Events responsible for the LUNA cryptocurrency crash

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In recent days, the cryptocurrency ecosystem has become a target of a ruthless but well-thought-out attack.

According to guesswork and speculations, the popular algorithm stablecoin TerraUSD (UST) has fallen victim to a coordinated attack in which an attacker instantly sold UST stablecoin worth several hundred million dollars on the Binance and Curve platforms. This caused the UST to deviate from the peg to the US dollar, which in turn caused a huge panic in the entire cryptocurrency market. But let’s take a closer look at the whole problem.

TerraUSD (UST) is the best known and most powerful stablecoin built on the Terra blockchain. Following its successful launch, UST issuance began in September 2020. The UST stablecoin is value-linked to the US dollar at a 1:1 ratio. There is no particular entity or firm behind its issuance as the UST’s monetary stock is controlled algorithmically. The stablecoin market supply is determined based on the issuance or burning of the LUNA token.

The system relies on traders who burn or create tokens to make a profit to maintain its peg to the US dollar. This process works by pairing UST with sister cryptocurrency Luna. Each time a UST token is issued, the equivalent of $1 in Luna tokens is burned and vice versa. So when the UST price drops below $1, traders are asked to burn the UST, for which they will receive the Luna token at a discounted price. As the UST supply falls, the price should theoretically return to $1 while maintaining a fix.

However, this did not happen in the current situation. According to speculation, the attacker’s plan was well thought out and coordinated.

About 10 minutes after the LFG (Luna Foundation Guard), a non-profit organization dedicated to supporting the Terra ecosystem and the UST stablecoin withdrew part of the $150 million liquidity from Curve Finance in preparation for 4pool (a pool consisting of USDT, USDC, FRAX and UST on Curve Finance), the attacker immediately took action.

Source: twitter

The attacker initially accumulated $3 billion in bitcoin through the so-called OTC trades and exchanged $1 billion in bitcoin for stablecoin $UST. In this way, he paved the way for the liquidation of the UST on Curve Finance and, at the same time, for the shortening of bitcoins, knowing that the LFG would sell its bitcoins to protect the stability of the stablecoin. The attack was ready for launch.

The attacker withdrew all available UST liquidity from Curve Finance, for which he needed about $350 million. He then began massively selling the accumulated $UST on the Binance Stock Exchange, creating a modest bid shock, resulting in a small deviation of $UST from the value of one dollar. The Internet and social networks began to spread information almost immediately that one entity had withdrawn all available liquidity from the UST pool on Curve Finance, which provoked a rapid negative reaction from traders. A huge number of shorts (short sales) began on the network’s native token LUNA within a few minutes.

Additionally, the massive FUD (fear, uncertainty, and doubt) and rapid dissemination of information have caused many investors to immediately sell their LUNA tokens at a market price. Consequently, as the price of LUNA fell, UST destabilized and began to loosen.

Initially, the price of $UST dropped to only $0.98. Platform’s founder, Terra Do Kwon, already noticed that something was off and announced the deployment of $1.5 billion ($0.75 billion in BTC and $0.75 billion in UST) capital to stabilize UST. Still, according to available information, he did not intend to dispose of these BTCs.

However, when the price of BTC began to fall rapidly, LFG completely emptied its Bitcoin wallet. According to btcinfocharts.com, the LUNA-LFG bitcoin wallet currently has zero bitcoins on its balance. According to on-chain data, LFG has withdrawn its entire bitcoin reserves of BTC 42,530.82, worth nearly $1.3 billion at a loss. LFG accumulated bitcoins at an average price of over $40,000 and liquidated its reserves at $30,237.

Source: coinmarketcap

However, the fact that the LFG sold its bitcoin reserves to stabilize the UST played the attackers perfectly into their cards. The attackers had already opened short positions on Bitcoin, on which they began to profit almost immediately. Furthermore, they used the remaining $650 million $UST for massive $UST sales on the Binance Stock Exchange, causing the price of stablecoin to fluctuate significantly.

The more BTCs were sold, the more the panic grew in the market, causing an awkward situation in which investors wanted to get rid of their $UST as soon as possible. However, the sale of BTC reserves failed to stabilize the price of $UST per dollar, bringing even greater uncertainty to the market.

After several hours, market panic over the $UST and $LUNA problems caused some centralized exchanges, including Binance, to suspend LUNA and UST withdrawals.

Depeg of the $UST stablecoin also influenced the largest decentralized protocol on the Terra platform called Anchor Protocol. The total locked asset value in this protocol fell from over $ 6 billion to over $ 600 million in two days, down 90%.

Carrying out this attack would probably not be economically possible once the 4pool was already active on Curve Finance (a pool consisting of USDT, USDC, FRAX and UST). It is estimated that draining liquidity from this pool would require up to $4 billion. It leads to the conclusion that the timing of the attack was not accidental.

Stablecoin $ UST is still in trouble. Its value is currently about $ 0.40, while the value of $LUNA has fallen from $ 80 to about 20 cents. However, the value of $UST is likely to return to its equilibrium value over time through Terra modules and arbitrage trades, but its credibility is already severely compromised.

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Cryptocurrency Market Price Correction

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Just yesterday afternoon, we briefed you on the latest developments related to the two-day Fed meeting, which resulted in a 50 basis point (0.5 percentage point) increase in the federal interest rate to a range of 0.75% -1% to beat the rising inflation in the United States.

Immediately after the Fed’s press release, the markets reacted to the interest rate news with growth as financial market experts expected this interest rate increase. Risky assets also gained from the statement by Fed Chairman Jerome Powell, refuting the rumours that the Fed would plan to raise interest rates by up to 75 basis points at one of its upcoming meetings. Immediately after this announcement, cryptocurrencies and stocks improved significantly.

However, the dynamic of risky markets is very high and often unpredictable. Just one day after Bitcoin rose by more than 5% and again tested the critical milestone of $40,000, the short-term optimism turned into uncertainty, which caused a massive outflow of capital from the market.

Bitcoin, the strongest and most popular cryptocurrency, dropped 7.92% within a few hours to a local low of $35,571, the most significant bitcoin price drop since 4 March 2022. Furthermore, bitcoin’s price dropped to its lowest level since 24 February, when bitcoin traded for only $32,900, according to Binance.

Market number two, Ethereum, recorded a loss of 6.57% in just a few hours to a local price low of $2,683. Other altcoins such as Solana, Terra and Cardano did not avoid corrections either and recorded losses of 9.01%, 4.35% and 12.27%, respectively.

In addition, total market capitalisation fell nearly 7.5%, from $1.8 trillion to a level fluctuating around $1.69 trillion.

