Forex Trading Strategy of Combining Spot and Option ...
Former investment bank FX trader: Risk management part 3/3
Welcome to the third and final part of this chapter. Thank you all for the 100s of comments and upvotes - maybe this post will take us above 1,000 for this topic! Keep any feedback or questions coming in the replies below. Before you read this note, please start with Part I and then Part II so it hangs together and makes sense. Part III
Squeezes and other risks
Crap trades, timeouts and monthly limits
Squeezes and other risks
We are going to cover three common risks that traders face: events; squeezes, asymmetric bets.
Economic releases can cause large short-term volatility. The most famous is Non Farm Payrolls, which is the most widely watched measure of US employment levels and affects the price of many instruments.On an NFP announcement currencies like EURUSD might jump (or drop) 100 pips no problem. This is fine and there are trading strategies that one may employ around this but the key thing is to be aware of these releases.You can find economic calendars all over the internet - including on this site - and you need only check if there are any major releases each day or week. For example, if you are trading off some intraday chart and scalping a few pips here and there it would be highly sensible to go into a known data release flat as it is pure coin-toss and not the reason for your trading. It only takes five minutes each day to plan for the day ahead so do not get caught out by this. Many retail traders get stopped out on such events when price volatility is at its peak.
Short squeezes bring a lot of danger and perhaps some opportunity. The story of VW and Porsche is the best short squeeze ever. Throughout these articles we've used FX examples wherever possible but in this one instance the concept (which is also highly relevant in FX) is best illustrated with an historical lesson from a different asset class. A short squeeze is when a participant ends up in a short position they are forced to cover. Especially when the rest of the market knows that this participant can be bullied into stopping out at terrible levels, provided the market can briefly drive the price into their pain zone. There's a reason for the car, don't worry Hedge funds had been shorting VW stock. However the amount of VW stock available to buy in the open market was actually quite limited. The local government owned a chunk and Porsche itself had bought and locked away around 30%. Neither of these would sell to the hedge-funds so a good amount of the stock was un-buyable at any price. If you sell or short a stock you must be prepared to buy it back to go flat at some point. To cut a long story short, Porsche bought a lot of call options on VW stock. These options gave them the right to purchase VW stock from banks at slightly above market price. Eventually the banks who had sold these options realised there was no VW stock to go out and buy since the German government wouldn’t sell its allocation and Porsche wouldn’t either. If Porsche called in the options the banks were in trouble. Porsche called in the options which forced the shorts to buy stock - at whatever price they could get it. The price squeezed higher as those that were short got massively squeezed and stopped out. For one brief moment in 2008, VW was the world’s most valuable company. Shorts were burned hard. Incredible event Porsche apparently made $11.5 billion on the trade. The BBC described Porsche as “a hedge fund with a carmaker attached.” If this all seems exotic then know that the same thing happens in FX all the time. If everyone in the market is talking about a key level in EURUSD being 1.2050 then you can bet the market will try to push through 1.2050 just to take out any short stops at that level. Whether it then rallies higher or fails and trades back lower is a different matter entirely. This brings us on to the matter of crowded trades. We will look at positioning in more detail in the next section. Crowded trades are dangerous for PNL. If everyone believes EURUSD is going down and has already sold EURUSD then you run the risk of a short squeeze. For additional selling to take place you need a very good reason for people to add to their position whereas a move in the other direction could force mass buying to cover their shorts. A trading mentor when I worked at the investment bank once advised me: Always think about which move would cause the maximum people the maximum pain. That move is precisely what you should be watching out for at all times.
Also known as picking up pennies in front of a steamroller. This risk has caught out many a retail trader. Sometimes it is referred to as a "negative skew" strategy. Ideally what you are looking for is asymmetric risk trade set-ups: that is where the downside is clearly defined and smaller than the upside. What you want to avoid is the opposite. A famous example of this going wrong was the Swiss National Bank de-peg in 2012. The Swiss National Bank had said they would defend the price of EURCHF so that it did not go below 1.2. Many people believed it could never go below 1.2 due to this. Many retail traders therefore opted for a strategy that some describe as ‘picking up pennies in front of a steam-roller’. They would would buy EURCHF above the peg level and hope for a tiny rally of several pips before selling them back and keep doing this repeatedly. Often they were highly leveraged at 100:1 so that they could amplify the profit of the tiny 5-10 pip rally. Then this happened. Something that changed FX markets forever The SNB suddenly did the unthinkable. They stopped defending the price. CHF jumped and so EURCHF (the number of CHF per 1 EUR) dropped to new lows very fast. Clearly, this trade had horrific risk : reward asymmetry: you risked 30% to make 0.05%. Other strategies like naively selling options have the same result. You win a small amount of money each day and then spectacularly blow up at some point down the line.
We have talked about short squeezes. But how do you know what the market position is? And should you care? Let’s start with the first. You should definitely care. Let’s imagine the entire market is exceptionally long EURUSD and positioning reaches extreme levels. This makes EURUSD very vulnerable. To keep the price going higher EURUSD needs to attract fresh buy orders. If everyone is already long and has no room to add, what can incentivise people to keep buying? The news flow might be good. They may believe EURUSD goes higher. But they have already bought and have their maximum position on. On the flip side, if there’s an unexpected event and EURUSD gaps lower you will have the entire market trying to exit the position at the same time. Like a herd of cows running through a single doorway. Messy. We are going to look at this in more detail in a later chapter, where we discuss ‘carry’ trades. For now this TRYJPY chart might provide some idea of what a rush to the exits of a crowded position looks like. A carry trade position clear-out in action Knowing if the market is currently at extreme levels of long or short can therefore be helpful. The CFTC makes available a weekly report, which details the overall positions of speculative traders “Non Commercial Traders” in some of the major futures products. This includes futures tied to deliverable FX pairs such as EURUSD as well as products such as gold. The report is called “CFTC Commitments of Traders” ("COT"). This is a great benchmark. It is far more representative of the overall market than the proprietary ones offered by retail brokers as it covers a far larger cross-section of the institutional market. Generally market participants will not pay a lot of attention to commercial hedgers, which are also detailed in the report. This data is worth tracking but these folks are simply hedging real-world transactions rather than speculating so their activity is far less revealing and far more noisy. You can find the data online for free and download it directly here. Raw format is kinda hard to work with However, many websites will chart this for you free of charge and you may find it more convenient to look at it that way. Just google “CFTC positioning charts”. But you can easily get visualisations You can visually spot extreme positioning. It is extremely powerful. Bear in mind the reports come out Friday afternoon US time and the report is a snapshot up to the prior Tuesday. That means it is a lagged report - by the time it is released it is a few days out of date. For longer term trades where you hold positions for weeks this is of course still pretty helpful information. As well as the absolute level (is the speculative market net long or short) you can also use this to pick up on changes in positioning. For example if bad news comes out how much does the net short increase? If good news comes out, the market may remain net short but how much did they buy back? A lot of traders ask themselves “Does the market have this trade on?” The positioning data is a good method for answering this. It provides a good finger on the pulse of the wider market sentiment and activity. For example you might say: “There was lots of noise about the good employment numbers in the US. However, there wasn’t actually a lot of position change on the back of it. Maybe everyone who wants to buy already has. What would happen now if bad news came out?” In general traders will be wary of entering a crowded position because it will be hard to attract additional buyers or sellers and there could be an aggressive exit. If you want to enter a trade that is showing extreme levels of positioning you must think carefully about this dynamic.
Retail traders often drastically underestimate how correlated their bets are. Through bitter experience, I have learned that a mistake in position correlation is the root of some of the most serious problems in trading. If you have eight highly correlated positions, then you are really trading one position that is eight times as large. Bruce Kovner of hedge fund, Caxton Associates For example, if you are trading a bunch of pairs against the USD you will end up with a simply huge USD exposure. A single USD-trigger can ruin all your bets. Your ideal scenario — and it isn’t always possible — would be to have a highly diversified portfolio of bets that do not move in tandem. Look at this chart. Inverted USD index (DXY) is green. AUDUSD is orange. EURUSD is blue. Chart from TradingView So the whole thing is just one big USD trade! If you are long AUDUSD, long EURUSD, and short DXY you have three anti USD bets that are all likely to work or fail together. The more diversified your portfolio of bets are, the more risk you can take on each. There’s a really good video, explaining the benefits of diversification from Ray Dalio. A systematic fund with access to an investable universe of 10,000 instruments has more opportunity to make a better risk-adjusted return than a trader who only focuses on three symbols. Diversification really is the closest thing to a free lunch in finance. But let’s be pragmatic and realistic. Human retail traders don’t have capacity to run even one hundred bets at a time. More realistic would be an average of 2-3 trades on simultaneously. So what can be done? For example:
You might diversify across time horizons by having a mix of short-term and long-term trades.
You might diversify across asset classes - trading some FX but also crypto and equities.
You might diversify your trade generation approach so you are not relying on the same indicators or drivers on each trade.
You might diversify your exposure to the market regime by having some trades that assume a trend will continue (momentum) and some that assume we will be range-bound (carry).
And so on. Basically you want to scan your portfolio of trades and make sure you are not putting all your eggs in one basket. If some trades underperform others will perform - assuming the bets are not correlated - and that way you can ensure your overall portfolio takes less risk per unit of return. The key thing is to start thinking about a portfolio of bets and what each new trade offers to your existing portfolio of risk. Will it diversify or amplify a current exposure?
Crap trades, timeouts and monthly limits
One common mistake is to get bored and restless and put on crap trades. This just means trades in which you have low conviction. It is perfectly fine not to trade. If you feel like you do not understand the market at a particular point, simply choose not to trade. Flat is a position. Do not waste your bullets on rubbish trades. Only enter a trade when you have carefully considered it from all angles and feel good about the risk. This will make it far easier to hold onto the trade if it moves against you at any point. You actually believe in it. Equally, you need to set monthly limits. A standard limit might be a 10% account balance stop per month. At that point you close all your positions immediately and stop trading till next month. Be strict with yourself and walk away Let’s assume you started the year with $100k and made 5% in January so enter Feb with $105k balance. Your stop is therefore 10% of $105k or $10.5k . If your account balance dips to $94.5k ($105k-$10.5k) then you stop yourself out and don’t resume trading till March the first. Having monthly calendar breaks is nice for another reason. Say you made a load of money in January. You don’t want to start February feeling you are up 5% or it is too tempting to avoid trading all month and protect the existing win. Each month and each year should feel like a clean slate and an independent period. Everyone has trading slumps. It is perfectly normal. It will definitely happen to you at some stage. The trick is to take a break and refocus. Conserve your capital by not trading a lot whilst you are on a losing streak. This period will be much harder for you emotionally and you’ll end up making suboptimal decisions. An enforced break will help you see the bigger picture. Put in place a process before you start trading and then it’ll be easy to follow and will feel much less emotional. Remember: the market doesn’t care if you win or lose, it is nothing personal. When your head has cooled and you feel calm you return the next month and begin the task of building back your account balance.
That's a wrap on risk management
Thanks for taking time to read this three-part chapter on risk management. I hope you enjoyed it. Do comment in the replies if you have any questions or feedback. Remember: the most important part of trading is not making money. It is not losing money. Always start with that principle. I hope these three notes have provided some food for thought on how you might approach risk management and are of practical use to you when trading. Avoiding mistakes is not a sexy tagline but it is an effective and reliable way to improve results. Next up I will be writing about an exciting topic I think many traders should look at rather differently: news trading. Please follow on here to receive notifications and the broad outline is below. News Trading Part I
Why use the economic calendar
Reading the economic calendar
Knowing what's priced in
First order thinking vs second order thinking
News Trading Part II
Preparing for quantitative and qualitative releases
Data surprise index
Using recent events to predict future reactions
Buy the rumour, sell the fact
The mysterious 'position trim' effect
Some key FX releases
*** Disclaimer:This content is not investment advice and you should not place any reliance on it. The views expressed are the author's own and should not be attributed to any other person, including their employer.
