10 reasons to invest in Cryptocurrencies

We all know that Cryptocurrencies have had a revolutionary impact on the world economy. The fact that they are not controlled by any government or bank, not affected by the inflation of a certain country, that allows us to work under some anonymity on a platform which is at the same time safe and in growth makes them very useful tools today, so many people have decided that this is the right time to invest in Cryptocurrencies.

These are 10 very convincing reasons to invest in Cryptocurrencies:


Security of Cryptocurrencies

One of the main strengths of Cryptocurrencies is security. Unlike traditional bank accounts and financial transactions that face the risk of being hacked, the Cryptocurrencies system is totally safe because it depends on cryptography. The security of the Blockchain (Blockchain) is such that, once the transaction has been confirmed, it cannot be changed.
The transaction process is carried out by “miners”, who takes them, legitimizes them and spreads them over the network, after which each node adds it to its database as part of the blockchain. With blockchain, investors can be sure that no one beyond the miners gets involved in their transactions. Another key point is that your currency funds are stored in a cryptographic system with a password and only the holder of that password can send Cryptocurrencies


Anonymity and privacy

Anonymity and privacy is another strength of Cryptocurrencies since the blockchain system prevents third-parties, organizations and governments from knowing what you are investing in or buying, how much you have spent and who you are buying from.


Transaction costs

The transaction fees with Cryptocurrencies are much lower than those made with traditional currencies. Generally, transaction costs are zero or too low for the change in Cryptocurrency, as miners are compensated by the network. The only fees paid by operators are those when there was a third party involved in creating and maintaining their own wallets

Use and ease of entry

Traditional methods of investment can be difficult; however, with Cryptocurrencies it is easy, so many permissions are not needed, and businesses operate 24 hours a day. You can receive and send Cryptocurrencies without the need for expensive software, without having great training or licenses and no one can prevent you from investing.

Portability of the Cryptocurrencies

It is becoming more and more complex to carry large amounts of money from place to place. Transporting thousands in cash can be a problem; however, with Cryptocurrencies, all these difficulties are resolved because it is possible to carry any amount of money in Cryptocurrencies in just flash memory.

Transaction speed

With Cryptocurrencies, you can send money everywhere around the globe without restrictions and will arrive in just minutes. It will only take the time the network delays to process the payment.

No debts

Cryptocurrencies do not represent debts, they represent themselves and always reflect exactly the total amount of money you count on.

Low inflation risk

Cryptocurrencies face very low inflationary risk. This happens because all the traditional currencies in the world are controlled by governments and if they face a crisis, then their currency suffers the effects. This leads to the fluctuation in the value of the currency. Investors in Cryptocurrencies believe that they have a lower inflationary risk than traditional currencies, as they are not controlled by government policies and do not depend on the economy of a specific country. Its value is not influenced by the normal tendencies of the global economy and therefore remains high even in the worst circumstances.

The rising price of Cryptocurrencies

The weightiest element that incites to invest in Cryptocurrencies is that its price always tends upward. The Bitcoin, for example, reached high values in November 2017 and then certainly fell, but it has remained stable between 8-9 thousand dollars. If we consider that seven years ago we barely paid a few dollars for a Bitcoin, then we have a panorama in which those who bet on investing in that Cryptocurrencies at that time saw their initial investment grow enormously.

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The Difference Between Fiat Money and Cryptocurrencies

Cryptocurrencies are becoming a global phenomenon amidst talk that they could replace fiat currencies in the near future. Cryptocurrencies adoption continues to gain momentum in part because of the world’s progression towards a cashless society.

The fact that some people, nowadays, transact through electronic money continues to affirm suggestions that cryptocurrencies could be the currencies of the future. However, it will take some time before they find their way into the mainstream sector, given the strong opposition from regulators around the world.

Even as the world moves towards a cashless society, very few people have an idea of how different cryptocurrencies are from fiat currencies.

What Is Fiat Money?

Fiat Money is a kind of currency, issued by the government and regulated by a central authority such as a central bank. Such currencies act like legal tender and are not necessarily backed by a physical commodity. Instead, it is based on the credit of the economy.

Fiat currencies such as the US Dollar, Pound or Euro derive their value from the forces of supply and demand in the market. Such currencies are always at risk of becoming worthless due to hyperinflation as they are not linked to any physical reserves such as commodities.

Fiat currency first came into being at around 1000 AD in China before spreading to other parts of the world. Initially, currencies were based on physical commodities such as gold. It is only in the 20th century that President Richard Nixon stopped the conversion of U.S dollar into gold.Advertisement

Advantages of Fiat Money

Fiat Money has remained legal tender in most countries in part because they are highly stable and controlled. Unlike other forms of money, such as cryptocurrencies and commodity-based currencies, fiat currencies are relatively stable. The stability allows regulators and governments to navigate the economy against recession and inflation.

Stability also allows fiat money to act as a means of storing value and facilitating exchange. It can also be used to provide a numerical account. Greater control also allows central banks to manage various economic variables such as liquidity, interest rates and credit supply key to ensuring a robust, stable economy.

Disadvantages of Fiat Money

Though Fiat Money is considered a stable currency, yet that is not always the case. Economic recessions over the years have highlighted some of the deficiencies associated with Fiat money. The fact that a central bank’s greater control at times does little to stop inflation or recession has led most people to believe that gold could be a much stable currency given its unlimited supply. The notion of central banks control over the economy and the constant increase in global prices create the need for cryptocurrencies.

What is a cryptocurrency?

A cryptocurrency is a form of digital or virtual currency that can work as a medium of exchange. Being virtual in nature, they use cryptography technology to process, secure and verify transactions.

Unlike fiat currencies, cryptocurrencies are not controlled by any central authority such as a central bank. Instead, they are limited entries in a database such as a blockchain that no one can change or manipulate, unless certain conditions are met.

Cryptocurrencies came into being as a side product of Satoshi Nakamoto, the brainchild behind Bitcoin cryptocurrency. Nakamoto did not intend to develop a currency but a peer-to-peer electronic cash system for facilitating transactions without any central oversight.

The decentralization aspect of the network means there is no central server where transactions are hosted or controlling authority. In a decentralized network like Bitcoin, every transaction to have ever happened is displayed for everyone to see. Each transaction file also consists of senders and recipients public keys.

Cryptocurrencies Advantages

Cryptocurrencies are available on a click of a button, all over the world. Anyone that can make an online transfer can also acquire and own a digital coin of choice. Although the process is still complicated, in the futures, it will be easier to transact and own cryptocurrencies.

Fast settlement times are another attribute that continues to accelerate widespread adoption of virtual currencies. Unlike other electronic cash settlement systems that take days to process transactions, cryptocurrencies enable instant settlements.

Lower transaction fees have seen cryptocurrencies emerge as a preferred means of sending money across borders. Transferring money using other bank gateways can be quite expensive given the number of fees charged along the way.

Privacy is another aspect that has made cryptocurrency desirable as users don’t have to share their identity to be able to complete transactions. There are altcoins which the main functions are to maintain the privacy of people behind transactions.

Disadvantages of Cryptocurrencies

Cryptocurrencies can be quite difficult to understand – one of the reasons why some countries and regulators continue to shun them. A lack of knowledge on how to use them is another headwind that continues to clobber digital currencies prospects and sentiments.

The fact that it is not possible to reverse a transaction once it is made is another headache that has forced most people to shun cryptocurrencies. If a wrong a transaction is made the only thing one can do is ask for a reversal from the recipient. There is nothing one can do on recipients of a wrong transaction turning down a request for a refund

Volatility is by far the biggest disadvantage that has clobbered cryptocurrencies sentiments. Volatility goes a long way in affecting the value of a coin, which can be difficult to comprehend or contend with.


Differences Between Fiat Money and Cryptocurrencies

While both fiat money and cryptocurrencies can be used as a means of payment, there are some differences.

Legality

Governments issue fiat currencies, which are in return regulated by the central bank. Fiat money is deemed legal tender in that it is often the official means of finalizing transactions. Governments control fiat money supply and issue policies from time to time that affects their value.

Cryptocurrencies, on the other hand, are merely digital assets that act as a medium of exchange that governments have no control over. The decentralization aspect means no central body can control or influence their value.

Some countries have banned cryptocurrencies on concerns that some of them are being used to fuel illegal activities such as terrorism and money laundering.

Tangibility

It is not possible to have a physical feel of cryptocurrencies as they operate online as virtual coins. Fiat currencies, on the other hand, have a physical aspect as they can exist as coins and notes thus possible to have a physical feel. Fiat money physical aspect at times does present a lot of challenges as it can be a nuisance to move around with vast chunks of money.

Exchange Aspect

Cryptocurrencies exist in digital form as they are created by computers and operate as private pieces of code. The means of exchange is thus purely digital. In contrast, fiat money can exist in both digital and physical form. Electronic payment services allow people to transfer fiat money digitally. In addition, people can transact with one another and exchange money physically.

Supply

A major difference between fiat money and cryptocurrency has to do with supply. Fiat money has an unlimited supply which means central authorities have no cap to the extent in which they can produce money.

Most cryptocurrencies have a cap when it comes to supply, which means there is a set amount of coins that will ever be in supply.  For example, the total number of Bitcoin coins that will ever be in supply is capped at 21 million.

With fiat money, it is impossible to tell the amount of money in circulation at any given time, but with cryptocurrencies, it is possible.

Storage

Cryptocurrencies virtual aspect means they can only exist online thereby stored in digital wallets commonly referred to as cryptocurrency wallets. While most digital wallets claim to offer secure storage, some of them have been hacked resulting in people losing a substantial amount of holdings.