The sudden change in the cryptocurrency market sentiment is closely linked to the behaviour of stock market participants, where investors have, over time, more thoroughly reassessed the future consequences of rising interest rates and the Fed’s continuing hawkish policy. Inflation, which is reaching a 40-year high in the US, is a major challenge as investors remain concerned about whether the US Federal Reserve will be able to reduce inflationary pressures without putting the US economy into a direct recession.

According to the head of the New York brokerage company Genesis Global Trading, risky markets now need to deal with the influence of tighter monetary policy, which may cause higher volatility and a growing correlation between the stock and cryptocurrency markets.

US 10 Year Treasury bonds have moved above 3%, the highest level since 2018. Rising government bond yields may signal that demand for government bonds is growing. When the rates on 10-year government bonds grow, investors tend to move their capital from risky assets to government bonds with minimal risk, which causes an outflow of capital from the stock or cryptocurrency markets.

Source: CNBC

The Fear & Greed Index, which deals with the multicriteria analysis of the cryptocurrency market, moved from „fear“ to „extreme fear“ within one day. In the past, the area of extreme fear has proven to be the best opportunity to expand your investment portfolio.

Market Drops Can Be a Profitable Buying Opportunity 

Although short-term cryptocurrency market sentiment may appear to be highly disrupted and negative, the financial and technological potential of cryptocurrencies and blockchain technology is unquestionable in the long run. 

For this reason, it is important to look at cryptocurrencies as long-term investments and not panic about short-term price fluctuations.

Emotional decision-making is a dangerous weapon that can quickly ruin your investment portfolio. Take advantage of the collapse of the cryptocurrencies with Fumbi, which offers you a quick, safe and easy investment in cryptocurrencies. As the most well-known investor and US billionaire, Warren Buffett, says, „be greedy when others are fearful.“

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The Fed Raises the Interest Rate by Half a Percentage Point

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The Federal Reserve System (Fed), led by Jerome Powell, announced on Wednesday an interest rate increase by 50 basis points (0.5 percentage points) to a range of 0.75% -1% to beat the worst inflation in the United States in 40 years.

The 50 basis point interest rate increase represents the second consecutive increase and the highest one-off rate increase in 22 years. However, the Fed is expected to make a total of six to seven interest rate increases this year.

The Fed also stressed in its press release that from 1 June, it would start reducing the number of assets held on its balance sheet, currently worth $9 trillion.

Source: Tradingeconomics

„The invasion of Ukraine by Russia is causing tremendous human and economic hardship,“ states the end of the press release from the two-day Fed meeting. „The invasion and related events are creating additional upward pressure on inflation and are likely to weigh on economic activity. In addition, COVID-related lockdowns in China are likely to exacerbate supply chain disruptions.“

The federal interest rate increase essentially makes money more expensive. Loans and mortgages in banks are more expensive and less affordable. On the one hand, it helps to slow inflation, but on the other hand, it weakens consumer demand and slows down economic growth.

However, the Fed’s leadership must proceed slowly and carefully when pursuing a restrictive monetary policy. Otherwise, rates could rise too fast, forcing companies to lay off people or push the country into recession.

Financial market experts expected this rate to increase, and thus stocks and cryptocurrencies responded to the news in the green. The strongest cryptocurrency, Bitcoin, responded to this news with an almost 2.5% growth, while Ethereum has improved by as much as 3.75% since the news was published.

In the coming months, the Fed is expected to continue its hawkish statements and aggressive policies. It is estimated that the interest rate could reach 3% – 3.25% by the end of the year.

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Fumbi is the first of its kind to offer cryptocurrencies to the general public, even at small deposits. Investing in cryptocurrencies through Fumbi is very easy and minimises risks. 

You can start with a deposit of just €50.

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Stablecoins, Their Purpose and Application in the World of Cryptocurrencies

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The invention of the alternative decentralised monetary system called Bitcoin has caused a massive revolution in money perception and available money systems. Over the years, bitcoin and other cryptocurrencies have proven the perfect tool for preserving value when inflation in countries around the world has hit its all-time highs in the past few decades.

Besides protection against inflation, cryptocurrencies have introduced many innovations to the financial sector. For example, fast and cheap international transactions and the ability to interact with a world of decentralised finance in which funds are entirely under your control, and there is no need to share sensitive information with third parties.

Cryptocurrencies have proven to be a revolutionary invention that is gradually gaining more and more attention from investors. However, due to significantly higher volatility than traditional fiat currencies, prevails an opinion that keeping your wealth in cryptocurrencies is high risk and inefficient short term. Intraday price movements in the tens of percent up or down have caused volatility to become one of the biggest enemies of cryptocurrencies, indirectly preventing new investors from entering the market.

Stablecoins are the answer to addressing high volatility in the cryptocurrency ecosystem. It is an innovative asset class that has brought an essential combination of traditional and modern financial systems to the growing environment of cryptocurrencies. Stablecoins strive to offer the best of both worlds – fast, secure and cheap transactions and the price stability of conventional currencies.

What Are Stablecoins?

Stablecoins, like other cryptocurrencies, are based on blockchain technology, which uses cryptography and encryption to enable secure and decentralised ownership of digital assets. However, this specific type of asset differs from other cryptocurrencies. Their prices are tied to the values of traditional money and commodities, such as the US dollar, euro or gold. This makes it possible to use stablecoins for everyday transactions without having to worry about high volatility, which makes it difficult to use cryptocurrencies for everyday purposes.

Prior to the existence of stablecoins, there were no ways for investors to avoid high volatility in the cryptocurrency market. The creation of stablecoins pegged to traditional money has thus brought about a solution that, among other things, allows investors to preserve their wealth if they expect a decline in the value of assets.

The five largest stablecoins today include Tether (USDT), USD Coin (USDC), TerraUSD (UST), Binance USD (BUSD) and DAI. The cumulative market capitalisation of these stablecoins is more than $176.8 billion.

Source: Coingecko

Stablecoin Functions 

The basic functions of stablecoins in practice include:

  • Fast and secure payments – Stablecoins allow you to send money quickly and cheaply without worrying about losses due to price changes.
  • Volatility Elimination – Cryptocurrencies such as Bitcoin or Ethereum are prone to fundamental factors and innovations that can quickly drive the price of these assets up or down. In contrast, stablecoins provide investors with the certainty that the price of their assets will not significantly fluctuate under the influence of various factors.
  • Interest collection – Through decentralised finance, there are many ways to collect interest for holding stablecoins. This interest rate is usually several times higher than interest rates in banks or other centralised institutions.
  • International transactions – Through stablecoins, it is possible to make international payments in a few seconds without the need to interact with banks.
  • Hedging – Stablecoins allow investors to avoid investment losses if they expect a significant decline in the cryptocurrency market.

