The daily news cycle demands every change in the price to be given an explanation related to what happened that day. Very rarely do the headlines admit: “we don’t know why that happened”.

Basically, anyone who still owns crypto is probably used to bad news by now and is bedded down for the long term. So what other reasons are there behind all this price movement?

Most of the reasons cryptocurrency is so volatile can be explained by it being new.

Because it’s new:

1. It’s smaller relative to the wealth of the individuals trading
2. It’s technically immature
3. It’s not regulated enough, so it’s prone to bad actors, scams and naïve investment schemes
4. Traditional finance is now involved, and (ironically) acts more like that twitchy, nervous investor than any actual investor. (“OH NO, THE FEDS HAVE PUT UP INTEREST RATES 0.000%! WHAT IF MY CLIENTS FIND OUT I BOUGHT BITCOIN? SELL SELL SELL!”)
5. The people in crypto have a bigger appetite for risk and volatility, and by exploiting that they amplify it.

Small Market Caps

Crypto has a market cap of just under a trillion dollars. A market cap is the total value of all coins in the ecosystem. If I issued a trillion coins tomorrow on Ethereum and then bought one for $1, my coin’s market cap would be worth $1 trillion.

Anyway, the point is, that the traditional financial markets are worth thousands of times more than the crypto market, which means that big players can have an even bigger impact, and even medium trades that wouldn’t shift the traditional markets can shift a crypto one.

Having a much bigger crypto market cap would certainly mean that “whales” (large crypto holders) have much less ability to move the market.

Some coins are so small, that one guy with a million dollars can pump or dump at will: and that’s not a regulated process. Projects launched with a vision to change the world end up being tools of rich guys at play.

Technical Immaturity

Crypto is always trying new things, and they don’t always work. Technology failures can create flash crashes, for instance. Huge losses can happen because of small technical mistakes. One reason why sticking to tried and tested crypto is a good idea. Let’s hope the Ethereum upgrade is successful!

Naïve Economic Plans

Decentralised finance is full of half-baked platforms, hacks, dodgy smart contracts and scammy business ideas that aren’t new, but are new in crypto. When these plans collapse, the ecosystem suffers.

A combination of technical immaturity and naïve economic plans was behind the recent Terra collapse.

This unstable stablecoin/crypto combination tried to create money out of thin air by balancing two worthless things together and hoping people would trade them. Which they did. The problem for the crypto ecosystem is that the returns it was offering on deposits (20%) were so tempting that DeFi lenders who should have known better bought into it. When it collapsed, they lost big-time – a process of unwinding that’s still going on today.

Yield Farming

Moving assets around in ever more complex circles to create income is fine as long as you can do maths, and as long as one of the parts of your circle doesn’t fail catastrophically.

In crypto, failures happen fast. Someone has the bright idea to let people stake their ETH and spend it too, and there’s another bright idea to put it somewhere else, betting on its value… it’s an unregulated recipe for disaster that makes you appreciate safety-first DeFi providers like GCISL.

Traditional Finance

Oddly, the involvement of traditional finance is also implicated in the volatility, because in a crunch, traditional finance will dump its crypto first – it’s perceived as more “optional”, and the markets are open 24/7 so it can be done urgently. This makes traditional financiers into the quivering nervous investors we met at the start.

Derivatives and Options (basically: gambling)

There are many places where you can place bets on crypto assets going up or down. This is the “derivatives” market. If there’s a single reason why crypto will survive this downturn, it will be a useful tool for derivatives traders to make money.

One of the differences in crypto, though, is that you can magnify your bet by 10 or even 100 – this is called “leverage” and involves borrowing assets temporarily to make your bet. While the EU would prefer 2-4 leverage, crypto goes way further than that.

With a bet like this, everything is fine when things are going the right way. But if they go the wrong way, then the more leverage you have, the quicker you can lose it all, in a process called “liquidation”. When a bet is liquidated, bitcoin is forcibly bought or sold on the open market. If lots of positions get liquidated at once (which is common), then the order books at exchanges are rapidly used up, and the price goes up or down within a shocking space of time (usually within half an hour – only automated trades could act this quickly and together).

Order Books: what happens when assets are dumped quickly?

An exchange order book is two lists: one of the people wanting to buy the asset at various prices, and one list of people wanting to sell. There are two kinds of orders: “limit” orders, where the buyer or seller specifies the price they want to sell at and “market” orders where the buyer/seller doesn’t care.

The headline “price” of the asset is the price it last sold at.

If you get a ton of market orders in the same direction, then they’re thrown at the order book in turn using up the orders and setting a new headline price. If this happens quickly enough, then the price plummets or rockets until the selling/buying stops and there’s a slight bounce-back as new orders come in to fill the sudden gap. Then the price stabilises for a while, but there might be more action because the new price might trigger a whole new series of liquidations a few hours later.

Is this ever going to stop?

In a word, no. Not while you can get 10 to 100 times leverage, anyway. Regulation might deal with that, but in the meantime, you might as well enjoy it and hope the gamblers betting on bitcoin going down get what’s coming to them!

The post Why are cryptocurrencies so volatile? appeared first on GCISL.

Normally when you buy cryptocurrency, it just sits in your wallet, doing nothing except changing value relative to traditional currencies.

However, there are many more “things to do with my crypto” to make it work harder for you, and one of them is staking.

Staking is, generally, when you take your coins out of circulation or transfer control of them to a third party so you can get rewards. That might be more of the same token, rewards in another token, or a combination of the two.

There are really two kinds of staking: when you do it yourself (running a node, becoming a validator, taking responsibility for the technical end of things) and when you entrust your coins to someone/something to do it for you (generally called “delegating”). Delegating could be lodging the coins with a staking provider or using a wallet to choose validators/nodes to entrust your coins to.

Some things that look like staking aren’t actually staking: for instance, yield-bearing crypto accounts such as those offered by GCISL. It’s important to know the difference because the detail is all-important. What’s the lock-in? Can your stake reduce as well as increase? What’s the yield? Could it change?

What are the best cryptocurrencies to stake?

This is the most important part of this whole equation. If you earn 100% on a coin that’s worthless, then the result is worthless too.

It’s quite common for a crypto coin to change value against traditional currencies by more than the yield (down or up). This is why you need to pick a good coin that will survive any bear market and stick in there.