The versatility of fiat money, on the other hand, means it can be stored in various forms. For instance, there are payment providers such as PayPal that allow people to store fiat money in digital form. Banks also do act as custodians of hard currencies.

Bottom Line

Cryptocurrencies and fiat money come with attributes that make them stand out as a means of legal tender regardless of jurisdiction. However, they also come with cons that have seen them continue to divide opinion around the world.

While there are many advantages of cryptocurrencies over fiat money, it seems that cryptocurrencies are not yet mature to replace the current standard payment method. It is a matter of time and not necessarily will be in the form of Bitcoin, Ethereum, or any other cryptocurrency. The crypto market will most likely evolve to create a positive product that might change the current money system.

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The most popular Cryptocurrency Terms

From the intricacies of Altcoin and Fiat Money to understanding Hashing and Mining, here is a guide to cryptocurrency terminology.

Newcomers to the world of cryptocurrency might be baffled by the trading jargon – why HODL? What is a Whale? – but don’t panic, there’s a simple definition for everything.

Altcoin

If you keep hearing about “altcoin”, but can’t find a trading price, that’s because it doesn’t exist. Altcoin is simply a blend word, derived from “alternative” and “coin”, and refers to any digital currency that isn’t bitcoin.

Bitcoin

The big one, created by the mysterious “Satoshi Nakamoto”, in 2008. Even now, despite the rise of a large number of altcoins, it’s still the currency that hogs the headlines.

Bitcoin cash

In August 2017, bitcoin experienced its first “fork” (see below) and split into bitcoin and bitcoin cash – they are now two entirely separate currencies.

Block and blockchain

A block is one package of permanently recorded transaction data. After it is completed, it goes into a blockchain, which acts as a permanent database of all of the previous blocks of data.

A new block is then generated for new information to be stored on. Each block also contains a mathematical puzzle with a unique answer, and new blocks cannot be submitted to the blockchain without the answer.

This answer is what cryptocurrency “miners” (see below) are searching for.

Confirmation

On average, a new block is added to the blockchain through mining every 10 minutes. This block verifies any new transactions, a process known as confirmation.

Some vendors will require several confirmations from different blocks, depending on how large the transaction is.

Fiat money

Fiat currency is legal tender whose value is backed by the government that issued it, such as the US dollar or UK pound.

Fork

A fork creates alternate versions of the blockchain and then the split blockchain runs simultaneously on different parts of the network.

A “hard fork” renders prior invalid transactions valid, and vice versa; a “soft fork” renders previously valid transactions invalid, but not the inverse.

FUD

An acronym for “fear, uncertainty and doubt”. Used particularly on cryptocurrency forums as a put-down for naysayers who are “spreading FUD again”.

Hardware wallet

A physical device designed to store your cryptocurrency safely off your computer, essentially like a very sophisticated USB stick.

Hashing

The process by which you mine bitcoin or similar cryptocurrency, by trying to solve the mathematical problem within it, using cryptographic hash functions.

HODL

Originally a typo on a cryptocurrency forum, when someone typed HODL instead of HOLD. Interpreted as “Hold On for Dear Life”, it’s become the battle cry of diehard cryptocurrency investors who believe that the investment will come good one day.

ICO

An acronym for Initial Coin Offering: a popular, and usually unregulated, way to raise cash for new cryptocurrency ventures.

A percentage of the new currency is sold to backers as blockchain “tokens” in return for more established cryptocurrencies.

Mining

The process of finding new bitcoins, which involves compiling recent transactions into blocks and trying to solve a computationally difficult puzzle through hashing.

Mining rig

A computer specially designed for mining cryptocurrencies.

Node

Any computer connected to the bitcoin network is called a node. These nodes validate and relay transactions while receiving a copy of the full blockchain.

Public key / private key

A cryptographic code that allows a user to receive cryptocurrencies into an account. The public key is made available to everyone via a publicly accessible directory, and the private key remains confidential to its respective owner.

Because the key pair is mathematically related, whatever is encrypted with a public key may only be decrypted by its corresponding private key.

Sats

The smallest fraction of a bitcoin is called a “satoshi” or “sat”. It represents one hundred-millionth of a bitcoin and is named after Satoshi Nakamoto.

Software Wallet

A wallet is where you “store” your bitcoins or other cryptocurrency – or to be more accurate, where you store the private keys used to access your public bitcoin address and sign for transactions.

A combination of the recipient’s public key and your private key is what makes a bitcoin transaction possible.

A software wallet stores these on a third-party server, or you can choose to store them in a desktop wallet downloaded on to your computer. The alternative is a specialist hardware wallet (see above).

Token

When a new cryptocurrency is created through an ICO (see above), funders are given tokens of the new currency in return for their liquid cash or liquid cryptocurrency.

These tokens supposedly become currency units if – and when – the new currency targets are met and it launches.

Whale

As the name suggests, whales are the biggest swimmers in the cryptocurrency pond. Cryptocurrency traders and speculators use this term to describe the players who hold huge amounts of bitcoin.

Hence, it’s no surprise that Satoshi Nakamoto is the biggest whale of all. These whales have the ability to impact markets significantly when they buy or sell, so other traders watch for signs of their movements.

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What is Ehereum?

In order to fully understand Ethereum, what it does and how it can potentially impact our society, it is important to learn what its core properties are and how they differ from standard approaches.

First of all, Ethereum is a decentralized system, which means it is not controlled by any single governing entity. An absolute majority of online services, businesses, and enterprises are built on a centralized system of governance. This approach has been used for hundreds of years, and while history proved time and time again that it’s flawed, its implementation is still necessary when the parties don’t trust each other.

A centralized approach means single-entity control, but it also means a single point of failure, which makes apps and online-servers utilizing this system extremely vulnerable to hacker attacks and even power outages. Moreover, most social networks and other online servers require users to provide at least some degree of personal information, which is then stored on their servers. From there, it can be easily stolen by the company itself, its rogue workers or hackers.

Ethereum logo

Ethereum, being a decentralized system, is fully autonomous and is not controlled by anyone at all. It has no central point of failure, as it is being run from thousands of volunteers’ computers around the globe, which means it can never go offline. Moreover, users’ personal information stays on their own computers, while content, such as apps, videos, etc., stays in full control of its creators without having to obey by the rules imposed by hosting services such as App Store and YouTube.

Secondly, it is important to understand that even though constantly compared to each other, Ethereum and Bitcoin are two completely different projects with entirely different goals. Bitcoin is the first ever cryptocurrency and a money-transfer system, built on and supported by a distributed public ledger technology called the Blockchain.

Ethereum took the technology behind Bitcoin and substantially expanded its capabilities. It is a whole network, with its own Internet browser, coding language and payment system. Most importantly, it enables users to create decentralized applications on Ethereum’s Blockchain.

Those applications can either be entirely new ideas or decentralized reworks of already existing concepts. This essentially cuts out the middleman and all the expenses associated with the involvement of a third party. For example, the only profit that comes from users ‘liking’ and ‘sharing’ their favorite musician’s posts on Facebook is generated from an advertisement placed on their page and it goes directly to Facebook. In an Ethereum version of such social network, both the artists and the audience would receive awards for positive communication and support. Similarly, In a decentralized version of Kickstarter, you won’t be getting just some artifact for your contribution to the company, you will be receiving a part of the company’s future profits. Finally, Ethereum-based applications will remove all sorts of payments to third parties for fascinating any kind of services.

In short, Ethereum is a public, open-source, Blockchain-based distributed software platform that allows developers to build and deploy decentralized applications.

As it was mentioned before, Ethereum is a decentralized system, which means it utilizes a peer-to-peer approach. Every single interaction happens between and is supported only by the users taking part in it, with no controlling authority being involved.

The entire Ethereum system is supported by a global system of so-called ‘nodes.’ Nodes are volunteers who download the entire Ethereum’s Blockchain to their desktops and fully enforce all the consensus rules of the system, keeping the network honest and receiving rewards in return.

Those consensus rules, as well as numerous other aspects of the network, are dictated by ‘smart contracts.’ Those are designed to automatically perform transactions and other specific actions within the network with parties that you don’t necessarily trust. The terms for both parties to fulfill are pre-programmed into the contract. The completion of these terms then triggers a transaction or any other specific action. Many people believe that smart contracts are the future and will eventually replace all other contractual agreements, as the implementation of smart contracts provides security that is superior to traditional contract law, reduce transaction costs associated with contracting and establish trust between two parties.

Moreover, the system also provides its users with the Ethereum Virtual Machine (EVM), which essentially serves as a runtime environment for smart contracts based on Ethereum. It provides users with security to execute an untrusted code while ensuring that the programs don’t interfere with each other. EVM is completely isolated from the main Ethereum network, which makes it a perfect sandbox-tool for testing and improving smart contracts.

The platform also provides a cryptocurrency token called ‘Ether.’

Who created Ethereum

In late 2013, Vitalik Buterin described his idea in a white paper, which he sent out to a few of his friends, who in turn sent it out further. As a result, about 30 people reached out to Vitalik to discuss the concept. He was waiting for critical reviews and people pointing out critical mistakes in the concept, but it never happened.

The project was publicly announced in January 2014, with the core team consisting of Vitalik Buterin, Mihai Alisie, Anthony Di Iorio, Charles Hoskinson, Joe Lubin and Gavin Wood. Buterin also presented Ethereum on stage at a Bitcoin conference in Miami, and just a few months later the team decided to hold a crowdsale of Ether, the native token of the network, to fund the development.

Is it a cryptocurrency?

By definition, Ethereum is a software platform that aims to act as a decentralized Internet as well as a decentralized app store. A system like this needs a currency to pay for the computational resources required to run an application or a program. This is where ‘Ether’ comes into play.

