Learning the friendly way

Cryptocurrencies have gained a reputation for being largely volatile assets. While stock too can have their moments (what with Peloton stocks dropping 20% every other day) the crypto market carries the brunt of it. 

Thankfully, stablecoins have come to the rescue. While still functioning as digital currencies powered by blockchain technology, stablecoins are pegged to external assets such as fiat currencies or gold, thereby eradicating (most of) their volatility. 

A Short History Of Stablecoins

After the advent of Bitcoin in 2009, it was only a few years later that a stable digital asset entered the market. Stablecoins came into existence in 2014 when a Hong-Kong based company named Tether Limited released a coin of the same name. The Tether coins' value was pegged to the US dollar, meaning that 1 USDT would always be worth $1. 

In order to guarantee this value, the company held the dollar equivalent in bank accounts. Skip past the controversy surrounding their reserves and lack of financial analysis, and there are now plenty of other stablecoin options on the market. 

Seeing the infinite benefits of digital currency transactions and blockchain technology, like speed, transparency and low fees, many companies around the world have created their own version of the stablecoin, mostly improving on the previous release. These coins have proven to be invaluable with businesses and retail merchants around the world.

Today, the two biggest stablecoins on the market are Tether (USDT) and USD Coin (USDC). One can argue whether these are "safe haven" assets, but one cannot deny that these tokens hold most of the advantages that digital currencies hold while eradicating the unpredictable market swings. 

In our attempt to better understand the concept, let's take a look at the two biggest stablecoins.

Tether (USDT) vs USD Coin (USDC)

Below we explore the two multi-billion-dollar market cap stablecoins, while they both provide the same service in terms of a digital currency, the companies behind them operate quite differently.

What Is Tether (USDT)?

As mentioned above, Tether is the first stablecoin to enter the market. Launched in 2014, the network was initially built on the Ethereum blockchain but is now compatible with a number of other networks. 

Note that the Ethereum-based USDT cannot be traded as a TRON-based token, coins need to stick to their respective blockchain networks as this is how the transactions are processed. 

It wasn't long before USDT was listed on the top exchanges, and included in dozens of trading pairs. 

Tether Limited have since released a Euro-based stablecoin as well as Tether crypto coin pegged to the price of gold. The downside to Tether falls on the company's reputation surrounding transparency and reserve funds. 

There have been several court cases where individuals and regulatory bodies have called for transparency surrounding the funds held in reserves. Tether has since provided access to this information but is yet to go through a third party audit. Regardless, Tether holds the third biggest market cap (at the time of writing). 

What Is USD Coin?

USD Coin is a stablecoin created by the Centre Consortium, an organisation made up of crypto trading platform Coinbase and Circle, a peer to peer payment platform. It launched in 2018 as an ERC-20 token and has since climbed the ranks to be in the top 5 biggest cryptocurrencies based on market cap. USD Coin is available on the Ethereum blockchain, as well as Solana, Polygon, Algorand and Binance Smart Chain networks. 

The significant bonus that USDC holds over its biggest competitor, USDT, is that the coin is regularly audited by a third-party institution. These audits are made public, allowing any user to verify the authenticity of their USDC value each month. Since launching USDC, Coinbase has removed USDT from its platform. 

Which Is Better: USDT vs USDC?

Due to the fact that these respective companies are holding the dollar-equivalent value in reserves, these two digital currencies are considered to be centralized, while the rest of the cryptocurrency market holds a decentralized nature. As the demand for digital currencies increases, it is likely that these two stablecoins will only continue to develop.

When looking for a stablecoin, these are two of your best options. When deciding which are the better of the two, consider what you will be using these for, and which networks you would ideally like to trade through. While Tether is more widespread, USD Coin is considered "more trustworthy", so at the end of the day, the better of the two is dependent on the holder.