Binary Options Recovery: Scammed Traders, Fake Brokers, and Funds Recovery
Following the “permanent temporary” measures against binary options and CFDs (contract for difference), the body in charge implements its own set of limitations that simply forbids regulated houses to offer such product in the UK, hence increasing the risk of pushing retails traders towards illegal brokers and outright scams. Fortunately, a new solution is now available to UK traders via a new United Kingdom Financial regulatory ruling. More scrutiny from UK banks about financial transactions, even to binary optionsIn short, banks will have to take more responsibility about the financial transactions they facilitate. This new ruling should lead to the creation of a new code of conduct that will help defrauded people to have their funds recovered by their bank, unless it is proven they acted recklessly. As a popular Financial blog puts, it, “It is likely that should a bank or credit card company be either impersonated by a fraudster in order to gain money, or trick a client into depositing, and the bank allows the transfer, a client will be able to take recourse. The broad protection should kick for many online scheme and scams, whether it is fake investment companies, fraudulent binary options brokers or those scammers who promise to help you recover your stolen funds…only to steal from you once again. On the other hands, it means the banks will be more likely to forbid transactions to legit businesses, such as reputable cryptocurrency exchanges or honest smart options platforms. The regulating bodies and financial institutions are taking a number of measures to prevent financial fraud. Binary options trading, in particular, is being controlled with a greater degree of robustness to protect the unwary general public being drawn into a situation where they suffer financial losses. Many hundreds of people around the world are targeted each day. ![img](prwn4ha2ecf51 " ") Frequently they are novice investors who are unfamiliar with the markets and do not recognize that the so-called trading platform and its way of working are actually bogus. The individual only realizes the extent of the fraud when eventually when the fraudsters finally decide that there is no more money to be had and shut down the account and promptly vanish without trace. Spotting Fraudulent Binary Options Broker Some lawyers in the financial fraud division are very familiar with the pattern of behaviour demonstrated by the fraudulent brokers and the distress caused by their dealings with inexperienced investors. There is a track of record of recovery in relation to financial fraud and has a number of strategies and tactics to compel the fraudulent broker or associated financial service providers to restore funds to those who have been deceived. Needless to say, the fraudsters are accomplished at hiding their tracks and frequently there are myriad inter-connected limited liability companies, often some are registered in different countries, with some dormant and some active. It is hardly surprising if the complexity of the situation results in a failure to discover a single person who can be challenged and held accountable. However, there are various channels financial fraud lawyers use when attempting to retrieve money for clients and each avenue is investigated. Whilst an individual may be alarmed and confused at the prospect of navigating through the complex structures that have been deliberately set up to confuse, Financial fraud lawyers are usually quite familiar with strategies fraudsters use, and frequently can steer a course to the recovery of some or all of the lost money. https://preview.redd.it/daa505b3ecf51.jpg?width=600&format=pjpg&auto=webp&s=b27aa7697b0bf1afbd238964166ce40c693db2e3 The step of last resort, legal action, is understandably daunting for a person who often has lost significant amounts of money to the fraudulent brokers. It is fully understandable that such a situation will leave the victim decidedly risk-averse. There have been experiences with class actions against the fraudulent brokers and has developed links with litigation funding organizations in order to offset the risk in respect of class actions. The lessons that can be drawn from the experiences of those individuals who have had the misfortune of losing their investments to fraudsters are to be extremely cautious. Always consider every offer or investment for at least 48 hours before making a decision, a genuine broker will understand the caution that a new investor will view a proposition. All investments carry a risk and anything that promises a return on your initial investment seems to be significantly higher than normal it is almost certainly not to be trusted. Do not allow yourself to be hurried into a decision, it is highly unlikely that an authentic broker would try to rush you into an investment, especially if you demonstrated reluctance; their reputation would suffer by such behaviour. You can now recover all money lost to bitcoin, binary options, cryptocurrency, investment, scam by hiring any one of these Verified Wealth Recovery Experts. To recover money lost to binary options, forex, bitcoins, cryptocurrency, and investment, get all the information you need here; https://bitcoinbinaryoptionsreview.com/binary-options-uk-scammed-traders-fake-brokers-and-funds-recovery/
The Next Crypto Wave: The Rise of Stablecoins and its Entry to the U.S. Dollar Market
Author: Christian Hsieh, CEO of Tokenomy This paper examines some explanations for the continual global market demand for the U.S. dollar, the rise of stablecoins, and the utility and opportunities that crypto dollars can offer to both the cryptocurrency and traditional markets. The U.S. dollar, dominant in world trade since the establishment of the 1944 Bretton Woods System, is unequivocally the world’s most demanded reserve currency. Today, more than 61% of foreign bank reserves and nearly 40% of the entire world’s debt is denominated in U.S. dollars1. However, there is a massive supply and demand imbalance in the U.S. dollar market. On the supply side, central banks throughout the world have implemented more than a decade-long accommodative monetary policy since the 2008 global financial crisis. The COVID-19 pandemic further exacerbated the need for central banks to provide necessary liquidity and keep staggering economies moving. While the Federal Reserve leads the effort of “money printing” and stimulus programs, the current money supply still cannot meet the constant high demand for the U.S. dollar2. Let us review some of the reasons for this constant dollar demand from a few economic fundamentals.
Demand for U.S. Dollars
Firstly, most of the world’s trade is denominated in U.S. dollars. Chief Economist of the IMF, Gita Gopinath, has compiled data reflecting that the U.S. dollar’s share of invoicing was 4.7 times larger than America’s share of the value of imports, and 3.1 times its share of world exports3. The U.S. dollar is the dominant “invoicing currency” in most developing countries4. https://preview.redd.it/d4xalwdyz8p51.png?width=535&format=png&auto=webp&s=9f0556c6aa6b29016c9b135f3279e8337dfee2a6 https://preview.redd.it/wucg40kzz8p51.png?width=653&format=png&auto=webp&s=71257fec29b43e0fc0df1bf04363717e3b52478f This U.S. dollar preference also directly impacts the world’s debt. According to the Bank of International Settlements, there is over $67 trillion in U.S. dollar denominated debt globally, and borrowing outside of the U.S. accounted for $12.5 trillion in Q1 20205. There is an immense demand for U.S. dollars every year just to service these dollar debts. The annual U.S. dollar buying demand is easily over $1 trillion assuming the borrowing cost is at 1.5% (1 year LIBOR + 1%) per year, a conservative estimate. https://preview.redd.it/6956j6f109p51.png?width=487&format=png&auto=webp&s=ccea257a4e9524c11df25737cac961308b542b69 Secondly, since the U.S. has a much stronger economy compared to its global peers, a higher return on investments draws U.S. dollar demand from everywhere in the world, to invest in companies both in the public and private markets. The U.S. hosts the largest stock markets in the world with more than $33 trillion in public market capitalization (combined both NYSE and NASDAQ)6. For the private market, North America’s total share is well over 60% of the $6.5 trillion global assets under management across private equity, real assets, and private debt investments7. The demand for higher quality investments extends to the fixed income market as well. As countries like Japan and Switzerland currently have negative-yielding interest rates8, fixed income investors’ quest for yield in the developed economies leads them back to the U.S. debt market. As of July 2020, there are $15 trillion worth of negative-yielding debt securities globally (see chart). In comparison, the positive, low-yielding U.S. debt remains a sound fixed income strategy for conservative investors in uncertain market conditions. Source: Bloomberg Last, but not least, there are many developing economies experiencing failing monetary policies, where hyperinflation has become a real national disaster. A classic example is Venezuela, where the currency Bolivar became practically worthless as the inflation rate skyrocketed to 10,000,000% in 20199. The recent Beirut port explosion in Lebanon caused a sudden economic meltdown and compounded its already troubled financial market, where inflation has soared to over 112% year on year10. For citizens living in unstable regions such as these, the only reliable store of value is the U.S. dollar. According to the Chainalysis 2020 Geography of Cryptocurrency Report, Venezuela has become one of the most active cryptocurrency trading countries11. The demand for cryptocurrency surges as a flight to safety mentality drives Venezuelans to acquire U.S. dollars to preserve savings that they might otherwise lose. The growth for cryptocurrency activities in those regions is fueled by these desperate citizens using cryptocurrencies as rails to access the U.S. dollar, on top of acquiring actual Bitcoin or other underlying crypto assets.
The Rise of Crypto Dollars
Due to the highly volatile nature of cryptocurrencies, USD stablecoin, a crypto-powered blockchain token that pegs its value to the U.S. dollar, was introduced to provide stable dollar exposure in the crypto trading sphere. Tether is the first of its kind. Issued in 2014 on the bitcoin blockchain (Omni layer protocol), under the token symbol USDT, it attempts to provide crypto traders with a stable settlement currency while they trade in and out of various crypto assets. The reason behind the stablecoin creation was to address the inefficient and burdensome aspects of having to move fiat U.S. dollars between the legacy banking system and crypto exchanges. Because one USDT is theoretically backed by one U.S. dollar, traders can use USDT to trade and settle to fiat dollars. It was not until 2017 that the majority of traders seemed to realize Tether’s intended utility and started using it widely. As of April 2019, USDT trading volume started exceeding the trading volume of bitcoina12, and it now dominates the crypto trading sphere with over $50 billion average daily trading volume13. https://preview.redd.it/3vq7v1jg09p51.png?width=700&format=png&auto=webp&s=46f11b5f5245a8c335ccc60432873e9bad2eb1e1 An interesting aspect of USDT is that although the claimed 1:1 backing with U.S. dollar collateral is in question, and the Tether company is in reality running fractional reserves through a loose offshore corporate structure, Tether’s trading volume and adoption continues to grow rapidly14. Perhaps in comparison to fiat U.S. dollars, which is not really backed by anything, Tether still has cash equivalents in reserves and crypto traders favor its liquidity and convenience over its lack of legitimacy. For those who are concerned about Tether’s solvency, they can now purchase credit default swaps for downside protection15. On the other hand, USDC, the more compliant contender, takes a distant second spot with total coin circulation of $1.8 billion, versus USDT at $14.5 billion (at the time of publication). It is still too early to tell who is the ultimate leader in the stablecoin arena, as more and more stablecoins are launching to offer various functions and supporting mechanisms. There are three main categories of stablecoin: fiat-backed, crypto-collateralized, and non-collateralized algorithm based stablecoins. Most of these are still at an experimental phase, and readers can learn more about them here. With the continuous innovation of stablecoin development, the utility stablecoins provide in the overall crypto market will become more apparent.
In addition to trade settlement, stablecoins can be applied in many other areas. Cross-border payments and remittances is an inefficient market that desperately needs innovation. In 2020, the average cost of sending money across the world is around 7%16, and it takes days to settle. The World Bank aims to reduce remittance fees to 3% by 2030. With the implementation of blockchain technology, this cost could be further reduced close to zero. J.P. Morgan, the largest bank in the U.S., has created an Interbank Information Network (IIN) with 416 global Institutions to transform the speed of payment flows through its own JPM Coin, another type of crypto dollar17. Although people argue that JPM Coin is not considered a cryptocurrency as it cannot trade openly on a public blockchain, it is by far the largest scale experiment with all the institutional participants trading within the “permissioned” blockchain. It might be more accurate to refer to it as the use of distributed ledger technology (DLT) instead of “blockchain” in this context. Nevertheless, we should keep in mind that as J.P. Morgan currently moves $6 trillion U.S. dollars per day18, the scale of this experiment would create a considerable impact in the international payment and remittance market if it were successful. Potentially the day will come when regulated crypto exchanges become participants of IIN, and the link between public and private crypto assets can be instantly connected, unlocking greater possibilities in blockchain applications. Many central banks are also in talks about developing their own central bank digital currency (CBDC). Although this idea was not new, the discussion was brought to the forefront due to Facebook’s aggressive Libra project announcement in June 2019 and the public attention that followed. As of July 2020, at least 36 central banks have published some sort of CBDC framework. While each nation has a slightly different motivation behind its currency digitization initiative, ranging from payment safety, transaction efficiency, easy monetary implementation, or financial inclusion, these central banks are committed to deploying a new digital payment infrastructure. When it comes to the technical architectures, research from BIS indicates that most of the current proofs-of-concept tend to be based upon distributed ledger technology (permissioned blockchain)19. https://preview.redd.it/lgb1f2rw19p51.png?width=700&format=png&auto=webp&s=040bb0deed0499df6bf08a072fd7c4a442a826a0 These institutional experiments are laying an essential foundation for an improved global payment infrastructure, where instant and frictionless cross-border settlements can take place with minimal costs. Of course, the interoperability of private DLT tokens and public blockchain stablecoins has yet to be explored, but the innovation with both public and private blockchain efforts could eventually merge. This was highlighted recently by the Governor of the Bank of England who stated that “stablecoins and CBDC could sit alongside each other20”. One thing for certain is that crypto dollars (or other fiat-linked digital currencies) are going to play a significant role in our future economy.