Ether is a digital bearer asset and it doesn’t require a third party to process the payment. However, it doesn’t only operate as a digital currency, it also acts as ‘fuel’ for the decentralized apps within the network. If a user wants to change something in one of the apps within Ethereum, they need to pay a transaction fee so that the network can process the change.

The transaction fees are automatically calculated based on how much ‘gas’ an action requires. The amount of required fuel is calculated based on how much computing power is necessary and how long it will take to run.

Is Ethereum like Bitcoin?

Ethereum and Bitcoin might be somehow similar when it comes to the cryptocurrency aspect, but the reality is that they are two completely different projects with completely different goals. While Bitcoin has established itself as a relatively stable and the most successful cryptocurrency to date, Ethereum is a multipurpose platform with its digital currency Ether being just a component of its smart contract applications.

Even when comparing the cryptocurrency aspect, the two projects appear to be vastly different. For instance, Bitcoin has a hard cap of 21 mln Bitcoins that can ever be created, while a potential supply of Ether can be practically endless. Moreover, Bitcoin’s average block mining time is 10 minutes, whereas Ethereum’s aims to be no more than 12 seconds, which means quicker confirmations.

Another major difference is that these days successful Bitcoin mining requires tremendous amounts of computing power and electricity and is only possible if using industrial-scale mining farms. On the other hand, Ethereum’s proof-of-work algorithm encourages decentralized mining by individuals.

Perhaps the most important difference between the two projects is that Ethereum’s internal code is Turing complete, which means that literally everything can be calculated as long as there is enough computing power and time to do so. Bitcoin doesn’t have this capability. While a Touring complete code provides Ethereum users with practically limitless possibilities, its complexity also means potential security complications.

How Ethereum works

As it was mentioned before, Ethereum is based on Bitcoin’s protocol and its Blockchain design but is tweaked so that applications beyond money systems can be supported. The two Blockchains’ only similarity is that they store entire transaction histories of their respective networks, but Ethereum’s Blockchain does a lot more than that. Besides the history of transactions, every node on Ethereum network also needs to download the most recent state, or the current information, of each smart contract within the network, every user’s balance and all the smart contract code and where it’s stored.

Essentially, the Ethereum Blockchain can be described as a transaction-based state machine. When it comes to computer science, a state machine is defined as something capable of reading a series of inputs and transitioning to a new state based on those inputs. When transactions are executed, the machine transitions into another state.

Every state of Ethereum consists of millions of transactions. Those transactions are grouped to form ‘blocks,’ with each and every block being chained together with its previous blocks. But before the transaction can be added to the ledger, it needs to be validated, that goes through a process called mining.

Mining is a process when a group of nodes apply their computing power to completing a ‘proof of work’ challenge, which is essentially a mathematical puzzle. The more powerful their computer is, the quicker it can solve the puzzle. An answer to this puzzle is in itself a proof of work, and it guarantees the validity of a block.

A lot of miners around the world are competing with each other in an attempt to create and validate a block, as every time a miner proves a block new Ether tokens are generated and awarded to said miner. Miners are a backbone of the Ethereum network, as they not only confirm and validate transactions and any other operations within the network but also generate new tokens of the network’s currency.

What can Ethereum be used for?

First and foremost, Ethereum allows developers to build and deploy decentralized applications. Moreover, any centralized services can be decentralized using the Ethereum platform. The potential of Ethereum platform for building apps not limited by anything other than the creators’ creativity.

Decentralized applications have a potential of changing the relationship between companies and their audiences completely. These days there are a lot of services that charge commission fees for simply providing an escrow service and a platform for users to trade goods and services. On the other hand, Ethereum’s Blockchain’s can enable customers to trace the origins of product they’re buying, while the implementation of smart contracts can ensure safe and fast trading for both parties without any intermediary.

The Blockchain technology itself has a potential of revolutionizing web-based services as well as industries with long-established contractual practices. For example, an insurance industry in the US possesses more than $7 bln inclined life insurance money, which can be redistributed fairly and transparently using Blockchain. Moreover, with the implementation of smart contracts, clients can be able to simply submit their insurance claim online and receive an instant automatic payout, considering that their claim met all the required criteria.

Essentially, the Ethereum Blockchain is capable of bringing its core principles – trust, transparency, security and efficiency – into any service, business or an industry.

Ethereum can also be used to create Decentralized Autonomous Organizations (DAO), which operate completely transparently and independently of any intervention, with no single leader. DAOs are run by programming code and a collection of smart contracts written on the Blockchain. It is designed to eliminate the need for a person or a group of people in complete and centralized control of an organization.

DAOs are owned by people who purchased tokens. However, the amount of purchased tokens doesn’t equate equity shares and ownership. Instead, tokens are contributions that provide people with voting rights.

Advantages of Ethereum

Ethereum platform benefits from all the properties of the Blockchain technology that it runs on. It is completely immune to any third party interventions, which means that all the decentralized apps and DAOs deployed within the network can’t be controlled by anyone at all.

Any Blockchain network is formed around a principle of consensus, meaning that all the nodes within the system need to agree on every change made within it. This eliminates possibilities of fraud, corruption and makes the network tamper-proof.

The whole platform is decentralized, which means there is no possible single point of failure. Hence, all the apps will always stay online and never switch off. Moreover, the decentralized nature and cryptographic security make the Ethereum network well protected against possible hacking attacks and fraudulent activities.

Disadvantages of Ethereum

Despite the fact that smart contracts are meant to make the network fault-proof, they can only be as good as the people writing the code for them. There is always room for human error, and any mistake in the code might get exploited. If that happens, there is no direct way to stop a hacker attack or an exploitation of said mistake. The only possible way of doing so would be to reach a consensus and rewrite an underlying code. However, this goes completely against the very essence of the Blockchain, as it is supposed to be an unchangeable and immutable ledger.

‘The DAO,’ which is a name of a particular DAO launched on April 30, 2016, was attacked and more than 3.6 mln Ether tokens were stolen from it. The attacker exploited a ‘recursive call bug’ in the code, essentially just draining the funds from DAO into a ‘child DAO,’ that had the same structure as The DAO. The loss of a massive chunk of The DAO’s funding wasn’t the only consequence of the attack, as it basically undermined the users’ trust in the whole Ethereum network, with Ether’s value falling from over $20 to under $13.

What apps were developed on Ethereum?

Ethereum has a potential of opening up the world of decentralized apps even for people without any technical background. If this happens, it can become a revolutionary leap for Blockchain technology that will bring it closer to mass-adoption. Currently, the network can be easily accessed through its native Mist browser, which provides a user-friendly interface as well as a digital wallet for storing and trading Ether. Most importantly, users can write, manage and deploy smart contracts. Alternatively, Ethereum network can be accessed through a MetaMask extension for Google Chrome and Firefox.

The Ethereum platform has the potential of profoundly disrupting hundreds of industries that currently depend on centralized control, such as insurance, finance, real estate and so on. Currently, the platform is being used to create decentralized apps for a broad range of services and industries. Below is a list of some of the most noticeable ones.

  • Gnosis — A decentralized prediction market that enables users to vote on anything from the weather to election results.
  • EtherTweet — This application takes its functionality from Twitter, providing users with a completely uncensored communication platform.
  • Etheria — It feels and looks very much like Minecraft, but exists entirely on the Ethereum Blockchain.
  • Weifund — An open platform for crowdfunding campaigns that implements smart contracts.
  • Uport — Provides users with a self-sovereign ID that enables them to collect verifications, log-in without passwords, digitally sign transactions and interact with Ethereum apps.
  • Provenance — The project aims to create an open and accessible framework of information for consumers to make informed decisions on their purchases. This is done through tracing the origins and histories of products.
  • Augur — An open-source prediction and forecast market that rewards correct predictions.
  • Alice — A platform that aims to bring transparency to social funding and charity through Blockchain technology.
  • Bitnation — The World’s First Virtual Nation, a Blockchain jurisdiction. It contains many of the same functions as a traditional nation, such as insurance, education, ID cards, diplomacy programmes, including ones for ambassadors and for refugees and many many more.
  • Ethlance — A freelance platform to exchange work for Ether rather than any other currencies.

How to get Ether

There are two primary ways of obtaining Ether: buying it and mining it.

The most common and perhaps the most convenient way of buying Ether is buying it on exchanges. All you need to do is find an exchange that trades in Ether and operates within your jurisdiction, set up an account and use either your bank account, wire transfer or in some cases even your bank card to buy Ether tokens. Those will then need to be stored in a wallet, which can be provided by an exchange itself, Ethereum’s native Mist browser or by various other specialized services.

Alternatively, you can obtain Ether through peer-to-peer trading, paying for it with any agreed upon currency, including Bitcoin and other cryptocurrencies. This can be done both online and in-person. Peer-to-peer trading is rather popular among Bitcoin users. However, due to the virtually unlimited supply of Ether tokens and the Ethereum platform not putting complete user anonymity at the forefront of the system, Ether is usually obtained via exchanges.

Another way of getting Ether tokens is by mining them. Mining Ethereum uses proof-of-work, which means that miners contribute their computing power to solve a complex mathematical problem in order to ‘seal-off’ and confirm a block of actions within the network. Miners who manage to successfully complete this task receive a reward for every block mined.

Future of Ethereum

Despite the fact that Ethereum, much like Bitcoin, has been around for several years, it only just started gaining mainstream media’s and general public’s attention. A lot of experts agree that it is a disruptive technology that is set to not only completely change the way the Internet works but also revolutionize services and industries that have been existing for hundreds of years.

