, and more transparent than before, it can transform the way banks function. Despite the volatility and lack of regulations in the crypto space, businesses and countries globally are progressing toward DeFi adoption.

Wild West Crypto Regulations

Crypto analysts and enthusiasts believe that the emerging trends in the West of bringing regulations into the crypto space are a positive step forward. The financial crisis of 2008 paved the way for newer dimensions like bitcoin and blockchain. The early adopters of this arena strongly advocated the crypto space and moved ahead, leaving behind the realm of traditional finance.

However, in recent years when crypto markets experienced massive meltdowns, especially with Sam Bankman-Fried’s FTX collapse that left the industry in the doldrums, a greater need for regulations has been felt.

Analysts say that while regulations could bring in some adjustments in the crypto markets, policies can make the ecosystem more sustainable and draw the attention of institutional investors. The existence of a regulated framework would make crypto companies secure and accountable. In addition, it will instill confidence and trust in the minds of investors.

Crypto to drive the internet

The primary reason why most of us feel skeptical or pessimistic about the future of crypto in 2023 is that we look at it only from an easy-money perspective. However, the big picture holds a lot more - the next iteration of the internet, Web 3.0, is fast approaching, and blockchains are the underlying essence of it. Web 3.0, in turn, leads us to the near-reality that blurs the boundaries between the physical and the virtual worlds - the metaverse.

While the features like augmented reality, virtual reality, 3D graphics, videos, and more constitute the front end of the metaverse, the backend is supported by blockchains. That said, the mode of payments and transactions in an ecosystem fuelled by blockchains would invariably be - cryptocurrency. Similar to the earlier versions of Web 1.0 and Web 2.0, the third iteration of the internet Web 3.0 will also take place and is inevitable.

It’s time we tweak our perspective toward crypto and stop seeing it as just a fast-money-making speculative medium.

Closing thoughts

Undoubtedly, the FTX collapse, followed by the crypto market crash, has adversely impacted institutional investors. However, that’s not the end of crypto! Such instances have occurred in the past in the case of bitcoin and Ethereum, yet the industry stood undeterred. The history of cryptocurrency indicates that this is just a passing phase.

Furthermore, the growing importance of blockchains, decentralized finance, upcoming regulations in the West, and, most importantly, the role of blockchains and crypto in the imminent era of metaverse signal that the markets must recover. Analysts believe that we - investors and enthusiasts - need to transform our viewpoint toward crypto to unlock its full potential.

References:

https://www.makeuseof.com/reasons-crypto-market-will-recover-2023/

https://www.coindesk.com/layer2/2022/11/22/steps-to-crypto-recovery-where-we-go-from-here/

https://www.businessinsider.in/cryptocurrency/news/bernstein-analysts-offer-a-cautious-bull-case-for-crypto-recovery-after-a-year-from-hell/articleshow/96742821.cms

https://fintechmagazine.com/crypto/whats-future-of-cryptocurrencies-and-digital-assets

DHCOINX writer

 

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The New Era of Cryptocurrency and Exchanges

In 2022, we saw one of the world’s biggest exchanges, FTX, crash. As the debacle unfolded before us, industry experts, crypto aficionados, and several others voiced their opinion about the crypto industry. The countless reports, news articles, online chatter, and more deemed the FTX crash a huge setback for cryptocurrency, exchanges, and particularly centralized exchanges (CEXs). In fact, some even called the event the end of the crypto frenzy.

However, if we look at today’s scenario, just three months later, the numbers and the market give a different picture. For instance, according to Pantera Capital, Bitcoin is entering its seventh bull cycle. In the article, the firm categorically breaks down the performance pattern of the world’s biggest cryptocurrency and deduces how the year will lead to rebuilding users’ trust in cryptocurrency. In fact, it also highlights how the world has invested in cryptocurrency through four crypto winters.

While the above is merely one instance, other reports suggest that the FTX crash would not lead to the end of the era of cryptocurrency and exchanges. In fact, the setback is already leading to a new era of exchanges where the rules are more stringent, security is being paid far more attention, and technology is being used to create a safer industry for crypto investors.