The most survivable coin is, of course, Ethereum. It’s going nowhere and offers a reasonable APY wherever you stake it.

Other coins worthy of note include Cardano (ADA), Tezos (XTZ), Polkadot (DOT) and Algorand (ALGO). It’s worth checking on the current and historical news for blockchains and coins. Coindesk is a reputable place for crypto news.

You might be surprised what you find! Some staking coins such as EOS and Solana (SOL) have been going through difficult periods and/or teething issues, for example. And some coins that looked like a good deal two months ago now look dodgy: LUNA for instance, which was a clever idea for a stablecoin/crypto balancing combination that turned into a disaster. Crypto is very fast-moving, so keep an eye on the news anyway.

The unstakeable

There are also lots of cryptocurrencies that you can’t stake: Bitcoin being the prime example, but any “proof-of-work” crypto (where coins are issued as a reward for solving maths puzzles) would have the same limitation, including coins such as Litecoin, Bitcoin Cash, and others.

You can still earn interest on unstakeable cryptos by lending them out (for instance, you can get a percentage return on Bitcoin from GCISL), but nothing gets staked on a blockchain when that happens: it’s a simple “deposit for interest” scenario reliant on the company offering the service.

Is staking crypto worth it?

Well, the returns are good! In general “worth it” is a judgement for you, not us: we have no idea what your risk/reward appetite is.

But in investment terms, a 5-12% return on an asset in a year is an astonishing performance in this environment, and sometimes worth the risk (if you’re investing money you can afford to lose). And for the right coins that you think have a future, your rewards would not only be the yield on staking but any increase in the underlying dollar value of the coin. If there’s a big shake-out of the market, only the strong will prosper. ETH is generally strong, Cardano is a survivor, but insert research here!

One rule in crypto seems to be that returns decrease as the amount of value “locked” into a blockchain increases. So the more coins staked, the less the return. And if a return is too good to be true (like 20%), it probably is.

Is staking crypto safe?

Staking crypto directly into a blockchain probably is because blockchains are unhackable by nature (even if you can hack stuff on them, like smart contracts).

You should be aware, though, that if you’re directly staking in the blockchain and it doesn’t like what you’re doing, it might decide to slash your stake. Generally, this happens more for dishonesty, but shirking your validation duties can leave you with lesser payouts, and there’s a technical requirement and minimum stake for all blockchains.

If you’re staking indirectly with smaller amounts (like most people) then your main issue would be whether you trust the staking provider or validator you’ve given your coins to. The weak link in any system is always people (and companies). Companies and exchanges can get hacked. Wallets can get hacked. Safety is all because 100% loss is not good for your investment.

No crypto, of course, is safe from its value in US Dollar terms being volatile: while the market size is so small (relative to traditional finance), this will always be the case. That’s a risk you just have to ride out, safe in the knowledge that you’ve chosen a coin with a future, and that’s a mixture of technical competence and real-world business use case.

There are extra risks with smaller blockchains. They can be attacked in ways other than hacking: for instance, if a malign actor gets control of 50% of a blockchain’s resources or governance rights, that blockchain might well be toast.

Or, a whale dumping or pumping can pull the token value all over the place, affecting the whole ecosystem and its tokenomics (tokenomics = the economics behind the token, how it runs). If a coin isn’t fully decentralised, that can be a real problem.

Ethereum is a blockchain that’s simply too big to take over like that, so that’s one less risk that you get using established crypto. A factor with Ethereum, though, is that to be a full Ethereum staker (“validator”) you have to deposit 32ETH (that’s a lot – even at today’s lesser prices, that is over $32,000). And, surprisingly, as yet, there’s no mechanism for getting it back, because the upgrade to ETH 2.0 hasn’t happened yet and the “unstake” function hasn’t been programmed in!

As an aside, this is why someone had the bright idea of creating another token that you can trade your staked ETH for: which means you can have your stake and eat it too.

This might be another clever idea that falls apart under the glare of reality though.

Conclusion

If you choose the right crypto that has a future (despite the volatility) and the right technology or company (with a good track record, solid finances, and excellent security), then staking (or something equivalent) is worth it because of the returns that traditional finance simply isn’t giving small investors.

If you want a shortcut, then head off to GCISL to open a yield-bearing crypto account with a safety-first company you can trust. It’s less scary than staking, with competitive interest rates, has bank-quality security, and even has a proper exchange built-in.

The post Is crypto staking worth it? appeared first on GCISL.

If your crypto rose from the grave and started sucking on your other savings, you’d probably want to stake it through the heart somehow, but that’s not quite what crypto staking is about.

The strict definition of crypto staking is when you take your crypto and lock it away in the blockchain so that you can claim a stake of rewards generated for processing transactions.

How does pure crypto staking work?

The exact mechanism differs from coin to coin, but the concept is simple for pure staking: there’s a way to specify how many of your coins you want to lock into the blockchain to get rewards.

What rewards exactly? Again, it differs from coin to coin, but it would normally be a share of newly minted coins, and sometimes a say in how the coin is run. In the long run, you would measure these rewards the same way you measure the return from any investment: by looking at its APY (Annual Percentage Yield).

There is a responsibility attached, though, you actually have to be running the correct software and leaving it online to process transactions. You don’t have to run every transaction, the blockchain chooses different stakeholders for every block, depending on how many coins they stake and a touch of randomness. This is how people who deposit more coins get more rewards.

What is proof of stake?

“Pure” crypto staking (directly into the blockchain) only works on coins that run a Proof-of-Stake consensus mechanism.

That is, the blockchain uses the processing power of existing coin holders to keep itself going and process transactions.

Proof-of-work coins use a competition model where computers compete to solve brute-force mathematical problems for rewards.

This is called mining, and the mining process doesn’t require you to hold any coins, so there’s no staking process. Bitcoin is the most famous example of this.

Popular Crypto Staking Coins

Ethereum (ETH)

The most popular coin to stake is the second biggest cryptocurrency: Ethereum. But while Ethereum staking has been going on, it’s not quite yet been built into the main blockchain which for the moment is still proof-of-work but into what’s called the “Beacon Blockchain” – an almost-but-not-quite-testnet.

