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Combining "token" and "economics," tokenomics explores the lifecycle and value of cryptocurrencies within their blockchain ecosystems. It looks at everything from a token’s creation to its circulation and potential retirement, focusing on the factors that drive its value. 

For crypto enthusiasts, understanding tokenomics provides insights into a cryptocurrency's future and its worth, highlighting the impact of supply, demand, governance, and real-world use. It’s essential for grasping the true value of any digital asset. Let’s explore this concept in more detail. 

What does tokenomics mean?

Tokenomics form the backbone of any cryptocurrency as it outlines the rules and principles that shape how cryptocurrencies function, including the total supply of tokens, their distribution, and their uses. These rules are as crucial for effectively designing digital currencies as they are for those trading them.

Tokenomics significantly impacts a cryptocurrency's value as it affects how people view and assess a coin's worth. Key factors include token scarcity (limited supply), utility in various applications, and market demand. 

This is why tokenomics is so important: strongly designed tokenomics can build trust and drive adoption, significantly boosting a cryptocurrency's value, while poorly designed tokenomics can undermine a coin’s appeal and value.

For instance, Bitcoin's tokenomics is defined by its capped supply of 21 million coins, ensuring scarcity and value appreciation over time. Bitcoin’s mining rewards and periodic halving events maintain its value and security. In contrast, Ethereum has no supply cap, leading to different dynamics. 

Bitcoin's decentralized nature and broad adoption also influence its value, with demand and utility driving its market price. These elements make Bitcoin a deflationary asset with a unique economic model in the crypto world.

Why tokenomics matters

In the crypto world, where regulation is minimal, tokenomics offers a way to assess cryptocurrencies based on their actual value and utility, rather than just their trading performance on exchanges. With no official rules governing digital currencies, tokenomics becomes a key factor in evaluating their true worth and potential.

Benefits of tokenomics

Tokenomics brings several advantages to the world of cryptocurrency. Firstly, it creates clear rules and incentives, ensuring a transparent and fair economic system for participants. Secondly, by encouraging incentivised actions like staking or supporting network security, tokenomics can drive growth and sustainability within the network.

It also adds value by enabling the development of decentralized applications (dapps) and vibrant ecosystems around cryptocurrencies. Additionally, tokenomics enhances liquidity and trading opportunities, allowing users to easily buy, sell, and exchange tokens across various markets. The implementation of variable fees within tokenomics models can further optimize network efficiency and user participation.

Overall, it fuels innovation, encourages incentivised participation, and supports the cryptocurrency ecosystem's expansion through both fixed and variable economic mechanisms.

Drawbacks of tokenomics

Despite its benefits, tokenomics has its drawbacks. Potential market volatility is a major concern, as token prices can fluctuate wildly due to speculation and trader sentiment. Poorly designed tokenomics models may lead to economic inefficiencies, reduced utility, or even susceptibility to manipulation. 

Tokenomics also doesn’t always ensure long-term value stability, so traders should carefully evaluate the risks and nuances of each token and project before diving in.

Tokenomics terminology explained

Asset Valuation

Asset valuation is about figuring out how much a coin or token is worth. This helps buyers decide if the current price is a good deal and helps traders predict future price movements.

Inflation

In tokenomics, inflation means the supply of a token goes up over time, which can lower its value. Managing inflation is crucial to keep the token’s value balanced within its ecosystem.

Deflation

Deflation happens when a token’s supply decreases, which can make it more valuable over time. This scarcity can encourage people to hold onto the token and potentially drive up its price.

Supply and Demand Elasticity

This term refers to how much a token’s price changes with shifts in supply and demand. A token with high elasticity will see bigger price changes when demand goes up or down compared to one with low elasticity.

Community Rewards

A strong, active community can boost a token’s value by showing support and trust. Community rewards reflect the engagement and credibility of the network, which can positively impact the token’s worth.

Pump and Dump Schemes

A pump and dump scheme is a scam where a group artificially drives up a token’s price by buying a lot of it. They then sell off their holdings when the price is high, causing it to drop suddenly and leaving other traders with losses.

