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1. Lesson: The Global Game

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To be able to get ahead of the curve and take smarter financial choices, it’s necessary to understand how our current financial system works. The fractional reserve system (see Fractional-reserve banking) that was established by the Swedish central bank in the late 1600s is a system that lets banks create money “out of thin air.” The golden rule is the 9 to 1 ratio: banks only need to hold 1 part of the money while they can supply 9 parts (~11% is held as a reserve).

As an example:

If you deposit 100 USD in a bank account, that bank can lend out 90 USD. If the borrower deposit the same amount in another bank account, the bank can lend out 81 USD on top of the 90 USD it has already lent. This process will continue until the bank has lent out 900 USD based on the original deposit of 100 USD. The bank only holds 100 USD but has created 800 USD out of thin air.

Why is this important to know?

The system is built as an “air castle.” It can create money out of “nothing” and add an interest rate on top of it. If you do not have the right knowledge about how the system works, it will be hard to maneuver in the economic landscape. You have to understand that banks are not playing by the same rules that ordinary businesses and people do. We have to pay back our loans unless we want to file for bankruptcy. The fractional reserve system is a good system to speed up the economic process, but it is not durable.

The interest rate

When I want to enlighten my peers on how interest rates work, I always use the same thought experiment:

Think of a world that only had one bank which created all the money in the world. Their first customer would like to lend an amount, let’s say $1000. The bank lends out the money with an interest rate of 10% per year. Within one year, the customer has to pay back $1100.

Do you see the problem here?

There are not enough money to pay back the loan with interest as there is no more money in circulation. So what does the customer do? He has to borrow more money to be able to pay back the loan, but by doing so he increases his overall loan. The interest rate makes the loan “unpayable.” In a financial system where the interest rate is fundamental, there will never be enough money to pay back the loans. There will always be defaults and bankruptcies.

In the bigger picture: Look at the US National Debt. The US might be able to pay back their national debt, but they will have to cut expenditure from other posts which in turn will significantly hurt the world economy. This can be even worse than to let the debt increase and raise the invisible “debt ceiling.”

The world economy is “tricked” into a global game of debt. The world’s debt can never be paid back entirely, and there will always come financial meltdowns followed by mass bankruptcies.

The ones that benefit from this system is banks, lenders (the rich guys), and businesses that are able to operate in such a system.

What does this mean for me?

The essential knowledge you can take from this is to “join the global game.” If you do not have money to lend out with an interest that is higher than the inflation rate, or money to invest in different index funds (never invest in a single stock unless there is a 100% guarantee of growth) you will end up losing money, year by year.

The system is bad, I know, but we cannot fight the powers in place that profits from the system (unless something amazing happens and a new system replaces the old).

OK: So you got a good job and receive salary month by month. “I do make money!” Yes, you do, but you are still losing money, money that could have been used to grow your economic backbone. And what happens when you are fired or the company you work for files for bankruptcy? You are left with nothing and your assets will soon be gone.

My first advice is this:

If you do have a job where you receive a monthly salary, put 10% of your salary in a robust index fund and leave them there. Set this up automatically on a monthly basis and “forget them.” Then you will at least be joining the global game and take low risk. You can also choose to invest those 10% in different assets, like bitcoin, but then you would take a significantly higher risk and stand a chance to lose it all.

The most important thing to remember: NEVER LOSE MONEY.

Continue reading: 2. Lesson: Never Lose Money

Please make a comment if you have any inputs.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 3 rated postsMultiple journalists and analysts are behind the name Edward Talliot.




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9 Comments

9 Comments

  1. rbrito

    June 6, 2017 at 4:16 pm

    If i has the opportunity to read a least this article about 1 months ago i wouldn’t loss 12 btc. Learn how important is to be financial educated and not to to business base on emotions.

    • 4feichu

      June 23, 2017 at 11:52 pm

      just curious so I can learn from your mistake, how’d you lose the BTC?

    • CryptoMob

      December 20, 2017 at 5:02 pm

      jeah i can just agree

  2. NoHomeJerome

    August 15, 2017 at 11:20 am

    Thank you, Edward.

    Do you suggest investing in an index fund in addition to any cryptocurrency investments? Or do you suggest we pick either one, depending on personal preferences and risk-aversion levels?

  3. ndoudaffy

    November 29, 2017 at 2:34 pm

    I am filling very greatefull because of your suppor.I trust and believe in you.

    • Jonas Borchgrevink

      November 29, 2017 at 11:24 pm

      Thank you very much!

  4. kendrickmane

    December 28, 2017 at 5:12 am

    Bro this exemplifies what a website is supposed to be there wasn’t one sentence in that article that wasn’t potent

  5. terryx

    January 25, 2018 at 4:30 am

    I lost a bitcoin down the back of my couch once

  6. matola44

    July 7, 2018 at 5:25 am

    Initially, I invested in the stock market without help, and I did not know what to lose. here, however, I go forward with the help of others.