Types of Stablecoins

The creation of a class of assets similar to traditional fiat currencies required introducing a certain tying mechanism, which ensures that the asset’s price will be as close as possible to the value of the underlying asset in the long run. Although there are several ways to achieve this goal, in practice, we usually encounter stablecoins pegged to other assets serving as collateral – tools to back the asset. Recently, algorithmic stablecoins have come to the fore, and their operation does not rely on coverage by other assets but a computer code. However, let’s step back and gradually introduce all types of stablecoins.

Stablecoins Backed by Fiat Currencies

Backing stablecoins with fiat money is based on maintaining coverage reserves depending on the nature of the stablecoin. If stablecoin is pegged to the US dollar, it is usually backed by US dollar reserves. For these stablecoins, each one-dollar token in circulation is backed by the dollar equivalent in reserves – either in cash or in money equivalents. The best-known assets in this category include the two largest stablecoins: Tether (USDT) and USD Coin (USDC).

Stablecoin reserves are maintained by central entities that regularly review their funds and work with regulators to ensure that stablecoin issuers continue to maintain and back them.

Anyone can send and receive stablecoins already in circulation, although the central entity that issues them may have the power to freeze stablecoins at suspicious addresses under specific conditions. Such a case occurred when Tether and Circle froze millions of dollars at addresses connected to illegal activities.

Stablecoins Backed by Crypto

This type of stablecoin uses other cryptocurrencies as collateral for its coverage. However, due to the volatile nature of cryptocurrencies, these stablecoins tend to be excessively collateralised to ensure that stablecoin retains a fixed value even at times of high volatility in the cryptocurrency market. Cryptocurrency-backed stablecoins are usually managed through a set of smart contracts that dynamically ensure the issuance and burning of new coins while providing a higher level of transparency.

Perhaps the most well-known stablecoin in this category is Dai, pegged to the US dollar and backed by the cryptocurrency Ethereum. If someone wants to issue a DAI worth $1,000, it is necessary to deposit the cryptocurrency Ethereum worth $1,500. If the investor wants his collateral back, he will simply put 1,000 DAI back into the protocol, and his collateral will be returned to him.

Price stabilisation of stablecoin DAI is achieved through price incentives. For example, if the DAI falls to $0.9, it creates incentives to repay the loan, reducing the DAI’s offer and bringing the price back to $1. The same is true for the opposite. Suppose the DAI price rises above $1, for example, to $1.05. Investors are then motivated to issue new DAI tokens and subsequently sell them on the secondary market, which increases their circulation, and the price stabilises back to $1.

This means that in the case of this stablecoin, there is no need to trust any central reserve manager, as the system is managed through arbitration incentives and smart contracts.

Source: Finextra

Presently, it is possible to borrow stablecoin DAI by inserting collateral not just in the cryptocurrency Ethereum but also in various other cryptocurrencies. The amount of the collateral varies dynamically with different cryptocurrencies, depending on the level of the collateralisation indicator.

Commodity-Backed Stablecoins

Commodity-backed stablecoins are usually backed directly by the physical assets to which their price is pegged – be it gold, oil, or silver. In the ecosystem of cryptocurrencies, we usually encounter stablecoins backed by physical gold, such as Pax Gold (PAXG) or Tether Gold (XAUT). For this specific type of stablecoins, some volatility can be expected, as the prices of these assets usually copy the price of the underlying asset. In this case, their price is determined by the development of the cost of gold.

Commodity-backed stablecoins open the door to investing in commodities such as gold or silver without the need to purchase the physical asset and the need to resolve storage and availability issues. Furthermore, these stablecoins are usually traded 24 hours a day, seven a week, while traditional commodities can only be traded on trading days.

A stablecoin backed by a commodity can also be found in Fumbi. Our innovative Fumbi Bitcoin & Gold Index tracks the value of Bitcoin and PAX Gold so that your finances are split 50:50. The algorithm intelligently buys the cryptocurrency that has fallen and sells the one that has grown. Thanks to this combination, you can easily, and stress-free save for your future.

Algorithmic Stablecoins

Algorithmic stablecoins, otherwise referred to as non-collateralised, have brought to the market a new and innovative approach to managing and ensuring the price stabilisation of these assets.

The price of these stablecoins isn’t based on assets but on algorithms that allow traders to issue and burn coins as needed to ensure that their price is fixed. The most popular algorithmic stablecoin is TerraUSD (UST), the third-largest stablecoin by market capitalisation, after USDT and USDC.

UST maintains its dollar value by motivating investors to issue or burn new USTs to maintain its stable price. This process works through interdependent UST pairing with a native Terra token named LUNA.

When the price of a UST falls below $1, traders can burn the UST and remove it from circulation in exchange for one dollar in the LUNA token. This reduces the supply of UST tokens, which pushes the prices up. Conversely, if the UST price exceeds more than one dollar, traders are motivated to burn the LUNA token in exchange for the UST token, increasing their supply in circulation, which pushes the prices down.

Algorithmic stablecoins have been gaining the attention of more and more investors in recent months, mainly due to their significantly higher decentralised nature compared to stablecoins covered by fiat currencies.

Sablecoins and DeFi

Following the boom in decentralised finance, stablecoins have become an integral part of the DeFi sector. Stablecoins allow investors to generate returns on their crypto assets in the DeFi market while mitigating the potential adverse effects of volatility.

Investors looking for higher returns than traditional fixed-rate investments – such as savings accounts, money market funds, or bonds – can digitise their funds and collect significantly higher interest rates on various DeFi and even centralised protocols.

Interest collection through decentralised finance works in a similar way to traditional banks, where investors can collect interest for lending their funds to a bank that subsequently lends them or carries out other investment activities with them. In the case of DeFi, this is very similar, but the borrowed funds are not the responsibility of any third party, but usually a smart open-source contract, the terms of which can be viewed by anyone.

Source: Loanscan

Final Words

Stablecoins have become an integral part of the ever-growing cryptocurrency market, bringing new earning opportunities and protection to the undesirable effects of price fluctuations. However, despite their enormous and relentless success, the risks involved in their use also need to be considered.

If you decide to use stablecoins, it is necessary to choose those that prove to be stable in the long run and are not associated with any cases concerning, for example, the auditability of their reserves or significant price volatility.

Therefore, before using any stablecoin, first do your own research, based on which you will decide which stablecoin would be the right choice for you

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Quarterly Cryptocurrency Market Overview – Q1/2022

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The year 2022 began in a sign of relatively high volatility. At first, traditionally in the world of cryptocurrencies, but later, unfortunately, also in other economic sectors. The Russian invasion of Ukraine drove the prices of several raw materials and energy to new highs, but the subsequent correction depicted an unprecedented instability on their price chart. The stock markets were in a similar situation, only that the price curve fell first. Following crypto investors, the rest of the world is also getting used to uncertainty.