Vitalik Buterin, the creator of Ethereum, is being very careful and modest with his predictions. In a recent interview, he stated that he intends to keep Ethereum the leading Blockchain-related platform, focusing on technical issues and security improvement in the new future.

Overall, opinions on the future of Ethereum among cryptocurrency experts are generally positive. However, there are many old-school financial experts who, despite the extraordinary success and relative stability of both Bitcoin and Ether, as well as the undeniable importance of technologies behind the projects, are still predicting their impending downfall.

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Is Bitcoin Legal

Every single fiat currency in the world is created, released and controlled by a single entity – in most cases a central bank. By law, ordinary citizens are only allowed to buy, sell or keep the currency. If someone tries to create any amount of money, they will inevitably find themselves behind bars.

When Bitcoin was introduced, it created a completely new and unique paradigm. The world’s first digital, decentralized currency that isn’t controlled by anyone at all. Moreover, the very concept of Bitcoin implies that anyone with enough computing power can create coins by simply being an active part of the community.

As it’s becoming more and more mainstream, law enforcement agencies, tax authorities and legal regulators all over the world are trying to wrap their heads around the concept of cryptocurrency and where exactly does it fit in existing regulations and legal frameworks.

The legality of Bitcoin depends on who you are, where you are in the world, and what you’re doing with it. Here’s our guide on legal issues concerning Bitcoin, where we mostly focus on the US but cover other major countries as well.

Concerns about cryptocurrencies

In many jurisdictions, the authorities are still struggling to understand Bitcoin, let alone define it in legal terms. Many concerns have been raised over its decentralized nature. It seems only natural for governing authorities to be worried about a financial community that can’t be fully controlled.

This also extends to exchanges and protection of people’s funds. While US-based exchanges have to be regulated, there are plenty of offshore platforms that don’t. Indeed, the cryptocurrency history has been filled with instances of exchanges suddenly shutting down and running away with people’s funds.

The most famous of such cases is the closure of the notorious exchange Mt.Gox. At the beginning of 2014, formerly the most prominent Bitcoin exchange in existence filed for bankruptcy due to technological problems and the apparent theft or loss of 744,000 of its users Bitcoins. That number made up about six percent of 12.4 mln Bitcoins in circulation at the time.

Bitcoin’s ability to be used semi-anonymously is another cause for concern. Even though every single transaction is recorded in the Blockchain, it is very easy for users to stay almost completely anonymous, as those records only contain the public keys and the amount of funds transferred.

Most of these concerns were voiced after a dark web market Silk Road gained mainstream-media attention, as Bitcoins were the only form of payment accepted there. The market was since shut down by the FBI, but the authorities are still worried about Bitcoin’s appeal among the traders of illegal goods and services. Moreover, it is feared that Bitcoin’s semi-anonymity and decentralized nature can be exploited in money laundering and tax evasion schemes.

Your opportunities depend on the role

Buying goods

In 2013, Bitcoin was classified as a convertible decentralized virtual currency by the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN). They have also issued a guidance, in which they stated that those who obtain units of virtual currency and use it to purchase goods are not considered money transmitters and are operating within the law.

So, buying well-natured goods and services with Bitcoins is completely legal. The cryptocurrency is accepted as a form of payment on several major and minor online marketplaces and service providers, including OverstockShopify, and OKCupid. Moreover, there are shops and restaurants all over the US where you can pay with Bitcoins.

Investing

According to the same guidance, investing in Bitcoin is also within the legal territory.  Many regulated US-based exchanges have to comply with the Anti-Money Laundering and Know Your Customer policies.  Because of that, those who wish to trade and invest in Bitcoin have to verify their ID and connect an existing bank account.

Although, the US Securities and Exchange Commission (SEC) has warned potential investors that both fraudsters and promoters of high-risk investment schemes may target Bitcoin users.

Mining

The FinCEN guidance states that users creating units of Bitcoins and exchanging them for flat currency can be considered money transmitters and might be subject to special laws and regulations that cover that type of activity.

However, to this day the laws have rarely, if ever, been enforced to crackdown on Bitcoin miners.

Accepting payments in Bitcoins (for business)

It’s legal for businesses both big and small to accept Bitcoins payments. Assuming, of course, that it’s a well-natured business that sells goods and services for regular currency and chooses to accept Bitcoin as another legal way to pay. Any business accepting Bitcoin payments is also required to pay taxes on income received through Bitcoin.

Bitcoin has been recognized as a convertible virtual currency, which implies that accepting it as a form of payments is exactly the same as accepting cash, gold or gift cards.

Taxation

According to a Virtual Currency Guidance, which was first released by the Internal Revenue Service (IRS) in 2014, cryptocurrencies like Bitcoin are to be treated as property instead of as currency and to be taxed as such. However, it isn’t as simple as it might sound.

For instance, if you buy something worth $300 with your Bitcoins, it means that you just sold an asset. You either made a profit or a loss on that sale, depending on the Bitcoin’s value when you bought it and when you sold it. Whether it counts as an ordinary or a capital gain, short or long term depends on the circumstances.

The regulation is not entirely clear, but the IRS is trying to crack down on reporting. In the year 2015, only 802 people paid taxes on Bitcoin profits. The IRS is apparently using special software to track down Bitcoin tax cheats.

A bipartisan bill, which calls for a tax exemption for transactions under $600, was recently introduced in the House of Congress. If it passes, it will make lives of small, day-to-day traders much easier. Until then, it is recommended to keep records of all Bitcoin-related activities.

When it comes to trading Bitcoins, the records kept must contain the same information as stock or forex brokerage statements: date, description, quantity, price and fees. If you’re mining, you might need to know when the Bitcoin proceeds were attained. Businesses accepting Bitcoins as a form of payment need to record reference of sales, the amount received in BTC and the date of the transaction. If sales taxes are payable, the amount due is calculated based on the average exchange rate at the time of sale.

BitLicense

BitLicense is a set of regulations regarding Bitcoin transactions put forward by the New York State Department of Financial Services (NYDFS) for Bitcoin companies operating in New York or serving NY residents. As of September 2017, two years after the regulation came into effect, only five licenses were granted, and the companies that managed to obtain them had to spend upwards to $100,000 in order to do so. Many companies decided to opt-out of serving New York residents, with Bitfinex exchange describing the requirements set forth by NYDFS as ‘extremely invasive,’ adding that they would compromise their user base’s privacy.

The license can be obtained through a process of application, which costs $5,000. Companies looking to obtain the license will need to have a compliance officer, responsible for overseeing the firm’s compliance with the regulations. Moreover, all other federal and state laws that apply to Bitcoin have to be obeyed. This includes compliance with Money Transmitter laws, Anti-Money Laundering and Know Your Customer policies. Such protections can get very expensive.

Regulators’ opinions

SEC — Securities and Exchange Commission

The Securities and Exchange Commission has been notably quiet on the subject of Bitcoins, especially compared to regulatory bodies in other countries. In 2014, they published an investor alert, in which they warned people that Bitcoin users can be targeted by fraudsters.

The SEC has recently investigated a cryptocurrency initial coin offering (ICO) called ‘DAO.’ which was hacked and about $50 mln worth of Ether coins were stolen. In this investigation, SEC focused primarily on whether DAO coins constituted security. The report concluded that investing money in a token, expecting a profit which derives from the managerial efforts of other people makes a cryptocurrency security and requires appropriate regulation.

However, SEC’s report focused entirely on Initial Coin Offerings, and Bitcoin is way past that. So, any regulations SEC is likely to impose, will most likely only concern newcomers to the market. Whether Bitcoin can be treated as a security depends on the particular transaction, but SEC has decided that any firm using Blockchain technology to trade securities would need to register as an exchange, Alternative Trading System (ATS) or broker/dealer.

FinCEN — Financial Crimes Enforcement Network

According to FinCEN’s guidance on cryptocurrency, ‘virtual currency,’ as they call it, is defined as a ‘medium of exchange that operates like a currency in some environments, but does not have all the attributes of real currency.’ The guidance only addressed convertible virtual currency like Bitcoin, which can either act as a substitute for real currency or has an equivalent in existing currency.

‘Users’ of virtual currency are not considered an MSB (Money Serving Business) under FinCEN’s regulations. This means that if you obtained Bitcoins to pay for goods or services, you are not subject to MSB registration, reporting and recordkeeping regulations.

In contrast, ‘exchangers’ and ‘administrators’ are considered money transmitters, and therefore are required to comply with FinCEN’s regulations. The guidance defines ‘exchangers’ as people engaged as a business in the exchange of Bitcoins and other digital currencies, while ‘administrators’ are engaged as a business in putting virtual currency into circulation.

In July 2017, in its first action against a foreign-located MSB operating in the U.S., FinCEN imposed a £110 mln penalty on the BTC-e exchange, arresting one of its operators and seizing the site’s domain.

CFTC — Commodity Futures Trading Commission

CFTC is an independent US Federal agency that looks after financial derivatives. In 2014, a CFTC Commissioner stated that the agency definitely has authority when it comes to Bitcoin, as they believed it can be classified as a commodity.

Recently, the agency released a primer, in which they stated that virtual currencies can be considered commodities or derivatives contracts, depending on the particular facts and circumstances. This resulted in an eight percent drop in Bitcoin’s exchange rate, as investors feared tighter regulations.

CFTC seems to have taken a pro-Bitcoin stance, recently granting LedgerX the right to create a regulated Bitcoin futures market. In September 2017, CFTC filed its first-ever charges against Bitcoin fraudsters. In a move welcomed by genuine Bitcoin investors, Gelfman Blueprint was charged with fraud, misappropriation, and issuing false account statements in connection with solicited investments in Bitcoin.