Ethereum is heading into a “merge”, where the proof-of-stake and proof-of-work blockchains are combined, which is technically so complex you probably shouldn’t even think about it.

Because the DeFi sector always wants to have its cake and eat it too (and because Ethereum has no un-staking mechanism yet), another token exists: “stETH” or “Staked ETH”, which is a tradable token representing untradeable Ethereum and which trades at a discount to regular ETH.

This seems like one of those ideas that’s pre-doomed, but time will tell.

EOS

A well-established Ethereum competitor which also delivers decentralised processing, the EOS token can also be staked.

However, it’s a troubled blockchain that wasn’t decentralised enough and which let one particular party have too much control. You can learn more here.

One to avoid, probably.

Solana (SOL)

While EOS is an oldie, Solana is a super-fast new kid on the block to compete with Ethereum. Its main claim to fame is that it uses proof-of-stake and a new concept called “proof-of-history” to have a 400-millisecond gap between adding new blocks (compare this to Ethereum’s 13 seconds). It would be impossible to have a proof-of-work blockchain this fast because no one would solve the puzzles fast enough!

Polkadot (DOT)

Polkadot is a blockchain designed to transfer assets and information between other blockchains.

Polkadot gives you two ways to stake: you can be a “validator” (processes transactions) or a “nominator” (keeps an eye on validators). There’s actual competition for both “slots”: you can only have 22,500 nominators, for example. If there’s more than that, you won’t be able to join in. The APY for Polkadot for the top 256 validators is astonishingly high, but there’s also a lot of competition.

One to watch, but technically demanding.

Cardano (ADA)

Sometimes you just can’t stake on a blockchain yourself: there are too many technical demands or requirements. In that scenario, you’d join a “stake pool”, so called because you pool your resources with others so that they can be used (usually by a third party) as a stake.

Cardano explicitly acknowledges stake pools and the “stake delegates” who contribute their funds, and much of its functioning depends on playing stake pools against each other.

This means that if you contribute to a stake pool, it’s not a set-it-or-forget-it thing (like you have with GCISL and ETH): if the stake pool you’re in gets over-saturated, it can result in lower rewards and APY.

Tezos (XTZ)

Tezos is another open-source smart contract platform comparable to Ethereum. Like Cardano, it acknowledges two levels of staking. But, because it’s apparently cute, it gives them different names. For Tezos, the process of validating transactions is known as “baking”, and thus “validators” are now “bakers”. Smaller holders can delegate their tokens to these bakers, presumably for a bit of dough. Or, perhaps, crumbs.

There are other proof-of-stake coins, but you should be very suspicious of ones offering more return than the above coins!

How to stake crypto in 5 steps

1. Choose a crypto or coin to stake

You’ve seen some of the options up there, but it’s your decision. How much can you afford to stake? Can you run a transaction processor? How much knowledge and vigilance is required once you’ve done it? Does the coin have a future? Is the lock-in period to your liking?

The best website for comparisons is this Staking Rewards, where you can see the current rewards, price history and more. You will find an almost list of candidates and options, so overwhelming you might just decide to join GCISL and invest in Gold.

For instance, here’s what the Staking Rewards website has to say about Solana:

2. Learn the minimum staking requirements

The above website is quite good for finding out minimum staking requirements, but not all the data is there. All good staking coins have a lot of official information available of course, and you’ll need that website because…

3. Download the software wallet for the desired coin

… it’s in the coin’s interest to make it as easy as possible to stake, unstake and earn rewards, which means a wallet will double as a stake manager.

4. Figure out what hardware to use

If you’re going to be running actual validators, then you need to set one up. Most stakers, rather than using their personal PCs, would set up a Linux VPN at a virtual host, download the software and set it running. This means your transaction processing isn’t subject to disconnection. This is not an easy task though: setting the server up is not easy, hardening its security is also not easy, and you’ll get charged a monthly fee.

5. Begin staking

Press that button! Start that engine! Rev that revver!

6. Monitor that investment

You’d think that staking was “set-it-and-forget-it”, but that’s not always true (for instance, Cardano stake pools need watching).

Is Staking profitable?

Well, in terms of you always having more crypto than you started with as long as you follow the rules, then it’s always going to be profitable.

In terms of the fiat value of your crypto, well, it’s likely the coin you possess will change in value from day to day much more than the increase in your crypto from the yield. All you can do is to think medium-to-long-term and hope that the coin goes up in fiat value to cash out at a profit. That’s unless you believe fiat currencies are doomed and we’ll all be using crypto, in which case you don’t care about fiat value…

Staking the non-stakeable

Of course, there are companies that offer yield-bearing crypto accounts that look a little like staking, but you can do it on coins without proof-of-stake, and it’s generally easier and more convenient. GCISL is one of those companies, currently offering a 2% yield on ETH (ETH Maple, 90-day lock-in applies), and 7% on Gold. Download our app for more details.

The post How does crypto staking work? appeared first on GCISL.

The world of finance is full of clever terms and language that are meaningless to ordinary people. The best financial advisers explain things simply, but crypto doesn’t really have those, so it’s up to us! After all, it’s never a good idea to invest in something where you don’t have the first clue as to what’s going on. It’s not that you have to know everything, just enough to get started and not feel lost.

So, what’s cryptocurrency then?

Cryptocurrency is all-digital currency. If it helps, think of it like supermarket loyalty points, except you can send/receive them from other people, and you can trade them. For example, imagine being able to take your Nectar points and convert them to Tesco Clubcard points.

It’s not an exact analogy: cryptocurrencies and “tokens” vary in value all the time against the pound, the dollar and each other.

And, while Nectar points live on Nectar’s servers, most cryptocurrencies live on “public blockchains”: worldwide shared databases that don’t need the “proper” banking system to run.

So, some terms you probably need before you invest in crypto:

Blockchain

First described in 1982, a blockchain at heart is a database usually shared between multiple computers that you can add blocks of transactions to, but not edit.

It took the advent of Bitcoin for the technology to be used in earnest when “Satoshi Nakamoto“ (a person or group of people, but whose identity is unknown to this day) proposed a way that all the computers on a blockchain could have some way of agreeing on what transactions were valid.