In the background of the military conflict in Ukraine, Bitcoin has successfully demonstrated its importance in the geopolitical struggle. Russia’s proposal to accept Bitcoin as part of its gas payments can be considered the first sign of a new trend. Bitcoin is becoming a global neutral means of trade in the international market. In war, the currency is often just another of the weapons that powers use to assert their influence and demonstrate power. Bitcoin’s adoption in this area makes sense mainly because it is apolitical and does not tilt the scales to any party involved.

The topic of inflation has dominated the last month, not only in the EU but also in the USA. The rise in the price level does not seem to be as temporary as many politicians have promised. For this reason, many investors resort to traditional anti-inflation medicine – gold. However, more and more people are discovering the magic of Bitcoin, which is still in its infancy but on its way to becoming a digital version of this popular asset. The events of recent weeks only indicate that such an asset can be very useful in the future.

Download the full report from this link – Fumbi Network Q1 Report

Bitcoin in Q1

Source: Messari

Bitcoin opened the new calendar year with a valuation of $46,187. With small deviations, the entire first quarter was marked by fluctuations in the price range between $35,000 and $45,000. However, Bitcoin broke out of this zone at the end of March and closed the first quarter at $45,537, with a loss of -1.7% compared to the opening price on January 1, 2022. The best day in the first quarter for Bitcoin was February 28, when its value rose by 14.59% in a single day.

Highlights

  • The first quarter was mostly marked by accumulation, during which Bitcoin probably found its local minimum. The cryptocurrency market capitalization climbed back to two trillion dollars at the end of March.
  • The majority of the top 10 altcoins were in the red in the first quarter, Terra surprised.
  • The Russian invasion of Ukraine has caused a wave of uncertainty across the global economy and financial markets. The cryptocurrency market has been no exception. However, it quickly became apparent that bitcoin could serve as a safe, quickly transferable and stable alternative to traditional money.
  • The proposal to ban Proof-of-Work cryptocurrencies in the European Union has not passed. In the voting process of the European Parliament’s Committee on Economic and Monetary Affairs (ECON), 32 MEPs were in favor of rejecting the proposal, while only 24 were in favor of approving it.
  • The Canadian branch of KPMG, part of a global network of financial audit, tax and advisory firms, has announced the purchase of cryptocurrencies Bitcoin and Ethereum. KPMG is a member of the Big Four accounting organizations – the world’s four largest professional services networks.
  • On-chain data shows that the number of retail-owned addresses is steadily growing. In addition, there has been a significant drop in the 1 Year Active Supply in the past quarter, which means investors are not willing to sell bitcoins at current prices.
  • In recent months, TVL has been consolidating between $73 and $85 billion, indicating steady investor interest in interacting with DeFi apps. Ethereum continues to be the most popular smart contract platform, with alternative platforms such as Terra, Binance Smart or Avalanche remaining at the forefront.

Download the full report from this link – Fumbi Network Q1 Report

BTC – Addresses with Balance Greater than 0.001 BTC

Source: Messari

The metric of addresses with balance greater than 0.001 BTC tracks the sum count of unique addresses holding at least 0.001 native units as of the end of the reference period, worth about $45. The number of such addresses has increased by nearly 3.7% in the last three months, signaling an inflow and continuously growing investors interest in bitcoin. The main motives behind the bitcoin accumulation by retail investors are likely to be yield, hedge against inflation and speculations.

ETH – Address Count

Source: Messari

The total number of addresses on the Ethereum network continues to grow at a rapid pace. During the first three months of the new calendar year, the number of addresses on the Ethereum network grew by 8.57% to 78,376,564 addresses. The significant growth in addresses signals users‘ unabated interest in interacting with decentralized applications and NFT collections. In addition, the ETH 2.0 upgrade is gaining attention from many investors who are accumulating Ethereum as an investment asset over the long term horizont.

ETH – Average Transaction Fees

Source: Messari

Every time an operation occurs on Ethereum’s network, a transaction fee is incurred. Based on the complexity of the transaction and how quickly the user wants the transaction settled, the gas fee changes. During the first quarter, there was a significant decrease in the average transaction fee in the Ethereum network. The main reasons for the decline in transaction fees on the Ethereum network include the growing popularity of alternative blockchain platforms focused on DeFi, as well as the growing interest in using Layer 2 (L2) solutions on the Ethereum blockchain.

Download the full report from this link – Fumbi Network Q1 Report

DeFi

Source: DefiPulse

The beginning of the year was marked by a decline in TVL, which correlated with price fluctuations of BTC and other cryptocurrencies. The entire DeFi sector declined significantly, but the protocols on the Ethereum network proved to be more stable during the market downturn compared to other less commonly used networks. However, there were exceptions that did well during the fall of the market, such as Terra.

In recent months, TVL has consolidated between $ 73 billion and $ 85 billion, indicating stable interest. This is influenced by several factors, a significant factor that pulls TVL down is the uncertainty regarding the regulation of the entire DeFi sector, which is awaited not only by the companies creating these protocols, but also by investors and ordinary users.

On the positive side, however, institutions are beginning to take an interest in DeFi and would like to take part in these activities, as DeFi offers new opportunities for risk management, arbitration and trading. Higher risk also means higher yields compared to traditional bonds, stocks or forex trading.

NFT & Metaverse

Source: Dune Analytics

NFTs are still a popular topic and one could say that the craze we experienced in 2021 continues. Interest in NFTs and trading volumes correlate to some extent with the price movements of bitcoin and other cryptocurrencies. If there is uncertainty in the market and cryptocurrency prices are moving down, we can expect to see less interest in NFTs. Once the price of BTC stabilized in March, volumes and enthusiasm for speculating in NFTs increased again.

New collections of NFTs are appearing daily on popular NFT marketplaces such as OpenSea, Rarible and LooksRare, and while some end up as worthless JPEGs after a short time, others hit the road to success and can bring in big returns. What sets blue chip NFT collections like Bored Ape Yatcht Club or Akuki apart is a supportive community, a packed roadmap, various creative opportunities for using NFTs (e.g. selling merch with NFTs), events or collaborations with artists and celebrities.

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Women Are Great Investors, and There Should Be a Lot More of Them

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The number of women investing in crypto is much lower than men. However, it’s women that invest better.

Based on 2020 Eurostat data, the gender pay gap (GPG) between men and women in Europe is 13%. Latvia has scored the lowest where women’s wages were 22.3% below men’s (Source: Eurostat). In the US, it’s 18% (Source: CNBC). Over the last decade, there has been very little change in the average GPG worldwide despite the increasing qualification of women.

