Tokenista
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January 10, 2019, 02:53:22 PM |
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Currencies, both fiat and crypto, don't actually contain any value they simply represent value. They are called Trade Instruments, meaning, instruments that facilitate trade. Stocks are an example of trade instruments that aren't money, they have no actual value but they represent a share of a company and the company itself does the work that turns the profits that gives a share its theoretical value. All trade Instruments work along the same lines: Fiat is traded by banks and Foreign Exchange companies, Stock is traded on Stock Exchanges such as the New York Stock Exchange and Cryptocurrencies are traded on various Cryptocurrency Exchanges. All of their values are representations of real things, for example Stocks Represent created and distributed goods and services by a particular company, while fiat currency represents created and distributed goods and services of a nation. Both change based on industrial/technological/scientific/developmental/etc. advancements within those companies or nations, as well as various factors such as trade volume and inflation. It is best to trade your trade instruments at the highest value possible and use them to buy real items, such as: Precious metals, Livestock, Software, Machines, Produce/Seeds, Land, Realestate, etc and then use those to get more trade instruments.
Politics can effect a nations Currency or Stock Market. For example, when Mosul was taken over by ISIS and all of the Gold in the Bank of Mosul was taken, and the Investment Opportunities went bleak, their Money became much less Valuable, even though after the fall of Sudam Hussein the British Government just printed the Country of Iraq new Notes. The opposite of that can be seen in 2 ways, and that situation can also be compared to the effect of a Cu-De-Ta on the Currency or Stocks. But the opposite would be Vietnam, who had a Civil War that America got way too involved in, and then at the end opened up their Markets and their Currency did well and Investment in Vietnam continues to be good. A Similar effect is Trump. The people with a lot of Money and Stocks and Companies on the Stock Market in America, all just got Tax Breaks, so they are willing to spend more, and take bigger risks, and they all trust Trump not to do them wrong because he came from the same Environment as them.
Then, an example of something similar but not exactly the same, is Brexit. When Brexit happened, everyone panicked. Stock Markets dropped in America, as well as Britain and Asia, and then the British Pound went down in value. That was not good for Britain, because anyone with savings, or anything, had money that was worth less than it was the day before on the Global Market. But that was good for everyone else, because you could buy British Pounds, and you would get more of them than usual for USD. So you could go on vacation in Britain and get things for Cheaper if you were starting with USD. Or, you could buy British Pounds and wait for them to go up in value.
Trade volume is how many people are buying and selling a particular currency or stock. The more people who are buying it, the higher the value will rise.
An example of Inflation is when the United States starts printing too much money. When this happens a dollar starts being worth less, which in turn means it will take more money to buy the same materials. For instance, if you go to the store and one day Milk is $3/Gallon but then you go a few months later and notice it is $5/Gallon, this is because of inflation. Inflation also drives things like the minimum wage and social security checks, which are usually based on the cost of living. Cryptocurrencies with no cap will eventually inflate into eternity and lose value, unless they have a high trade volume.
Supply and Demand is the comparison of how many people want something against how many their are of that thing. For example, when Apple creates a new IPhone the value is higher than it really should be and as the technology slightly or drastically ages, the value goes down.
A Whale is a person who has a large quantity of a certain trade instrument and uses that to effect the markets. For example, if someone has 51% of a particular stock they could either sell them all quickly which would bring the value of that stock down, or they could hold on to all of them which makes them more rare and makes them more valuable.
Bubbles are when something is artificially high in value, 2 examples of this are: IPhones as mentioned before, and Gasoline. Gasoline raises in value based simply on the speculation that “one day we might run out”, this creates bubbles which raises prices.
Bulls and Bears
This is a lot more simple than people think before getting into it. Bulls strike upwards, with their Horns, so that represents someone who makes money buying Stock when they see that a Market is doing well and is likely to do better. That way they can make an investment, and it is likely to go up and they can sell soon after and make a profit.
Bears strike Downwards, with their Paws and Claws, that represents someone who makes money as the Market goes down. So when you are scared, because you spent $5 per Stock or per Coin, and now it is $4, and you want to get out before you lose any more money. The Bear will buy your Stock, or Coin, and will wait for it to go back up later. So he profits on the Fear of others, or on temporary situations like Brexit, etc. A Bear doesn’t look for a Stock that is doing good and will do better, a Bear looks for a Stock that has done good long term, and is not doing well at the moment, but is likely to bounce back.
Then that brings us to the Bear Whales, Buy Wall and Sell Walls of the Cryptocurrency World. A Bear Whale is someone who has maybe 50,000 or 100,000 Bitcoins, maybe more, and they decide they are going to drop 50% to 90% of that on the market, to kill the “Buy Wall”. A Buy Wall is all the people who have said “I will pay X price” but that price was below the last price that it was sold for on the Market.
So say I am selling my Coins, and I want $1 each, but you put a Buy Order up for $0.90 cents each, I might sell my Coins to you. But if there are 5,000 people trying to buy it, they may have Buy Orders at $0.99 cents, and $0.98 cents, so your $0.90 one may take a long time to get filled, or may never get filled if the coin goes to $5 each, and $10 each. But if someone comes on the Market, and drops enough Coins on everyone to get to $0.90 cents, and even $0.80 cents, and $0.50 cents. That scares the shit out of everyone, and they sell their Coins, which makes it worse, because now they are selling into the Buy Wall, and dropping the price even lower.
And the Bear Whale buys all your Coins at the bottom, so instead of 50,000 or 100,000. Now he has 200,000 or 1,000,000 Coins
Just as an example. If the Bear Whale starts sales at $1, and you have a buy order for $0.95 cents, and he sells to everyone that wants Coins for $1, and he sells down to you at $0.95 cents, then sells down to $0.80 cents. You might sell your Coins to him at $0.80 cents out of Fear, and he may have sold that exact Coin to you for $0.95.
And if you were buying $500 worth at $0.95 cents, you might sell all of those to him at $0.80.
The first post explains Trade Instruments and compares Crypto to Fiat to Stocks, but something else needs to be pointed out. You have probably heard of the phrase "Liquid", cash is "Liquid", Bitcoins are "Liquid". Gold is not Liquid, you can not go online and buy things using your Gold Bars. You can not use Cows to buy things at the Store, you can not use Oil to buy things. These things are not liquid, they are not Trade Instruments, they are Commodities. You use your Liquid, Trade Instruments, to buy Commodities, Land, Machines, Services, Software, etc.
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