IRS — Internal Revenue Service

Even though IRS released general guidance on the taxing of digital currencies, many questions still remain unanswered. The agency further complicated things with its decision to tax Bitcoin as property, which means that even paying for a cup of coffee with the cryptocurrency will incur a tax.

According to the IRS regulations, buying goods and services with Bitcoin is exactly the same as selling an asset. If you spend your Bitcoins, it means that you’ve either made a profit or a loss, depending on a BTC’s exchange rate when you bought it and when you sold it.

In order to comply with the IRS regulations, it is recommended that you keep a record of all your Bitcoin-related transactions.

As only 0.04% of customers included crypto in their 2017 tax reports, the IRS has ramped up their hunt for Bitcoin tax evaders, having even formed a dedicated taskforce. However, while the IRS is closely monitoring Bitcoin and other cryptocurrency transactions in an attempt to get more tax dollars, there have been rumours about a possible future tax amnesty for Bitcoin users. Whether it will actually happen as well as when it will happen still remains to be seen.

Federal Reserve

The US Federal Reserve is the world’s most influential banking entity, as it controls the global reserve currency – the US dollar. They are very interested in digital currencies and the technology associated with them, having published thorough papers on both Bitcoin and Blockchain. The fact that a financial giant like Federal Reserve invested man-hours into understanding the concept of Bitcoin speaks volumes about how influential the currency is becoming.

However, the organization has repeatedly issued warnings about the risks associated with digital currencies. Recently, the Federal Reserve stated that they are keeping very ‘close attention’ to Blockchain, describing it as something that ‘could ameliorate or exacerbate traditional financial risks.’ A US Fed Governor was also quoted saying that digital currencies could make it easier to hide illegal activities.

Janet Yellen, the US Federal Reserve chair, was recently quoted saying that the Fed is currently researching into introducing its own digital currency. If that happens, the U.S. will join the crypto market with their own, official and state-controlled cryptocurrency.

FINRA — Financial Industry Regulatory Authority

The self-regulatory organization for U.S. brokers has been quite active in terms of defining Bitcoin, completing guides and issuing warnings for its clients.

What is interesting, is that in its report on Distributed Ledger Technology FINRA implied that the widespread use of Blockchain technology could impact the organization’s core business practices. Specifically, the way FINRA members self-regulate in the areas of Anti Money Laundering and Know Your Customer policies, asset verification, business continuity, surveillance, payments, and even record-keeping.

OCC — Office of the Controller of the Currency

In its 2016 paper, the office of the US Treasury proposed a possibility of moving forward with considering applications from fintech companies to become special purpose national banks (SPNBs). This initiative is set to provide companies that wish to become limited purpose digital banks with a unified federal regulatory regime. However, as of November 2017, there are still some significant political and legal uncertainties surrounding this initiative.

Moreover, the OCC released another optimistic paper in which it called for the formation of a ‘responsible innovation’ department. They are planning to launch offices in Washington, New York and San Francisco to spur the growth of emerging technologies, including digital currencies.

CFPB — Customer Financial Protection Bureau

The Bureau has issued a consumer warning about Bitcoin. The volatile exchange rates, possible lack of assistance from exchanges in case of lost funds, and the threat of hacking and scams were cited among potential issues. Besides that, the CFPB has also acknowledged Bitcoin’s benefits.

NFA — National Futures Association

The NFA is an independent self-regulatory organization for the US futures market. Every participant in the futures market, including those trading in Bitcoin, is required to have the NFA membership.

Organizations which develop legislation

Similarly to most other governmental organizations, the US Senate and The House of Representatives haven’t been very local in regard to Bitcoin and other digital currencies.

In August 2013, the US Senate sent out letters to various law enforcement agencies, asking about potential risks and threats in relation to cryptocurrencies. Most of the agencies responded with a cautious acknowledgment of legitimate uses of Bitcoins.

Since then, the topic of cryptocurrencies was often discussed both in the Senate and The House of Representatives. In 2016, The Congressional Blockchain Caucus was formed in order to bring all congressmen up to speed on the subject of Bitcoin and Blockchain in hopes of creating future laws that will affect that particular sector.

In the Summer of 2017, US lawmakers drafted a bill that is set to protect cryptocurrencies from government interference. If the bill goes through it will provide protection to certain cryptocurrencies that comply with specific minimum requirements to prevent them from being used in illegal business practices. The bill is expected to be filed in the Fall of 2017.

Countries in which Bitcoin is banned

Bolivia

In 2014, El Banco Central de Bolivia outright banned any currency that wasn’t issued by or regulated by the government. The bank specifically mentioned Bitcoins as well as some other digital currencies, but the ban extends to all cryptocurrencies.

Bolivian authorities have recently cracked down on cryptocurrency use, labeling it a pyramid scheme and arresting 60 people. An accompanying statement emphasized that the action was necessary to remind the population that any kind of digital currency is prohibited.

Ecuador

The Ecuadorian government has banned Bitcoin and all other digital currencies, due to the establishment of a new state-run electronic money system. The project is designed to be directly tied to the local currency and is controlled by the government.

Vietnam

In 2014, the Vietnamese Central Bank issued a statement in which it explicitly prohibited the population to use Bitcoins within the country. This was done as a precautionary measure with the faith of digital currency set to be decided later by the Prime Minister.

According to reports, in August of 2017, the Vietnamese Prime Minister has authorized a plan that could potentially lead to the official recognition of Bitcoin and other digital currencies as a form of payment by 2018.

However, in October 2017 Vietnamese government made another complete turnaround and outright banned the use of digital currency in the country. It was also announced that starting early 2018 anyone caught using digital currencies will face a fine.

Countries in which Bitcoin is legal

Australia

Initially, Australians were potentially subject to goods-and-services tax when they either purchased or spent a cryptocurrency. Often, consumers could effectively bear this tax twice: once when they purchase the cryptocurrency and once again when they’ve used it in exchange for goods and services subject to that tax.

Just recently, in a move aimed at paving the way for more potential fintech investments into the country, the Australian government has finally provided a legislative end to the double taxation of Bitcoin and other digital currencies.

Bulgaria

Bulgaria was the first European Union member state to officially recognize Bitcoin as a currency, instead of treating it as a gold-like commodity.

Canada

Bitcoin is currently classified as an intangible asset. It is expected to be regulated under Anti-Money Laundering and Counter-Terrorist Financing laws. This provision is yet to become active, but when it is, ‘dealers in digital currency’ will be regulated as Money Services Businesses.

China

In 2013, the People’s Bank of China (PBOC) banned all financial institutions from handling Bitcoin-related transactions, prohibiting pricing in, buying, and selling of Bitcoins. Trading Bitcoins by individuals is still legal in China.

The Chinese government has been cracking down on cryptocurrencies use in their country, urging multiple exchanges to stop withdrawals, without providing any lawful paperwork. In September 2017, all Chinese virtual currency exchanges were urged to stop trading by the end of the month in order to remain compliant with the regulations.

Additionally, Chinese regulators introduced bans on cryptocurrency exchanges and ICOs. However, while those bans were undoubtedly harsh and unprecedented, they weren’t able to completely stamp Bitcoin out of China. In their latest attempt to do so, Chinese regulators will begin adding both onshore and offshore platforms related to virtual currencies and ICOs to the Great Firewall.

Estonia

The Estonian Ministry of Finance has ruled that there are no legal obstacles to use Bitcoin and other similar cryptocurrencies as a payment method. Traders must identify the buyer when establishing a business relationship or if the buyer acquires more than €1,000 worth of the currency a month.

Finland

The Finnish Tax Administration decided to treat Bitcoin transactions as private contracts equivalent to contracts for difference for tax purposes. If you’re buying goods with Bitcoins or converting BTCs into flat currency, any increase in price will be taxable, while losses are not tax-deductible. Mined Bitcoins are considered earned income.

Finnish Central Board of Taxes has gone against the conventional EU approach and classified all services around Bitcoin and other similar digital currencies as financial services, making them VAT exempt.

France

In 2014, the French Ministry of the Economy and Finances has outlined regulations to be put in place for financial institutions and users of digital currencies. The regulations required Bitcoin distributors to limit the level of anonymity by identifying and verifying their users. The treatment of digital currencies is required to be clarified for tax purposes as well, with currencies becoming subject to capital tax gains. A threshold of €5,000 was proposed on the margin tax to allow the population to try, invest and develop business with Bitcoin before paying tax.

Germany

In Germany, Bitcoin is recognized as private money. This decision enables users of Bitcoin to continue using it without any interference from the government and gives the authorities an opportunity to tax the profits of companies using the digital currency.

Iceland

According to a 2014 statement from the Central Bank of Iceland, transactions with Bitcoins and other digital currencies are subject to restrictions.

In 2017, the Central Bank introduced a new set of rules, according to which wide and general exemptions were granted from the previously imposed restrictions.

Israel

As of 2017, the Israel Tax Authorities view Bitcoin as a taxable asset, instead of currency or financial security. According to this policy, every time a Bitcoin is sold, the seller has to pay a capital gains tax of 25 percent. Miners and traders are treated as businesses, which makes them subject to corporate income tax and a 17 percent VAT.

Just recently, it was reported that Israel is to begin taxing Bitcoin and other cryptocurrencies as property. This means that it will be taxed by the capital gains tax, which in Israel stands at 25% for private investors, while a marginal rate for businesses stands at 47%. As cryptocurrencies are considered an “intangible asset”, private investors won’t have to pay VAT, while the businesses will still be subject to VAT.