In fact, the gender pay gap grows only wider for those with a university degree. One of the reasons is that employers expect women to drop out of working life after the birth of a child while there is no such expectation of men. Also, the conditions for return from parental leave are not ideal. Furthermore, mothers are often treated differently than fathers because society expects that women will have to leave work more often for child care than men. Of course, the situation is not improved by other stereotypes, such as that we don’t talk about salaries publicly or that people in management are used to this fact and take advantage of it.

Until the situation improves, it’s important that women can grow their finances as effectively as possible to secure their future. Investing is an excellent opportunity to lower the wealth gap between men and women. However, investing too is dominated by men.

Why Do Women Invest Less Than Men?

The reasons why men dominate the world of investing are many. According to Sarah Coles from Hargreaves Lansdown, women usually have their self-confidence bar set much higher – they need much more information to think they understand the topic than men. The same goes for job applications as well as investing. Since women have a substantial lead in time spent on unpaid housework, caring for family, and household, it often takes them longer to get into the topic deep enough to trust their decisions and start investing. On the other hand, men jump into investing with much less information and have no problem choosing riskier investments.

Another reason is that companies often communicate investment products primarily through the male audience. Even though it turns out that women and men don’t necessarily need different products, women respond to different arguments and information. They often meet with advertising with male rhetoric and visuals, which can make women feel unwelcome in this environment.

Reason to Invest

Besides the fact that women earn less, investing is also important because they statistically live longer but often enter retirement sooner. Therefore, they might depend on pension for a longer time and can easily end up in a situation when the money from the state won’t be enough. Thus, they should start long-term saving from an early age.

„Investing is important to me, and I’ve already started while at university when I began to realise that it’s necessary for me as a woman to be independent and be able to provide for my future,“ says Milena Košová, Head of Marketing at our Fumbi. „I don’t want to have to depend on anybody, and I don’t want to rely on the state pension. Instead, I prefer to save continuously through cryptocurrencies.“

What about investing in cryptocurrencies?

Regarding cryptocurrencies, the female representation relative to men is even lower than in other forms of investing. Based on the CNBC survey, over twice as many men hold crypto as women. About 16% of men and only 7% of women invest in crypto. (Source: CNBC)

The representation of women in the IT sector is only about 28.8% (Source: WhatIs), which may also influence women’s view of the cryptocurrency industry and make it feel distant due to male dominance. Based on our survey, 69% of men are interested in investing in cryptocurrencies, but only 31% of women. As for our current Fumbi users, the ratio of men to women is approximately 80:20.

We believe that soon this sector will cease to be perceived as exclusively male, and more and more women will join in. For example, the number of women and men working at Fumbi is almost even.

How do women invest?

Do you know who HODLer is? This term refers to someone who doesn’t let the market volatility get to them, doesn’t get scared and keeps holding crypto as a tool for long-term investment. As it turns out, women are much more disciplined investors – they stick more to the set strategy and are lesser subject to emotions. Globally, women are better investors – according to the Fidelity report 2021 Women and Investing Study, women achieve on average 0.4% higher profits than men.

„When the crypto is going down, you have to brace yourself and stop checking your account every minute,“ advises Milena. „The crypto market is volatile, and you have to count with cryptocurrencies going down sometimes – they can’t keep going up all the time. Fumbi products are tools for long-term investing, and that’s how they should be viewed as. Experience investors do not withdraw when the price goes down. They do the opposite instead – they buy.“

Investing in cryptocurrencies should be part of every woman’s financial strategy. Cryptocurrencies are a tool for long-term investing, and at Fumbi, we have a team of experts (among them a woman of course – hello, Linda!) that you can trust and invest with maximum security starting from only €50.

How to Start Investing

Choose an amount

Decide how much you can invest. It has to be an amount that you can afford to lose in the worst-case scenario. A favourite is monthly investing, where you create a standing order and regularly send smaller amounts to your Fumbi account. At Fumbi, you can invest every month for as little as €50.

Choose a product

Our Fumbi Index Portfolio contains the top 26 proven cryptocurrencies in which you can invest simply with a single deposit. Your investment is managed by a sophisticated Fumbi Algorithm that tracks the growth of the entire crypto market and doesn’t rely on individual cryptoassets. The results show that users who invested in this product in 2021 profited a lot more than those who invested only in Bitcoin.

If you want to stabilise your investment with gold, use Fumbi Bitcoin and Gold. You invest not only in Bitcoin but also in the cryptocurrency PAX Gold, covered by the real stable gold. This product is excellent for long term investing and is a go-to for even more conservative investors.

If you are more familiar with crypto, you can create your own portfolio with Fumbi Custom. You can choose from Bitcoin, Ethereum, Polkadot, Terra, Avalanche, and Cardano.

You don’t need to deal with buying a wallet and storing your cryptocurrencies for any of our Fumbi products. With us, you are the direct owner of your cryptocurrencies safely stored through the Ledger Vault platform, one world’s safest cryptoasset storage solutions.

Follow Us

So you don’t miss out on any news, follow the emails we are sending out. You will find know whenever we have something new, or we will let you know when could be the right time to make an additional deposit.

On Facebook you will find news and various interesting information.

Leave nothing to chance and better secure your future by investing in cryptocurrencies. With Fumbi, it’s simple, maximally safe, and efficient.

QUICK REGISTRATION

Best regards from our female Fumbi team from marketing and sales: Iveta Šplíchalová, Lenka Bóna, Milena Košová, Laura Suchopová a Anna Šuchaňová

Juraj Forgacs

Fumbi

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You Are Not Losing When Cryptocurrency Drops Unless You Withdraw

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The cryptocurrency market has excellent growth potential but is also considerably volatile. Therefore, it can be subject to frequent fluctuations. Even though it occasionally quickly drops, many experts agree that it should grow substantially in the future. If you are new to investing in cryptocurrencies, it may seem like an investment loss whenever the market is down. In reality, you’ll decide whether you’ll be actually losing by how you’ll react to the market drop.

Better Invest Than Speculate

Investments in cryptocurrencies behave the same as anything else. Every market has its ups and downs, and cryptocurrencies are no exemption.
However, they differ from other assets in the extent, timing and speed of these fluctuations. The cryptocurrency market is volatile, and it can easily frighten new investors. But it’s precisely the price corrections that present an opportunity to increase your investment portfolio.

Focus on the long-term investment and not on speculations where people aim for a quick profit. Speculations go hand in hand with great risk because nobody can exactly predict the short term market development. Long-term market growth is much easier to anticipate. Investors often find that the longer they keep their finances invested, the higher the chances of profit. This is precisely what Fumbi products are built on, the long-term cryptocurrency market growth.