Bitcoin

Bitcoin is the biggest cryptocurrency by market value. It was created specifically to be a replacement currency following the debacle of the 2008 financial crash. It’s survived market crashes, glitches, exchange hacks and legislative attacks and has now become much more connected with the traditional financial markets, which have now begun using it as an alternative investment. For some people, Bitcoin is cryptocurrency.  They’re wrong because…

Altcoins

… there are cryptocurrencies other than Bitcoin. The most popular is Ethereum, but other currencies include Bitcoin Cash (which split off from Bitcoin like Robbie Williams split off from Take That), EOS, Tron, and Stellar. These are also blockchain-based digital currencies (i.e. “The Tron Blockchain”, which is fuelled by the Tron cryptocurrency (“TRX”)).

The altcoin family also includes coins that live on a host blockchain, and not their own… these are called “Tokens”.

Tokens

Sometimes the purpose of a blockchain is to actively encourage projects to use it, which means launching tokens. The Ethereum blockchain is designed to be a giant virtual computer hosting thousands of tokens, for instance. These tokens can also be bought, sold and exchanged, and have a monetary value. Many of these tokens are used by dApps. There’s also a separate kind of one-off token called an “NFT”, which is supposed to represent a single digital asset.

dApps (Decentralised Apps)

A dApp is a software application on a blockchain. It consists of an ecosystem of Smart Contracts (bits of code on a blockchain) with a user interface on top of them.

Aside from trendy uses like “CryptoKitties”, the most commonly used dApps are finance-related, usually to do with sending, receiving, lending or borrowing. These dApps are DeFi in action.

DeFi (Decentralised Finance)

DeFi is a version of the finance industry but has no connection to it. Anyone can participate in DeFi if they have the software and the crypto to do it. DeFi usually generates better returns on activities than traditional finance, but it is riskier.

DeFi extends the world of banking activities, such as lending, to normal people. DeFi even extends to real-world currencies and assets, represented by tokens called stablecoins.

Stablecoins

A stablecoin is a digital blockchain token that’s designed to represent the value of a real-world asset in the DeFi space. For instance, USDC is a digital dollar, but there are others. There’s TEUR (true euro), GYEN (a yen-based stablecoin), and even gold (PAXG).

Not all stablecoins are created equal – the ones above are backed by actual assets. For instance Circle, the company behind USDC, backs it with audited assets worth more than the total value of USDC in circulation. Some other stablecoins such as “USDT” claim the same level of backing but with less evidence.

Other stablecoins might try to use other cryptos as assets (“crypto-backed stablecoins”) or even just try some programming jiggery-pokery to try and create value out of thin air (“algorithmic stablecoins”).

GCISL – buy crypto, invest crypto, earn crypto

Bitcoin, Ethereum and USDC are three of the cryptos you can buy at GCISL and invest easily for interest at GCISL, paid daily.

Do you want more definitions?

Check out our blog defining the top DeFi terms.

The post Terms you should know before you invest in crypto appeared first on GCISL.

However, as usual, there’s a lot of fuss made by people who don’t know one end of a stablecoin from the other to make a wider point, which is “crypto bad, mmhkay?”.

What is a stablecoin

One definition from USD coin’s website is this:

“A stablecoin is a blockchain-powered digital currency that combines the benefits of open, borderless cryptocurrency with the price stability of traditional fiat currencies.”

… which is true but misses out on some important information. Stablecoins are stable, yes – but stable against what?

The answer is: they’re stable against real-world digital assets. USD coin (USDC) is stable against the US dollar. There are other US dollar stablecoins too, such as PAX (USDP), Tether (USDT), DAI, and “True US Dollar” (TUSD). There are gold stablecoins like PAXG, euro stablecoins (there aren’t as many of these, but EURS is a big one), and even Japanese Yen stablecoins (GYEN).

Why are stablecoins important?

Blockchain’s connection to the financial systems is… well, not really there. Fiat currencies and digital currencies require a lot of effort to talk to each other. That would make trading between one and the other a horrible experience… if it wasn’t for stablecoins. Stablecoins allow financial activity in “real” money with all the convenience of the digital asset ecosystem. Without that, no one would know what anything was worth in the “real” world.

What can you do with stablecoins?

Now that there are debit cards running off some fiat stablecoins, you can do pretty much anything you can do with “real” dollars. With a dollar stablecoin you can send it back and forth, and convert it to other currencies (digital, and other stablecoins). You can lend them, or borrow them, or you can actually pay for things (gasp!).

Not all stablecoins are created equal, though. Different stablecoins are for different things: you won’t be able to buy some groceries with a debit card backed by gold stablecoins, for instance.

Types of stablecoin

They say the devil’s in the detail, and that’s especially true with stablecoins. Did you know there are hundreds of them? But there are very few that you’d actually trust for any length of time (though they might be useful for temporary trades). We’re only going to cover currency stablecoins in this next section.

Fiat-collateralised stablecoins

How could a digital dollar be worth an actual dollar? Well, if that invisible coin can be redeemed for a real dollar, and if its exchange value is always one dollar (regardless of how many of it are bought and sold), you could argue that it’s worth a dollar.

In this category of stablecoins, the worth of the coin is directly linked to the assets of the company producing the coin that they have put aside for redemptions.

USDC (US dollar coin) from Circle is the biggest and is fully backed by US dollars. (it’s also the most regulated and audited stablecoin). At the time of writing, there are around 53 billion in circulation.

USDC publish a monthly audit: you can find April 2022‘s here.

The company “Trust Token” offers stablecoins in multiple currencies, fully backed by reserves. Some of these coins are listed at exchanges, so foreign exchange is also possible.

The company Paxos also offers a fully collateralised US Dollar Stablecoin.

But in terms of take-up in DeFi, USDC seems to be the industry leader.

One USD stablecoin that’s suffered from doubt about its real reserves is USDT: Tether. While it has been stubbornly resistant to various attacks over the years, doubts persist, and more reputable coins are in the ascendancy.

Crypto-collateralised stablecoins

File this under: “er, massively complicated”. If you have a crypto coin that is backed by other cryptocurrencies, then you’ve created a potentially large problem for yourself. In general, this problem is addressed by “over-collateralisation”. That is, you store more crypto than the value of the coins you’ve issued. This becomes a problem again if the value of your collateral dips quickly so that the coin is under-collateralised.