Japan

Japan is one of the very few countries where Bitcoin is recognized as a legal form of payment. In 2017, the tax on Bitcoin trading was eliminated and Japanese financial authorities started issuing cryptocurrency exchange licenses.

Jordan

According to the Central Bank of Jordan’s current policy, banks, exchanges, financial companies and payment service companies are prohibited from dealing in Bitcoin and other digital currencies. Both the Central Bank and the government of Jordan issued warnings discouraging people from using Bitcoins, but small businesses and merchants still accept them.

Mexico

Mexican parliament is currently considering a legislation aimed at regulating the country’s rapidly-growing financial technology sector, which includes Bitcoin and other cryptocurrencies. The legislation proposes a clear set of rules for fintech companies, aimed at reducing costs and driving competition in the sector. It is also set to ensure financial stability and prevent money laundering and financing of extremists.

Slovenia

According to the Slovenian Ministry of Finance, Bitcoin can neither be considered a currency, not an asset. Bitcoin transactions are not subject to capital gains tax, but Bitcoin mining and businesses selling goods and services for the digital currency are taxed.

Sweden

When it comes to acceptance of Bitcoin and other digital currencies, the Swedish jurisdiction is one of the most favorable in the world. The Swedish Financial Supervisory Authority has publicly proclaimed digital currencies like Bitcoin a legitimate way of payment. Moreover, the Swedish tax authority has even decided to tax Bitcoin mining depending on how successful it is.

Certain businesses, which are mainly exchanges, are required to file an application for a license and comply with all the regulations applicable to more traditional financial service providers, such as Anti-Money Laundering and Know Your Customer policies.

Countries in which Bitcoin is not regulated

Belgium

Even though the Minister of Finance indicated that there is no immediate need for the government to intervene in the Bitcoin system, there have been talks about a new legislation which is set to strengthen government control over Bitcoin and other cryptocurrencies.

Brazil

Back in 2014, The Central Bank of Brazil issued a statement concerning cryptocurrencies, in which it stated that Bitcoin and other digital currencies are not to be regulated. A few years later, the President of the Central Bank went on to describe Bitcoin as a pyramid scheme.

China: Hong Kong

The Chief Executive of Hong Kong Monetary Authority (HKMA) deemed Bitcoins a virtual commodity, stating that the HKMA will not regulate the cryptocurrency.

The Secretary for Financial Services and the Treasury of Hong Kong has said that the existing laws don’t directly regulate Bitcoins and other similar digital currencies, but provide sanctions for unlawful acts involving those currencies, such as fraud and money laundering.

Colombia

In 2014, Superintendencia Financiera de Colombia stated that the use of Bitcoin is not regulated. Just recently, the same governing body released another statement, in which it said that the Colombian government still doesn’t authorize or legalize Bitcoin for financial transactions. However, as of today, the country has no plans to make it illegal.

Cyprus

The use of Bitcoins and other cryptocurrencies is not regulated in Cyprus.

Denmark

Denmark’s Financial Supervisory Authority (FSA) declared that Bitcoin is not a currency and stated that it does not fall under its regulatory authority.

Greece

There are no specific regulations regarding Bitcoin and other digital currencies in place in Greece.

India

According to a statement made by the Deputy Governor of the Reserve Bank of India, IRB neither regulates nor supports Bitcoins. Although Bitcoin is not banned in India, it is forecasted that it will not become fully legal without a suitable organization to monitor all cryptocurrency-related activities.

In the end of 2017, India’s Ministry of Finance compared Bitcoin and other cryptocurrencies to ponzi schemes and warned investors of the potential dangers.

Indonesia

As of today, Indonesian authorities haven’t outlined and detailed policies of regulating or banning the use of Bitcoin.

However, the Bank of Indonesia has recently issued a statement warning potential investors against of selling, buying and trading cryptocurrency. The statement went on to state that any virtual currency is not legitimate within the country.

Lebanon

The Bank of Lebanon was the first in the region to issue a warning about Bitcoin in 2013. Since then, there has been little to no action from the country’s officials regarding digital currencies. The only notable exception being the Lebanese Central Bank’s Governor criticizing Bitcoin and other digital currencies. He labeled them unregulated commodities, stating that they should be prohibited.

Lithuania

The Central Bank of Lithuania has issued a statement, warning the population of the potential risks involving operations with digital currencies. The main sentiment was that Bitcoins are not regulated by the Lithuanian or European authorities. The statement also mentioned the possibility of regulations, but no action is likely to take place.

Malaysia

In 2014, Malaysia’s Central Bank announced that it doesn’t consider Bitcoin a legal tender and it has no intentions to regulate it.

However, Bank Negara is currently shaping its new stance on cryptocurrencies. Despite an overall positive attitude toward Bitcoin, there are rumors that the Malaysian government might still ban cryptocurrency. The decision is set to be made by the end of 2017.

New Zealand

According to the Reserve Bank of New Zealand, non-banks don’t need their approval for operations that involve storage and transfer of Bitcoins and other digital currencies as long as they don’t involve the issuance of physical money.

Russia

In 2016, Bitcoins were deemed ‘not illegal’ by the Federal Tax Service of Russia.

However, since then Russian Central Bank stated that it is ‘categorically’ against the regulation of digital currencies as real money, as a means of payment for goods and services and against equating them with foreign currency.

Later, President Putin condemned Bitcoin and called for a ban of all digital currencies and the Deputy Finance Minister told reporters that cryptocurrencies are very likely to be outlawed. [replace the rest] However, Russian regulators have completely changed their minds since, with reports emerging that Bitcoin will be legal, while mining will be regulated. Since then, the Russian Ministry of Finance was cited saying it will legalize cryptocurrency trading on “official” exchanges.

Singapore

The Monetary Authority of Singapore (MAS) has previously issued statements of no interference policy and a warning to potential users of Bitcoins and other digital currencies. In a recent interview, a MAS official stated that the Central Bank still has no plans of regulating the cryptocurrencies, but it will keep an open mind. He also established the necessity of introducing Anti-Money Laundering control in the near future.

The Inland Revenue Authority of Singapore has issued a series of tax guidelines regarding the use of Bitcoin, according to which BTC transactions might be treated as a barter exchange and taxed accordingly. Businesses dealing with Bitcoin exchanges will be taxed based on their BTC sales.  

Thailand

Initially, Bank of Thailand discouraged the population from using Bitcoins, warning potential investors of the risks involved. But it has since softened its stance, ordering a study on the cryptocurrency.

According to a ministerial regulation, Thai Bitcoin exchanges are required to have a Thailand Business Development Department e-commerce license and only facilitate exchanges of digital currencies for Thai Baht. There are also Know Your Customer and Customer Due Diligence policies in place.

The Netherlands

Digital currencies such as Bitcoin don’t currently fall within the scope of the Act of Financial Supervision of the Netherlands.  

Ukraine

The National Bank of Ukraine has recently published a statement, in which it clarified that the Ukrainian hryvnia is the only one currency that can be legally used in the country. The Bank also stated that the status of Bitcoin in Ukraine is further complicated by the lack of a unified classification of the currency in the world and it does not publicly support any of the definitions made in other jurisdictions.

United Kingdom

The UK government has stated that Bitcoin is currently unregulated and is traded as ‘private money’ for most purposes, including VAT. This means that no VAT is imposed when Bitcoin is exchanged for sterling and other currencies. However, suppliers of any goods and services sold for Bitcoin and other digital currencies need to pay VAT. Profits and losses on digital currencies are subject to capital gains tax.

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Cryptocurrencies – The Future of Money?

In 2009, when the Bitcoin whitepaper came out, the idea was clear: there was a need to create a decentralized currency system that would free the ‘masses’ from the firm grip of central banks and other financial institutions.

Bitcoin was born, becoming the currency of the people, effectively making fiat the currency of governments. Almost a decade later, Bitcoin has surged in global popularity and has given birth to over 1,500 other alternative blockchain-based coins.

The digitization of money is inevitable, and ironically, governments (who have been the biggest threat to Bitcoin and other cryptos) are now looking into issuing their own cryptocurrencies

National Cryptocurrencies

If the first decade of cryptocurrency has been about adoption and regulation, then the trend of the coming decade promises to be about national cryptocurrencies.

Like other cryptos, national cryptocurrencies are based on the distributable ledger technology (blockchain), but they are issued and backed by national governments.

The only issue with national currencies is decentralisation because naturally, governments are reluctant to lose control of the monetary system.

But while national cryptocurrencies defeat one of the major appeals of blockchain technology, they also pave the way for a more efficient monetary environment.

Venezuela and Cryptocurrencies

In appreciation of the great advantages and potential of the blockchain technology, some central banks are on the verge of releasing their national cryptocurrencies, while many others have set definitive deadlines for their projects.

Venezuela though was the first to take action, releasing the Petro Crypto in February 2018. The Petro cryptocurrency was introduced to minimise the impact of US sanctions on the country as well as to enhance access to international funding and supplement the free-falling Venezuelan bolivar currency.

The Petro was designed to be backed by Venezuela’s abundant reserves of natural resources, such as oil, gas, diamonds, and gold.

The Petro received a national backing in May 2018 when the country’s President announced that a youth bank would be established which will be exclusively funded using the national cryptocurrency.

Iran and Cryptocurrencies

Another country that has been inspired by Venezuela is Iran, which coincidentally, also faces sanctions from the US that threaten to cripple its resource-dependent economy.

The Central Bank of Iran announced two months ago that it was finalising plans to launch its own cryptocurrency backed by Iranian rials.

The US sanctions will mean that Iran is cut from international payment systems, but the cryptocurrency, which utilises the blockchain technology, will help the country facilitate the transfer of funds throughout the world.