Closing thoughts

Tokenomics is crucial in the cryptocurrency world as it sets the rules, incentives, and economic principles for digital assets. It shapes how cryptocurrencies are valued and accepted by influencing key factors like scarcity, utility, and demand. 

A well-crafted tokenomics model can build trust, drive adoption, and enhance a cryptocurrency's value. However, it’s essential to be mindful of potential challenges, such as market volatility and poorly designed models. By understanding tokenomics, you can better assess the true worth of cryptocurrencies and make more informed decisions.

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UNI is the native token to the Ethereum-based automated crypto exchange, Uniswap. Currently the biggest contender in the DeFi space, Uniswap has become synonymous with decentralized exchanges and the automated trading of decentralized finance (DeFi) tokens.

Covering everything from its growth to rewards to its supply, learn about the leading cryptocurrency linked to the automated market maker that's been making investment news headlines in recent months. Let's dive in to uncover more about the top 15 biggest digital asset on the market.

What Is Uniswap (UNI)?

As mentioned above, Uniswap is a decentralized exchange that facilitates the automated trading of DeFi assets. Decentralized in nature, all trading is facilitated by crypto smart contracts as opposed to employees at a company managing operations, a level up from the decentralized ideology of Bitcoin.

Uniswap was created to provide liquidity to the DeFi industry and allows anyone to create a liquidity pool for any pair of digital assets. After launching in late 2018, the platform experienced an unexpected boom when the DeFi movement exploded. Despite being a technical process, customers and traders around the world joined in on the action.

Following the DeFi phenomenon of increased liquidity mining and yield farming platforms, the automated market maker (AMM) saw a significant increase in the tokens put in and traded on the platform. 

Competing with centralized exchanges, Uniswap provides a trading platform to anyone, without the need for any identity verification or credentials. With no KYC verification, users can swap a wide range of tokens depending on the liquidity pools available.

Who Created Uniswap?

Created by Hayden Adams, an Ethereum developer, Uniswap was designed to introduce AMMs to the Ethereum network. Adams worked closely with Ethereum founder, Vitalik Buterin, as he built and implemented the protocol. 

Adams states that he was inspired to create the platform following a post by Buterin himself. In a short amount of time this protocol became one of the biggest disruptors to the financial market in recent years.

How Does Uniswap Work?

A unique element to the platform is the advent of the Constant Product Market Maker Model. This pricing mechanism works in a way that instead of determining the price of a token through connecting a buyer with a seller, the price is determined by a constant equation (x multiplied by y = k).  

In order to add a token to Uniswap, users would need to fund it with the equivalent value of ETH and the ERC-20 token in question. Say, for instance, that you wanted to add a token to Uniswap called FIRE. You would need to launch a new Uniswap smart contract for the token FIRE and also create a liquidity pool that holds the same amount of FIRE and ETH. 

In this case, x in the equation would equal the number of ETH while y equals the number of FIRE in the liquidity pool. K represents the constant value, using the balance of supply and demand to determine the value. As someone buys FIRE using ETH, the FIRE supply decreases and the ETH supply increases, thus driving up the price of FIRE. 

The platform allows any ERC-20 token to be traded, with an easy means of creating the smart contract and liquidity pool necessary. In May 2020, Uniswap V2 was launched which allowed for direct ERC20 to ERC20 exchanges as well as support for several incompatible ERC20 tokens like OmiseGo (OMG) and Tether (USDT). 

In order to trade on Uniswap a user will need to have a wallet that complies with the platform, like MetaMask, Fortmatic, WalletConnect, or Portis Wallet.‍

How Does The Uniswap Token Work?

Launched in September 2020, 400 governance tokens (UNI) were airdropped to each wallet that had made use of the platform before 1 September that year. 66 million of the 150 million UNI tokens distributed were claimed in the first 24 hours. 

According to the platform, Uniswap tokens were created to "officially enshrine Uniswap as publicly-owned and self-sustainable infrastructure while continuing to carefully protect its indestructible and autonomous qualities."

Providing both profitability potential and governance rights, holders of the digital asset have the right to vote in how the platform develops, unifying the protocol's authority and cutting out the middleman. This grants holders immediate ownership of a number of Uniswap initiatives including the UNI community treasury, eth ENS, the protocol fee switch, SOCKS liquidity tokens and the Uniswap Default List (tokens.uniswap.eth).