Users can buy and sell USDT and USDC directly through the Tap app. Simply create your account, complete the KYC process and deposit funds into your digital wallet. Manage your entire crypto portfolio from one convenient, secure location.
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Having an investment IQ is crucial for anyone who wants to build long-term wealth and financial security. An investment IQ refers to the knowledge and understanding of the principles, strategies, and risks associated with investing in financial markets. 

With a strong investment IQ, you can make informed decisions about how to allocate your money and build a diversified portfolio that can weather market volatility and generate solid returns over time. It will also help you to avoid common mistakes, such as chasing “trendy” stocks or trying to time the market. 

The investing quiz below is about testing and building your investment IQ, designed to give you the confidence and competence needed to manage your finances effectively and achieve your financial goals.

Question 1

Who famously said, "The four most dangerous words in investing are: 'this time it's different'"?

a) Warren Buffett

b) Peter Lynch

c) Benjamin Graham

d) Ray Dalio

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a) Warren Buffet

Warren Buffett famously said, "The four most dangerous words in investing are: 'this time it's different'" to highlight the risk of complacency and overconfidence among investors. The phrase is often used to describe the belief that the rules of investing have somehow changed and that the past is no longer relevant to current market conditions. 

However, as Buffett has emphasized, this mindset can lead investors to make risky decisions based on false assumptions, ultimately leading to significant losses. By recognizing that the fundamental principles of investing remain constant over time, investors can avoid being blindsided by unexpected events and make sound, informed decisions based on a long-term perspective.

Question 2

What is the most important factor to consider when evaluating a company's stock?

a) Its price-to-earnings (P/E) ratio

b) Its revenue growth rate

c) Its market capitalization

d) Its dividend yield

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a) Its price-to-earnings (P/E) ratio

The price-to-earnings (P/E) ratio is a widely used metric in evaluating a company's stock because it provides insight into a company's valuation and potential growth prospects.

A high P/E ratio may suggest that the market has high expectations for the company's future earnings growth, while a low P/E ratio may indicate that the market is not optimistic about the company's growth prospects. This makes P/E ratio a valuable tool in assessing the relative value of a company's stock and its potential for long-term growth.

Question 3

Who famously said, "In investing, what is comfortable is rarely profitable"?

a) Jim Rogers

b) Jack Bogle

c) Peter Lynch

d) John Paulson

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a) Jim Rogers

Jim Rogers meant that investors often seek the safety of familiar, comfortable investments, such as blue-chip stocks or low-risk bonds. However, these investments may not always offer the highest returns, and may even lead to missed opportunities for growth.

By stepping outside of one's comfort zone and exploring new, potentially riskier investments, investors can potentially reap greater rewards and achieve more profitable outcomes in the long run.

Question 4

What is the primary goal of diversification in investing?

a) To maximize returns

b) To minimize risk

c) To beat the market

d) To invest in a variety of industries

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b) To minimize risk

The primary goal of diversification in investing is to minimize risk by spreading investments across different assets and sectors. This strategy aims to reduce the impact of any single investment's poor performance by offsetting losses with gains from other investments. By diversifying a portfolio, investors can potentially reduce their overall risk and increase their chances of achieving long-term financial goals.

Question 5

Who famously said, "The stock market is a device for transferring money from the impatient to the patient"?

a) Benjamin Graham

b) Peter Lynch

c) Warren Buffett

d) Jack Bogle

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c) Warren Buffet

Warren Buffet said these words to emphasize the importance of patience and long-term thinking in investing. Many investors are often tempted to make quick trades or chase short-term gains, but these actions can be risky and result in losses. 

On the other hand, investors who are patient and willing to hold onto their investments for the long-term are more likely to see their portfolios grow in value. By recognizing that successful investing requires a patient approach, investors can avoid impulsive decisions and focus on achieving their long-term financial goals.

Question 6

What is the difference between a stock and a bond?

a) Stocks represent ownership in a company, while bonds represent a loan to a company.

b) Stocks pay interest to investors, while bonds pay dividends.

c) Stocks are guaranteed by the government, while bonds are not.

d) Stocks are generally considered lower risk than bonds.