Other countries that are in advanced stages of launching their own cryptocurrencies include Japan, Sweden, Russia, Israel, Tunisia, Senegal and Estonia.

The Future of Cryptocurrencies

Clearly, national cryptocurrencies will be a predominant trend in the near future. But this comes with some pros and cons. In terms of currency distribution, cryptocurrency is safe and easier to distribute than traditional cash.

National cryptocurrencies will also allow for the faster settlement of payments and potentially, even much cheaper transactional costs. Still, a blockchain based digital currency carries with it some disadvantages.

To launch a national cryptocurrency would require significant investment, which may not be a justifiable use of taxpayer money. Another disadvantage would be slow payment authorisation, something that is continually being innovated upon in the crypto world; but there would not be such time freedom with a national cryptocurrency that will be used widely. The inefficient use of electricity for small payments is also another factor to consider.

Final Word

Ultimately, central banks are mandated to ensure financial stability by the efficient use of their monetary policy. National cryptocurrencies only make it easier for central banks to achieve this because monetary policy will directly be transmitted to firms and households.

As blockchain technology continues to improve, it only means that national cryptocurrencies will continue to solve the current constraints of the conventional monetary system. Also, check out our post on how cryptocurrency works in general.

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What Top 5 Cryptocurrencies To Invest In 2021?

Best Cryptocurrency Investments in 2021

Planning to invest in cryptocurrencies in 2021? Want to stay ahead of the crypto trends? We’ve made it easy with our complete guide to the top 5 cryptocurrencies to invest for 2021. 

Beginners have difficulties finding the best cryptocurrency to invest in 2021. We’ve all been in this situation, so don’t worry! we understand how confusing it is when looking for new cryptocurrency investments.

By the end of this guide, you’ll know how to find cryptocurrencies to invest in 2021.

Now that we’ve almost ended Q4 2020, many cryptocurrency investors are starting to look forward to 2021. Being able to predict new cryptocurrency trends is a key skill for any trader. But with more than 6,000 different altcoins on the market, how can you tell which ones will be the best cryptocurrency investments in 2021? 

The future of crypto is never certain, so making cryptocurrency predictions can be tricky — especially since the periods of volatility in the wake of the coronavirus pandemic. However, the good news is that some crypto experts have said 2021 could be the year of crypto, thanks to market recovery and developments such as the long-awaited Ethereum upgrades. 

In this article, we’ll be explaining which cryptos you should consider adding to your portfolio in 2021. Whether you’re new to cryptocurrency investing or an experienced investor, read on to find out the top 5 cryptocurrencies to invest in 2021. 

Are you ready to find out about the next cryptocurrencies to invest in 2021? Let’s get started!

What Are The Top Cryptocurrencies to Invest in 2021?

Below you will find the best 5 cryptocurrencies to invest in 2021 and beyond.

1. Bitcoin (BTC)

Are you asking yourself, “should I invest in Bitcoin? is the value of Bitcoin already at its peak? or is Bitcoin the best cryptocurrency to invest in 2021?. the following info should help you to decide if investing in Bitcoin Cryptocurrency is a good idea for you.

It should come as no surprise that Bitcoin is at the top of our list of cryptocurrencies to invest in 2021. This so-called ‘king of cryptocurrencies’ has dominated the market since its launch in 2009 — and there’s no sign that its status will change soon. In fact, cryptocurrency predictions suggest that Bitcoin could be set for its strongest year yet. 

According to Ryan Selkis, the CEO of the cryptocurrency tracking site Messari, Bitcoin and Ethereum will retain their top positions when it comes to market capitalization. This is in contrast to a variety of other assets, which he predicted will lose their ranking in the top 10 cryptocurrencies in 2021.  

After its market value took a tumble in March 2020, Bitcoin made a rapid recovery and both its price and market cap have skyrocketed ever since. From lows of $4,721 in late March, when coronavirus restrictions started coming in around the world, the cryptocurrency had reached prices of approximately $9,000 by June and July. At the time of writing in late September 2020, its price is now $16,299. 

This is a healthy recovery rate, with its price more than doubling in just over six months. While this rate of change isn’t unusual for a cryptocurrency that’s famous for its volatility, it should be encouraging for any Bitcoin investors who were worried by the sudden crash in March. 

So what’s next? Some experts believe this recovery is only the beginning. In July, a chart associated with Citibank predicted that the price of Bitcoin could skyrocket to an incredible $120,000 in 2021! This is 6 times its previous highest price, $20,000, which it reached in 2017. 

So, is Bitcoin your next cryptocurrency to invest in 2021?

Many experts think Bitcoin could be one of the best cryptocurrency to invest in 2021.

2. Ethereum (ETH)

If Bitcoin is the king of cryptocurrency, then Ethereum could well be the heir! This blockchain platform is the world’s major cryptocurrency other than Bitcoin and has maintained a strong market cap ever since its release in 2015. At the time of writing, its market cap is $51,507,291,691.

Despite the uncertainties surrounding the coronavirus pandemic, which shook the performance of almost every crypto in late March, Ethereum has been strong throughout 2020. If you’re looking for top cryptocurrencies to invest in 2021, it should therefore be a serious contender.

In early September, the price of Ethereum hit $480 — its highest price of 2020. There are two key factors behind this surge in value. One is the growth of decentralized finance (otherwise known as DeFi). The Ethereum platform supports many of the cryptos which are driving the DeFi sector, such as Chainlink (LINK), Wrapped Bitcoin (WBTC), and Maker (MKR). In fact, Ethereum has processed $13.5 billion worth of decentralized exchanges in 2020 alone — up from under $3 billion in 2019! 

The second factor which secures Ethereum’s place on our list of top cryptocurrencies to invest in 2021 is the launch of Ethereum 2.0. This eagerly awaited upgrade is due to be complete by the end of 2020 and will make Ethereum far more efficient. Once it’s able to process more transactions more quickly, we could see its price explode. 

3. Litecoin (LTC)

With a price of just $67.56, Litecoin might not be the most bullish crypto on this list. But with a market capitalization of $4,451,393,965 and strong growth on the radar, it’s worth considering if you’re planning to start cryptocurrency investing in 2021. 

Our list of what is the top cryptocurrency to invest in 2021 cannot be complete without Litecoin. It showed strong performance in 2017 with a growth of more than 8000%.

Although some investors see Litecoin as the skinny cap to Bitcoin’s full-fat cappuccino (it was launched in 2011 and is generally seen as a Bitcoin spinoff), it’s a mistake to dismiss this crypto outright. Not only is it a lot faster than Bitcoin, taking just 2 and a half minutes to process a block as opposed to 10 minutes — it’s also unveiled some exciting developments throughout 2020. 

The launch of the role-playing game (RPG) LiteBringer, which runs on the Litecoin blockchain, has caused a surge in transactions. According to the Litecoin Foundation, LiteBringer caused the number of transactions to triple in a week, with more than 75% of them now caused by the game. This performance is so encouraging that the platform CoinSwitch has predicted the price of Litecoin could reach $600 in 2021. 

The last word, Because of Litecoin close connection to Bitcoin, Investors are very interested in Litcoin, and that is why Litecoin is listed in our top 10 cryptocurrencies to invest in 2021 and for the next cryptocurrency to watch.

4. Bitcoin Cash (BCH)

First launched in 2017, Bitcoin Cash quickly hit the radar of anyone who’s interested in cryptocurrency investing. This peer-to-peer electronic cash system was launched as a scalable branch of the original Bitcoin, after traders raised concerns over Bitcoin’s scalability. It’s now the world’s sixth largest cryptocurrency by market cap, at $4,630,146,203. 

Although predictions for the price of Bitcoin Cash vary, the cryptocurrency trading platform StormGain has predicted that it will rise to $500 within the next 5 years. If this is the case, then 2021 could be an excellent time to add Bitcoin Cash to your portfolio as far as the best cryptocurrency to invest goes!

5. TRON (TRX) 

TRON was founded in 2017, originally on the Ethereum network. It’s now switched to an independent blockchain platform and uses a proof-of-stake algorithm to process transactions. With a current market cap of $1,825,286,288 and a price of $0.026, why could TRON be one of the top cryptocurrencies to invest in 2021? 

 As more organizations start to adopt the TRON blockchain platform, the value of TRX will increase. It currently hosts more decentralized apps (dApps) than Ethereum, leading many investors to speculate that TRON has a bright future in 2021. The general consensus is that the price will fluctuate throughout next year, but according to Coinpedia, it could hit highs of $0.4 — making it a strong potential cryptocurrency investment opportunity in 2021.

Tron did have some notable price swings over the past years but has recently been stabilizing. If you’re looking into this coin as the best cryptocurrency to invest in 2021, make sure to do some research, and follow the news.

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Different coins of crypto currency on a dark background

How to Invest in Cryptocurrency With 5 Simple Steps

A new form of investment has been stirring up the web zone these days. We hear the terminologies (which often sound very complicated with all its jargon) like cryptocurrency, online investment, or digital wallet. We cannot help but wonder if this is an excellent money-making venture for us. Others are even curious about how to invest in cryptocurrency since some people claim that they are earning from it.

This article will delve into the basics of investing in Bitcoin as it is the most popular cryptocurrency to this time being. Investing in cryptocurrencies – or investing per se – requires extensive researches and continual practice. We zero in on what Bitcoin is and if it is worth investing in this year.

What is Bitcoin?

Bitcoin is a digital currency – meaning there are no physical coins. You purchase this on a universal system that controls and tracks it. There is no regulating body like a government, for instance, that controls it. Just imagine that it is a system with humongous accounting books that record who owns what and how much owns what. Coins can be bought in a matter of minutes. Presto! You are a viable investor.