The coin DAI, which is actually the first stablecoin, is a crypto-backed stablecoin that’s historically done quite well with maintaining its peg. It’s not just backed by crypto, but by complicated and headache-inducing lending and borrowing activity. It’s living on the edge of danger, though.

Algorithmic stablecoin

The difference between a crypto-collateralised stablecoin and an “algorithmic” stablecoin is that the crypto-collateralised one uses established crypto with a known and independent value, such as bitcoin or ethereum.

An algorithmic stablecoin is one that creates additional coins to trade against the main stablecoin and then uses logic to keep the value stable. Sometimes (like the notorious and recently-crashed UST coin) an ecosystem has some crypto collateral anyway for emergencies. This can create its own problems if something goes wrong, and the algorithms dump it on the market.

So, like perpetual motion, while algorithmic stablecoins can work for a while, they’ve never succeeded indefinitely. There’s a long list of coins that have failed (i.e. lost their peg to the dollar): for instance, in the mid-May crash, coins fUSD and DEI lost their peg in the general melée.

Verdict: you know that bargepole you own? Don’t use it in proximity to these coins!

Earn interest on stablecoins

I think we’ve established that you should only invest in regulated, asset-backed stablecoins.

One of the quirks of the crypto ecosystem is that you can earn more interest on fiat stablecoins than you can on fiat. This is because there’s a lot less of it, so there’s more borrowing demand, and you can do interesting new things with it in the digital ecosystem. Most of those things are a bit like gambling, but they’re still things, and people still borrow stablecoins to do it.

You can earn a competitive rate of interest on USDC stablecoins at GCISL through our crypto yield-bearing account, as well as being able to diversify into bitcoin and ethereum, and GCISL’s Gold account, which offers even better rates.

You can onboard at the GCISL website. Once you’ve registered and been verified, you can fund your account with the USDC you already own or send in those pesky real pounds or euros you’ve been dying to get rid of, with no deposit fees (there is a minimum deposit of the equivalent of 100 euros).

You can even buy new USDCs with a debit card through the in-app provider MoonPay, though fees apply for that.

After that, press the “invest” button, and watch the digits fly.

The post What is a stablecoin? appeared first on GCISL.

Nowadays, the main problem to solve is whether the exchange or wallet you’re using supports withdrawing crypto to a regular bank account (you would have to exchange it for your native currency first, of course).

Because withdrawing crypto in that way requires interfaces to the regular banking system; it’s not something wallets offer as standard, though there are one or two that have this facility (it’s called a “crypto off-ramp”, btw).

GCISL, in contrast to most wallets, does offer easy withdrawal to fiat currencies, as well as allowing you to withdraw your crypto to your own wallets. Both of these options have no withdrawal minimum amount, which is nice. For most coins there’s also no lock-in period: you can disinvest and withdraw at will.

So, what’s the withdrawal process? We’ll use the app to demonstrate. First of all, you have a decision to make. You can also use the step-by-step guides in our Help Centre for further guidance.

Withdrawing traditional currency (“fiat”)

If you click on “Traditional Currency”, you’ve got a choice: withdraw GBP through FPS (“Fast Payments Service”) or Euros through SEPA.

It’s vital that the account you’re withdrawing to is in your name. This is for security reasons. And, you don’t want to go giving your hard-earned rewards to someone else, do you?

So, what will you see when you click these promising buttons? Well, here’s the GBP interface.

Using the fast payments service, you only need the name of the bank (e.g. “HSBC”), and the usual sort code and account number. And of course, the bank account needs to be in your name. That’s a deal-breaker. The transfer should be more-or-less instant.

For Euros? Yes, a bank account needs to be in the EU and compatible with “SEPA” for this to work.

So, first, you need to select the country that your bank account is in. This needs to be a country that uses SEPA for payments.

Then, enter the name of your bank. This field isn’t for your account name, that should always be the same as on your photo ID when you onboarded. If it isn’t, the withdrawal will fail.

After that, it’s time for the IBAN – “International Bank Account Number”. This should be on your statement.

Finally, how much do you want to withdraw? A nominal flat fee will be deducted from the withdrawal amount, and the rest will be transmitted forthwith to your clutches.

Withdrawing crypto

When you’re withdrawing anything in crypto, the most important thing is to make sure you’re withdrawing it to the right place: that is, the right blockchain.

This isn’t quite as straightforward as it sounds. For instance, Binance Smart Chain and ERC-20 Ethereum addresses share an address format, but ERC-20 is your friend.

Here’s a summary of the address types you need for each token.

The same Ethereum ERC-20 compatible address should work for all of these except bitcoin, so your wallet only needs the one Ethereum address.

You can see from the withdrawal form that GCISL can’t check whether you have the right kind of Ethereum-looking address: it just has to take your word for it. Funds sent to the wrong blockchain (such as Binance Smart Chain) will become inaccessible to you, so be sure to double-check.

Note that there is a flat fee with withdrawal equivalent to $10 for Bitcoin, and $20 for other cryptocurrencies. This helps cover transmission/gas fees which can be expensive at peak times.

Once you’ve filled in this form and confirmed your withdrawal, GCISL will initiate a transaction on the relevant blockchain. The amount of time this takes is dependent on how busy the network is: any transaction has to be “confirmed” by multiple computers before it’s regarded as “done”. It could take minutes, it could take hours, but at the time of writing, Bitcoin tends to be quicker!

Whichever coin you withdraw, you will receive a notification of the transaction by email. That email will contain a transaction number you can use to follow the transaction.

Blockchain.com (Bitcoin) and Etherscan (Ethereum) are good options to use. It’s usually best to just let the process play out, though.

A quick note: in order to withdraw the sign-up bonus of 10USDC, you need to have a balance of 500 euro for at least 90 days.

Don’t forget that crypto interest may be taxable!

The post How To Withdraw Money From Crypto appeared first on GCISL.

It’s a rule of life that “those who hath, shall be given more”, and never more so than now. I don’t think they were talking about crypto yield accounts when they wrote that, but you can never be too sure.

A crypto yield account is an online account that allows you to earn interest (i.e. free money). But you’re not investing regular currency like GBP or EUR, you’re investing cryptocurrency (virtual assets) and stablecoins (virtual assets that track a real-world asset like the US dollar).

So, how is a crypto yield account better than the other ways of earning free money?