The launch of UNI was seen as a direct retaliation to SushiSwap, another decentralized exchange which cloned the platform and added its own token (SUSHI). 

The digital asset is an Ethereum based ERC-20 token and operates on the Ethereum blockchain.‍

What Is Uniswap Version 3?

More commonly referred to as Uniswap V3, the latest version of the automated market maker was launched on 5 May 2021. This upgrade incorporated better capital efficiency for liquidity providers, improved infrastructure and enhanced execution for traders. Prior to the launch of Uniswap V3 the price of the native token reached a new all time high.‍

Uniswap Success

Sparked by the DeFi movement, the platform has seen enormous success not only in the DeFi space but in the cryptocurrency industry as a whole.  

In February 2021, Uniswap became the first DEX to have a trading volume of over $100 billion while in recent months it has regularly exceeded $1 billion in trading volume each day. This trading volume makes it not only the biggest DEX in the space, but one of the biggest exchanges in the industry. It's contribution to the DeFi space is widely celebrated.

 At the time of writing Uniswap had a market capitalisation of $15.5 billion.

Where Can I Buy Uniswap?

Tap enables you to buy, sell, store and manage your digital assets including UNI (Uniswap) directly via the app.

TradFi refers to the traditional finance institutions and fintech companies operating within the current mainstream financial system. These service providers are heavily centralized and regulated by governments and are primarily brick-and-mortar businesses that have provided banking and financial services for decades. They typically also carry high barriers to entry, and stringent KYC and AML processes.

TradFi includes everything from banks to hedge funds to brokerages. Examples of TradFi platforms include JPMorgan Chase and Goldman Sachs (banks) as well as fintech companies like PayPal, Square, and SoFi. All these platforms execute financial transactions in a centralized and controlled manner.

Benefits of TradFi and the mainstream financial system

Only businesses with the appropriate licenses and accreditations can offer TradFi services. If these TradFi institutions' services falter in any way, customers can file complaints and receive compensation with the backing of regulatory bodies. Additionally, the amount of paperwork makes it difficult for scammers and fraudulent people to get involved, particularly with money laundering.

TradFi also assists the government by monitoring illegal spending and investments in the finance industry. In DeFi, because crypto transactions are anonymous, this is more challenging to do. By working together, TradFi institutions and governments can better achieve their goals.

TradFi has several limitations. The excessive rules and government intervention stifle development and innovation in the sector. It also keeps a significant portion of the population from accessing financial services. 

In the coming years, TradFi institutions, blockchain technology, and cryptocurrencies will hopefully find a way to collaborate to create an advanced financial infrastructure that is accessible to everyone.

TradFi vs DeFi

DeFi, or decentralized finance, is a financial infrastructure that doesn't require central authorities like banks or governments. It uses blockchain technology and smart contracts to verify and authorize transactions in a decentralized, peer-to-peer manner. 

One of the most prominent key differences between the two is that with TradFi services, the money is issued by the bank while decentralized finance platforms use a blockchain protocol to issue the funds to crypto users. Smart contracts then authorize the transaction between the two parties, while TradFi transactions are facilitated by banks. 

Touched on above, DeFi is much more financially inclusive, providing services to anyone who can fulfil the requirements (which typically involve providing collateral). TradFi platforms on the other hand will put the applicants through rigorous checking of financial statements and credit scores. 

You can get started with the crypto assets services offered by DeFi platforms in a few easy steps. TradFi investing has now been opened up to a much wider audience as a result of digitization, however, it still requires intensive KYC (Know Your Customer) and AML (anti-money laundering) documentation.

TradFi vs CeFi

The centralized nature of CeFi (centralized finance) fuses together the best aspects of DeFi and TradFi. This system provides opportunities to investors who wish to use cryptocurrency-based accounts with less of the risk and might include crypto exchange services. These accounts have many benefits, with a strong similarity to traditional savings accounts.

However, the APYs (annual percentage yield) differ significantly from CeFi to TradFi platforms. You can borrow money against your crypto assets on CeFi platforms just like you would with a collateral-backed loan from a bank. This requires little to no documentation, unlike TradFi.