There is never a dull moment in the crypto sector. The industry narratives constantly shift as innovation continues to evolve. Twelve years since its inception, Bitcoin has evolved from an abstract subject to a familiar concept. Its role as a secured, scarce, decentralized digital store of value has continued to gain acceptance, and it is well on its way to becoming an investable asset class as a portfolio hedge against asset price inflation and fiat currency depreciation.Stablecoins have proven to be useful as proxy dollars in the crypto world, similar to how dollars are essential in the traditional world. It is only a matter of time before stablecoins or private digital tokens dominate the cross-border payments and global remittances industry. There are no shortages of hypes and experiments that draw new participants into the crypto space, such as smart contracts, new blockchains, ICOs, tokenization of things, or the most recent trends on DeFi tokens. These projects highlight the possibilities for a much more robust digital future, but the market also needs time to test and adopt. A reliable digital payment infrastructure must be built first in order to allow these experiments to flourish. In this paper we examined the historical background and economic reasons for the U.S. dollar’s dominance in the world, and the probable conclusion is that the demand for U.S. dollars will likely continue, especially in the middle of a global pandemic, accompanied by a worldwide economic slowdown. The current monetary system is far from perfect, but there are no better alternatives for replacement at least in the near term. Incremental improvements are being made in both the public and private sectors, and stablecoins have a definite role to play in both the traditional and the new crypto world. Thank you. Reference:  How the US dollar became the world’s reserve currency, Investopedia  The dollar is in high demand, prone to dangerous appreciation, The Economist  Dollar dominance in trade and finance, Gita Gopinath  Global trades dependence on dollars, The Economist & IMF working papers  Total credit to non-bank borrowers by currency of denomination, BIS  Biggest stock exchanges in the world, Business Insider  McKinsey Global Private Market Review 2020, McKinsey & Company  Central banks current interest rates, Global Rates  Venezuela hyperinflation hits 10 million percent, CNBC  Lebanon inflation crisis, Reuters  Venezuela cryptocurrency market, Chainalysis  The most used cryptocurrency isn’t Bitcoin, Bloomberg  Trading volume of all crypto assets, coinmarketcap.com  Tether US dollar peg is no longer credible, Forbes  New crypto derivatives let you bet on (or against) Tether’s solvency, Coindesk  Remittance Price Worldwide, The World Bank  Interbank Information Network, J.P. Morgan  Jamie Dimon interview, CBS News  Rise of the central bank digital currency, BIS  Speech by Andrew Bailey, 3 September 2020, Bank of England
Capitalxtend gets approval to become a Financial Commission member
https://preview.redd.it/zr6ge0maxvo51.jpg?width=825&format=pjpg&auto=webp&s=a63265115e38b802f732abfe805080351eaf4293 Capitalxtend, global financial service provider, has recently announced that it has received approval to join financial Commission. Capitalxtend provides services including trading in a wide range of instruments including Forex, CFDs, Indices, Commodities, Equities & Cryptocurrencies. The Financial Commission’s board has adopted resolutions approving a new applicant to join the self-regulator’s member roster, which is made up of online brokerages operating in FX, derivatives and cryptocurrency markets. This round of approved applicants includes Capitalxtend. The Financial Commission is an independent external dispute resolution (EDR) organization for the foreign exchange (forex) industry. Following the acceptance of its application by FinaCom PLC, Capitalxtend has obtained membership status which means that its traders can be eligible for compensation of up to €20,000 per submitted claim and have access to all dispute resolution services offered by the commission. After the acceptance of application by FinaCom PLC, Captialxtend members are now eligible for compensation of up to €20,000 per submitted claim. Traders that are members of Capitalxtend now also have access to all dispute resolution services offered by the commission. Capitalxtend is a multi-asset brokerage firm that offers trading of Forex, CFDs, indices, commodities, equities, and cryptocurrencies. The company operates as an offshore provider of financial services based out of Vincent and the Grenadines. https://preview.redd.it/94hldfs8xvo51.jpg?width=603&format=pjpg&auto=webp&s=781a4e703beef150a759831e9084f6df0dc7e45a Capitalxtend Team has been serving Traders since 2005 and has led the way in online trading ever since, to become a leading global financial service provider. Capitalxtend specialise in leveraged trading, bringing our clients the opportunities to generate returns in both rising and falling markets. What sets us apart is a combination of lightning-fast execution, tight spreads, 0% commission and deep understanding of what our customers need. FinaCom is an independent international service that offers the resolution of disputes to resolve trader-broker conflicts. In addition to a more streamlined and swift resolution process, relative to traditional channels of arbitration, all clients of members of the Financial Commission are protected by the Compensation Fund, which acts as an insurance policy. According to its latest annual report, the self-regulator made progress across some of its key business drivers. Specifically, the number of new complaints rose seven percent year-over-year as a record $7.4 million sought by traders in 2019, up from $3,184,932 in 2018. Likewise, the number of resolved complaints in “clients favor” increased 17 percent to 179, up from 153 the previous year. The commission also ruled in favor of its broker members in 451 cases it assessed, up from 373 in 2018. For approved members, the Financial Commission also introduces many services that intended to allow brokers to spot and halt fraudulent transactions. This includes its DisputeWatch tool which lets the broker search its community registry to see if a client has any dispute records, and sends alerts regarding suspicious clients that have the potential to abuse a company.
Hi There, I have a small business that requires me to make moderately large annual purchases from my US supplier in USD. In the past, I've been paying for consignments in USD by converting at the spot rate at the time of purchase. I would like to hedge against some from the crazy forex swings in as cheaply a way as possible. Can anyone point me towards good value USD accounts in Australia? Alternatively, ways to hedge forex transactions that don't cost an arm and a leg?
The apex in now in sight. Final preparations for the crash.
I think the market will top in the next five trading days (Final week of May), and in the next 10 trading days volatility will again take centre stage. The last time I took a pop at a big bold calling of the exact high price and exact day was February 12th, 2020. The market went up a tiny bit more from there. There was a weak uptrend that lasted about a week, and then the market came down. I think we’re now at the same point we were on the 12th of February. In the final days before chaos is unleashed. At this point I think the high in the market will be made sometime between Friday the 29th of May, 2020 and Tuesday the second of June, 2020. I think the high price on the SPX will be at, or very close to, 3080. I think the drop that follows this will be a bit over 1,920 points. This gives a target price of 1160 (And I’ll take 1225 to front run this). Over the week ahead I’m going to make a superhuman effort to provide all the things I think are needed to benefit during this. This will include my analysis, generic strategies and my jackpot trades paying over 1:100. Early in the week that follows I’ll talk through positions I am taking expecting the high. From the start of the week after that, I think the market falls. I think the market will take about a week to get to 2500 area. From there we’ll see a small bullish week back to around 2700. After this the strong market crash will begin. This would imply there being bad news around the 6 - 8th of June and this followed by worse news around the 21st to 23rd of June. Capitulation will start around the 24th - 25th of June. During this there will be some bull days, and we should sell into these bull days. Once the market starts to fall the time I can allocate to providing free information is going to drop to very close to zero. There’ll be some stuff I copy and paste talking about what I am doing. There may be some end of days (Or weekends) where I can do detailed write ups. I’ll be able to maintain fairly good tracking of swing positions, but not intra-day/week. When the market starts to move 99.9% of my attention will have to be entirely focused on the management of my own trades and ensuring people who I have as clients are well prepared and fully updated as things develop. Once the market is falling I’ll be accepting no new clients. I won’t be able to be contacted until I think the low has been made. Please understand this is not rudeness, but when the market is moving - that’s when I do my job. I can talk about things before them and after them, not during them. Itinerary of content I aim to cover in the week ahead. (I’ll link these in this post as they’re completed. So bookmark this) Analysis;
A brief overview of the analysis methods I am using. What I’ll be looking for to confirm trade plans and what I’d be looking for to tell me I am wrong and to stop losses.
Areas of engagement and action plan for following market breaks.
Action to look for to spot a possible bottom coming.
Call spreads: How and why.
Naked put options: How and why.
Placing limit orders to enter into bear markets: How and why.
Put spreads: How and why.
Selling covered calls. How and why.
Jackpot trades; Individual swing trades paying between $70,000 - $150,000 for each $500 - $1,000 risked. Psychology; How to keep your mind while everyone around you loses theirs. Things I’ll setup to track trading plans Free Stuff: Discord view only server covering swing trading plans. This will include;
Monthly put options
Monthly call spreads
Monthly put spreads
Futures swing trades
Forex swing trades
Paid Stuff: During the fall I’m only going to be able to continue to provide weekly and daily trade plans if people pay for it. The reason for this is, for it to be viable for me, I’m going to have to hire people to do the leg work in managing this. I won’t have time to do it all myself. I’m charging you to cover the costs I’ll incur to give it to you. I’ll setup a discord server with;
Trading chat. Live updates. Limited QA.
Daily and weekly analysis/trade plans (Multiple markets)
Daily and weekly call/put spreads (For income)
Complex ‘Set&Forget’ pending order trade plans (Futures, commodities and Forex).
To join the paid discord server will cost you only $50, but it is only open to join until the market starts to fall. I’ll accept new people during the next 3 weeks. Once the market starts to fall, I’ll edit this post to remove this section, and will not accept anyone new. If the market does not fall within 8 weeks from today - my plan is not working. I’ll refund all payments/close the server. There are some people here to call me a scammer. I’d suggest you do not send me the $50 if you’ve not already gotten at least $50 of value out of what I’ve shared. I’m going to keep on doing the same thing. Personally, I think i should be charging over 100* what I am, but I suppose value is very subjective. I’ll accept payments for this only via Paypal (Much easier if I end up refunding). To join this; 1 - Send $50 to PayPal email: [Redacted. People are more hassle than it's worth to help] 2 - Send payment transaction number via email to the same email address. Links to join will be sent to you. Please allow for some time, but should usually be within a few hours. I’m going to do my best to try to get through as many of my messages here as possible over the weekend (Currently seems to be about 50 pending, so no promises). By end of next week I’ll probably not be reading/replying to any messages, and by the week after I’ll probably also not be reading replies to threads/username mentions etc. I want to make sure everyone fully understands that and is prepared for it. During the week ahead I’ll bombard you with everything I think you need to understand what is happening, and while it is happening I’ll be non-contactable publicly. This will remain the case until I think we’re in at the low - and then I’ll again have time to be chatty. Relevant links will be added to this post to refer to different things (Plans, strategies and so on). So bookmark this thread and then you can use it as a master thread to find everything (I think) will be important. I think we have just 10 more trading days until this starts. 10 days where the market is fairly dull and boring, and then months and months of work starts to all come together over a matter of minutes. I’d suggest at this time it would be especially prudent to take actions to protect yourself from any lasting exposure to this. Real world and digital. Put foam on the runway.
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Why is tick spot volume a good approximation to real volume?
Every time price changes in spot forex, a new tick is registered, and that tick increments the volume counter. You would think that since this means both large and small transactions are given the same volume weighting, tick volume wouldn't be a good approximation to what the actual volume is.