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MobileGo (MGO) Is Up More Than 40% Since Thanksgiving

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The last few weeks have been an extremely challenging time for crypto enthusiasts.  Major coins like Bitcoin (BTC) and Ethereum (ETH) have been demolished while many smaller alternative coins have done even worse.  Fortunately, there are still a few bright spots left in the market that traders may want to turn their attention toward.  One of those bright spots is MobileGo (MGO).

Price Surge

Although most cryptos have taken a severe beating in the past few weeks, MGO has done just the opposite.  As seen in the chart below, MGO has soared by more than 40% since Thanksgiving.

A few of the reasons for the surge include being in an industry with rising popularity, innovative methods of earning gaming currency, and key strategic partnerships.

Exploding Popularity of the Gaming Industry

Despite the volatility in the cryptocurrency markets, blockchain remains one of the most exciting technologies being developed.  Blockchain has the potential to disrupt global industries and take them to levels once thought impossible.  MobileGo is attempting to do just that in the gaming industry.

The Gaming market is an extremely exciting opportunity as the industry is growing by leaps and bounds.  According to Market Researcher, Newzoo, the global games market is expected to grow from $137.9 billion in 2018 to more than $180.1 billion in 2021.

GShare Development

One of the company’s main innovations is the development of GShare.  GShare is a special tool which allows its users to earn GShare Gold coins by harnessing the power of their computers.  In this way, it’s very similar to cryptocurrency mining.  These coins (not cryptocurrency) are a soft currency which will be earned as soon as the user runs the app and presses the “start” button.  Users can play their favorite games, work, or simply browse the internet.

Additionally, gamers can also earn GShare Gold Coins by entering tournaments.  There is a wide variety of tournament options so that players can choose tournaments that fit their interests and skill levels.  In this way, it’s really an open environment that caters to individuals of all backgrounds.

Once the coins are earned, users will have several different redemption options that include the following:

  • Tournament Entry Fees
  • Social Activity Platforms

The option to use the coins through social media avenues is extremely interesting.  This presents an opportunity for the coins to gain international recognition by uniting different groups of people for positive results.  These social activity opportunities should become clearer soon.

Xsolla Partnership

MGO coins can be earned through special promotions, exchange trading, or by winning tournaments.  The last one is especially important as it’s directly related to GShare.  Users can use their GShare Gold coins to enter tournaments that fit their skill level.  And, if successful, users will earn MGO coins by performing well.

Being able to earn MGO coins by winning tournaments is very exciting considering the recent partnership news with Xsolla.  Xsolla provides game developers with a comprehensive suite of flexible tools and service to help launch, monetize and scale their games globally.  In late October, Xsolla announced that it would start accepting made-for-gaming cryptocurrency, MobileGo, for its PC and mobile games partners.

The partnership means that developers will be able to receive royalty payouts in MGO cryptocurrency.  As stated earlier, the gaming industry is expected to grow significantly in the future which makes this a very compelling opportunity.  As blockchain technology and gaming continue to grow in the future, it’s safe to assume that more and more game developers will be interested in cashing out via cryptocurrency.  MGO being an option this early in the game is a massive advantage.

Conclusion

Although it’s still early for MobileGo, the company appears to be making all the right moves in an effort to attain blockchain gaming dominance.  Only the future will tell whether the company will prove successful, but things certainly appear promising at the moment.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.8 stars on average, based on 13 rated posts




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Are Crypto News Sites Allowing Freedom Of Thought?

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As the interest in cryptocurrencies has exploded during the past couple years, crypto news sites have been on the rise.  These sites are quickly becoming an invaluable resource for traders who enjoy learning about new crypto projects and trade ideas.  The content distributed through these platforms is typically created by a combination of full-time staff and guest contributors/bloggers.  Many of these writers also have a lot of experience in crypto trading so the articles are extremely beneficial for readers.

One thing that readers should always keep in mind is that the content from these sites normally represents the independent thoughts of the writer.  This is important because writers/traders aren’t infallible.  They can make mistakes like all of us.  So, the best approach for readers is to try to attain a diversity of thought.  A diversity of thought means to gather as much information as possible, from a wide selection of sources.  This is absolutely necessary before reaching a conclusion on a certain topic.

But what happens when a website prevents writers from writing about specific topics?  A colleague of mine recently tried publishing an article at Coinnounce.  The writer wanted to publish an article about the buying opportunity that the Bitcoin crash was affording investors.  Normally an article is rejected for legitimate reasons such as poor grammar, plagiarism, or promotional work.  Unfortunately, Coinnounce cited that the website was bearish on Bitcoin and that they wouldn’t be publishing bullish articles.  Even more troubling is that when Bitcoin rebounded in price, Coinnounce reached out to my colleague and told him they would now be willing to publish the bullish article.