1. Yield accounts are a lot less work

There are a lot of ways to earn free crypto out there in the ecosystem. For instance, you can earn crypto by using the Brave browser and joining their reward programme (you get BAT tokens for viewing ads, and these are redeemable at many exchanges).

You can also fill in surveys for small amounts of crypto. You can visit faucets for a tiny free amount. You can spend time searching for airdrops, in case a crypto company is giving a small amount away (beware of scams and useless tokens). Also, maybe you’ll pick up a free NFT. But then, how does that ever acquire a retail value?

Some exchanges try to gamify the experience with “missions” – that is, activities you can do each day to earn crypto. While these start off easy (“sign up for missions”), they can quickly end up being all-consuming (“trade $400 of ETH”).

At some exchanges, you can also “earn and learn” – earning small amounts of crypto for reading articles about crypto. That’s one activity we’d recommend because being knowledgeable about crypto is good protection against some of the risks. But, we’d still recommend Coindesk’s reports.

All of these have one thing in common: it’s swapping hours of your life for small crypto rewards. That’s not as “free” as it looks unless you were going to do it anyway.

2. They don’t threaten your capital

One of the other ways to earn free crypto is by crypto lending. However, there is a distinct risk that market forces and defaulting debtors can more than wipe out any gains you might make.

3. Crypto yield accounts don’t force you to spend money to get your rewards

There are crypto debit cards, and they do offer cashback, sometimes paid in bitcoin, sometimes paid in their own native token. It’s a good option for things you were going to buy anyway, of course.

That said, you often have to buy and “stake” crypto to get those cashback rewards: which often means buying thousands of pounds of a platform’s own tokens.

Set it and forget it

A crypto yield account is a genuinely “set-it-and-forget-it” deal, and you can get on with your life. In fact, if you have the capital to put in, you can do this and do the other things.

One crypto yield account definitely worth your time is offered by GCISL. We offer competitive rates on your crypto (BTC, ETH, USD stablecoins) simply for depositing it. We get on with the hard stuff of making the crypto ecosystem generate returns for you, while you just get on with other things!

To get started, sign up for free at our website. Signing up even gets you a free 10USDC bonus, which you can invest and watch immediately growing in real-time! Free crypto for all! In dollar form!

Once you’ve verified yourself (feeling verified now? Good! Wow, that selfie you just did looks great!), you can fund your account in one of three ways: sending in crypto to GCISL’s hardened, bank-grade crypto wallets, sending a bank transfer (GBP or EUR), or buying crypto with a debit card (third-party fees apply). There’s a minimum deposit of 230 EUR equivalent. There’s no deposit fee, and it’s easy to fund your account, so it’s also easy to build up your reserves over time.

After funding your account and seeing it replete with assets, you can decide what you want to do with it. Are you HODLing bitcoin or ethereum, and want to benefit while you wait for a glorious future? Or are you wanting stable returns on your coin with a stablecoin? Or both? GCISL has you covered, and you can get your crypto in-app from GCISL with no deposit fee, no commission and a competitive rate. Press the “invest” button, specify how much, and then you’re earning!

Yet another way to get free crypto is to earn yourself a 500 USDC referral fee by bringing other people into GCISL (terms and conditions apply). A referral link is generated for you to give to friends and family. So why wait? Sign up today to earn yourself some free crypto!

The post The Simplest Way To Earn Free Crypto appeared first on GCISL.

If you’re not keeping your crypto at a centralised exchange (right next to the trading), then you’ll need a crypto wallet.

That’s a combination of hardware, software and (believe it or not) paper that allows you to access and manage your digital assets. While your assets never leave the internet, the keys that you need to control them are generated and stored by the software.

(See “crypto wallets explained” for more).

What can a crypto wallet do?

Crypto wallets offer a range of functionality (varies by wallet, of course):

• Providing addresses for you to receive your crypto
• Sending crypto and helping calculate fees
• Keeping your crypto address list friendly
• Token swaps and crypto sell/buy in-app
• Access to decentralised finance activities
• Web3 wallets such as Metamask can connect to websites so that you can use your crypto directly.

Hosted Wallets

There’s no shortage of companies wanting to offer you a safe home for your crypto: in fact, some exchanges purposely build their websites and apps to look more like wallets than exchanges: trading interfaces tend to be scary.

If you want to go down this route, then you just need to find an exchange and sign up. There are plenty of exchanges that have signed up to pledge to be responsible and safe. If you can, check deposit and withdrawal fees before doing anything – they can be steep.

Of course, then you need to fund your account and buy crypto. Normally you’d fund by bank transfer or sending in crypto you already owned. Some exchanges offer debit card deposits, direct purchase of crypto by debit card, and other features. Debit card options tend to be more expensive, though.

While exchanges have become a lot better recently, they’re still prime targets for hackers and are a central point for governments to lean on, too. Most crypto experts would advise keeping your crypto nearer to you unless you were actively buying and selling, though that means possible withdrawal fees.

The upside is that at long as the exchange has decent account/password recovery, you’ll be able to regain access to your coins after a hardware disaster.

Self-custody Wallets

Do you want to keep your crypto close to your chest? Well, then there’s an app for that. Or rather, many apps. All of them would keep your crypto keys on your phone or hard disk, and some of them provide more features, including buying and swapping crypto. It’s important to look at the safety record of the wallets because bad programming can result in funds being mis-sent, or hackers getting in. Objective reviews are your friend!

If you’re using a more basic wallet, you should download the app and follow its setup instructions to add a user and create a wallet. During this process, the wallet software will give you a passphrase to write down. This passphrase can be transferred between copies of the same app (for instance, desktop and mobile versions).

While there’s a possibility it could be imported into other wallet software, you won’t see all your assets if the wallet doesn’t support them.

You should write the passphrase down and keep it safe – anyone could use it to access your stash.

Once you’ve set up the wallet, then you can transfer your crypto into it. Generally, the wallet will give you a QR code to scan, which is also your public wallet address, which people can send funds to, but not take funds from.

Hardware Wallets

While software wallets keep their keys on a hard disk, hardware wallets are (generally) USB devices that are designed for safely holding crypto keys. Quite often they’re password-protected, encrypted, or protected by a PIN. The big names on this are Trezor and Ledger.