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Foreign Currency ACB Reporting for Day Trading Forex
Hello, I am looking for any advice and insight into tracking trading and investments with USD borrowed margin involved as a Canadian, as well as Day Trading / Forex multiple pairs. It sounds like it is possible to track the Adjusted Cost Base of Forex Trading through tracking long and borrowed positions when doing a spot trade on a currency pair such as EUUSD with Canadian Currency, but I can't find too many resources on how-to, or software that assists with this other than. https://www.adjustedcostbase.ca/blog/calculating-adjusted-cost-base-with-foreign-currency-transactions/ Holding Canadian Dollars as the Account Currency in a Forex Trading Accouunt My understanding is that 1) Going long on EUUSD, with EUR being the base currency, USD being the quote currency, you're purchasing EUR, and borrowing USD to cover the EUR position? 2) Going short on EUUSD, you're borrowing EUR and selling it, and also borrowing USD to go long on USD position? Anyone have any insight, or resources, or referrals to trading/investment tax accountants? If the frequency of trades are say 2-3 times a week (with say 1-2 trades per day, enter and exit same day), but this is not a full-time profession, would this be better tracked as capital transactions (therefore need to track ACB in a capital account) or just claim these transactions as income transactions for simplicity? Thanks
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Dans la logique de mon post sur la vulgarisation du marché monétaire, voici une vulgarisation de la finance dans sa globalité. Avant de me lancer dans le vif du sujet, je tiens à clarifier des notions importantes qui pourraient porter à confusion et que je sais que je verrai dans les commentaires. Je vais aussi vous donner un peu mon opinion personnelle pour éviter tout malentendu dans la discussion, sautez cette partie si ça ne vous intéresse pas. Si la modération trouve que c'est trop hors-sujet, libre à elle de supprimer le post. J’ai entendu vos critiques dans les commentaires, j’avoue que j’ai vraiment trop simplifié certains passages, j’avais peur que le post soit trop long et trop technique, parfois au prix de la précision et de la rigueur, mea culpa. Cette fois-ci j’ai fait le choix de faire une synthèse des différents marchés financiers, qui régissent l’allocation des ressources financières dans notre société. Nombre d’entre vous ont dû entendre parler de certains d’entre eux, peut-être que vous participez à certains. Toutefois, comme dans mon autre post, je tiens à faire une précision importante. Les informations que je vous donne ici sont grandement insuffisantes pour que vous vous lanciez sur ces marchés, sans que cela s’apparente à une soirée au Monte Carlo pour votre portefeuille. Je ne vous incite aucunement à le faire, mon but étant uniquement d’éclairer ce qui se passe sur les marchés financiers, je n’ai aucune participation à quoi que ce soit, je ne suis pas rémunéré et je ne cherche pas à vendre ou à promouvoir quoi que ce soit. Je ne serai pas 100% exhaustif mais je ferai de mon mieux pour éclairer des sujets que vous pouvez parfois rencontrer dans la presse. Encore une fois, les questions et les remarques sont la bienvenue. Un marché financier est une notion très abstraite somme toute, il s’agît de l’ensemble des acteurs, des informations et des outils qui font que l’offre (d’actifs) et la demande (le capital) se rencontrent. Ce n’est pas à confondre avec une bourse, qui est un lieu physique (et maintenant virtuel) où se rencontrent l’offre et la demande, ou une place financière, qui est une ville qui regroupe un grand nombre de marchés financiers et d’acteurs majeurs. Quand votre tonton vous prête 10k EUR pour que vous lanciez votre site d’e-commerce, ou que vous déposez de l’argent à la banque, vous participez à un marché financier. Au fil de l’histoire, différents outils financiers ont fait leur apparition, parfois graduellement, parfois brusquement sous l’impulsion de génies/fous (souvent des mathématiciens) et ont conféré des propriétés particulières aux marchés financiers. Il s’agît entre autres de la capacité à : - Investitransférer le capital et les liquidités inutilisés - Transférer le risque entre participants - Echanger à l’international - Eviter qu’il y ait trop de disparités entre les prix dans le marché, et qu’ils suivent (plus ou moins bien) la valeur intrinsèque. Un marché efficace est par définition un marché qui reflète bien la valeur intrinsèque d'un investissement compte-tenu des informations disponibles. Des inefficacités peuvent surgir de coûts de transaction et/ou de frais d'agence élevés, de la faible liquidité des actifs ou encore à cause de barrières de toutes sortes. A mon humble avis, dans une économie de marché, il est dans l’intérêt public à ce que certains marchés soient efficaces pour que les inégalités économiques ne soient pas amplifiées et que toutes les classes sociales puissent y avoir accès, tant que cela ne se nuit pas indirectement à la société. Parlons maintenant de prix et de valeur intrinsèque. La valeur intrinsèque d’un actif ou d’un instrument financier est la valeur financière (et parfois non-financière) future qu’il procurera, compte tenu de l’incertitude qu’il y a autour de la capacité de l’actif à réaliser cette valeur à l’avenir. La valeur intrinsèque est subjective car elle dépend de l’acheteur, principalement de son aversion et de sa capacité à encaisser le risque, mais pas que, comme nous allons le voir. Le prix reflète entre autres l’offre et la demande de l’actif, plus précisément les informations qu’ont les acheteurs, leurs biais et les barrières à la transaction, c’est pour cela qu’il peut dévier, parfois fortement, de la valeur intrinsèque. La valeur intrinsèque est fondamentalement impossible à connaître, mais cela ne veut pas dire qu’il n’y a pas de modèles mathématiques ou qualitatifs pour tenter de l’estimer. Ce qu’on appelle un acteur rationnel c’est un participant qui va, compte tenu de son capital, de ses besoins de liquidité, de son horizon d’investissement et de son aversion au risque (qui est une caractéristique rationnelle) acheter les actifs dont le prix est en-dessous de la valeur intrinsèque qu’il leur assigne et vendre ceux dont le prix est au-dessus de cette valeur. Je ne crois pas qu’il y ait une façon non biaisée de présenter la finance alors je vais vous donner mon biais. Je crois personnellement en la finance comportementale et ce que je vais dire dans ce paragraphe est très controversé et mériterait toute une vie de recherche pour justifier (on peut en reparler dans les commentaires). Il faut savoir qu’il y a des paramètres anthropologiques (psychologiques, sociologiques, culturels, religieux et géographiques) qui viennent affecter les marchés, notamment leur efficacité, et les financiers et les régulateurs peuvent aborder le problème de plusieurs façons. Parfois on va trouver des intermédiaires qui vont faire fi de ces barrières, parfois on va tenter d’anonymiser les participants, parfois on va trouver un moyen de diffuser l’information à tous les participants, parfois on va réguler pour empêcher certains comportements nuisibles ou illégaux, ou bien on va créer des outils ou des stratagèmes pour contourner les barrières sans les effacer. La désintermédiation, la dérèglementation et le décloisonnement, ainsi que la volonté d’atteindre la concurrence pure et parfaite, ne sont pas toujours les meilleurs moyens d’avoir des marchés efficaces. Il faudrait que toutes les barrières socioculturelles, tous les biais psychologiques des participants des marchés disparaissent pour que cela puisse se faire, ce qui n’est évidemment ni souhaitable ni possible. Le début est un peu technique mais est crucial pour que vous compreniez la suite. Premièrement, je vais vous parler de la notion de marché primaire et de marché secondaire, qui détermine où est transféré le capital et le risque. Deuxièmement, je vais vous parler de l’organisation et de la régulation des marchés. Troisièmement, je vais vous parler de la classification des marchés en fonction des instruments financiers qui s’y échangent et dernièrement je vais vous parler de la classification des marchés en fonction des actifs qui s’y échangent. A – Les marchés primaires, secondaires, tertiaires et quaternaires. Le marché primaire est le marché qui fait rencontrer ceux qui vont fournir des actions ou des obligations de leur propre entreprise, des matières premières ou autres actifs, en échange de capital. Quand une entreprise ou un Etat lèvent des fonds ils participent sur ce marché, quand une société d’exploitation de pétrole brut vend ses barils elle y participe aussi. Quand vous prêtez de l’argent à votre pote, ou que vous achetez une maison neuve à un promoteur immobilier vous participez au marché primaire. En général, il s’agît d’un marché désorganisé où des particuliers et des entreprises se rencontrent par leurs propres moyens (bouche à oreille, publicité) et qui est très peu régulé, qu’on appelle gré-à-gré, que j’expliciterai bientôt. Ce marché est relativement risqué et peu transparent, en général votre seul recours juridique est le civil et si votre contrepartie fait faillite vous n’avez aucune garantie de pouvoir récupérer votre dû. Il demande de faire confiance à votre contrepartie, d’être compétent et parfois spécialisé dans ce domaine ainsi que d’être particulièrement critique des informations que l’on vous donne. Quand il est organisé, il s’agît le plus souvent d’une vente aux enchères entre participants agréés. Le marché secondaire est le marché où les actifs sont revendus entre investisseurs, ici le capital et le risque sont transférés d’un investisseur à un autre. Ce marché a plusieurs fonctions, il permet entre autres aux investisseurs de sortir du marché quand ils en ont envie, de standardiser et regrouper les actifs, d’actualiser le prix des actifs en fonction des événements et de permettre à un plus grand nombre d’investisseurs de détenir certains actifs qui leur serait parfois impossible d’obtenir faute de contacts ou de moyens. Si une action ou une obligation est échangée sur le marché secondaire, cela veut dire que l’entreprise sous-jacente a donné son accord à ce qu’elle renonce à choisir qui détient ses parts ou sa dette (à quelques exceptions près), elle n’est pas affectée directement par la transaction. Le marché secondaire est le plus souvent organisé et régulé, moyennant commission. Il est le plus souvent organisé dans un type d’enchère très particulier qu’on appelle bourse, ou bien d’un marché organisé par un courtier. Je parle brièvement du marché tertiaire et du marché quaternaire car vous pourrez peut-être en entendre parler, le marché tertiaire est le marché où les courtiers interagissent avec les grosses institutions (souvent des banques) et le marché quaternaire est le marché entre grosses institutions uniquement. Ce sont des marchés gré-à-gré. B – L’organisation et la régulation des marchés Le marché le plus basique est le marché gré-à-gré ou over the counter (OTC) en anglais. Comme je l’ai dit plus haut, ce marché n’est pas organisé, il est sans intermédiaires. Pour y participer il faut trouver des contreparties par ses propres moyens, chercher les informations par soi-même et surtout faire confiance à la personne en face, chose qui n’est pas toujours facile. C’est surtout sur ce marché que se manifestent les barrières anthropologiques et les biais psychologiques car il y a peu de moyens de réguler ce qui s’y passe ou d’être sûr des informations que l’on a. Bien évidemment il existe des lois et des garde-fous juridiques ou médiatiques, mais vous êtes libres de rédiger n’importe quel contrat légal sur ce marché. C’est d’ailleurs ici que vous verrez les instruments financiers les plus complexes comme les options exotiques ou les swaps. Sur le marché gré-à-gré on dit que la liquidité est faible, comme vous avez souvent affaire à des actifs uniques (startups, œuvres d’art, options exotiques) que très peu de personnes convoitent, ce qui fait qu’il est coûteux et long de trouver des acheteurs, et ce qui pousse les prix à la hausse. Je ne vais pas m’attarder dessus car il y a énormément à dire dessus, mais la vente aux enchères est une forme d’organisation des marchés. Vous y trouverez par exemple les obligations souveraines, les œuvres d’art ou bien, lors d’une introduction en bourse d’une entreprise, des actions sont attribuées aux premiers actionnaires via une enchère, ce qui permet de déterminer le prix initial de l’action en bourse. Si cela vous intéresse, regardez les différents types de vente aux enchères comme l’enchère anglaise ou l’enchère néerlandaise. Ici vous avez quelques intermédiaires qui rentrent en jeux comme le commissaire-priseur ou la banque d’investissement pour l’introduction en bourse, qui vont prendre leur commission en échange de la publicité qu’ils fournissent à votre actif et de la facilitation de la transaction – autrement dit de la liquidité. Il est à noter qu’un commissaire-priseur qui tient à sa réputation va exiger certaines contraintes et garanties sur l’actif, ce qui donne un début de régulation au marché financier. Dans le cas d’une introduction en bourse (Initial Public Offering ou IPO), les exigences sont draconiennes, les comptes financiers, les cadres dirigeants de l’entreprise et les actionnaires actuels sont scrutés à la fois par l’Autorité des Marchés Financiers (AMF) en France, et les analystes financiers. La bourse est une forme d’enchère très spécifique. Elle rassemble des traders qui travaillent pour des courtiers ou des sociétés de gestion d’actifs et fonctionne avec une enchère dite continue/dirigée par ordres et est chapeautée par l’AMF en France. Les traders donnent des ordres de vente et d’achat – soit ils donnent un prix et achètent ou vendent tout ce qui est à un prix meilleur ou égal, soit ils spécifient une quantité et achètent ou vendent peu importe le prix, il existe aussi des ordres plus complexes où l’on spécifie un prix, une quantité et une date limite, entre autres. La bourse génère des profits en prenant une commission sur chaque ordre et à chaque fois qu’une nouvelle entreprise rentre sur le marché s’il s’agît d’une bouse d’actions. Ici il n’y a pas un prix unique pour un actif, il y a le prix de la demande (ask) et le prix de l’offre (bid) – il faut proposer un prix égal ou supérieur à l’ask pour pouvoir acheter l’actif et un prix inférieur ou égal au bid pour pouvoir le vendre. Un des effets de cette structure de marché (qui peut paraître contre-intuitif pour ceux habitués au marché gré-à-gré) est que plus on veut acheter une grande quantité de l’actif, plus