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a) Stocks represent ownership in a company, while bonds represent a loan to a company.

A stock represents ownership in a company, while a bond represents a loan to a company or government entity. Stocks offer the potential for capital appreciation and dividends, while bonds offer fixed interest payments and return of principal at maturity. Stocks are generally considered riskier than bonds but also have greater potential for reward.

Question 7

Who famously said, "Rule No. 1: Never lose money. Rule No. 2: Never forget rule No.1"?

a) Warren Buffett

b) Ray Dalio

c) Peter Lynch

d) John Paulson

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a) Warren Buffet

Warren Buffett said, "Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1," to emphasize the importance of risk management and capital preservation in investing. By avoiding losses, investors can protect their capital and avoid the difficult task of having to recoup losses. 

Buffett's approach focuses on investing in high-quality companies with strong fundamentals, which are less likely to experience significant declines in value. By following these two simple rules, investors can potentially achieve greater long-term success and avoid costly mistakes in their investment decisions.

Question 8

What is a mutual fund?

a) A type of stock that pays dividends to investors

b) A pool of money from many investors that is used to buy a diversified portfolio of stocks, bonds, or other securities.

c) A type of bond that is issued by the government

d) A certificate of deposit (CD) issued by a bank

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b) A pool of money from many investors that is used to buy a diversified portfolio of stocks, bonds, or other securities.

A mutual fund is a professionally managed investment account that pools money from multiple investors to invest in a diverse range of assets. They offer diversification and professional management, making investing more accessible and convenient for individual investors.

Question 9

Who famously said, "The investor's chief problem and even his worst enemy is likely to be himself"?

a) Warren Buffett

b) Benjamin Graham

c) John Templeton

d) Jack Bogle

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b) Benjamin Graham

Benjamin Graham said, "The investor's chief problem and even his worst enemy is likely to be himself," emphasizing the role of emotions and behavioral biases in investment decisions. Many investors are prone to making impulsive decisions based on fear, greed, or other emotional triggers, which can lead to poor investment outcomes. 

By recognizing one's own tendencies towards emotional decision-making and by practicing discipline and rationality in investment decisions, investors can potentially achieve greater long-term success and avoid costly mistakes.

Question 10

What is dollar-cost averaging?

a) Buying stocks only when they are at their lowest price

b) Investing a fixed amount of money in a stock or mutual fund at regular intervals, regardless of market conditions.

c) Selling stocks when they reach their highest price

d) Investing a lump sum of money in a stock or mutual fund all at once.

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b) Investing a fixed amount of money in a stock or mutual fund at regular intervals, regardless of market conditions.

Dollar-cost averaging is an investment strategy where an investor invests a fixed amount of money at regular intervals, regardless of market conditions. This can potentially reduce the impact of market volatility on investment returns.

In conclusion

That concludes our investing quiz. Did you learn something new? As mentioned above, Investing IQ is essential for building wealth and achieving financial security. It involves understanding the principles, strategies, and risks of investing. With a strong investment IQ, investors can make informed decisions, build diversified portfolios with an appropriate asset allocation that can withstand market volatility, and avoid common mistakes. 

Key factors to consider when investing include a company's P/E ratio and the importance of diversification to minimize risk. Famous investors like Warren Buffet and Jim Rogers have emphasized the importance of patience, long-term thinking, and avoiding losses.

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In this article, we're covering what transaction fees are, and taking a look at which cryptocurrencies offer the lowest transaction fees.

While long-term traders are unlikely to get affected by transaction fees, short-term traders and people actively using cryptocurrencies are often plagued with excessive fee structures.

This complaint has led to layer 2 solutions, where transactions can most quickly and cost-effectively be executed, as well as new blockchain platforms entirely (as was the case when developers migrated away from Ethereum due to high transaction costs).

What are transaction fees?