While some government-backed insurances cover TradFi deposits, this is not the case for CeFi deposits, making it a more risky endeavor.

How do TradFi financial institutions fit into the crypto world?

In order to stay afloat and keep up with the times, industries rely on implementing cutting-edge technologies. Today, blockchain technology and digital assets are at the forefront of a financial revolution.

If traditional financial institutions, TradFi platforms, want to maintain their relevance, they will have to eventually adopt cryptocurrencies into their systems, thus bringing them into mainstream use.

Due to traditional finance needing to comply with government regulations, the implementation of digital currencies into their platforms will likely have positive forward momentum for crypto regulation. 

While currently they remain separate, there is plenty of opportunity for traditional finance and crypto platforms across key sectors like lending and insurance to join forces and merge each one's progress thus far in terms of innovation, speed, and accountability. 

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In a world where markets fluctuate and investments rise and fall, understanding market volatility is key to making informed choices. Whether you're a novice investor, an aspiring trader, or simply curious about the financial landscape, this article will empower you with a concise explanation of volatility. By the end, you'll be equipped with the knowledge to navigate through uncertain times and seize opportunities when they arise.

What is volatility?

In the dynamic world of finance and investing, volatility stands as a powerful force that can influence markets and impact investment outcomes. But what exactly is volatility? At its core, volatility is a statistical measure of variation or fluctuation in the value of an asset or market index over a specific period. It paints a picture of the price fluctuations of the financial instrument, showcasing the twists and turns it experiences along the way.

Understanding volatility is crucial for anyone seeking to make informed choices in the financial realm. By comprehending this concept, you gain the ability to navigate through uncertain times and seize opportunities when they arise. Volatility is not just about random price movements, it carries meaning, insights, and opportunities for those who can decipher its patterns.

Measuring volatility involves a range of calculation methods, with volatility indicators like standard deviation and Bollinger Bands providing valuable insights. These measurements help quantify the speed and magnitude of price changes, giving investors and traders a clearer picture of an asset's behavior.

What drives volatility? 

Economic indicators, market conditions, and even investor sentiment play significant roles in shaping volatility levels. Understanding these factors can help you anticipate and interpret market movements, empowering you to make more informed decisions about any financial instrument.

It is important to note that volatility is not something to fear. Instead, it is an essential element of any market that offers opportunities for growth and profit. By embracing volatility and equipping yourself with the knowledge to navigate its ebbs and flows, you can embark on a journey that leads to greater financial empowerment and success.

How to measure volatility

When it comes to calculating volatility, there are several calculation methods that provide insights into the degree of price fluctuation and market dynamics. Let's explore three commonly used volatility measures: standard deviation, Bollinger bands and average true range.

Standard deviation

Standard deviation is a widely used statistical tool for measuring volatility. It quantifies the variability of an asset's returns from its average market price. A greater standard deviation indicates high volatility. By calculating the standard deviation of historical price data, investors and analysts can assess the asset's typical price movements and potential risk. 

This measurement helps provide a statistical framework for understanding volatility patterns and making informed decisions.

Bollinger bands

Bollinger bands are another popular tool for measuring volatility. They consist of three lines plotted on a price chart. The middle line represents a moving average, while the upper and lower lines depict bands that are typically two standard deviations away from the average price. 

The width of the bands expands and contracts based on the asset's price volatility. Narrower bands suggest low volatility, while wider bands indicate high volatility. Traders often use Bollinger bands to identify potential price breakouts or reversals, making it a practical tool for short-term trading strategies.

Average True Range (ATR)

The Average true range is a volatility indicator that measures the average trading range of a financial asset over a given period. It takes into account the asset's daily highs and lows, capturing the true extent of price movement. A higher ATR suggests higher volatility, while a lower ATR indicates lower volatility.

The ATR helps investors and traders gauge the potential range of price trends and set appropriate stop-loss levels or profit targets. It can be particularly useful for determining position sizes and managing risk in various trading strategies.

These three measurements provide valuable insights into volatility, allowing market participants to assess risk, identify opportunities, and make informed decisions. By incorporating these tools into their analysis, individuals can navigate the ever-changing market landscape with greater confidence and precision.