il va falloir proposer un prix élevé, et inversement plus l’on veut en vendre, plus il va falloir baisser son prix. La bourse crée un peu plus de symétrie entre les acheteurs et les vendeurs, ce qui n’existe pas dans le marché gré-à-gré où l’avantage est déterminé largement par le contrôle qu’ont les acheteurs et les vendeurs sur le marché et l’information en circulation. Le rapport de force ne disparaît pas entièrement mais est artificiellement atténué. Cela fait aussi que si beaucoup d’acheteurs et vendeurs sont intéressés par un actif et que beaucoup d’ordres circulent, statistiquement la différence entre le bid et l’ask sera plus faible, c’est pour cela qu’on mesure traditionnellement la liquidité d’un actif en bourse par la différence entre le bid et l’ask, qu’on appelle le « bid-ask spread », par la moyenne du bid et de l’ask. En exigeant une forte transparence, en attirant des analystes financiers, les autorités des marchés et les médias, la bourse est un peu moins risquée que le marché gré-à-gré, permet d’avoir une meilleure idée de la valeur intrinsèque et surtout une bien meilleure liquidité, bien sûr à un prix. Bien sûr, le risque propre aux rendements futurs de l’investissement n’est pas vraiment affecté et jouer en bourse reste relativement risqué, voir même à espérance négative dans le cas du marché des changes. Sans rentrer sans les détails, la bourse permet parfois d’effectuer la vente à découvert (short-selling), c’est quand vous empruntez un actif à quelqu’un qui le détient, moyennant commission, pour le vendre immédiatement, le racheter plus tard (en espérant que les prix ont fortement baissé) et le rendre à son propriétaire après – cette pratique permet dans de nombreux cas d’ajuster des prix trop élevés lorsque pour x ou y raison les détenteurs ne les vendent pas alors que le prix est surélevé. Traditionnellement une bourse se tient dans un lieu physique mais maintenant c’est largement effectué virtuellement. La dernière structure de marché majeure est le marché organisé par un courtier – souvent une banque d’investissement. Ici le courtier achète une grosse quantité d’actifs sur la bourse en tant que broker et la revend au détail à ses clients en tant que dealer, ses traders sont là pour répondre à la demande des clients au meilleur prix possible et à liquider le surplus. Le courtier peut prendre une commission sur les ordres, fixer son propre bid-ask en fonction de ses stocks disponibles et empocher la différence. Dans certains cas il peut prêter de l’argent à ses clients pour qu’ils achètent ses produits et encaisser les intérêts du prêt ou encore proposer les services d’analystes financiers qui vont faire des recommandations aux clients (a.k.a full service). Ces marchés restent contrôlés par l’AMF en France vu le contrôle qu’a le courtier sur son marché, le but étant que ses prix suivent ceux de la bourse. Le courtier gère son propre risque et met des limites (comme le margin call) pour éviter que ses clients ne fassent faillite – il est perdant si cela se produit, surtout s’il a prêté de l’argent à son client, il a surtout intérêt à ce que son client continue d’effectuer des ordres car c’est comme cela qu’il se rémunère, parfois au détriment du client. C – marché au comptant, marché à terme et marché dérivé Le marché au comptant, en anglais « spot » est le marché où les échanges ont lieu en temps direct – si accord il y a, l’actif et le capital sont échangés au moment de la transaction. Sans aucun autre instrument il n’offre pas beaucoup de flexibilité, il ne permet pas de manipuler facilement le risque auquel on s’expose, car en achetant un actif on prend à 100% le risque du sous-jacent et on est totalement soumis aux aléas des prix. Le marché à terme est un peu différent. Ici on s’engage dans des contrats spécifiques où l’on se met d’accord sur un prix et où l’échange de capital et d’actif s’effectue à une date postérieure, peu importe le prix du marché à ce moment. Le terme utilisé pour dire qu’on rentre dans un contrat à terme est prendre une position. Ici on a un transfert d’une partie du risque de l’acheteur de l’actif (on dit qu’il est en position longue) au vendeur (on dit qu’il est en position courte). En effet, celui en position longue préfère fixer le prix futur et ne pas prendre le risque que les prix baissent et celui en position courte prend le risque d’acheter quelque chose qui en vaudra moins à la date de l’échange. Cela permet à certains investisseurs de couvrir, par exemple, leur risque de change s’ils savent qu’à une certaine date ils voudront échanger une certaine somme de monnaie contre une autre et à d’autres qui ont une plus grande capacité à encaisser le risque de spéculer. Ces contrats ont d’autant plus de valeur que le sous-jacent est volatile. Vu qu’on a vu le marché gré-à-gré et la bourse, je vais parler des différences entre les deux sur le marché à terme. Sur le marché à terme gré-à-gré, les contrats à terme sont appelés « forwards », vous pouvez les personnaliser comme vous voulez, avec vos prix, vos quantités, vous négociez ça. Cependant, si votre contrepartie fait faillite avant l’exécution du contrat, vous n’avez aucun moyen d’effectuer la transaction et vous n’avez aucun moyen de sortir de ce contrat si vous-mêmes vous avez des difficultés à remplir vos obligations. Si vous êtes un agriculteur qui vend sa récolte de l’année prochaine avec ce type de contrat, vous avez intérêt à faire en sorte que vous produisez assez pour l’exécuter ou que vous pouvez acheter ce qui vous manque si vous n’y parvenez pas le jour de la livraison. Sur le marché à terme en bourse c’est un peu différent, ici les prix, les quantités, les obligations contractuelles et modalités de livraison sont fixés à l’avance par l’offre et la demande et ne sont pas négociables, avec ce qu’on appelle les contrats « futures ». L’avantage des futures est que si vous pensez qu’il y a un risque que vous ne puissiez apporter votre partie du contrat (le capital ou l’actif), vous pouvez vous dégager de votre obligation contractuelle en cédant votre position à quelqu’un en capacité de le faire – si vous avez de la chance, plus de participants pourront exécuter votre position maintenant, ce qui normalement devrait rendre votre position attirante et on vous achètera votre contrat. Si au contraire, nombre comme vous ne peuvent exécuter ce contrat (mauvaises récoltes à cause de la météo par exemple), vous aurez du mal à le céder et vous serez peut-être obligé de payer quelqu’un pour qu’il l’exécute à votre place. Par ailleurs, les participants sont obligés d’avoir un apport en capital pour rentrer dans un future et si par hasard votre contrepartie fait faillite, la chambre de compensation (ou clearing house) vous remboursera, ce qui élimine le risque de contrepartie. Autre particularité du contrat à terme, vous pouvez conserver la rente de votre actif tant que la date d’exécution n’est pas venue, mais vous devez toujours payer les frais de stockage, livraison ou autres, ce qui est bien sûr pris en compte dans le prix. Le marché des dérivés est vraiment là où le risque est transféré et manipulé. Ici on échange ce qu’on appelle des options/warrants, des contrats d’échange (swaps), des pensions livrées (repurchase agreements ou « repo »), les couvertures de défaillance (credit default swaps, CDS) entre autres. N’ayez crainte on va attaquer chacun de ces termes. D’abord, sur le marché des dérivés en bourse on a les options dite « vanilla ». Une option, contrairement à un contrat à terme, donne le droit et non l’obligation, d’acheter ou de vendre un actif à un moment donné à un prix donné et on effectue une transaction financière pour rentrer dans ce contrat, proportionnelle au risque que transféré d’une partie à l’autre. Le droit d’acheter l’actif est appelé « call » et le droit de le vendre est appelé « put », le prix convenu est appelé « strike price ». Si le jour venu votre strike price est plus intéressante que le prix de l’actif à ce moment-là, on dit que votre option est « in the money » (ITM), si votre option est moins intéressante on dit qu’elle est « out of the money » (OTM) et si elle est aussi intéressante que le prix actuel, on dit qu’elle est « at the money » (ATM). Si votre option vous donne seulement la possibilité d’exercer votre droit à une date donnée, on dit qu’elle est de style européen, si vous pouvez l’exercer à n’importe quel moment jusqu’à la date convenue on dit qu’elle est de style américain. Plus le prix de l’actif sous-jacent est volatile, et plus il est facile d’exercer l’option (par exemple si elle est de style américain), plus il y a de fortes chances que l’option soit in-the-money, plus la valeur de l’option augmente, car le détenteur transmet beaucoup de risque à sa contrepartie. Vous trouverez aussi en bourse de commerce des options sur la météo, pour vous protéger en cas de mauvaises récoltes par exemple. L’intérêt de ces options est qu’elles peuvent facilement créer de gros effets de levier étant donné qu’une option vaut typiquement 2-10% de l’actif sous-jacent, puis comme c’est échangé en bourse on peut s’en débarrasser rapidement si on ne peut pas les exercer faute de moyens ou d’actif. Pour les matheux intrigués je conseille en introduction le modèle de Black-Scholes. Sur le marché gré-à-gré on va retrouver tous les contrats divers et variés susmentionnés. Une warrant est une option non-échangeable émise par une banque en série limitée. Ensuite on a les options exotiques, qui sont tout un tas d’options avec des règles particulières. Pour vous donner des exemples on a des options pour échanger des actifs (pourquoi pas du blé contre une action Google ?), les options style asiatique qui vous donnent le droit d’acheter un actif à son prix moyen sur une période donnée (pour vous protéger de la volatilité) ou les options style parisiennes qu’on ne peut exercer que si le prix du sous-jacent est dans certains clous pendant une certaine période (pour vous protéger de la manipulation des cours). Le swap ou contrat d’échange est quand deux parties se mettent d’accord pour faire plusieurs contrats à terme à répétition, nous allons en voir des exemples plus tard. Je m'attarde un peu sur le repo car c'est très discuté dans les actualités récemment. J'y ai fait référence dans mon post sur la monnaie. Un repo est une transaction spot (actif contre capital) plus un contrat forward pour que l'actif soit racheté à une période future. C'est une façon pour une institution financière d'emprunter de l'argent à une autre (souvent pour une très courte période, parfois 24h), comme la banque centrale, sans que l'autre partie ne prenne quelconque risque, tant est que l'actif échangé soit fiable, comme un bon du trésor. La banque centrale injecte des liquidités temporairement, elles reviennent dans ses coffres le jour suivant. Ce n'est pas comme le Quantitative Easing où l'actif est définitivement acheté par la banque centrale et l'argent est injecté durablement dans le système. La banque centrale fait des repo pour imposer pratiquement par la force les taux qu'elle veut transmettre au reste de l'économie, surtout lorsque les banques commerciales ne se font plus confiance et font grimper leurs taux au-delà des limites définies par la banque centrale. Les couvertures de défaillance servent à rembourser les détenteurs d'obligations lorsque l'entreprise sous-jacente fait défaut (c'est un contrat d'assurance). Synthèse de l'organisation et de la classification des marchés D – Les marchés selon les types d’actifs Le marché monétaire (que j’ai couvert en détail dans mon post précédent) est le marché où les liquidités excédentaires sont prêtées pour une période courte aux entreprises, particuliers ou Etats qui en ont besoin, moyennant une rente nommée intérêt. je vous renvoie à mon post sur le sujet Le marché de la dette long-terme est là où se financent les participants qui veulent des fonds pour une période supérieure à deux ans, moyennant intérêts. On appelle le marché où s’échange entre investisseurs la dette long-terme le marché obligataire. On a des obligations de différents types en fonction des intérêts versés ou des options attachées à l'obligation. Une obligation a un principal et un coupon (l'intérêt versé périodiquement). Une obligation sans coupon est un zéro-coupon et au lieu de verser un intérêt, on prête initialement une somme au débiteur qui est inférieure au principal qu'il doit rendre à la fin du contrat. Le principal peut être remboursé progressivement comme pour une dette immobilière (amortissement) ou en totalité d'un coup à la fin du contrat (bullet bond). Le coupon peut être à taux fixe ou variable. Si c'est variable ce sera en général le LIBOR + une petite prime de risque/liquidité ou bien une grosse prime - le LIBOR. Comme on peut revendre des obligations sur le marché secondaire, leur prix va varier en fonction du risque que le débiteur fasse défaut et des taux. Si les taux en vigueur aujourd'hui sont meilleurs que celui de votre obligation, sa valeur relative décroît. C'est pour cela que les obligations d'Etat ont un risque de prix sur le marché secondaire et ne sont pas sans risque, le risque de défaut n'est pas le seul risque d'une obligation. Une des propriétés vertueuses des obligations est la convexité, en termes simples, une obligation peut plus facilement prendre de la valeur si les taux baissent, qu'elle ne peut en perdre si les taux augmentent. On trouvera sur le marché des dérivés des couvertures de défaillance (CDS), des repo et des swaps pour échanger des taux fixes contre des taux variables, ainsi que des mortgage-backed-securities (MBS) qui regroupent de nombreux crédits immobiliers d'une banque régionale ou des collateralized-debt-obligations (CDO) qui regroupent des crédits et d'autres instruments financiers pour produire un actif complexe avec un risque personnalisé (souvent très élevé). Ce sont les CDO, les MBS et les CDS qui ont causé la crise de 2008 comme les agences de notation n'ont pas fait leur rôle et ont sous-estimé le risque de ces produits. Le marché action est le marché où s’échangent les parts des entreprises. Une action représente la valeur résiduelle des profits (ou de la liquidation) d’une entreprise une fois que tous les créanciers (l’Etat compris) sont payés. Certaines actions ont des droits de votes, d’autres non. Elles versent une rente appelée dividendes, qui sont variables en fonction des résultats de l’entreprise ainsi que de ses besoins en capital. Une définition alternative d’une action est une dette à durée indéterminée/illimitée. En bourse on va calculer la valeur intrinsèque de l'action en faisant la somme des dividendes futurs qu'on espère plus le prix de cession espéré divisisés par un taux qui représente le risque de