When I found out about the rejection and the reason given, I decided to browse the Coinnounce website (which I had never heard of) to find out what kinds of articles were being published.  And sure enough, the articles were nearly all bearish in some fashion.  The problem with this approach is that nobody knows where Bitcoin is going.  It’s 100% speculation.  What actually matters is the logic presented in the article that helps back up a prediction.  So, while Coinnounce is free to run its business as it sees fit, the website (or the articles published) should have a disclaimer that the information presented represents the thoughts of the website’s owners/editors.  Otherwise, readers may not have a clear understanding of what is being presented.

The point of this article is not to call out Coinnounce.  Rather, the point is to make sure readers are aware that some sites may have different motivations than others.  It’s important to read from a variety of sources to get as much information as possible.  This is true not just for cryptocurrency markets, but for everything in life.  I’m proud to write for Hacked which runs an open and honest platform.  The articles written do represent the thoughts and feelings of the writers.  So, while the editors may not always come to the same conclusions that the articles do, they will never suppress freedom of thought.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Are Cryptocurrency Exchanges Asking Low Volume Coins For Bribes?

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Over the last few years, as cryptocurrency trading volume has soared, there has been tremendous growth in the number of exchanges.  Crypto trading volume really took off in 2017 as retail traders and institutional money flooded into the market.  This presented an opportunity for savvy entrepreneurs to stake their claim and start an exchange.  Unfortunately, not all exchanges are created equal.  Crypto trading is still an industry in its infancy which means it’s not regulated nearly as tough as many other industries.

Big Exchanges Charge Expensive Listing Fees

During the crazy bull run that lasted through the very early part of 2018, crypto projects were desperately trying to get listed on the biggest and most active exchanges.  The most coveted exchanges include Binance, Bittrex, Poloniex, Kraken, and BitStamp.  And while these exchanges certainly offer an attractive landing spot, there is a major problem; the listing fee.  As these exchanges have grown and gained power, only projects that are willing to pay an expensive fee receive a listing.

In August, Bitcoinist.com ran a story about the reported listing fees that Binance was charging.  Christopher Franko, the co-founder of Expanse, submitted a listing request in early August.  According to Franko, Binance contacted him and requested a $2.6 million payment to list his coin.  This approach is problematic for small projects as they can’t afford to pay the fee. Only the biggest projects which are extremely well capitalized and have money to burn can get listed on the most popular exchanges.

In October, Binance issued a listing fee update.  The company now claims that the exchange “will make all listing fees transparent and donate 100% of them to charity.  Project teams will still propose the number they would like to provide for a “listing fee,” or now more appropriately called a ‘donation.’ Binance will not dictate a number, nor is there a minimum required listing fee.”

Small Exchanges Offer An Alternative

Crypto projects that aren’t as resource rich will have a very difficult time getting listed on the most popular exchanges.  The expensive initial listing requirement will consequently relegate many projects to listing on smaller exchanges such as KuCoin, OKEx, and Cryptopia.   While there is nothing wrong with these exchanges, volume isn’t as pronounced as it is on the largest exchanges.

Instead of generating revenue from expensive initial listing fees, these small exchanges rely on trading volume for the bulk of their revenue.  From 2017 through the early part of 2018, that wasn’t a problem.  Cryptocurrency trading volume exploded as retail and institutional money flooded into the market.  Both traders and exchanges were reaping the benefits.  But now that crypto has been in a prolonged bear market, volume has cooled off.  Some of the small exchanges now rely on other gimmicks to generate revenue.

Many of the gimmicks center around advertising/marketing expenses.  For example, on Cryptopia, companies can pay fees to have their coin advertised on the trading landing page.

Bribes To Maintain Listing

While there is nothing wrong with generating revenue from advertising, there have been some troubling reports lately about exchanges asking coins to engage in “liquidity management.”  Rahul Sood, the Chief Executive Officer of Unikrn, recently took to Twitter to let the world know that both OKEx and KuCoin had delisted his UKG token because he refused to engage in liquidity management.

Sood made it clear that he was entirely focused on building his business and not trying to “game” volume to appease the likes of OKEx and KuCoin.  And Sood certainly isn’t the only crypto executive who’s voicing his frustration.  David Koepsell, CEO of Encrypgen, also stated on Telegram that Encrypgen’s token, DNA, was delisted on KuCoin because he refused to pay a bribe.

It’s unclear what bribe KuCoin was asking for but most likely related to a fee for “market making.”  Unfortunately, given the current lack of trading volume in the crypto markets, these small exchanges have had to resort to questionable tactics to bring in additional revenue.

Conclusion

KuCoin and OKEx don’t appear to be playing the long game.  They are delisting solid coins like UKG and DNA that refuse to pay bribes.  While that may not be a problem now, it may become one in the future when the volume returns to the alt market.  Projects that were delisted for refusing to pay a bribe won’t return and, instead, will take their business elsewhere.

One bright spot in the story is that Cryptopia doesn’t appear to engage in the same questionable tactics.  While the company does charge a small fee for an exchange listing, there are no reports of demanding coins pay a market making fee to stay listed.  Since the OKEx and KuCoin delisting, Encrypgen’s volume has exploded on Cryptopia.  Only time will tell but Cryptopia may end up being the big winner in all of this.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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