Transaction fees are fees paid to the miner of the network to execute the transaction. While some networks differ in how they operate, transaction fees are consistent across the board. Looking at Bitcoin as an example, when a user sends BTC the transaction is entered into a pool of pending transactions known as a mempool. 

The miner will then pick up a batch of transactions and validate them, checking to see whether the original wallet does in fact have the funds to send and if the wallet addresses are valid. Once the transaction is executed, the data relevant to the transaction is added to a block, which is added to the blockchain chronologically. 

As compensation to the miner for their time and electricity, they earn a small crypto transaction fee from each transaction as well as a reward for adding the block, known as a miner's reward. This process also ensures the safety and integrity of the network.

When the networks are very busy, the cost of sending a transaction is increased. Users can then choose to add in a higher crypto transaction fee in order to prioritise their transaction in the mempool. 

Transaction fees for smart contracts are based on how much electricity will be needed to complete the task. Typically, transaction fees on smart contracts are much higher.

Generally, the terms transaction fee and network fee can be used interchangeably. They both refer to the transaction fee necessary by the network for the transaction to get processed.

Exchange fees refer to something else entirely. Exchange fees are fees charged by the exchange in order to conduct the service. Be sure to check before conducting a transaction on an exchange as you might be required to pay a transaction fee (or network fees) as well as exchange fees.

How to pay less for transaction fees

A transaction fee is imperative to your transaction getting executed so it cannot be avoided entirely, however, there are ways to reduce the amount you need to pay.

Transaction fees increase when the network is busy, so sending your transaction while the network is quieter is a great way to reduce the transaction fee associated with the network. Typically the busier periods are during business hours in the United States. 

Look out for Lightning Network for Bitcoin and layer-2 scaling solutions for Ethereum as these will provide a cost-effective solution to high transaction costs. 

Which cryptocurrency has the lowest average transaction fee?

Let's take a look at some of the most popular cryptocurrencies and the average transaction fee associated with their platforms. 

XRP - $0.0002 per transaction

Developed by Ripple Labs, XRP is optimised for fast, affordable cross-border payments, with a focus on serving financial institutions and remittance providers. Thanks to its unique architecture, XRP has cemented its status as a key player in the payment processing space.

XRP's minimal costs and 4-second transaction times make it a preferred choice for users and institutions alike. 

Solana (SOL) - $0.00025 per transaction

Solana’s transaction fees cost just fractions of a cent ($0.00025), with complex transactions also coming in incredibly cheap. The network stands out for its lightning-fast transactions, typically wrapping up in about 2.5 seconds. Thanks to its scalable design, Solana can handle many transactions simultaneously, making it a hit for dapps and big blockchain projects.

This efficiency, coupled with its rapid speed, has made Solana a favourite among both developers and users, and a permanent feature in the top 10 biggest cryptocurrencies based on market cap (currently number 5).

Litecoin (LCH) - $0.0025 per transaction

Litecoin stands out as one of the cheapest crypto options out there, costing around $0.0025 per transfer. As an early pioneer in the space, Litecoin was designed with fast, affordable payments in mind, borrowing and refining Bitcoin's underlying technology. Litecoin's speedy 2.5-minute transaction times add to this appeal.

The minimal fees on Litecoin are a huge plus, with its efficiency and speed making Litecoin an attractive choice for those seeking a cost-effective crypto.

Bitcoin Cash (BCH) - $0.01 per transaction

Bitcoin Cash makes it onto the list with an attractive $0.01 average transaction fee. As a Bitcoin offshoot, BCH was engineered for faster, more affordable transfers via larger block sizes. 

The cost-effective fees on Bitcoin Cash have made BCH a viable option for those looking for a low-cost market entry and equally impressive low-cost transaction fees. 

Dogecoin (DOGE) - $0.04 per transaction

Dogecoin, born in 2013 as a playful take on crypto, has surprisingly become a significant player in the crypto space. Despite its lighthearted meme-inspired origins, Dogecoin's enthusiastic community and celebrity endorsements have propelled it into the mainstream. 