Like any growing industry, the blockchain and cryptocurrency space does have drawbacks and challenges that people need to solve. These solutions will usher users, investors, and, in essence, the world toward a new chapter. Here are five things reports believe would be key for users to resume using exchanges and why they should.

Transparency and Visibility

People are indeed suspicious of the crypto industry, but their suspicions can be resolved if exchanges give them a reason to. To begin with, centralized exchanges must provide the necessary transparency to their users. One of the ways this can be incorporated in the way CoinEx launched its audit for Proof of Reserves. The audit is known as Merkle Tree.

CoinEx uses the Merkle Tree to showcase that it has enough reserves to satisfy all customer needs. In an event where users begin to withdraw money from the exchange frantically, the audit method confirms that CoinEx has enough funds for people to withdraw from.

Another method similar to this is self-verification, suggested by Lennix Lai, an executive from the exchange OKX. According to the self-verification method, people must be able to verify the Proof of Reserves themselves and check if the exchange has sufficient funds. This way, the end user gets more control and feels safer. Lai said, “This self-verification feature means that even if we wanted to, there would be no way for us to comingle user funds since we are operating with complete transparency.”

Self Custody

Usually, exchanges are custodial and non-custodial. Custodial means the exchanges hold users' keys, which are used to withdraw and deposit funds. Non-custodial means the users have the keys. Once again, the motive is crystal clear. Users must feel more in control when they are participating in any crypto-oriented activity on exchanges.

With self-custody of keys or non-custodial exchanges, the users will be assured that their funds are safe with “them,” not the exchange itself. The method will also allow users to invest without worrying about the exchange’s backend activity. It will mitigate their fear of losing funds, which is bound to persist after the crash.

Third-Party Auditors and Partners

Exchanges in the past have also suffered from issues such as theft due to security breaches. Although these scenarios are accidental, exchanges are starting to take stringent measures to minimize security issues and stay ahead of the curve. While a self-audit is good if the team is well-equipped, it can often be misconstrued due to the lack of transparency.

Thus, collaborating with third-party auditors and publishing the final reports will also provide more visibility to the users while enabling them to understand the efforts taken by exchanges to secure their platforms.

Another interesting trend would be the use of cybersecurity partners to audit and actively participate in the exchange’s development cycle. As the different features, such as P2P trading and the introduction of ICO tokens, are built, the security partners can strategize and deploy how the operations would take place on the chain and ensure there aren’t loopholes or security bugs at the development stage.

The Rise of Crypto

Unlike what many experts said at the time of the FTX crash, crypto is rising again. In January 2023, several major cryptocurrencies rose by an impeccable margin. Bitcoin rose by about 37%, Ethereum rose by 30%, and Solana exploded with an increase of 150%. In fact, the least gains among the top 10 cryptocurrencies were made by XRP, which was 15%.

These are signs that crypto is ready to bounce back, and some reports even suggest that Bitcoin might reach the previous year’s high or surpass it by the end of 2023. Thus, investing as an option can be considered by users who had taken a step back from the industry in November 2022.

While the companies focus on providing a more transparent and safer environment for crypto investing, users can also research exchanges and understand which ones they can choose to invest in and trade in crypto.

The New Wave of Exchanges

Although people would likely go for mainstream names when it comes to safe investing, it will be important to also look at the market's newer and more recent players. Due to the fiasco last year, the current and new exchanges would work to rebuild trust in users.

As a result, new exchanges such as DHCOINX would focus more on security and safety aspects. Furthermore, there’s also the possibility of such exchanges incorporating better methods to achieve the abovementioned goals.

Conclusion

Overall, to summarize, the FTX crash has acted as an alert for both users and exchanges. While companies will work towards re-establishing trust among users, the latter is likely to focus more on their research before entering the market, and rightly so. After all, these collective efforts will lead to a better industry and help everyone take a step toward the new era of cryptocurrency and exchanges.

DHCOINX writer

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Top Advantages of Trading On
Centralized Exchanges

In their initial years, such as when Bitcoin and Ethereum were founded, cryptocurrency exchanges were centralized. This was simply because there was a need to buy, sell, trade, and invest in these digital assets, and to meet the demand, exchange platforms were developed.