Three main factors affecting market volatility

Volatility in financial markets is influenced by a multitude of factors, ranging from economic indicators to market conditions and investor sentiment. Understanding these factors is crucial for comprehending the drivers behind volatility and making informed decisions on how to trade volatility. Let's explore three key factors that can affect volatility:

Economic indicators

Economic indicators, such as GDP growth, inflation rates, interest rates, and employment figures, have a significant impact on market volatility. Positive economic data can boost investor confidence and lead to periods of low volatility, while negative or unexpected data can create uncertainty and increase volatility. Traders and investors closely monitor these indicators to gauge the health of the economy and anticipate potential market movements.

Market conditions

Market conditions, including geopolitical events, industry trends, and regulatory changes, can greatly influence stock prices and therefore volatility. Geopolitical tensions, such as trade disputes or political instability, can create uncertainty and volatility in global markets. Similarly, changes in industry dynamics, technological advancements, or shifts in consumer behavior can disrupt established market patterns, leading to increased volatility.

Investor sentiment

The collective sentiment and behavior of market participants play a significant role in driving volatility. Investor optimism or pessimism can lead to exaggerated price movements and heightened volatility. Factors such as market psychology, fear, and greed can influence how investors interpret and respond to market information. Understanding and monitoring investor sentiment can provide insights into potential market shifts and the overall level of volatility.

It's important to note that these factors interact with one another, creating a complex web of influences on volatility. Keeping a close eye on economic indicators, staying informed about market conditions, and gauging investor sentiment can help individuals navigate volatile markets and make empowered decisions. 

By recognizing and analyzing these factors, investors and traders can better understand the underlying forces driving volatility and position themselves for success.

Types of volatility

There are two primary types of volatility: historical and implied. 

Historical volatility

Historical volatility, a reflection of an asset's past price movements, plays a vital role in understanding an investment's risk and potential reward. By examining an asset's historical price data over a specific period, investors can gain valuable insights into its typical fluctuations.

This knowledge empowers them to assess the level of risk associated with the investment at hand. Higher historical volatility signals a greater likelihood of significant price swings, while lower historical volatility indicates more stable price behavior. Armed with an understanding of an asset's historical volatility, investors can make informed decisions, effectively manage risk, and devise appropriate investment strategies tailored to their risk tolerance and goals.

Implied volatility

A powerful concept derived from options pricing, implied volatility measures the market's collective expectations regarding future price movements of the underlying asset. It serves as a measure of perceived uncertainty surrounding the underlying asset's future performance.

By examining implied volatility, investors can gauge the market participants' outlook and sentiment, providing valuable insights into potential price movements. Higher implied volatility suggests increased anticipated price fluctuations, while lower implied volatility signifies a more subdued market outlook.

Understanding implied volatility equips investors with a deeper understanding of market sentiment, enabling them to make more informed decisions and adjust their strategies accordingly to capitalize on opportunities in the market.

Understanding both historical and implied volatility allows traders to develop effective strategies in different market conditions.

What volatility means for trading vs investing in the stock market

Volatility plays a distinct role for traders and investors in the stock market. For investors, volatility represents risk and the potential for higher returns. They must carefully assess their risk tolerance and investment horizon when navigating through volatile markets. Long-term investors often view volatility as an opportunity to buy assets at discounted prices, confident that the market will eventually stabilize and provide favorable returns over time.

Traders, on the other hand, embrace volatile assets as they present short-term opportunities for gains. They capitalize on rapid price movements by executing timely buy and sell orders, aiming to profit from the volatility itself. Traders employ various strategies, such as momentum trading or breakout trading, to take advantage of price swings that occur during volatile market conditions.

Businesses also feel the impact of volatility as they plan budgets, manage supply chains, and make strategic decisions. Fluctuating prices and uncertain market conditions can significantly impact profitability and operational stability. Businesses must develop contingency plans and risk management strategies to navigate through periods of heightened volatility.

In summary, while volatile assets carry risk, they also offer opportunities. Understanding the implications of volatility is vital for all stakeholders involved in the stock market, allowing them to make informed decisions and navigate through dynamic market conditions.