Its low $0.04 average transaction fees and fast 1-minute transaction times make it practical for frequent micro-transactions like tipping and donations, blending fun and function.

The financial landscape well and truly changed after Bitcoin was released in 2009. The new digital cash system took the financial power away from banks and government entities and put it back into the hands of the people. While Bitcoin has become a household name over the last decade, the creator remains a mystery. Let's take a deeper dive into one of the biggest mysteries of the modern world.  

The Bitcoin solution

Before we plunge into the mysteries of the anonymous entity behind this century's greatest invention, let us first highlight the revolutionary product that is Bitcoin. The electronic cash system was first introduced to the world in late 2008 by a certain Satoshi Nakamoto. 

The character seemingly came from the abyss and presented to the world a solution to the global financial crisis that caused widespread destruction. This solution was in the form of a digital currency and used blockchain technology to facilitate, maintain and operate the network. 

Nakamoto did not invent blockchain technology, instead, he improved on several issues like the double-spending problem. The technology was originally created to facilitate file sharing although was hindered by that issue. Today, blockchain technology has a wide range of use cases and is being implemented into industries around the world, far beyond just the crypto and financial fields. 

Bitcoin remains the biggest cryptocurrency to this day, with over 17,500 alternative cryptocurrencies and counting. At the time of writing the industry is worth just under $2 trillion, although it reached highs of $2.968 trillion in November 2021. No asset in the history of the world has gone on to achieve such success in such a short space of time. 

What we know about Satoshi Nakamoto

While we know the name Satoshi Nakamoto, it remains to be known who is behind the pseudonym. This person or entity released the Bitcoin whitepaper in October 2008 to a group of cryptographers and shortly afterwards created the BitcoinTalk forum and Bitcoin.org website. 

Two months later, the first block on the Bitcoin network was mined, known as the Genesis block, with the caption "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks." It was mined that same day.

Stephan Thomas, a BitcoinTalk Forum member, mapped out when Nakamoto posted on forums to get an indication of what time zone he might live in. The results showed that he was least active during 6h00 to 11h00 GMT, suggesting that should he sleep at night (not a given for developers) that would place him in a time zone somewhere between GMT -5 to GMT -7, somewhere in the Americas.

During 2010, Nakamoto was an active member of the Bitcoin community. He worked on building Bitcoin's protocol and often collaborated and communicated with other developers. Then, towards the end of the year, he strangely handed over the keys and codes to another active developer, Gavin Andresen, and transferred the domains he had created to other members of the community. By the end of the year, he seemed to have cut ties with the project.

Before all but vanishing, the last trace of communication we know of from Satoshi Nakamoto was a message to Mike Hearn, another developer, on 23 April 2011, that read: "I've moved on to other things. It's in good hands with Gavin and everyone." And just as abruptly as Bitcoin had entered the world, Nakamoto left it.

Who could be behind the anonymous entity? 

While many people have been suspected of being Satoshi Nakamoto, there is yet to be enough evidence to convince anyone else. Over the years, many journalists have tried to lift the veil, and again, to no avail. For over a decade the world has been left wondering who is behind the anonymous name, and why would they not come forward?

The biggest contenders for the mystery person have been Hal Finney, Nick Szabo, and Dave Kleiman, who have all denied this. One man, Craig Wright, has come forward to claim to be Satoshi Nakamoto, however, the industry remains unconvinced. 

Hal Finney

Hal Finney is a computer scientist who had previously tried to create a digital cash system. Finney is noted as being one of the earliest people interested in Bitcoin, with the first transaction taking place between Satoshi Nakamoto's wallet and Finney's. 

Finney also lived in the same town as Dorian Satoshi Nakamoto, a Japanese man who was hunted by the media when they assumed they had found the "real" identity. Finney passed away in August 2014. 