l'investissement et le retour minimum qu'on attend en échange. Alternativement on calcule la valeur liquidative des actifs de l'entreprise moins sa dette si on pense qu'elle va faire faillite. Plus un dividende est éloigné dans le temps, moins il comptera dans la valeur intrinsèque, puis si l'on estime que le risque est élevé, les dividendes lointains ne comptent quasiment pas. Si on pense que le marché est efficace, deux autres méthodes populaires existent, la première est appelée les multiples. En gros on regarde les entreprises comparables et on calcule ler prix divisés par leurs revenus par exemple, puis on multiplie les revenus de l'entreprise qu'on analyse par ces multiples pour avoir une idée de sa valorisation relative. Sinon, on regarde à quel point l'action varie en même temps que le restedu marché. Si l'action varie moins fortement que le marché, on lui donne une valeur plus grande, inversement si elle varie plus fortement on baisse sa valeur car on considère que c'est une action risquée. Hors bourse, il y a plusieurs méthodes. Si l'entreprise est toute nouvelle on va surtout valoriser la compétence des entrepreneurs pour estimer le risque, si l'entreprise gagne déjà de l'argent mais ne verse pas de dividendes on va regarder ses flux de trésorerie et son EBITDA. On classifie les actions en fonction des secteurs industriels, du prix par rapport aux revenus nets, flux de trésorerie et aux dividendes (Value et Growth) ainsi qu'en fonction de leur capitalisation boursière. On trouvera ici nos options, mais aussi des indices boursiers qui font la moyenne des rendements (en terme de prix et de dividendes) d'un groupe d'actions, soit à part égale pour chaque entreprise, soit pondérée par leur capitalisation boursière ou leurs prix par action individuelle. Ces indices sont suivis par des fonds indiciels, qui peuvent être soit des fonds mutuels (achetés en gré-à-gré) ou des ETF (achetés en bourse/courtiers). On trouvera ici nos options, nos warrants, des equity swaps (échange de dividendes par exemple) ou des total return swaps (pour les ETF synthétiques, voir mon post sur le sujet). On notera que le marché action et le marché obligataire forment le marché dit des capitaux. Le marché des changes (Foreign Exchange ou tout simplement ForEx en anglais) est le marché qui fait jonction entre les différentes économies et permet de convertir une monnaie en une autre – la monnaie ne verse pas de rente mais est sujette à l’inflation/déflation de l’économie qu’elle représente. L’offre et la demande d’une monnaie est déterminée par l’attractivité de l’économie – si beaucoup d’investisseurs étrangers veulent y investir, la demande pour la monnaie va croître et sa valeur relative va s’apprécier, ou bien si des ressortissants d'un pays veulent renvoyer des liquidités chez eux. Alternativement certaines monnaies sont fixées à d’autres monnaies ou, rarement aujourd’hui, fluctuent en fonction du prix de certaines matières premières et de la quantité d'icelles possédée par la banque centrale par rapport à la demande de la monnaie. Dans le cas des cryptomonnaies, en plus de la demande et l'offre de monnaie, on valorise aussi la qualité des services, la capacité de calcul allouée et coût pour effectuer les transactions. Ici on peut faire des swaps de monnaie, en gros simuler le coût d'un échange de monnaie sans s'échanger réellement la monnaie. Ca permet de couvrir le risque de change sans passer par le marché classique. Le marché alternatif est composé de plusieurs marchés comme le marché des matières premières (représenté par les bourses de commerce) où s’échangent métaux précieux, l'énergie, le pétrole et blé entre autres, le marché des fonds d’investissement à stratégies alternatives type private equity/venture capital/hedge fund avec des stratégies impossibles à réaliser pour des particuliers seuls, le marché de l’immobilier – où la rente est appelée loyer, le marché des œuvres d’art, du vin et j’en passe et des meilleurs. Sur les matières premières on va aussi trouver des indices de prix (commodity indexes), des futures sur l'or, des options sur la météo et des forwards sur des matières exotiques. L'immobilier est classé en plusieurs catégories comme le résidentiel, le commercial et les bureaux, les actifs peuvent être détenus en direct ou à travers des fonds privés ou cotés. En résumé Voilà une synthèse de la finance aujourd'hui. J'ai omis des sujets comme la FinTech car cela sort du propos, mais, tant est que la modération l'accepte, je vais publier une brève histoire de la finance qui comprendra cela. J'ai fait exprès d'aborder certains sujets sans trop les creuser, notamment les bulles financières, car je préfère répondre à des questions précises plutôt que de me lancer dans une explication qui va perdre tout le monde. Je n'ai pas eu le temps de faire tous les graphiques et schémas que je voulais mais si vous en voulez en particulier ce sera avec plaisir. Si vous voulez des sources pour des éléments particuliers hésitez pas, j'ai toute une bibliographie d'articles et de livres. Merci à ceux qui m'ont encouragé à écrire ce post.
Which are your Top 5 favourite coins out of the Top 100? An analysis.
I am putting together my investment portfolio for 2018 and made a complete summary of the current Top 100. Interestingly, I noticed that all coins can be categorized into 12 markets. Which markets do you think will play the biggest role in the coming year? Here is a complete overview of all coins in an excel sheet including name, market, TPS, risk profile, time since launch (negative numbers mean that they are launching that many months in the future) and market cap. You can also sort by all of these fields of course. Coins written in bold are the strongest contenders within their market either due to having the best technology or having a small market cap and still excellent technology and potential. https://docs.google.com/spreadsheets/d/1s8PHcNvvjuy848q18py_CGcu8elRGQAUIf86EYh4QZo/edit#gid=0 The 12 markets are
Currency 13 coins
Platform 25 coins
Ecosystem 9 coins
Privacy 10 coins
Currency Exchange Tool 8 coins
Gaming & Gambling 5 coins
Misc 15 coins
Social Network 4 coins
Fee Token 3 coins
Decentralized Data Storage 4 coins
Cloud Computing 3 coins
Stable Coin 2 coins
Before we look at the individual markets, we need to take a look of the overall market and its biggest issue scalability first: Cryptocurrencies aim to be a decentralized currency that can be used worldwide. Its goal is to replace dollar, Euro, Yen, all FIAT currencies worldwide. The coin that will achieve that will be worth several trillion dollars. Bitcoin can only process 7 transactions per second (TPS). In order to replace all FIAT, it would need to perform at at least VISA levels, which usually processes around 3,000 TPS, up to 25,000 TPS during peak times and a maximum of 64,000 TPS. That means that this cryptocurrency would need to be able to perform at least several thousand TPS. However, a ground breaking technology should not look at current technology to set a goal for its use, i.e. estimating the number of emails sent in 1990 based on the number of faxes sent wasn’t a good estimate. For that reason, 10,000 TPS is the absolute baseline for a cryptocurrency that wants to replace FIAT. This brings me to IOTA, which wants to connect all 80 billion IoT devices that are expected to exist by 2025, which constantly communicate with each other, creating 80 billion or more transactions per second. This is the benchmark that cryptocurrencies should be aiming for. Currently, 8 billion devices are connected to the Internet. With its Lightning network recently launched, Bitcoin is realistically looking at 50,000 possible soon. Other notable cryptocurrencies besides IOTA and Bitcoin are Nano with 7,000 TPS already tested, Dash with several billion TPS possible with Masternodes, Neo, LISK and RHOC with 100,000 TPS by 2020, Ripple with 50,000 TPS, Ethereum with 10,000 with Sharding. However, it needs to be said that scalability usually goes at the cost of decentralization and security. So, it needs to be seen, which of these technologies can prove itself resilient and performant. Without further ado, here are the coins of the first market
Market 1 - Currency:
Bitcoin: 1st generation blockchain with currently bad scalability currently, though the implementation of the Lightning Network looks promising and could alleviate most scalability concerns, scalability and high energy use.
Ripple: Centralized currency that might become very successful due to tight involvement with banks and cross-border payments for financial institutions; banks and companies like Western Union and Moneygram (who they are currently working with) as customers customers. However, it seems they are aiming for more decentralization now.https://ripple.com/dev-blog/decentralization-strategy-update/. Has high TPS due to Proof of Correctness algorithm.
Bitcoin Cash: Bitcoin fork with the difference of having an 8 times bigger block size, making it 8 times more scalable than Bitcoin currently. Further block size increases are planned. Only significant difference is bigger block size while big blocks lead to further problems that don't seem to do well beyond a few thousand TPS. Opponents to a block size argue that increasing the block size limit is unimaginative, offers only temporary relief, and damages decentralization by increasing costs of participation. In order to preserve decentralization, system requirements to participate should be kept low. To understand this, consider an extreme example: very big blocks (1GB+) would require data center level resources to validate the blockchain. This would preclude all but the wealthiest individuals from participating.Community seems more open than Bitcoin's though.
Litecoin : Little brother of Bitcoin. Bitcoin fork with different mining algorithm but not much else.Copies everything that Bitcoin does pretty much. Lack of real innovation.
Dash: Dash (Digital Cash) is a fork of Bitcoin and focuses on user ease. It has very fast transactions within seconds, low fees and uses Proof of Service from Masternodes for consensus. They are currently building a system called Evolution which will allow users to send money using usernames and merchants will find it easy to integrate Dash using the API. You could say Dash is trying to be a PayPal of cryptocurrencies. Currently, cryptocurrencies must choose between decentralization, speed, scalability and can pick only 2. With Masternodes, Dash picked speed and scalability at some cost of decentralization, since with Masternodes the voting power is shifted towards Masternodes, which are run by Dash users who own the most Dash.
IOTA: 3rd generation blockchain called Tangle, which has a high scalability, no fees and instant transactions. IOTA aims to be the connective layer between all 80 billion IOT devices that are expected to be connected to the Internet in 2025, possibly creating 80 billion transactions per second or 800 billion TPS, who knows. However, it needs to be seen if the Tangle can keep up with this scalability and iron out its security issues that have not yet been completely resolved.
Nano: 3rd generation blockchain called Block Lattice with high scalability, no fees and instant transactions. Unlike IOTA, Nano only wants to be a payment processor and nothing else, for now at least. With Nano, every user has their own blockchain and has to perform a small amount of computing for each transaction, which makes Nano perform at 300 TPS with no problems and 7,000 TPS have also been tested successfully. Very promising 3rd gen technology and strong focus on only being the fastest currency without trying to be everything.
Decred: As mining operations have grown, Bitcoin’s decision-making process has become more centralized, with the largest mining companies holding large amounts of power over the Bitcoin improvement process. Decred focuses heavily on decentralization with their PoW Pos hybrid governance system to become what Bitcoin was set out to be. They will soon implement the Lightning Network to scale up. While there do not seem to be more differences to Bitcoin besides the novel hybrid consensus algorithm, which Ethereum, Aeternity and Bitcoin Atom are also implementing, the welcoming and positive Decred community and professoinal team add another level of potential to the coin.
Aeternity: We’ve seen recently, that it’s difficult to scale the execution of smart contracts on the blockchain. Crypto Kitties is a great example. Something as simple as creating and trading unique assets on Ethereum bogged the network down when transaction volume soared. Ethereum and Zilliqa address this problem with Sharding. Aeternity focuses on increasing the scalability of smart contracts and dapps by moving smart contracts off-chain. Instead of running on the blockchain, smart contracts on Aeternity run in private state channels between the parties involved in the contracts. State channels are lines of communication between parties in a smart contract. They don’t touch the blockchain unless they need to for adjudication or transfer of value. Because they’re off-chain, state channel contracts can operate much more efficiently. They don’t need to pay the network for every time they compute and can also operate with greater privacy. An important aspect of smart contract and dapp development is access to outside data sources. This could mean checking the weather in London, score of a football game, or price of gold. Oracles provide access to data hosted outside the blockchain. In many blockchain projects, oracles represent a security risk and potential point of failure, since they tend to be singular, centralized data streams. Aeternity proposes decentralizing oracles with their oracle machine. Doing so would make outside data immutable and unchangeable once it reaches Aeternity’s blockchain. Of course, the data source could still be hacked, so Aeternity implements a prediction market where users can bet on the accuracy and honesty of incoming data from various oracles.It also uses prediction markets for various voting and verification purposes within the platform. Aeternity’s network runs on on a hybrid of proof of work and proof of stake. Founded by a long-time crypto-enthusiast and early colleague of Vitalik Buterin, Yanislav Malahov. Promising concept though not product yet
Bitcoin Atom: Atomic Swaps and hybrid consenus. This looks like the only Bitcoin clone that actually is looking to innovate next to Bitcoin Cash.
Dogecoin: Litecoin fork, fantastic community, though lagging behind a bit in technology.
Bitcoin Gold: A bit better security than bitcoin through ASIC resistant algorithm, but that's it. Not that interesting.