Tips on how to manage volatility in markets

Managing volatility in the financial markets can be a daunting task, but there are strategies that can help individuals navigate uncertain times and mitigate risks. Here are some tips for managing volatility:

Diversify your portfolio

One of the fundamental principles of managing volatility is diversification. By spreading your investments across different asset classes, sectors, and geographic regions, you can reduce the impact of volatility on your portfolio. Diversification helps to ensure that if one investment performs poorly, others may offset the losses, providing a more balanced approach to risk management.

Set realistic expectations

Volatility is an inherent characteristic of the markets, and it's essential to set realistic expectations. Avoid chasing short-term gains or trying to time the market during volatile periods. Instead, focus on long-term goals and develop a disciplined investment strategy that aligns with your risk tolerance and financial objectives.

Maintain adequate liquidity

Having sufficient liquidity is crucial during periods of volatility. It provides the flexibility to take advantage of opportunities that may arise and helps you weather market downturns without having to make hasty or unplanned investment decisions. Keeping a portion of your portfolio in cash or highly liquid assets can provide a buffer and peace of mind.

Stay informed and educated

Knowledge is power when it comes to managing volatility. Stay informed about market trends, economic indicators, and global events that can impact the financial markets. Continuously educate yourself about investment strategies, risk management techniques, and asset allocation. By staying informed, you can make more informed decisions and react appropriately to changing market conditions.

Maintain a long-term perspective

Volatility can tempt investors to make impulsive decisions based on short-term fluctuations. However, maintaining a long-term perspective is vital for success. Understand that markets go through cycles, and volatility is often temporary. Stick to your investment plan, avoid emotional reactions, and focus on the underlying fundamentals of your investments.

Consider risk management techniques

In addition to diversification, consider risk management techniques such as setting stop-loss orders, using trailing stops, or implementing hedging strategies. These tools can help protect against sudden market downturns and limit potential losses.

Remember, managing volatility is about accepting that it's a natural part of investing. By following these tips and maintaining a disciplined approach, you can navigate through volatile periods with more confidence, make informed decisions, and potentially seize opportunities that arise.

Volatility across different markets

Volatility is not limited to the financial world; it pervades various industries, each with its own unique dynamics. In the realm of finance, stock markets are particularly prone to volatility. Factors such as company earnings, economic indicators, and investor sentiment can drive rapid price fluctuations. Understanding these drivers and monitoring market trends can help investors adjust their strategies and make well-informed decisions to navigate through volatile stock markets.

Cryptocurrencies have gained significant attention due to their unprecedented volatility. The prices of cryptocurrencies can surge or plummet within a matter of hours or even minutes. Factors such as regulatory developments, technological advancements, and market speculation can trigger intense price swings. Individuals investing or trading in cryptocurrencies need to be prepared for this inherent volatility and develop strategies that account for the unique characteristics of this asset class.

Commodity markets, encompassing resources such as oil, gold, and agricultural products, also experience considerable volatility. Supply and demand dynamics, geopolitical factors, and natural disasters can all contribute to price fluctuations. Traders and businesses operating in these markets must stay attuned to global events and industry-specific factors to manage risks effectively and capitalize on potential opportunities arising from volatile commodity prices.

By recognizing the varying indications of volatility in different fields, investors, traders, and businesses can adapt their strategies and decision-making processes accordingly. This understanding allows for the development of sector-specific expertise and the implementation of risk management techniques tailored to the particular industry's volatility.

Always remember that navigating volatility in these specific fields requires vigilance, adaptability, and a deep understanding of the unique factors at play.

In conclusion

Volatility, in its simplest form, refers to the degree of variation or fluctuation in the price or value of an asset. It measures the speed and magnitude of price changes over a given period. It is an inherent aspect of financial markets, but it doesn't have to be a barrier to success. By comprehending the concept of volatility, understanding its measurement methods, and recognizing the factors that drive it, you can make informed choices. 

Empowered with this knowledge, you can navigate through uncertainty, capitalize on opportunities, and weather the storm when markets become turbulent. Remember, volatility is not negative, it's a dynamic force that, when harnessed wisely, can lead to rewarding outcomes.

