In part 1 and part 2 of this series I covered some basic concepts about risk management and trading in general. In this part, I’m going to explain how these concepts can be used for hedging against price volatility. It’s important to note that we are not talking about active trading techniques here, this is about risk management.
In my earlier post Crypto risk management – part 1: introduction I gave a brief intro to some thoughts and financial instruments that might be useful when managing risk of owning cryptocurrency. In this second part I’ll introduce in more detail how margin trading with leverage works. In the next and third post, I will then explain how this can be used to hedge against risk.
Almost anyone who has heard about Bitcoin or Ethereum, know that it’s risky business. Some risk factors are; the immature technology, lack of real-world applications that provide real value, lack of protective regulation and price volatility against fiat currencies. In this post I’ll go through ways to manage some of these risks.
Blockchains are being talked about everywhere it feels like. Companies, institutions, friends and family they all ask about it, and (most of the time) trying to understand what this new technology is, and what it can do for them. In the past I did a non-technical explanation of how blockchains work. But you don’t really explain why you would use something, by explaining how it works. So in this blog I’m going to try to explain what value blockchains can bring to almost any company.
I previously talked about liquidity and money on blockchains. I find this a very interesting subject. I believe, some of the greatest benefits that blockchain technology will bring to the world is disintermediation in liquidity, custodianship and brokerage. That is, without any middle men, having the ability to easily swap between different types of digital assets (liquidity), keep assets safe (custodianship), and automatically execute on agreements (brokerage). I will put this into some perspective… Continue reading “Lending yourself money, from assets you own. Interest-free.”
The most basic economic concepts like what is money can sometimes be difficult to get right. A few weeks back I wrote about how Bitcoin is not money. In this post I’m going to continue with a few random thoughts about money, financial liquidity and explore what true money could look like on the blockchain. Continue reading “Money on blockchains”
This has certainly been a crazy week in the cryptocurrency landscape. I keep writing about this topic, because it truly fascinates me. For years, this crypto thing has been looked at with pessimism, laughed at, and misunderstood. Cryptocurrencies are still misunderstood, but now suddenly both aspiring digital cat owners and Wall Street brokers alike, wants a piece of it! The clash of two worlds… Continue reading “The clash of two worlds – kitties and Wall Street brokers”
It’s sometimes hard to frame conversations around cryptocurrencies like Bitcoin and Ether. That’s largely down to the fact that no one can truly express what these things are, and what they mean to humans and our society. These are entirely new organisms that lack precedence. But finding the right definitions are going to be important because it will ultimately decide if and/or how governments will regulate these things. Is Bitcoin money? Is Bitcoin a network or a protocol? Is Bitcoin a community? It’s none of the above and all of them at the same time. Continue reading “Bitcoin is not money”
Fungible currency is, or must be, a cornerstone of a democratic and free society. In this blog I will explore what a fungible currency is and why Bitcoin and Ether currently are lacking in this respect. Continue reading “Fungibility – why Bitcoin or Ether aren’t the most democratic currencies yet”
In the past few weeks I’ve written about that blockchains are a kind of distributed ledger, and how they can be useful. But in these posts I left with a few unanswered questions that I’ll try to answer here.
So far everything about blockchains seem wonderful. Blockchains will allow software, people and organisations to transact with each other in more transparent and democratic ways where authenticity can be verified in a decentralised manner. If more software was built like this we would no longer need to pay with freedom, privacy and surveillance. But what do we have to pay with instead? There ain’t no such thing as a free lunch. Continue reading “What’s the cost of using blockchains?”