Nick Szabo

Nick Szabo is also credited with having tried to create a digital cash system prior to Bitcoin's launch, releasing BitGold in 1998. He also coined the name "smart contracts". The cryptographer and computer scientist was listed as the most likely person to be Satoshi Nakamoto following a study done in 2014 by a group of students and researchers at Aston University who conducted a thorough linguistics analysis on all previous communication. 

Dave Kleiman

Dave Kleiman was a computer forensics expert whose name has come up plenty of times, largely thanks to Craig Wright. Kleiman's estate sued Wright over claims that they had invented Bitcoin together and had access to a large, shared amount of BTC. He died broke and in squalor in 2013.

Craig Wright

The Australian computer scientist and businessman has gone to great lengths to claim to be Satoshi Nakamoto, however, has provided little to no evidence. These claims have been unequivocally disregarded by the Bitcoin community. 

The mystery remains unsolved

Perhaps the biggest irony of all is that while the technology is entirely trustless and operates with the work of thousands of nodes who don't know each other. All we know is that whoever it was/they are, they revolutionized the world as we know it and have left us with some sort of extraordinary.

When it comes to investing, yield is a term that gets thrown around a lot. But what exactly is yield, and why does it matter? In its simplest form, yield refers to the income generated by an investment. It's a key metric that investors use to assess the performance of an investment, and it can be influenced by a range of factors.

Understanding yield is essential for anyone looking to build a successful investment portfolio. In this article, we'll explore what yield is, how to calculate yield, and why it's important. We'll also look at different types of yield. Whether you're a seasoned investor or just starting out, this article will provide you with the knowledge to help you make informed investment decisions.

What is yield? Understanding the basics

Simply put, yield refers to the income generated by an investment. It's typically expressed as a percentage of the investment's current value, and it can come in many forms, such as interest payments, dividends, or rental income.

Understanding yield is important for investors because it provides a way to compare different types of investments and assess their potential for generating income. For example, a bond with a higher yield may be more attractive to an investor than a similar bond with a lower yield, all else being equal.

Yield can be influenced by a range of factors, including market conditions, interest rates, and the type of investment being made. Different types of investments may have different types of yield as well, with some providing a fixed yield and others offering a variable yield.

By understanding the basics of yield, investors can make more informed decisions about where to put their money and how to build a successful investment portfolio.

The different types of yield

Yields can vary based on the invested security, the duration of investment, and the return amount. There are different types of yields for different types of investments.

Bond's yield

The yield on bonds that pay annual interest can be calculated using the nominal yield, which is calculated as the annual interest earned divided by the face value of the bond. However, a floating interest rate bond yields will change over the life of the bond depending on the applicable interest rate at different times. Floating interest rate bonds pay a variable interest over its tenure.

Similarly, the interest earned on an index-linked bond, which has its interest payments adjusted for an index, such as the Consumer Price Index (CPI) inflation index, will change as the fluctuations in the value of the index.

Yield on stocks

When investing in stocks, two types of yields are popularly used. The first is yield on cost (YOC), which is calculated based on the purchase price at the initial investment. This yield is calculated as the sum of the price increase and dividends paid divided by the purchase price. The second is the current yield, which is calculated based on the current market price of the stock.

Yield to maturity

Yield to maturity (YTM) is a special measure of the total return expected on a bond each year if the bond is held until maturity. It differs from nominal yield, which is usually calculated on a per-year basis and is subject to change with each passing year.

On the other hand, YTM is the yield expected per year and the value is expected to remain constant throughout the holding period until the maturity of the bond.

Yield to worst

The yield to worst (YTW) is a measure of the lowest potential yield that can be received on a bond without the possibility of the issuer defaulting. YTW indicates the worst-case scenario on the bond by calculating the return that would be received if the issuer uses provisions including prepayments, call back, or sinking funds.

This yield forms an important risk measure and ensures that certain income requirements will still be met even in the worst scenarios.

Yield to call

The yield to call (YTC) is a measure linked to a callable bond—a special category of bonds that can be redeemed by the issuer prior to its maturity—and YTC refers to the bond’s yield at the time of its call date.