USD Coin stands out as a prominent stablecoin in the cryptocurrency market. Catering to a wide array of applications for both crypto enthusiasts and traditional finance players alike, USD Coin holds a prominent position among the top 10 cryptocurrencies by market capitalization.

In this article, we delve into the features of this acclaimed stablecoin, examining its potential as a traditional asset, a means of preserving savings, and a service for digital value settlement.

USD Coin is relatively new to the market, launching in September 2018. The stablecoin is pegged to the US dollar, meaning that its value should always reflect the price of the dollar on a 1:1 ratio.

This is established by keeping an equivalent amount of the circulating supply in a reserve account, i.e. for every 1 USDC in circulation, $1 needs to be held in reserve. The reserve is a mixture of cash and short-term United States Treasury bonds.

What is the point of the USD Coin?

Built on top of the Ethereum network, USDC is a tokenized version of the US dollar that can operate over the internet and public blockchains. It is designed to provide a stable digital currency in an industry prone to volatility.

Setting itself apart in an increasingly saturated stablecoin market, USD Coin has received wide interest due to it providing a strong layer of transparency. The platform maintains strict protocols to ensure that the reserves are always at the correct levels, ensuring holders that they can withdraw 1 USDC for $1 at any given time, by way of enlisting a major accounting firm.

All USD holdings are required to be reported regularly by USDC issuers, which are in turn published by Grant Thornton LLP. Unlike Bitcoin, while the company uses the decentralized network of Ethereum to function, it has a centralized agency controlling it.

Who created USD Coin?

The coin was created by the Centre Consortium, a foundation consisting of the peer-to-peer payment service company, Circle and cryptocurrency exchange, Coinbase. Circle and Coinbase were the first commercial industry users of the stablecoin.

In 2020, Circle and Coinbase announced an upgrade to the USDC protocol and smart contracts. These upgrades were implemented to increase the cryptocurrency's usability for everyday payments, commerce and peer-to-peer transactions.

Both companies are well-funded and have achieved regulatory compliance, confirming the cryptocurrency's stability and international transparency appeal.

How Does USD Coin Work?

USD Coins are created through a process of minting. Users send USD to the USDC issuer's bank account, which then uses the USDC smart contract to create the equivalent amount of USDC. The digital currencies are then delivered to the user, with the fiat payment held in reserve.

Should the user wish to liquidate their USDC, they can send a request to the USDC issuer who then sends a request to the USDC smart contract to take a certain amount of USDC out of circulation. The issuer then sends the equivalent amount of USD (minus fees) to the user's bank account, taken from the reserve.

USD Coins can be traded through exchanges for other cryptocurrencies, or sent to crypto wallets around the world (provided that they support ERC-20 tokens). The coins are also often used to hedge against cryptocurrencies going through turbulent or crashing market periods.

What Is USDC?

USDC is a fiat-collateralized ERC-20 token hosted on the Ethereum blockchain platform. The stablecoin has an unlimited total supply with currently just under 26 billion USDC in circulation.

The coin provides an easy means of transferring asset funds internationally at a fraction of the cost and time that sending the traditional fiat would take, appealing to both businesses and individuals. It has also proven to be a popular innovation in the DeFi (decentralized finance) space.

How Can I Buy USDC?

If you're looking to add USDC to your crypto portfolio you can do so conveniently through the Tap app. Constantly reviewing and assessing the market, the Tap app has added support for a number of prominent cryptocurrencies, including USDC. Buy, sell, trade, and store USDC securely in the regulated Tap app. To learn more about cryptocurrencies, head to our blog.

Crypto wallets are a critical tool for anyone looking to use, store, and manage crypto assets. Crypto wallets come in various forms, with different features and security options that cater to the needs of different users. Finding the right crypto wallet is essential if you want to get the most out of your cryptocurrency holdings.

No matter what type of crypto wallet you choose, it’s important to do your research before making a decision since each one comes with its own set of advantages and disadvantages. It’s also important that you keep your private keys safe so no one else can access them, this will ensure that only you have control over your funds and crypto assets. 

What is a crypto a wallet?

A crypto wallet is a digital wallet that stores manages and facilitates the use of various cryptocurrencies. In order to store and use crypto assets, one needs a digital wallet. Unlike traditional wallets that simply hold your cash or cards, crypto wallets facilitate transactions as well as store your funds. 