However, they were mainly centralized because we were still in the early stages of understanding the potential of blockchain, decentralized systems, and having a DEX seemed like a work in progress.

Today we’ve come a long way since then and have accomplished so much more with cryptocurrencies, blockchain, and the entire space that includes niches such as NFTs and DeFi.

Numerous DEXs or Decentralized Exchanges have emerged in the last few years. The rationale behind it is pretty close to the core philosophy of blockchain and cryptocurrency - To have an open, permissionless, and trustworthy system where all processes take place without involving any intermediaries or third parties. 

The idea is for people to have independence and autonomy over their own money and fair access to trading, investing, and other financial services such as lending and borrowing.

So there’s always an ongoing debate about which one is better - centralized exchanges or decentralized exchanges.

For the uninitiated, a centralized exchange is where the exchange platform controls all the operations, processes, and transactions. This is quite the opposite of a decentralized exchange where all of this happens via smart contracts.

Smart contracts are essentially codes that include the rules and criteria for any process to take place and execute everything based on those.

while many would argue that decentralized exchanges are the way to go about it, I believe there are numerous practical advantages of centralized exchanges that we might overlook while comparing the two.

I realized this while considering which type of trading platform I should sign up with and encountered a few advantages of trading on centralized exchanges. So let’s jump right into it.

1.Customer Support

One of the most significant advantages of centralized exchanges is their customer support. For instance, exchanges such as DHCOINX provide 24/7 customer support for all their users and can help them in any way they require.

While customer support is a significant factor when you access any service, it is even more essential in the world of cryptocurrencies. A majority of the global population is still not using cryptocurrencies.

Two of the biggest reasons for this are intimidation and lack of understanding. People find it daunting to access these services because they have little knowledge of how they work and their potential.

Excellent customer support facilities can go a long way in eliminating or alleviating these inhibitions and can help in propagating the mass adoption of cryptocurrencies.

2.Regulations And Laws

It is true that regulations and laws require people to provide their personal information to the exchanges and the government. However, centralized exchanges which follow these regulations are more likely to stay safe from bans and prohibitions that their government might impose.

A simple example of this is the recent ban on cryptocurrency transactions in China. The Central Bank of China deemed all forms of crypto transactions illegal. The country which previously used to be the biggest Bitcoin mining country now had all the miners either halting their operations or moving to a different country which is quite difficult.

There are cryptocurrency-friendly countries such as Kazakhstan, which is now the second biggest Bitcoin mining country. Its minimal regulations have provided numerous miners a stable source of income for themselves.

Thus centralized exchanges such as DHCOINX, which follow regulations and laws, provide far greater stability for all its users and traders. This is because they do not have to worry about the exchanges being banned or prohibited overnight.

3.Fiat-Cryptocurrency Pairs

This is yet another significant advantage of centralized exchanges. These provide fiat-cryptocurrency pairs on the platform for its users. This means that people who are new to the cryptocurrency world and are debuting on an exchange platform for the first time can fund their accounts with fiat currencies.

This also helps increase the adoption of digital currencies that are considered to be the future. Furthermore, as an immediate advantage, users can always choose fiat-crypto pairs which are most profitable for them and later on withdraw funds in the form of fiat currencies for their usage.

4.High Liquidity and Trade Volume

Currently, centralized exchanges have a much greater market share when compared to decentralized exchanges. This means that more cryptocurrencies are being traded on centralized exchanges and at a higher frequency when compared to decentralized ones.

The benefit is rather obvious. At any point, your requirements for a particular cryptocurrency of a specific volume will more likely be met on a centralized exchange such as DHCOINX than on a decentralized one.

Thus, you can buy, sell, and trade more frequently and smoothly on these centralized exchanges than decentralized exchanges.

5.Additional Services and Access

Since decentralized exchanges are only now emerging in recent years, centralized exchanges have far more additional services on their platform. While everyone aims to build a one-stop-shop for all things crypto, centralized exchanges are mor