When your keys are on one of these things, no hackers can touch them. Having said that, you will still have a piece of paper with a passphrase…

After buying a hardware wallet, you would follow the instructions to set it up and install whatever software is advised. Then, you’d send in the crypto to the addresses the wallet set up for you.

Fun fact: did you know you can see your coins on the blockchain through a browser? You can’t do anything with them, and no one can see who owns them without doing a lot of forensic research, but sites such as Etherscan and Blockchain.com’s Explorer will allow you to reassure yourself your coins are still there.

Or, you can use GCISL and see your crypto grow

Wallets are all very well, but in the end, the funds are… well, sitting there.

With GCISL, you can park them in a hosted wallet with bank-grade safety that allows you to put it to work and earn yields up to 7% (as at the time of writing).

How do you do that? First, sign up on GCISL’s friendly website or download the even-friendlier app from the App Store or Google Play. Create a login, and then go through verification – KYC (“Know Your Customer”) and AML (“Anti-Money Laundering”) are there for your protection!

Once that’s done, add extra security to your account, and then get to the fun(d) part!

If you have crypto, you can send it in from existing wallets to GCISL’s one (people would normally send in Bitcoin, Ethereum or USDC).

Alternatively, it’s easy to send in sterling/euro as a bank transfer, and then buy the crypto you need with that (with competitive exchange rates and fees).

Lastly, you could use “MoonPay”, our third-party payment provider to buy crypto with a debit card.

While GCISL doesn’t charge deposit fees, there would be third-party exchange fees using MoonPay. Don’t forget the minimum deposit is the equivalent of 100 euro.

But what to invest in? GCISL makes it easy to choose by selecting only the best, most established cryptocurrencies (Bitcoin and Ethereum) and the safest and most respected stablecoins, such as USDC.

The post How To Create a Crypto Wallet appeared first on GCISL.

So, if you can’t rely on coins named after the smartest people ever, what is the smartest way of investing in cryptocurrency?

Well, the smartest way is also the most boring way: where you have a choice of “become an expert investor”, or “hand your funds to expert investors”!

Responsible investing: become an expert investor

Cryptocurrency has some unique features that mean there are extra questions for the smart investor to ask. For instance, “should I even invest in crypto?” is a valid question. Will it be here tomorrow? Is it all hype?

Cryptocurrency is at the very start of a merge with traditional finance and is rapidly legitimising itself. So as a sector, it’s now accepted as a valid place to invest money and get a return. There are more industry groups lobbying for transparency and honesty, and it’s never been working harder to clean up its act.

Do your research, and don’t buy the hype – either way!

There are thousands of cryptocurrencies, and many will disappoint or fail. It’s surprisingly difficult to establish the “fundamentals” of a coin, especially when its value appears to bear no resemblance to its actual prospects. This is very frustrating when you see coins with good fundamentals suffering, and hype-driven coins prospering.

Crypto still does contain a LOT of hype, delusional investors, and dishonest claims around the various coins: the worse the fundamentals of the coin, the more hype is needed. Crypto as a sector is also targeted with a lot of FUD (fear, uncertainty, and doubt), particularly by politicians with close ties to the banking industry.

So, ignore most of what you hear from politicians and the mainstream media.

One of the best sources of links to reports about cryptocurrencies is Coindesk. Of course, most reports start from the basic idea that cryptocurrency is a good thing: but that doesn’t mean the research is wrong.

You should also pay attention to who wrote an article or report. Who paid for it? Did they have an angle?

Playing Risk

Risk comes in many forms. At the beginning of cryptocurrency, there was a non-zero chance of Bitcoin collapsing and everyone losing everything because the system would fall into disuse.

That didn’t happen. But the history of Bitcoin gives us an idea of where the risks come from in cryptocurrency. Knowing where those come from is vital for being an expert investor.

The risks come at three levels: risk to the ecosystem, risk to an asset, and risk to you.

Hacks and Exploits

Two early hacks in 2011 and 2013 on the same Bitcoin exchange (Mt Gox) had a terrible effect on the cryptocurrency ecosystem, which was basically just bitcoin at the time. A coin hack on an Ethereum smart contract also caused a lot of problems in 2015 which even resulted in the coin splitting into two!

The ecosystem is now a lot tougher to bring down: it’s bigger, and the security is better (especially at centralised exchanges). However, there are still hackers exploiting the faulty code written by people.

Wallets and exchanges are still a popular target for hackers, so it pays to find out which ones are the most hardened or used.

Keeping up with the crypto news is also a must.

Poor Programming and Design

Sometimes poor programming can result in as much damage as hackers: for instance, recently the design of the UST stablecoin (and its LUNA companion that it used as a counterweight) was cruelly exposed by some heavy-duty market action that crashed it.

Equally, a poorly programmed wallet or smart contract could just throw your funds away, with no recourse, with no need for hackers.

Useless Business Plans

It’s often said that you should “diversify” your holdings, and that can apply to crypto. But you obviously need to make sure you’re investing in coins you’ve done your research on. In crypto, buying a range of different coins doesn’t necessarily protect you from a slump in the market: all cryptos tend to move together against the dollar, with smaller coins moving most. The exception is dollar-backed USD stablecoins: if you invest in them, you really are hedging your bets!

Market Manipulation

Market manipulation is a big risk because “whales” don’t need to be hackers to game the system. They just need enough money to manipulate a coin and use it as their own personal plaything.

If groups of people get together, they can also run “pump and dump” scams. The idea is to get a group of people to all buy a coin at the same time at the same place to engineer a price rise. People not in on the scam buy the coin and raise its price still further (this is the danger of FOMO – fear of missing out). Then, the people behind the scam cash out at the top, leaving newer investors holding the bag. It’s illegal in traditional finance.

Straight-out-fraudulent Companies

This is a problem that has lessened slightly in 2022: in 2017, a ton of companies sprang up with fictitious people and copy/pasted white papers for new coins to do ICOs: “Initial Coin Offerings”, promising the earth, the moon, and 22% of all known stars to lucky investors.

Some were honest, most were not. When the outcomes became clear and a bear market set in, the money dried up and ICOs got a bad name.

Due diligence on any company you’re going to trust is vital. Test that website. Check that the T&Cs weren’t written to Kentucky Fried Chicken. Poke. Prod.