Digibyte: Digibyte's PoS blockchain is spread over a 100,000+ servers, phones, computers, and nodes across the globe, aiming for the ultimate level of decentralization. DigiByte rebalances the load between the five mining algorithms by adjusting the difficulty of each so one algorithm doesn’t become dominant. The algorithm's asymmetric difficulty has gained notoriety and been deployed in many other blockchains.DigiByte’s adoption over the past four years has been slow. It’s still a relatively obscure currency compared its competitors. The DigiByte website offers a lot of great marketing copy and buzzwords. However, there’s not much technical information about what they have planned for the future. You could say Digibyte is like Bitcoin, but with shorter blocktimes and a multi-algorithm. However, that's not really a difference big enough to truly set themselves apart from Bitcoin, since these technologies could be implemented by any blockchain without much difficulty. Their decentralization is probably their strongest asset, however, this also change quickly if the currency takes off and big miners decide to go into Digibyte.
Bitcoin Diamond Asic resistant Bitcoin and Copycat
Market 2 - Platform
Most of the cryptos here have smart contracts and allow dapps (Decentralized apps) to be build on their platform and to use their token as an exchange of value between dapp services.
Ethereum: 2nd generation blockchain that allows the use of smart contracts. Bad scalability currently, though this concern could be alleviated by the soon to be implemented Lightning Network aka Plasma and its Sharding concept.
EOS: Promising technology that wants to be able do everything, from smart contracts like Ethereum, scalability similar to Nano with 1000 tx/second + near instant transactions and zero fees, to also wanting to be a platform for dapps. However, EOS doesn't have a product yet and everything is just promises still. Highly overvalued right now. However, there are lots of red flags, have dumped $500 million Ether over the last 2 months and possibly bought back EOS to increase the size of their ICO, which has been going on for over a year and has raised several billion dollars. All in all, their market cap is way too high for that and not even having a product.
Cardano: Similar to Ethereum/EOS, however, only promises made with no delivery yet, highly overrated right now. Interesting concept though. Market cap way too high for not even having a product. Somewhat promising technology.
VeChain: Singapore-based project that’s building a business enterprise platform and inventory tracking system. Examples are verifying genuine luxury goods and food supply chains. Has one of the strongest communities in the crypto world. Most hyped token of all, with merit though.
Neo: Neo is a platform, similar to Eth, but more extensive, allowing dapps and smart contracts, but with a different smart contract gas system, consensus mechanism (PoS vs. dBfT), governance model, fixed vs unfixed supply, expensive contracts vs nearly free contracts, different ideologies for real world adoption. There are currently only 9 nodes, each of which are being run by a company/entity hand selected by the NEO council (most of which are located in china) and are under contract. This means that although the locations of the nodes may differ, ultimately the neo council can bring them down due to their legal contracts. In fact this has been done in the past when the neo council was moving 50 million neo that had been locked up. Also dbft (or neo's implmentation of it) has failed underload causing network outages during major icos. The first step in decentralization is that the NEO Counsel will select trusted nodes (Universities, business partners, etc.) and slowly become less centralized that way. The final step in decentralization will be allowing NEO holders to vote for new nodes, similar to a DPoS system (ARK/EOS/LISK). NEO has a regulation/government friendly ideology. Finally they are trying to work undewith the Chinese government in regards to regulations. If for some reason they wanted it shut down, they could just shut it down.
Stellar: PoS system, similar goals as Ripple, but more of a platform than only a currency. 80% of Stellar are owned by Stellar.org still, making the currency centralized.
Ethereum classic: Original Ethereum that decided not to fork after a hack. The Ethereum that we know is its fork. Uninteresing, because it has a lot of less resources than Ethereum now and a lot less community support.
Ziliqa: Zilliqa is building a new way of sharding. 2400 tpx already tested, 10,000 tps soon possible by being linearly scalable with the number of nodes. That means, the more nodes, the faster the network gets. They are looking at implementing privacy as well.
QTUM: Enables Smart contracts on the Bitcoin blockchain. Useful.
Icon: Korean ethereum. Decentralized application platform that's building communities in partnership with banks, insurance providers, hospitals, and universities. Focused on ID verification and payments. No big differentiators to the other 20 Ethereums, except that is has a product. That is a plus. Maybe cheap alternative to Ethereum.
LISK: Lisk's difference to other BaaS is that side chains are independent to the main chain and have to have their own nodes. Similar to neo whole allows dapps to deploy their blockchain to. However, Lisk is currently somewhat centralized with a small group of members owning more than 50% of the delegated positions. Lisk plans to change the consensus algorithm for that reason in the near future.
Rchain: Similar to Ethereum with smart contract, though much more scalable at an expected 40,000 TPS and possible 100,000 TPS. Not launched yet. No product launched yet, though promising technology. Not overvalued, probably at the right price right now.
ARDR: Similar to Lisk. Ardor is a public blockchain platform that will allow people to utilize the blockchain technology of Nxt through the use of child chains. A child chain, which is a ‘light’ blockchain that can be customized to a certain extent, is designed to allow easy self-deploy for your own blockchain. Nxt claims that users will "not need to worry" about security, as that part is now handled by the main chain (Ardor). This is the chief innovation of Ardor. Ardor was evolved from NXT by the same company. NEM started as a NXT clone.
Ontology: Similar to Neo. Interesting coin
Bytom: Bytom is an interactive protocol of multiple byte assets. Heterogeneous byte-assets (indigenous digital currency, digital assets) that operate in different forms on the Bytom Blockchain and atomic assets (warrants, securities, dividends, bonds, intelligence information, forecasting information and other information that exist in the physical world) can be registered, exchanged, gambled and engaged in other more complicated and contract-based interoperations via Bytom.
Nxt: Similar to Lisk
Stratis: Different to LISK, Stratis will allow businesses and organizations to create their own blockchain according to their own needs, but secured on the parent Stratis chain. Stratis’s simple interface will allow organizations to quickly and easily deploy and/or test blockchain functionality of the Ethereum, BitShares, BitCoin, Lisk and Stratis environements.
Status: Status provides access to all of Ethereum’s decentralized applications (dapps) through an app on your smartphone. It opens the door to mass adoption of Ethereum dapps by targeting the fastest growing computer segment in the world – smartphone users.16. Ark: Fork of Lisk that focuses on a smaller feature set. Ark wallets can only vote for one delegate at a time which forces delegates to compete against each other and makes cartel formations incredibly hard, if not impossible.
Neblio: Similar to Neo, but 30x smaller market cap.
NEM: Is similar to Neo No marketing team, very high market cap for little clarilty what they do.
Bancor: Bancor is a Decentralized Liquidity Network that allows you to hold any Ethereum token and convert it to any other token in the network, with no counter party, at an automatically calculated price, using a simple web wallet.
Dragonchain: The Purpose of DragonChain is to help companies quickly and easily incorporate blockchain into their business applications. Many companies might be interested in making this transition because of the benefits associated with serving clients over a blockchain – increased efficiency and security for transactions, a reduction of costs from eliminating potential fraud and scams, etc.
Skycoin: Transactions with zero fees that take apparently two seconds, unlimited transaction rate, no need for miners and block rewards, low power usage, all of the usual cryptocurrency technical vulnerabilities fixed, a consensus mechanism superior to anything that exists, resistant to all conceivable threats (government censorship, community infighting, cybenucleaconventional warfare, etc). Skycoin has their own consensus algorithm known as Obelisk written and published academically by an early developer of Ethereum. Obelisk is a non-energy intensive consensus algorithm based on a concept called ‘web of trust dynamics’ which is completely different to PoW, PoS, and their derivatives. Skywire, the flagship application of Skycoin, has the ambitious goal of decentralizing the internet at the hardware level and is about to begin the testnet in April. However, this is just one of the many facets of the Skycoin ecosystem. Skywire will not only provide decentralized bandwidth but also storage and computation, completing the holy trinity of commodities essential for the new internet. Skycion a smear campaign launched against it, though they seem legit and reliable. Thus, they are probably undervalued.
Market 3 - Ecosystem
The 3rd market with 11 coins is comprised of ecosystem coins, which aim to strengthen the ease of use within the crypto space through decentralized exchanges, open standards for apps and more
Nebulas: Similar to how Google indexes webpages Nebulas will index blockchain projects, smart contracts & data using the Nebulas rank algorithm that sifts & sorts the data. Developers rewarded NAS to develop & deploy on NAS chain. Nebulas calls this developer incentive protocol – basically rewards are issued based on how often dapp/contract etc. is used, the more the better the rewards and Proof of devotion. Works like DPoS except the best, most economically incentivised developers (Bookkeeppers) get the forging spots. Ensuring brains stay with the project (Cross between PoI & PoS). 2,400 TPS+, DAG used to solve the inter-transaction dependencies in the PEE (Parallel Execution Environment) feature, first crypto Wallet that supports the Lightening Network.
Waves: Decentralized exchange and crowdfunding platform. Let’s companies and projects to issue and manage their own digital coin tokens to raise money.
Salt: Leveraging blockchain assets to secure cash loands. Plans to offer cash loans in traditional currencies, backed by your cryptocurrency assets. Allows lenders worldwide to skip credit checks for easier access to affordable loans.
CHAINLINK: ChainLink is a decentralized oracle service, the first of its kind. Oracles are defined as an ‘agent’ that finds and verifies real-world occurrences and submits this information to a blockchain to be used in smart contracts.With ChainLink, smart contract users can use the network’s oracles to retrieve data from off-chain application program interfaces (APIs), data pools, and other resources and integrate them into the blockchain and smart contracts. Basically, ChainLink takes information that is external to blockchain applications and puts it on-chain. The difference to Aeternity is that Chainlink deploys the smart contracts on the Ethereum blockchain while Aeternity has its own chain.
WTC: Combines blockchain with IoT to create a management system for supply chains Interesting
Ethos unifyies all cryptos. Ethos is building a multi-cryptocurrency phone wallet. The team is also building an investment diversification tool and a social network
Aion: Aion is the token that pays for services on the Aeternity platform.
USDT: is no cryptocurrency really, but a replacement for dollar for trading After months of asking for proof of dollar backing, still no response from Tether.
Market 4 - Privacy
The 4th market are privacy coins. As you might know, Bitcoin is not anonymous. If the IRS or any other party asks an exchange who is the identity behind a specific Bitcoin address, they know who you are and can track back almost all of the Bitcoin transactions you have ever made and all your account balances. Privacy coins aim to prevent exactly that through address fungability, which changes addresses constantly, IP obfuscation and more. There are 2 types of privacy coins, one with completely privacy and one with optional privacy. Optional Privacy coins like Dash and Nav have the advantage of more user friendliness over completely privacy coins such as Monero and Enigma.
Monero: Currently most popular privacy coin, though with a very high market cap. Since their privacy is all on chain, all prior transactions would be deanonymized if their protocol is ever cracked. This requires a quantum computing attack though. PIVX is better in that regard.
Zcash: A decentralized and open-source cryptocurrency that hide the sender, recipient, and value of transactions. Offers users the option to make transactions public later for auditing. Decent privacy coin, though no default privacy
Verge: Calls itself privacy coin without providing private transactions, multiple problems over the last weeks has a toxic community, and way too much hype for what they have.
Bytecoin: First privacy-focused cryptocurrency with anonymous transactions. Bytecoin’s code was later adapted to create Monero, the more well-known anonymous cryptocurrency. Has several scam accusations, 80% pre-mine, bad devs, bad tech
Bitcoin Private: A merge fork of Bitcoin and Zclassic with Zclassic being a fork of Zcash with the difference of a lack of a founders fee required to mine a valid block. This promotes a fair distribution, preventing centralized coin ownership and control. Bitcoin private offers the optional ability to keep the sender, receiver, and amount private in a given transaction. However, this is already offered by several good privacy coins (Monero, PIVX) and Bitcoin private doesn't offer much more beyond this.
Komodo: The Komodo blockchain platform uses Komodo’s open-source cryptocurrency for doing transparent, anonymous, private, and fungible transactions. They are then made ultra-secure using Bitcoin’s blockchain via a Delayed Proof of Work (dPoW) protocol and decentralized crowdfunding (ICO) platform to remove middlemen from project funding. Offers services for startups to create and manage their own Blockchains.
PIVX: As a fork of Dash, PIVX uses an advanced implementation of the Zerocoin protocol to provide it’s privacy. This is a form of zeroknowledge proofs, which allow users to spend ‘Zerocoins’ that have no link back to them. Unlike Zcash u have denominations in PIVX, so they can’t track users by their payment amount being equal to the amount of ‘minted’ coins, because everyone uses the same denominations. PIVX is also implementing Bulletproofs, just like Monero, and this will take care of arguably the biggest weakness of zeroknowledge protocols: the trusted setup.
Zcoin: PoW cryptocurrency. Private financial transactions, enabled by the Zerocoin Protocol. Zcoin is the first full implementation of the Zerocoin Protocol, which allows users to have complete privacy via Zero-Knowledge cryptographic proofs.
Enigma: Monero is to Bitcoin what enigma is to Ethereum. Enigma is for making the data used in smart contracts private. More of a platform for dapps than a currency like Monero. Very promising.