Each crypto wallet has a public and private key which are unique alphanumeric codes that grant the user access to the funds. Public keys are wallet addresses to which other users can send you cryptocurrencies, similar to your bank account number, while private keys are akin to a pin number and should not be shared with anyone. 

In essence, crypto wallets act as secure interfaces for users to access, store and transfer funds across different blockchain networks. In essence, it’s like a bank account for digital currencies. 

The different types of crypto wallets

Crypto wallets can be divided into two main categories: hot wallets and cold wallets. 

Internet connectivity is the defining factor between hot wallets and cold wallets. Hot wallets are connected to the internet, making them less secure but much more user-friendly. On the other hand, cold wallets are stored completely offline and do not require any internet connection. This provides a higher level of security, which makes them ideal for individuals who plan on storing their crypto assets long-term. 

Each of these categories can be further broken down into varying wallets. Under the hot wallets umbrella, there are desktop wallets, mobile wallets, and web wallets, while under the cold wallets umbrella, there are hardware and paper wallets. 

Hot wallets

As a hot wallet is easy to set up and constantly connected to the internet they are ideal for users looking to make daily or frequent transactions. Typically with hot wallets, funds are quickly accessible and they tend to be very straightforward to operate. Below we look at the three main types of hot wallets: desktop wallets, mobile wallets, and web wallets. 

Desktop wallet

A desktop wallet is a cryptocurrency storage solution that allows users to store, send, and receive crypto assets from their personal computers with the crypto wallet stored on the device’s hard drive. 

It is generally considered to be a secure way of managing crypto assets as it does not require the user to store their funds on an exchange, instead giving control over the private keys associated with the hot wallet to the user.

The downside however is that it may be vulnerable to computer viruses should someone gain access to your desktop. 

Mobile wallet

Mobile wallets are digital crypto wallets that allow users to manage their cryptocurrencies directly on their mobile devices. These crypto wallets are very convenient and secure compared to carrying large amounts of money around or keeping it in a traditional bank account.

Mobile wallets provide users instant access with more control over their funds and are particularly useful for quick payments that require a scan of a QR code. When downloading this type of hot wallet ensure that you use a link from the website directly to ensure that you are not falling for a fake wallet. This goes for all hot wallets and cold wallets listed here.

Mobile wallets are typically the best crypto wallets for users actively using or spending their crypto assets. If you are choosing this option you might want to consider Tap for its convenience, security and ease of use.

Web wallet

Web wallets are hosted by third-party services, which act as custodians for users' private keys. Web wallets provide an easy way to manage digital currencies, allowing users to quickly send and receive payments without having to download or install any software. 

Additionally, web wallets offer enhanced security features such as two-factor authentication and multi-signature transactions. With these features in place, web wallets can provide a secure environment for storing cryptocurrencies regardless of the user's level of technical expertise, an added bonus for hot wallets.

Cold wallets

Cold wallets are hack resistant and therefore are considered the best crypto wallets for hodlers. In order to facilitate trades, cold wallets need to connect to the internet in order to trade directly from their cold storage devices.

Hardware wallet

Hardware wallets store private keys on a physical device like a USB drive or an external hard drive. A common example of this is the Ledger Nano X, while secure it retails for roughly $150.

These crypto wallets provide maximum security but require more effort to set up and use compared to other types of crypto wallets. They typically are also more expensive as one needs to buy a physical device. 

Paper wallet

Finally, paper wallets are simply printed copies of public/private key pairs which allow you to securely store funds offline without having any digital device at all. While these are considered to be the best crypto wallets in terms of security, if the paper gets damaged then the funds are lost.

Finding the right crypto wallet for you

In order to find the right crypto wallet you will need to establish what specifically you wish to do with your funds. If you are looking to hold them long-term, cold wallets are by far the more secure solution, however, if you are making payments and using cryptocurrencies in your day-to-day life, a hot wallet or even a mobile wallet might be better suited to your needs. 

Many crypto users utilize a combination of two or three, using the more secure crypto wallet option to hold their funds long-term while also having a portion of funds in a preferred hot wallet allowing them quick and easy access to their funds when they need them. 

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