Tax-equivalent yield

Municipal bonds, which are bonds issued by a state, municipality, or county to finance its capital expenditures and are mostly non-taxable, also have a tax-equivalent yield (TEY). TEY is the pretax yield that a taxable bond needs to have for its yield to be the same as that of a tax-free municipal bond, and it is determined by the investor's tax bracket.

Mutual fund yield

Mutual fund yield is used to represent the net income return of a mutual fund and is calculated by dividing the annual income distribution payment by the value of a mutual fund’s shares. It includes the income received through dividends and interest that was earned by the fund's portfolio during the given year.

The importance of yield in investing

Yield is a crucial metric for investors to consider when making investment decisions.

For income-seeking investors, yield is particularly important as it directly impacts their cash flow. High-yield investments can provide a steady stream of income to investors, allowing them to meet their financial goals and cover their expenses.

However, it's important to note that high yields can come with higher risks. Investors must carefully evaluate the underlying assets and the sustainability of the yield to ensure that it's not artificially inflated.

Overall, yield should be one of many factors investors consider when making investment decisions, but it's a crucial one for those seeking income.

Yield vs. return on an initial investment: what's the difference?

In investing, yield and return are both important metrics as they measure the performance of an investment, however, they have different meanings.

Return on investment (ROI) is a measure of the overall profitability of an investment over a given period of time, taking into account both capital gains and income rendered by the investment.

Yield, on the other hand, excludes capital gains and is specifically the income generated by an investment as a percentage of the investment's current value. Yield is often used to measure the income generated by fixed-income investments like bonds or dividend-paying stocks.

While yield and return are related, they can differ in certain situations. For example, if the value of an investment increases significantly, the yield may decrease even if the total return remains high. Alternatively, an investment with a low yield may have a high return if its value appreciates significantly.

Ultimately, investors should consider both yield and return when evaluating investments, but the importance of each metric will depend on the individual investor's goals and priorities.

How to calculate average yield

To calculate yield, you need to determine the return on investment for a given security or investment. The method of used to calculate yield varies depending on the type of investment. 
For stocks, the two most commonly used yields are the yield on cost and the current yield. 

Calculating yield on cost

The yield on cost is calculated based on the purchase price, price increase, and dividends paid. To calculate the yield on cost of an investment, you need to know the current annual income generated by the investment and the original cost of the investment. The formula for yield on cost is:

YOC = (Annual Income / Original Cost) x 100

For example, let's say you purchased a stock for $100 and it pays an annual dividend of $5. After one year, the yield on cost would be:

YOC = ($5 / $100) x 100 = 5%

This means that for every $100 you invested, you are earning a 5% return in annual income.

Yield on cost is particularly useful for investments that increase their dividend payments over time. As the annual income generated by the investment increases, the yield on cost will also increase, which can be a sign of a successful long-term investment.

Calculating current yield

The current yield is calculated based on the current market value, price increase, and dividends paid. 

The current yield is the annual income (interest or dividends) divided by the current market price of the security. It is calculated as follows:

Current Yield = Annual Income / Current Market Price
For example, suppose a bond with a face value of $1,000, a coupon rate of 5%, and a maturity of 10 years is currently trading at $950.

Annual income = $50 (5% coupon rate * $1,000 face value)

Current market price = $950

Current yield = $50 / $950 = 5.26%

The calculated yield value therefore is 5.26%.

In conclusion

What is yield? Yield is an essential term in investing that refers to the income generated by an investment, and it provides a way for investors to compare different types of investments and assess their potential for generating income. While a higher yield is generally preferable, investors must look at a range of other factors when determining whether it is a valuable investment or not.

The post-pandemic working world is a different place entirely. These days, many people have given up their nine to five jobs to work from home, joining the gig economy where projects are more short-term and schedules are flexible. After all, all one needs is a reliable internet connection and a space to work.