And if all that sounds like hard work… there’s an easier way!

Well, we’re going to suggest that you use GCISL instead to do your heavy lifting. A trustworthy company that you can do due diligence on, bank-grade security, and experts behind the scenes that know their stuff. Sometimes the smart option is to find a trusted partner and rely on them.

Onboard at GCISL (or download the GCISL Web from the App Store or Google Play), and you can invest for interest, and diversify into only the safest crypto.

The post What’s the smartest way of investing in cryptocurrency? appeared first on GCISL.

Sherlock Holmes said: “When you have eliminated all which is impossible, then whatever remains, however improbable, must be the truth.”

And the truth is: it’s impossible to make a respectable return on traditional savings accounts right now. It can also be difficult right now to make a respectable return on some of the traditional finance industry investment vehicles.

When consumer-facing investment platforms are “suggesting” (not promising!) everything from negative yields to 13.4% over 10 years, that’s a terrible performance, with the only guaranteed winner being the platform itself.

Cryptocurrency is a new asset class: it’s virtual assets. That might seem weird: how can something that’s just a number on a database be worth something? Or be traded? Well, the traditional finance market has absolutely no problem with the concept: most of the money in the world is wrapped up in promises, and fiat money like USD or GBP comes into existence at the stroke of a keypress.

However, the key technology behind cryptocurrency (“blockchain”) is revolutionary and useful. The top cryptocurrencies have proven their worth time and time again: for instance, Ethereum’s smarter blockchain is the world computer behind millions of automated transactions a day, all transparent.

But why invest in it? Well, it’s probably the future of finance (a gradual merger with the traditional finance sector so everyone uses blockchain is a reasonable long-term prediction). Crypto can also give you returns that don’t have their juice sapped from them at source by over-entitled financial middlemen.

5 steps for investing in cryptocurrency

1. Understand what you’re investing in

It’s actually quite difficult to find good reporting about cryptocurrency in the wider world thanks to the hysteria of most media outlets about it, and it is even more difficult to find useful summaries about particular coins.

One of the best sources of information is Coindesk, which has reports and summaries by experts.

If you read those reports, that would make you better informed than 99% of the world’s population about Bitcoin. Though the downside is you may find yourself being asked about it at parties!

2. Look to the future

Cryptocurrency as an asset class is only 12 years old, and Ethereum is only 8. They’ve made massive strides in that time, facing down regulators, crashes, hacks and more – and are still standing. It’s acknowledged that blockchain is a valuable technology that would revolutionise the way economies work. There’s a long future ahead for traditional finance itself merging with the crypto ecosystem. That, combined with the fact that some coins have a hard cap on the number that can ever exist, means that things are likely to trend upwards over time.

3. Be aware of the volatility

But that upward trend is medium-to-long term. The problem with a new asset class is that there’s a lot less money in it than in established ones. There’s still a large amount of money in the crypto sphere, but that’s dwarfed by the trillions in traditional finance. Any billionaire, for instance, can have an outsize effect on the crypto market (Elon Musk, for example). As the sector gets larger, that ability will fade, but for the moment trading crypto day-to-day is a nerve-jangling exercise, and best avoided by the uninitiated (no matter how tempting).

4. Manage your risk

Some crypto is safer than others. Knowing the risk profile of coins and having an idea of how to spread your investment is the key to this. Bitcoin and Ethereum are volatile but proven.

Sometimes risk can come from unexpected places. “Stablecoins” are supposed to be pegged to a real-world asset for stability, like the US dollar.

But the design of the stablecoin and whether it’s got anything to back it up is an all-important consideration. A stablecoin like Circle’s USDC (backed by proven assets) was always going to be more stable than a coin using clever mathematical tricks, such as UST and its sister coin “LUNA”, which collapsed when its weaknesses were intentionally exploited, leaving a lot of unhappy investors in its wake.

Also, always beware of the current hot trends: the more excitable people are getting, the more cautious you should be! NFTs, for example, are an example of a useful technology being used for inappropriate financial purposes and marketed to people with wild promises of future gains. FOMO (“fear of missing out”) has never been so dangerous.

5. Don’t invest more than you can afford to lose

This is basic advice for any situation where your capital is at risk. Traditional finance and cryptocurrency are both perfectly capable of wiping out your money if you choose the wrong risk profile.

How can I invest in crypto – GCISL!

One of the simplest ways to dip your toe into the crypto waters is to use a platform like GCISL. It combines the simplicity of a yield-bearing account with the returns of crypto.

Although the dollar value of Bitcoin and Ethereum can change, the amount of it you own won’t go down: it will go up, thanks to interest.

The service we offer at GCISL means that your investment into crypto can be cautious and at your own pace, rather than all-in and risky (although there is always risk attached!), and it only deals with the most stable and safe assets. That might not be as exciting as being able to choose from a whole page of excitingly named virtual coins, but it’s a lot safer, especially when your coins are being protected by bank-grade security.

How much do I need to invest?

The nature of investments is that “the more the better”: the more capital you have, the more interest you get. But who in this life routinely has large lump sums? For most people, it’s something you have to build to.

One of the ways investment experts advise investing is with small, regular amounts. Aside from being more affordable, this means that you are helping to deal with changes in the value of an asset by spreading out the buying. Of course, the amount can’t be too small since even in crypto it’s unlikely to accomplish much. You can get funds into GCISL as easily as by pressing a button in your online banking.

GCISL’s small minimum investment of the equivalent of 100 euro and fee-free deposit means that even “small” amounts are put to good use immediately. Any amount can also be withdrawn in fiat currency fee-free to your bank account if you happen to need it (though, if you take our advice, you shouldn’t!).

The main options in GCISL also don’t lock your assets up, though lock-in periods may apply to some of the investment accounts.

Whether your risk profile is happier with USD-linked assets and interest, or whether you want to invest in coins with exciting long-term prospects such as Bitcoin or Ethereum, GCISL is a pretty good way to start.

You can onboard for free on our website. Once you have been verified (photo ID, proof of address, selfie) and have set up additional security on your account, you can deposit funds. Then, put them into your chosen investment account, and watch them start earning!

We have produced a small illustrated guide to onboarding with GCISL in our Help Centre, which might be helpful.

The post How much do I need to start a cryptocurrency investment appeared first on GCISL.