A Loss Is Not Really a Loss

When you have your resources invested in cryptocurrencies while the cryptocurrency market is down, it’s easy to feel like you are losing your money. However, that doesn’t become a reality unless you sell your cryptocurrencies at the wrong moment. While the corrections at the cryptocurrency market are not the most pleasant thing, seasoned investors know that the market naturally experiences positive and negative growth. This is especially true for the cryptocurrency market. Holding on to your cryptocurrency investment while the market is going down is the only way that your portfolio might later profit from the revitalisation of the market.

A market reversal can easily lead to a return on your investment, often with additional profit. However, if you sell all of your cryptocurrencies while the market is down, there is no hope for a recovery. Even if it might feel like it, you are not losing during drops unless you sell your cryptocurrencies.

If you buy bitcoin, it doesn’t automatically mean that you will be profiting next month. After a month, maybe even after half a year, you can easily find yourself at a loss without affecting the expectation of long-term growth. It’s good to realise that a possible hundredfold value growth within the next few years won’t happen without sizable turbulences.

What to Do When the Market Is in Red Numbers?

A much better strategy than selling out is rebalancing the portfolio to mirror market conditions and prospects. Thus, maintaining the desired combination of cryptoassets.

For example, if you have spent €1000 and the value of your investment drops by 50% to €500, you are at an unrealised loss. What to do now?

  • If you are not selling your cryptocurrencies and the value of the investment increases by 100%, you have your initial deposit of €1,000 back.
  • In case you have deposited another €1,000 during this drop to €500, your current investment would be €1,500. After 100% market growth, it would become €3,000. After subtracting your deposits of €2,000, you would be left with €1,000 of pure profit.
  • However, if you had withdrawn the rest of your investment when it dropped by 50%, you wouldn’t be able to profit from the market growth.

That’s why it’s profitable to invest while the market is down.

Invest Into Cryptocurrencies Effortlessly With Fumbi

If you are considering investing in cryptocurrencies, Fumbi is here for you. Thanks to us, your investment is effortless, easy to comprehend and safe.

Our Fumbi Index Portfolio follows the market capitalisation of cryptocurrencies, while our very own smart Fumbi Algorithm performs daily rebalancing. The algorithm mirrors the market growth as a whole and doesn’t rely on specific cryptocurrencies.

Last year, investing in the Fumbi Index Portfolio brought our users twice the profit of investing in bitcoin alone. While bitcoin brought investors a yield of 62.34%, the Fumbi Index Portfolio achieved 146.23%.

For a long-term investment towards your future, you can also use our newest product, Fumbi Bitcoin and Gold. It connects the unique benefits of two worlds: the potential of the fast-growing Bitcoin and the stability of real gold. Besides Bitcoin, you also invest in cryptocurrency PAX Gold, which is covered by real gold deposited by the Paxos company. The gold stabilises possible fluctuations.

We are using the Ledger Vault for cryptocurrency deposits, one of the world’s most reliable and safest ways of cryptocurrency storage. Furthermore, we are the only crypto investment platform that regularly performs an independent audit of wallets.

Join over 100,000 of our users and capitalise on the potential of cryptocurrencies easily, safely and efficiently.

Start investing

Juraj Forgacs

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Who is Satoshi Nakamoto?

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The invention of a decentralised financial service called Bitcoin revolutionised the way we perceive money and traditional financial systems. Investors worldwide, including world-renowned institutions, have started to look for an alternative where your financial resources belong exclusively to you, and no central authority intervention is needed for their use and transfer.

In 2008, the anonymous founder of Bitcoin, Satoshi Nakamoto, came up with the invention of a decentralised money system. In his paper „Bitcoin: A Peer-to-Peer Electronic Cash System„, he explains the methods of using a peer-to-peer (P2P) network to create what has been described as a system for electronic transactions without relying on trust.

However, who was really acting under the pseudonym Satoshi Nakamoto remains unknown. Satoshi undeniably remains the most enigmatic figure in the history of cryptocurrencies. It has been over 13 years since the publication of his Bitcoin document, and we still don’t even know whether it’s just one person or a group of people that developed Bitcoin. Many experts agree that it’s highly improbable for a single person to create such sophisticated and thought-out technology in such a short period. 

The History of Nakamoto

Satoshi Nakamoto was communicating with the first programmers involved electronically only. He was most active from 2008 to 2010 when he published hundreds of papers and posts on the BitcoinTalk, a forum he created.

Along with other developers, Nakamoto worked to improve the bitcoin software until the mid-2010s. He then handed over control of the source code repository to Gavin Andersen, one of the first members of the close Bitcoin community.

However, by the end of 2010, Satoshi went utterly silent. On 12 December 2010, Satoshi posted his last message on the bitcoin forum. He informed developers that there is still much to do to ensure that the bitcoin software is immune to DoS attacks (Denial-of-Service attacks). Satoshi mysteriously disappeared immediately after the message and hasn’t logged into his profile since. On 26 April 2011, Nakamoto decided to leave the evolving crypto community for good. On this day, Satoshi wrote to one bitcoin developer an email explaining that he has „moved on to other projects“ and reassured him that the future of Bitcoin is in good hands. Since then, Satoshi had vanished into thin air.

Although Satoshi claimed to be 34 years old at the time and from Japan, this information is impossible to confirm or refute. However, Satoshi communicated in perfect English without a single Japanese word and often used British dialect and slang words which slightly contradicts his claims.

Although Satoshi Nakamoto’s identity has yet to be attributed to any person, it is estimated that Nakomoto owns one million bitcoin in the current market value of $38 billion. Since the maximum amount in circulation is fixed at 21 million, Satoshi possesses 5% of all bitcoins. However, these bitcoins haven’t moved from their addresses in years, and it’s uncertain if they ever will. 

Who might be Nakamoto?

For years, media all over the world have been trying to catch any virtual trace that Nakamoto might have left behind in his posts and figure out who the real founder of Bitcoin is. Although there are several candidates, each has denied it, and Nakamoto’s identity remains a mystery.

Shinichi Mochizuki

Genius mathematician Shinichi Mochizuki, who moved from Japan to the US at the age of five and graduated from the Philips Exeter Academy at the age of 16, was one of the first mathematicians identified as Satoshi Nakamoto. 

The claim that Mochizuki is Satoshi Nakamoto came from Theodor Holm Nelson, an American sociologist, philosopher, and pioneer in information technology who was the first to formulate and coin the term hypertext.

In his video, Nelson explains that Mochizuki has demonstrated a level of intelligence and knowledge too similar to that of the pseudonymous creator of Bitcoin. Furthermore, he pointed out that just like Nakamoto, who introduced the world to Bitcoin and then disappeared, Mochizuki has done something similar in the past. 