To reiterate, Bitcoin is not a physical tender. So the question is: how do we buy them? A primary method is to buy from a Bitcoin exchange or invest in a fund. If you are interested, try to learn more about “Satoshi” and get a free wallet app (this will help in understanding the necessary procedure). Remember that you should never invest significant amounts in something you do not fully understand.

Often, we are skeptical when making simple purchases online. This is even the case when there is a physical exchange (product or service). What more for investing online digitally! Bitcoin and investing in Bitcoin is legal unless you partake in scamming or coin mining. Any form of investment is healthy and encouraged.

How to Invest in Cryptocurrency

Assuming that you have learned and researched what Bitcoin is really about. You may now start buying Bitcoins. Keep tabs on these requirements that you need to prepare and take note before purchasing.

1. Get a digital wallet. Now you know that Bitcoins are not coins; so digital wallets are not leather wallets. They are online services that allow electronic transactions. It is used for purchases using a computer or a smartphone. Your bank account will also be linked to this digital wallet.

2. You will need to verify your identities through the wallet. You should secure personal documents like passport, driving license, or social security number during verification.

3. As this is the digital world, hackers may pose a critical problem. Transact only insecure networks.

4. You will also need a Bank Account, debit card, or credit card to link. These will fund your transactions.

5. Visit Bitcoin exchanges from online market places where you can exchange conventional currency to Bitcoins.

Is investing in cryptocurrency worth it?

Well, for one, the market is still young, so there is an expectation that prices will go higher. Cryptocurrency is also the new pink. This trend-setting investing is seen to be the medium of exchange in the future – Forbes said.

Although you will stumble upon many pros and cons in this kind of investment, when you start digging for knowledge about cryptocurrencies, its ten years of existence and operation cannot be denied. It is still in the trend this year. When proper timing on buying and selling is mastered, you can often buy low and sell high.

Now that you know how to invest in cryptocurrency, this will no doubt make you think that it is an interesting way to make money.

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Nicaragua: Reckless COVID-19 Response

Calls for Mass Gatherings; No Quarantine or Travel Restrictions

A woman holds a sign that reads “Love in Times of Covid-19” during a government-sponsored march in Managua, Nicaragua, on March 14, 2020. © 2020 REUTERS/Oswaldo Rivas

(Washington, DC) – Nicaraguan President Daniel Ortega’s administration has responded to the COVID-19 pandemic with tactics that blatantly contradict global health experts’ advice and put people’s health and lives at risk, Human Rights Watch said today.

Ortega is the only Latin American leader who has not made a single public announcement on how his government would address the pandemic. Vice President Rosario Murillo, Ortega’s wife, told Nicaraguans to remain calm and continue working. The authorities have encouraged attendance at massive rallies and school and adopted only voluntary quarantine measures for people arriving from abroad.

“While the world faces the most serious pandemic in a century, President Ortega is nowhere to be seen and his government is recklessly failing to put in place the basic preventive measures recommended by public health experts,” said José Miguel Vivanco, Americas director at Human Rights Watch. “Ortega’s failure to take this crisis seriously puts the lives and health of Nicaraguans at risk.”

According to the government’s official tally, Nicaragua has 7 confirmed cases of COVID-19 and has had 1 death. But local health professionals said the total number is unknown and may be higher due to a lack of comprehensive testing. Doctors in hospitals across the country reported sending multiple “suspicious cases” for testing at a Health Ministry facility, Conchita Palacios, but said that it was maintaining tight control over information and had not provided any public statement about the number of tests conducted or the results. One doctor reported an abnormal rise in pneumonia cases, which might also point to broader spread of the virus.

On April 6, the Health Ministry rejected Bishop Rolando Álvarez’s proposal to implement a COVID-19 prevention plan that included telephone consultations with doctors and eventual treatment at six locations throughout Nicaragua.

During its 2018 crackdown on dissent, the Ortega administration fired at least 400 doctors, nurses, and other health workers from several public hospitals in apparent retaliation for providing care to victims of protest violence. During the crackdown, security forces and armed pro-government groups killed hundreds of people and injured thousands. The security forces have arbitrarily arrested and tortured protesters, threatened and harassed journalists and human rights defenders, and forced the closure of independent news outlets and non-governmental organizations.

In a document obtained by local media in mid-March, the Health Ministry predicted that the number of COVID-19 cases could rise to over 32,500 and the number of deaths to 813 in a 6-month period. Such numbers could cause the collapse of the already frail health care system.

Nonetheless, the Ortega government has not taken any emergency measures in response to the pandemic and has kept schools open and allowed church services and events for tourists. Vice President Murillo has encouraged families to attend Easter festivities, although the Nicaraguan Episcopal Church and bishops advised vulnerable people to stay home.

Local sources have also reported that the government is discouraging Nicaraguans, including health workers, airport staff, and policemen, from wearing masks, and one activist said that pro-government groups have harassed those seen wearing them.

On March 14, Vice President Murillo organized a national march to show solidarity with those affected by the virus, calling it “Love in the Time of COVID-19.” Neither Murillo nor Ortega was present, but the march drew thousands of political supporters and public workers to the streets, despite World Health Organization warnings against mass gatherings.

The march followed Murillo’s announcement that the government would not institute a quarantine or block its borders to travelers. On March 23, the Health Ministry recommended a voluntary quarantine for any traveler arriving from a country with COVID-19 cases, indicating a slight change in the government’s position. But the government has not required any other social distancing measures. Nicaragua is the only country in Latin America to maintain open borders, after Cuba closed its borders on March 31. Every country in the region has reported cases, with Mexico and Panama each reporting over 2,000 and Honduras and Costa Rica reporting hundreds.

After learning of the first case of the virus on March 18, the Nicaraguan government deployed government workers and volunteers to people’s homes to “raise awareness” of COVID-19. The Education Ministry has also told teachers to go house-to-house to convince parents to continue sending their children to school.

On April 7, the Pan American Health Organization expressed concern about Nicaragua’s response to the pandemic, calling its prevention and control measures “inadequate” and urging authorities to follow the health organization’s recommendations to save lives.

In a statement, the Inter-American Commission on Human Rights said that Nicaragua should recognize the “extreme gravity” of the COVID-19 situation and carry out measures to protect public health. In particular, the commission urged Nicaragua to ensure people’s access to public information and explore options to release prisoners to house arrest or other alternative measures, prioritizing those with serious health conditions who may be at increased risk if there were an outbreak in prisons. The Commission also pressed for the release of the remaining 60 people detained in the context of the 2018 crackdown. On April 8, the government released 1,700 inmates under the pretext of responding to COVID-19, but did not include any of those detained in the context of the crackdown, local sources said.

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Managing Your Business Finances

To anyone not directly involved in finance, even the most basic financial management concepts can evoke a feeling of panic!

However, when you decide to start a business, you will need to keep a close eye, and a hand, on your business’s finances, if you expect any measure of long-term success.

Simply put, It’s your responsibility, as a business owner, to have a handle on your finances!

Here are a few concepts, simplified, that should help you to understand and manage your business’s finances:

Income

Income sometimes also referred to as gross income, turnover, or revenue, is the total amount of sales made, before any deductions are factored in.

Keeping track of this is a simple matter of keeping records of your sales. Simple. Moreover, by preparing and keeping records of invoices, it is a simple matter to calculate your sales. Some companies, particularly those engaged in long term contracts, issue a proforma invoice at the start of a project, in order to get the income “on the books.” A final invoice is then submitted at the end of the project.

Expenses

Expenses are almost as simple as income. Basically, your business has two kinds of expenses – direct expenses (salaries or payments to contractors) and indirect expenses – your overheads or running costs.

Profit

This is what we are all in business for – profits. Breaking even is a milestone, but for a business to grow, it needs to make a profit.

The simplest form of calculation would be sales less direct expenses. This figure is known as gross profit. To calculate your business’s net profit, you need to deduct your indirect expenses from the resulting figure.

Finally, to calculate the actual profit your business is making, you need to deduct income tax from this last figure.

If you have an amount left, you have made a profit. Also fairly straightforward when you think about it!

Assets and liabilities

Assets of a business are divided into two categories: so-called liquid, or short-term assets, and long-term assets. Generally, short-term assets are your bank balance (the cash you have on hand) and account receivable, or the money your clients still owe you.

Long-term assets are purchases, such as buildings, vehicles, or equipment, that are the property of the business, and that are retained for a long time. Note that assets are subject to what is known as “depreciation” meaning that they decrease in value over time. This decrease should be factored into your running costs or indirect expenses.

Liabilities, on the other hand, are any amounts of money that your business owes, either short or long term. Vehicle and asset finance falls under this category, as do loans, credit agreements with supplier’s etcetera.

Capital

Capital is the money that you put into, or need to put into, your business in order to start and run in.

Cash Flow

The last concept, and probably the most critical, is cash flow. This is the in and out flow of money in your business, and keeping a tight grip on this is probably the most important thing you will do for your business!

Consider this: your business is set to make a $ 5 000 profit, on paper. However, your suppliers require 30-day payment, and your client only pays you after 60 days. Essentially, if you owe your suppliers $ 2 000, you will need to carry this expense for a full 30 days after it becomes due, before you recoup it – something few new businesses can afford to do!

So keep a firm grip on cash flow, as well as making sure you understand and monitor your firm’s financial status, and you should be fine. Ignore it, and you could be in trouble!

Our expert consulting teams can help by providing custom guidance to help alleviate the components of your business that are holding you back from doing what you do best. Our teams can also help you build your business and plan for future goals.

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