These temporary projects allow for more freedom when it comes to creative license, time constraints and living a life best suited to the individual. And they just got a whole lot easier thanks to the electronic cash system that is Bitcoin (and other crypto assets).

The Gig Economy Meets Blockchain

There are plenty of upsides to working in the gig economy, most notably that you can pick your own hours. As you are in control of your schedule you can choose your vacation times, you’re your own boss, and you get to choose what jobs you take on.

In the UK alone the gig economy between 2016 and 2019 doubled in size, equating to a staggering 4.7 million workers. Meanwhile, in the European Union, the number of freelancers rose by 24% between 2008 and 2015, from 7.7 million to 9.6 million people.

The U.S. Bureau of Labor Statistics reported that 36% of all employees in the United States are part of the gig economy, approximately 57 million people. Unfortunately of these 57 million, 58% reported that they have not been paid for work that has been completed. 

This problem could be solved through the use of blockchain and smart contracts. Smart contracts are digital agreements that automatically execute once the criteria have been met. Say you agree to complete a project within a certain time frame, once the project is completed and submitted, the payment is released. No need to request or accept payment, the funds are cleared and deposited directly into their wallet.

Another positive to merging the gig economy with blockchain technology is the use of cryptocurrencies. 

4 reasons why getting paid in crypto makes sense

While smart contracts would need to be made in order for them to smoothen out the wrinkles of unpaid jobs, cryptocurrencies are available right now. The benefits of crypto transactions when it comes to working remotely just make sense.‍

1) Cryptocurrency transactions are fast and cheap
‍While the thought of using Bitcoin payments might sound scary, they are in fact incredibly simple to send, receive and withdraw. With the use of blockchain technology and the Bitcoin network, international transactions can be completed in minutes with considerably fewer fees. Not just Bitcoin, all digital currencies for that matter.

All you need to do is pick a cryptocurrency, share your wallet address and wait for the crypto transaction to clear. Through the Tap mobile app you can then use the funds to pay bills or sell them for fiat currencies and send them to your personal Tap account to spend as you please or directly to your bank account. 

2) Anyone can make crypto payments
‍While opening a bank account is typically a very tedious task, opening a crypto account is very easy. Anyone anywhere in the world can easily create an account, add funds, and start transacting. As the network is entirely digital, employees and employers based anywhere in the world can tap into this and effortlessly make crypto payments.

3) You can work from anywhere
‍On that note, cryptocurrencies give you the freedom to work anywhere in the world as there are no constraints on receiving payments allowing you to sell your skills in the global market. There has also been an increase in jobs looking for freelancers that are willing to accept Bitcoin, goodbye central banks and hello digital assets‍

4) Low transaction fees make small jobs worth it 
‍If you've ever been hesitant about accepting small jobs, this is the one for you. When small jobs pay less, the payments might frequently be entirely overwhelmed by the transaction fees associated with receiving your payment for the job.

That is not the case when it comes to some cryptocurrencies, with Litecoin for example charging merely $0.02 per transaction. 

How to get paid in cryptocurrencies

If you’ve decided to take the plunge, you can either request that your employer pays in crypto, or specifically look for crypto-paying jobs (more on this below). The next step is to set up an account from where you can receive said crypto.

The Tap mobile app will tick all the boxes, and opening an account is incredibly simple. First, you will need to download the app and then register. You’ll be asked to fill in some personal information and then verify your identity with a government-issued identity document. This is all very normal and is required by law. 

Once you are verified, head to the home page, select the Crypto wallet and choose a cryptocurrency you would like to receive / the cryptocurrency you will be paid in. Then select Receive and send the wallet address to your employer/contractor. You will get a notification when the funds arrive in your account. 

If you're interested in jobs that offer cryptocurrency payments, consider exploring platforms like Purse.io, Ethlance and Coinality. These platforms are part of the gig economy and provide opportunities to earn cryptocurrencies. Best of luck in your search!