In 2012, Mochizuki solved one of the greatest mathematical problems known as the ABC Conjecture, which deals with the nature of prime numbers. After examining the solution, many mathematical experts realised that they didn’t understand it. Mochizuki, however, didn’t bother to explain his solution to anybody. Usually, mathematicians discuss their findings with their colleagues, but Mochizuki simply left. He didn’t even submit his work to the Annals of Mathematics, where prominent mathematicians evaluate their work before publication. His behaviour was similar to Satoshi Nakamoto’s, who just as suddenly left the Bitcoin project.

Furthermore, Satoshi’s perfect mastery of the English language and grammar in correspondence wouldn’t be a problem for Mochizuki since he moved to the United States when he was five. The strongest argument against Mochizuki being Satoshi Nakamoto is the lack of experience in computer science and coding.

Hal Finney

Hal was one of the first people to react to Satoshi’s post on the cyberpunks mailing list, and many experts believe that he was one of the members of the team behind the creation of Bitcoin. 

„When Satoshi announced the first release of the software, I grabbed it right away,“ said Finney in a 2013 post on the BitcoinTalk forum. Finney was probably the first person after Nakamoto to run the bitcoin software. Finney even mined one of the blocks with an order number 70-80 on the bitcoin blockchain and was the first recipient of a bitcoin transaction when Satoshi Nakamoto himself sent him ten bitcoins. At the time of the first bitcoin transfer, there was no monetary value of this asset in dollars or euros. 

That Satoshi Nakamoto chose Hal as the first bitcoin recipient is of no surprise. Satoshi held Hal in high esteem. Thanks to developing the PGP encryption system and creating the first reusable proof-of-work system, Hal established himself as one of the smartest programmers and cryptographers in the world. 

Finney, a dedicated libertarian, believed that the computer is a tool to liberate and protect people, not control them. The cryptographic activist led various campaigns for privacy protection and against the use of massive databanks and the growing centralisation faced by Americans at the time.

The stylistic findings regarding the PGP encryption program and Bitcoin whitepaper were also interesting. Both Satoshi Nakamoto and Hal Finney use double space in their documents after each sentence. Furthermore, according to AI, both documents are written exactly the same, which means the same dialect, style, and sentence structure. Additionally, Hal often used British English, just like Nakamoto. Nevertheless, Finney has categorically denied any connection to being Satoshi Nakamoto. 

We might never learn whether Hal was Satoshi. The genius programmer lost his battle with amyotrophic lateral sclerosis on 28 August 2014.

Dorian Nakamoto

One of the most interesting stories concerning the search for the true identity of Satoshi Nakamoto is the story of Japanese-American engineer Dorian Nakamoto.

In 2014, American weekly magazine Newsweek named Dorian Prentice Satoshi Nakomoto, then a 64-years old physicist in retirement living in California, as the founder of Bitcoin. Publication of this news caused chaos in the broader crypto community, and many have believed that the mystery of Satoshi Nakamoto has been solved.

Newsweek pointed to a number of facts that link him to the genius inventor of Bitcoin. Both Satoshi and Dorian had libertarian tendencies and roots in Japan. Additionally, Dorian, who studied physics at the Polytechnic University of California and worked on secret defence projects, is a Japanese living in the US, which would explain Nakamoto’s fluent English.

The resolution of the whole story was supposed to take place when Newsweek journalist Leah Mcgrath Goodman met Dorian Nakomoto with the assistance of two police officers from Temple City, California. Dorian was wearing a crumpled T-shirt, old blue jeans, and white socks. He looked as if he hadn’t slept for two weeks. When Goodman asked him about Bitcoin, Dorian seemed slightly freaked, stared at the sidewalk, and said: „I am no longer involved in that and cannot discuss it. It’s been turned over to other people. They are in charge of it now. I no longer have any connection.“ As a result, his house got surrounded by hordes of reporters demanding one thing – confirmation that Dorian is the real Satoshi.

Eventually, it turned out that Dorian probably wasn’t the real Nakamoto. In other interviews, it was revealed that Dorian doesn’t know much about Bitcoin and when he said, „I have no connection to it anymore,“ he most likely meant a certain contract he was developing for the US army. Thus, the mystery remained unsolved.

Nick Szabo

Nick Szabo is a computer scientist known for his many years of work with digital currencies and smart contracts. In 1998, Szabo introduced the concept of decentralised digital currency Bit Gold, which is often seen as the precursor to Bitcoin. For this very reason, Szabo is often considered a possible founder of Bitcoin. 

There are several similarities between Szabo and Satoshi. Firstly, the concept of Bit Gold provided important inputs for the development trends on which Bitcoin itself was later built. Secondly, Nick Szabo has previously contacted an almost identical group of developers with a feedback request for his crypto project as Satoshi did. 

Furthermore, the web portal Gizmodo reports that Satoshi and Szabo have very similar writing styles, such as using similar phrases, abbreviations and ways of writing. Gizmodo states that in 2014 researchers from Aston University, England, have compared the writing styles of several adepts for Nakamoto. They found that none of the published texts by other candidates matches Nakomoto’s publications so precisely as those of Nick Szabo. Jack Grieve, a lecturer in charge of this research, has stated that the similarities between Szabo and Nakamoto were „uncanny.“

Dominik Frisby, author of „Bitcoin: The Future of Money?“ is leaning towards the same conclusion. He even approached an expert in stylometry, a study of linguistic style that deals with statistical determination or confirmation of characteristic attributes of the text. The expert also concluded that Szabov’s writing style was very similar to texts published by Satoshi himself.

The debate over whether Nick Szabo is the real Nakamoto was also fueled by altered time stamps on a blog post about the digital currency Bit Gold. Even though the blog post states publication date of 27 December 2008, a later date than the bitcoin white paper publication, the post was actually published in 2005. Why Nick Szabo altered the publication date to make it look like it was published after the bitcoin whitepaper remains a mystery.

Even though there is evidence that Szabo intentionally changed the publication date, there is no answer as to why he did it. The most probable variant is that he didn’t want his post about Bit Gold to precede the publication of the bitcoin document to hide his identity. Moreover, it’s interesting that the other developers, whether Finney or Wei Dai, have publicised their correspondence with Nakomoto, but Szabo never has.

However, Szabo has denied all claims and evidence that he is the real Satoshi Nakamoto. 

Conclusion

The main takeaway from the long quest after the anonymous Bitcoin creator’s identity is that it doesn’t matter who created Bitcoin. Regardless of whether Satoshi’s identity is known, Bitcoin would keep working as it does now. It would still be the decentralised currency managed by millions of nodes worldwide that doesn’t need for its operation intervention by any central authority.

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Juraj Forgacs

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Learn the Crypto Slang – Part Five

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When reading crypto articles, do you often come across slang expressions such as „DEX“, „DYOR“, or „FUD“ that you might not completely understand? That won’t be a problem for you anymore! 