Navcoin: Like bitcoin but with added privacy and pos and 1,170 tps, but only because of very short 30 second block times. Though, privacy is optional, but aims to be more user friendly than Monero. However, doesn't really decide if it wants to be a privacy coin or not. Same as Zcash.Strong technology, non-shady team.
Tenx: Raised 80 million, offers cryptocurrency-linked credit cards that let you spend virtual money in real life. Developing a series of payment platforms to make spending cryptocurrency easier. However, the question is if full privacy coins will be hindered in growth through government regulations and optional privacy coins will become more successful through ease of use and no regulatory hindrance.
Market 5 - Currency Exchange Tool
Due to the sheer number of different cryptocurrencies, exchanging one currency for the other it still cumbersome. Further, merchants don’t want to deal with overcluttered options of accepting cryptocurrencies. This is where exchange tool like Req come in, which allow easy and simple exchange of currencies.
Cryptonex: Fiat and currency exchange between various blockchain services, similar to REQ.
QASH: Qash is used to fuel its liquid platform which will be an exchange that will distribute their liquidity pool. Its product, the Worldbook is a multi-exchange order book that matches crypto to crypto, and crypto to fiat and the reverse across all currencies. E.g., someone is selling Bitcoin is USD on exchange1 not owned by Quoine and someone is buying Bitcoin in EURO on exchange 2 not owned by Quoine. If the forex conversions and crypto conversions match then the trade will go through and the Worldbook will match it, it'll make the sale and the purchase on either exchange and each user will get what they wanted, which means exchanges with lower liquidity if they join the Worldbook will be able to fill orders and take trade fees they otherwise would miss out on.They turned it on to test it a few months ago for an hour or so and their exchange was the top exchange in the world by 4x volume for the day because all Worldbook trades ran through it. Binance wants BNB to be used on their one exchange. Qash wants their QASH token embedded in all of their partners. More info here https://www.reddit.com/CryptoCurrency/comments/8a8lnwhich_are_your_top_5_favourite_coins_out_of_the/dwyjcbb/?context=3
Kyber: network Exchange between cryptocurrencies, similar to REQ. Features automatic coin conversions for payments. Also offers payment tools for developers and a cryptocurrency wallet.
Achain: Building a boundless blockchain world like Req .
Req: Exchange between cryptocurrencies.
Bitshares: Exchange between cryptocurrencies. Noteworthy are the 1.5 second average block times and throughput potential of 100,000 transactions per second with currently 2,400 TPS having been proven. However, bitshares had several Scam accusations in the past.
Loopring: A protocol that will enable higher liquidity between exchanges and personal wallets.
ZRX: Open standard for dapps. Open, permissionless protocol allowing for ERC20 tokens to be traded on the Ethereum blockchain. In 0x protocol, orders are transported off-chain, massively reducing gas costs and eliminating blockchain bloat. Relayers help broadcast orders and collect a fee each time they facilitate a trade. Anyone can build a relayer.
Market 6 - Gaming
With an industry size of $108B worldwide, Gaming is one of the largest markets in the world. For sure, cryptocurrencies will want to have a share of that pie.
Storm: Mobile game currency on a platform with 9 million players.
Fun: A platform for casino operators to host trustless, provably-fair gambling through the use of smart contracts, as well as creating their own implementation of state channels for scalability.
Electroneum: Mobile game currency They have lots of technical problems, such as several 51% attacks
Wax: Marketplace to trade in-game items
Market 7 - Misc
There are various markets being tapped right now. They are all summed up under misc.
OMG: Omise is designed to enable financial services for people without bank accounts. It works worldwide and with both traditional money and cryptocurrencies.
Power ledger: Australian blockchain-based cryptocurrency and energy trading platform that allows for decentralized selling and buying of renewable energy. Unique market and rather untapped market in the crypto space.
Populous: A platform that connects business owners and invoice buyers without middlemen. Invoice sellers get cash flow to fund their business and invoice buyers earn interest. Similar to OMG, small market.
Monacoin: The first Japanese cryptocurrency. Focused on micro-transactions and based on a popular internet meme of a type-written cat. This makes it similar to Dogecoin. Very niche, tiny market.
Revain: Legitimizing reviews via the blockchain. Interesting concept, though market not as big.
Augur: Platform to forecast and make wagers on the outcome of real-world events (AKA decentralized predictions). Uses predictions for a “wisdom of the crowd” search engine. Not launched yet.
Substratum: Revolutionzing hosting industry via per request billing as a decentralized internet hosting system. Uses a global network of private computers to create the free and open internet of the future. Participants earn cryptocurrency. Interesting concept.
Veritaseum: Is supposed to be a peer to peer gateway, though it looks like very much like a scam.
TRON: Tronix is looking to capitalize on ownership of internet data to content creators. However, they plagiarized their white paper, which is a no go. They apologized, so it needs to be seen how they will conduct themselves in the future. Extremely high market cap for not having a product, nor proof of concept.
Syscoin: A cryptocurrency with a decentralized marketplace that lets people buy and sell products directly without third parties. Trying to remove middlemen like eBay and Amazon.
Hshare: Most likely scam because of no code changes, most likely pump and dump scheme, dead community.
BAT: An Ethereum-based token that can be exchanged between content creators, users, and advertisers. Decentralized ad-network that pays based on engagement and attention.
Dent: Decentralizeed exchange of mobile data, enabling mobile data to be marketed, purchased or distributed, so that users can quickly buy or sell data from any user to another one.
Ncash: End to end encrypted Identification system for retailers to better serve their customers .
Factom Secure record-keeping system that allows companies to store their data directly on the Blockchain. The goal is to make records more transparent and trustworthy .
Market 8 - Social network
Web 2.0 is still going strong and Web 3.0 is not going to ignore it. There are several gaming tokens already out there and a few with decent traction already, such as Steem, which is Reddit with voting through money is a very interesting one.
Mithril: As users create content via social media, they will be rewarded for their contribution, the better the contribution, the more they will earn
Steem: Like Reddit, but voting with money. Already launched product and Alexa rank 1,000 Thumbs up.
Rdd: Reddcoin makes the process of sending and receiving money fun and rewarding for everyone. Reddcoin is dedicated to one thing – tipping on social networks as a way to bring cryptocurrency awareness and experience to the general public.
Kin: Token for the platform Kik. Kik has a massive user base of 400 million people. Replacing paying with FIAT with paying with KIN might get this token to mass adoption very quickly.
Market 9 - Fee token
Popular exchanges realized that they can make a few billion dollars more by launching their own token. Owning these tokens gives you a reduction of trading fees. Very handy and BNB (Binance Coin) has been one of the most resilient tokens, which have withstood most market drops over the last weeks and was among the very few coins that could show growth.
BNB: Fee token for Binance
Gas: Not a Fee token for an exchange, but it is a dividend paid out on Neo and a currency that can be used to purchase services for dapps.
Kucoin: Fee token for Kucoin
Market 10 - Decentralized Data Storage
Currently, data storage happens with large companies or data centers that are prone to failure or losing data. Decentralized data storage makes loss of data almost impossible by distributing your files to numerous clients that hold tiny pieces of your data. Remember Torrents? Torrents use a peer-to-peer network. It is similar to that. Many users maintain copies of the same file, when someone wants a copy of that file, they send a request to the peer-to-peer network., users who have the file, known as seeds, send fragments of the file to the requester., he requester receives many fragments from many different seeds, and the torrent software recompiles these fragments to form the original file.
Gbyte: Byteball data is stored and ordered using directed acyclic graph (DAG) rather than blockchain. This allows all users to secure each other's data by referencing earlier data units created by other users, and also removes scalability limits common for blockchains, such as blocksize issue.
Siacoin: Siacoin is decentralized storage platform. Distributes encrypted files to thousands of private users who get paid for renting out their disk space. Anybody with siacoins can rent storage from hosts on Sia. This is accomplish via "smart" storage contracts stored on the Sia blockchain. The smart contract provides a payment to the host only after the host has kept the file for a given amount of time. If the host loses the file, the host does not get paid.
Maidsafecoin: MaidSafe stands for Massive Array of Internet Disks, Secure Access for Everyone.Instead of working with data centers and servers that are common today and are vulnerable to data theft and monitoring, SAFE’s network uses advanced P2P technology to bring together the spare computing capacity of all SAFE users and create a global network. You can think of SAFE as a crowd-sourced internet. All data and applications reside in this network. It’s an autonomous network that automatically sets prices and distributes data and rents out hard drive disk space with a Blockchain-based storage solutions.When you upload a file to the network, such as a photo, it will be broken into pieces, hashed, and encrypted. The data is then randomly distributed across the network. Redundant copies of the data are created as well so that if someone storing your file turns off their computer, you will still have access to your data. And don’t worry, even with pieces of your data on other people’s computers, they won’t be able to read them. You can earn MadeSafeCoins by participating in storing data pieces from the network on your computer and thus earning a Proof of Resource.
Storj: Storj aims to become a cloud storage platform that can’t be censored or monitored, or have downtime. Your files are encrypted, shredded into little pieces called 'shards', and stored in a decentralized network of computers around the globe. No one but you has a complete copy of your file, not even in an encrypted form.
Market 11 - Cloud computing
Obviously, renting computing power, one of the biggest emerging markets as of recent years, e.g. AWS and Digital Ocean, is also a service, which can be bought and managed via the blockchain.
Golem: Allows easy use of Supercomputer in exchange for tokens. People worldwide can rent out their computers to the network and get paid for that service with Golem tokens.
Elf: Allows easy use of Cloud computing in exchange for tokens.
Market 12 - Stablecoin
Last but not least, there are 2 stablecoins that have established themselves within the market. A stable coin is a coin that wants to be independent of the volatility of the crypto markets. This has worked out pretty well for Maker and DGD, accomplished through a carefully diversified currency fund and backing each token by 1g or real gold respectively. DO NOT CONFUSE DGD AND MAKER with their STABLE COINS DGX and DAI. DGD and MAKER are volatile, because they are the companies of DGX and DAI. DGX and DAI are the stable coins.
DGD: Platform of the Stablecoin DGX. Every DGX coin is backed by 1g of gold and make use proof of asset consensus.
Maker: Platform of the Stablecoin DAI that doesn't vary much in price through widespread and smart diversification of assets.
EDIT: Added a risk factor from 0 to 10. The baseline is 2 for any crypto. Significant scandals, mishaps, shady practices, questionable technology, increase the risk factor. Not having a product yet automatically means a risk factor of 6. Strong adoption and thus strong scrutiny or positive community lower the risk factor. EDIT2: Added a subjective potential factor from 0 to 10, where its overall potential and a small or big market cap is factored in. Bitcoin with lots of potential only gets a 9, because of its massive market cap, because if Bitcoin goes 10x, smaller coins go 100x, PIVX gets a 10 for being as good as Monero while carrying a 10x smaller market cap, which would make PIVX go 100x if Monero goes 10x.
dash scam continues with mostly fake volume on exchanges
in this post, we see how the dash scam evolves with most of the exchange volume being blatantly wash traded and fake. this is the cmc market tab for dash: https://coinmarketcap.com/currencies/dash/#markets excluding the pairs which even cmc identifies as scam/wash-traded (the ones which have *), the rest of them are all exchanges that are unheard of.
The largest offenders in the top 10 include ZB exchange which appears to be wash trading their volume to over 390x as well as Lbank to over a whopping 4400x.
ZB.com is accused of showing 390x fake volume; Lbank accused of showin 4400x fake volume. Exrates is accused of having 96% fake volume (see "report" linked above) you can also just google most of those exchange names to see what kind of scams they are. considering on chain transactions, dash is among the least used blockchains, even though it has been around for years now from 2014 when it was instamined, and the scam has been ongoing since then. dash has a ponzi like structure where 10% of the block rewards go back to the developers, who then use that to pay for these shady exchange scam volume, to create an illusion of legitimacy, which in turns brings in new users who by seeing the volume think it is legit. always check actual blockchain usage, not exchange volume stats that are highly manipulated in this market. https://bitinfocharts.com/comparison/dash-transactions.html onchain, dash has fewer than 7500 transactions on an average. that puts it below bch, below litecoin, below dogecoin and ethereum classic in terms of actual usage. you can compare actual usage on blocktivity evidently, it is hardly adopted anywhere with such abysmal usage. yet dash pretends to have massive exchange volume, most of which is fake. its proving to be a rewarding tactic for scam coin promoters to fudge exchange volume so that people who are not aware of these things end up buying these worthless scam coins. some of the clues in spotting such scams include large volume on exchanges that does not add up with actual usage of the blockchain, huge percentage of mining rewards going back to the founders (the blockchain ponzi scheme). unless the market purges itself of such scams, its hard to gain any kind of legitimacy as an asset class.
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