Fumbi has prepared for you a five-week blog series with the most important abbreviations and terms from the world of crypto. It doesn’t matter whether you are a novice or a professional. The crypto world is rapidly evolving, so it’s essential to keep up with the slang used by the crypto community.

In part five, we prepared for you the following ten terms from the world of cryptocurrencies:

  1. Altcoin – An altcoin is a generic term for alternative cryptocurrencies, which means all cryptocurrencies except Bitcoin. The most famous altcoins include Ethereum, Cardano and Polkadot.
  1. Crypto OG – In the world of cryptocurrencies, OG is a highly respected person who often has a wealth of experience in using cryptocurrencies.
  1. Faucet – Faucets are websites or applications that reward users with new cryptocurrencies for completing easy tasks (for example, solving Captchas). The main goal is to spread awareness about the world of crypto.
  1. Blok Genesis – It is the first block ever mined on the blockchain of any cryptocurrency. In the case of Bitcoin, the genesis block was mined on 3 January 2009 and contained an initial block reward of 50 BTC.
  1. Laser eyes – They symbolise a bullish attitude towards Bitcoin and other cryptocurrencies. They have become especially popular on Twitter at the beginning of last year, when celebrities and famous personalities began adding laser-eyes to their profile pictures.
  1. Memecoin – It’s a type of cryptocurrency created out of a recession or in response to a certain funny event or situation. However, the purpose of these cryptocurrencies isn’t solving economic problems. Currently, the most famous meme coins are Dogecoin and Shiba Inu.
  1. Mempool – Mempool is a term for the „digital waiting room“ where transactions are collected before miners include them in a block.
  1. Satoshi – Satoshi is the smallest unit of the most popular cryptocurrency, Bitcoin. One satoshi is equivalent to 0.000000001 BTC and is named after Satoshi Nakamoto, founder of the Bitcoin network.
  1. Stablecoin – Stablecoin is a cryptoasset pegged to a fiat currency of the traditional world. As a rule, stablecoin mirrors the price of the stabilising currency (for example, USD or EUR), which makes its price stable in time. The most popular stablecoins include USDT, USDC and UST.
  1. Vaporware – A term for a long-awaited crypto project, the launch of which was announced a long time ago but never became a reality.

Do you want to improve and know all of the essential terms from the world of cryptocurrencies? Take a look at our Fumbi dictionary, where you’ll find many more terms and abbreviations.

In case you’ve missed our previous crypto slang articles, you can find them at the following links:

Learn the Crypto Slang – Part One

Learn the Crypto Slang – Part Two

Learn the Crypto Slang – Part Three

Learn the Crypto Slang – Part Four

Invest with Fumbi

If you want to capitalise on the potential of cryptocurrencies for your future, begin investing with our Fumbi Index Portfolio. We update the cryptocurrencies in the portfolio every three months – we add cryptocurrencies with the potential to grow and discard those which no longer meet our criteria. Furthermore, your investment is regularly administered by the sophisticated Fumbi Algorithm that follows the market’s growth as a whole and doesn’t rely on individual cryptoassets.

You can start investing from €50.

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Juraj Forgacs

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Learn the Crypto Slang – Part Four

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When reading crypto articles, do you often come across slang expressions such as „DEX“, „DYOR“, or „FUD“ that you might not completely understand? That won’t be a problem for you anymore! 

Fumbi has prepared for you a five-week blog series with the most important abbreviations and terms from the world of crypto. It doesn’t matter whether you are a novice or a professional. The crypto world is rapidly evolving, so it’s essential to keep up with the slang used by the crypto community.

In part four, we prepared for you the following ten terms from the world of cryptocurrencies:

  1. AML – ‚Anti-Money Laundering‘ (AML) is a cumulative term for laws, regulations, or decrees to fight against profits from illegal activities and financing terrorism. In the world of cryptocurrencies, centralised exchanges usually require KYC-AML procedures where they identify the customer and then actively prevent money laundering.
  1. ATH – ATH is short for „All-Time-High“, a particular asset’s historically highest achieved value.
  1. BTD (Buy the Dip) – During price drops, investors use the phrase as a recommendation for asset purchase because they expect that the price drop is just short-term, and the asset will most likely eventually return to its original or even higher value. 
  1. ERC-20 – ERC-20 is a technical norm defining a list of rules common for most Ethereum network tokens. It is used for all smart contracts on the Ethereum blockchain for token implementation and provides an exhaustive list of rules that all Ethereum tokens must follow.
  1. Hard Fork – The hard fork is a backwards incompatible software update. Therefore, a hard fork occurs when nodes add new rules into the protocol that are not compatible with old nodes‘ rules. As a result, nodes can communicate only with other nodes that accepted the new version of the software. Thus, the blockchain splits into two separate chains: one with old rules and one with new ones. 
  1. ICO – Short for „Initial Coin Offering“. Through this process, new crypto projects receive capital from investors for future research and project development.
  1. KYC – „Know Your Customer“ – a standard in the investment environment, when exchanges or brokers are required by law to know their customers. Initially, the main objective was investor protection. However, today it is more of a regulation frame to fight against money laundering and financing terrorism.
  1. NFT – Non-fungible tokens „NFT“ are digital assets directly connected to their owners through cryptography. Every NFT represents an individual digital item, whether an image, sound recording, or other files.
  1. Węzeł – A network node is any computer that ensures the functioning of the network. Nodes usually accept blocks, share them, and verify whether the miner follows the network rules. A Blockchain network is usually made of thousands of independent nodes worldwide.
  1. Soft Fork – A soft fork is a backwards-compatible network upgrade, meaning nodes that moved on to the newer version can still communicate with nodes that run the old version. The core attribute of the soft fork is that it is an addition of new rules that aren’t in conflict with the older ones. 

Do you want to improve and know all of the essential terms from the world of cryptocurrencies? Take a look at our Fumbi dictionary, where you’ll find many more terms and abbreviations.

In case you’ve missed our previous crypto slang articles, you can find them at the following links:

Learn the Crypto Slang – Part One

Learn the Crypto Slang – Part Two

Learn the Crypto Slang – Part Three

Invest with Fumbi

If you want to capitalise on the potential of cryptocurrencies for your future, begin investing with our Fumbi Index Portfolio. We update the cryptocurrencies in the portfolio every three months – we add cryptocurrencies with the potential to grow and discard those which no longer meet our criteria. Furthermore, your investment is regularly administered by the sophisticated Fumbi Algorithm that follows the market’s growth as a whole and doesn’t rely on individual cryptoassets.

You can start investing from €50.

START INVESTING

Juraj Forgacs

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