Ripple does not have a mining rewards system like Bitcoin for releasing new coins into the market, so they’ve enacted a plan to put 55 billion XRP into escrow accounts. Prior to 2017, Ripple did not offer any guarantees to coin-holders concerning the rate at which Ripple would release XRP coins into the wild, and this made investors nervous. At any moment, Ripple theoretically could have dumped the approximately 60 billion remaining XRP into the market and washed out any value that the investors... Continue reading...
Lifestyle inflation is a term used in personal financial planning for the tendency of people to increase their spending and standard of living right along with any raises and monetary resources, even if it’s is at the detriment of any plans for debt reduction or long-term savings. Monetary inflation describes the phenomenon when more money has no more utility value than a lesser amount used to because the cost of goods is going up. Lifestyle inflation is when people select higher-priced goods and lifestyle spending habits when they have the money available to do so. Continue reading...
Inflation plays a crucial role in your retirement planning. Investors should anticipate 2% - 3% inflation each year, meaning that the costs of goods and services rise substantially over time. Retirees should also consider that inflation is different for different items. For instance, health care has a higher rate of inflation each year than retail goods, and the cost of home improvements generally rises faster than the cost of food. Continue reading...
The Consumer Price Index (CPI) is a measure of the average change, over time, in the prices paid by urban consumers for a market basket of consumer goods and services. The CPI is an important economic indicator, as it’s changes influence the Federal Reserve’s monetary policy decisions and it gives an indication if an economy is experiencing adequate inflation. The most common reading on the CPI is % change from a previous period, with most developed economies generally striving for 2% annualized inflation. Continue reading...
Bitcoin is a digital currency that is secured and maintained by a peer-to-peer network of millions of users online, making it a decentralized, fast, secure, cheap, and efficient as a digital currency. Bitcoin is a digital currency that can be acquired via traditional currency, trades, or work, and can be used for transactions in an ever-expanding network of users and merchants. It is legitimized and maintained by a peer-to-peer network of millions of users online, making it a decentralized, fast, secure, cheap, and efficient digital currency that exists independent of any centralized gatekeepers such as governments, regulated markets, or corporations. Continue reading...
The value of a currency can depreciate in relation to the value of other currencies or to another benchmark. Currencies can have their value determined by the cost of a basket of consumer goods from one period to another, but this is really just a measure of inflation. Inflation (or “deflation”) is a subset of the appreciation/depreciation metric, but changes in the exchange rates between currencies are typically seen as the most relevant measure of a currency’s value. Continue reading...
The most common way to buy Bitcoin is through online services such as Coinbase, Bitpanda, Bitquick, Localbitcoins, and Spectrocoin, where customers can use credit cards, bank accounts, and various other payment methods to convert cash into coin. Transfers are based on frequently updated rates of exchange and may involve a combination of flat fees and percentages that go to the service. There are also some physical locations where you can perform these transactions, such as Bitcoin ATM machines and convenience stores that can help you transfer money through the same machines that add funds to prepaid phones. Each of these methods offers different advantages in terms of convenience, anonymity, and security. Continue reading...
Real rate of return is a notion that takes factors such as inflation and taxation into account before reporting a realized rate of interest on an investment. Economic theorist Irving Fisher first popularized the idea that there is a difference between a nominal interest rate and a real interest rate. Consider a bond that pays a steady coupon rate of 2% for the next 10 years. If inflation is more than 2%, the real rate of return on that investment is negative. If the investor got taxed on the nominal gains, the real rate of return is pushed further into negative territory. Continue reading...
Treasury Inflation Protected Securities (TIPS) are coupon-paying treasuries issued by the US Government whose principal amount adjusts with inflation. When a consumer buys Treasury Inflation Protected Securities (TIPS), they experience a few benefits when compared to other investment options. One benefit is that the security is backed by the full faith and credit of the US Government. Another benefit is that the principal amount adjusts automatically for inflation with the Consumer Price Index. Continue reading...
Stagflation is the occurrence of both stagnation, which is slowing growth and production levels, and inflation, which is the increase of the average cost of goods. If production costs rise for some reason, such as higher oil prices, it can cause economic growth to slow down and the supply of goods in the market to drop. This is known as stagnation. The weakened supply of goods in the market and the higher production costs of the goods will cause the retail prices of the good in the market to go up. Continue reading...
Ether is the currency that powers the Ethereum network, which is a platform of distributed blockchain computing on which transactions, smart contracts, and distributed applications operate. Ethereum is a blockchain code environment through which distributed applications, smart contracts, and financial transactions using the Ethereum protocol are tested, validated, and added to distributed ledgers by the mining computers acting as nodes in the network. Ether is the currency, or token, in the Ethereum world which is used to pay the miners and transaction fees which are specific to its blockchain. Continue reading...
The nominal value is the original stated value of a security or asset before it undergoes time value calculations that may change its market value. The nominal value is also known as face value when it refers to the value stated on a bond or other issued security. Taking accrued interest or time value into account for issued securities will give you the market value, but the nominal value will not change. Continue reading...
It is becoming increasingly popular today to have an IRA just for bitcoin. If you create a Self-Directed IRA, you can hold almost anything you want within it, if you can find a custodian and trustee willing to facilitate it. This isn’t overly difficult to do since many new companies are jumping at the opportunity to facilitate bitcoin and cryptocurrency IRAs. Examples of assets that can be held within a self-directed IRA include real estate, cryptocurrencies, precious metals, intellectual property, private businesses, hedge funds, private equity, tax lien certificates, livestock, and more. Continue reading...
Two words: blockchain technology. Transactions in bitcoin are encoded, packed into a block of other transactions, and all of these are sent out to thousands of computers running blockchain computations, known as hashes. All of these computers are running similar algorithms designed to force honest work and to take time for the computers to complete. The purpose of this step is merely forcing the blockchain to require time, energy, and effort, and to be randomized and decentralized when it is validating transactions. Whichever computer solves it first receives an incentive reward, and the entire blockchain, comprised of all computers running bitcoin client software, then updates the ledger to include the most recent validated transactions. Continue reading...
Ethereum is an open-source, public, blockchain-based distributed computing platform. Ethereum provides a cryptocurrency known as ether. Ethereum is a decentralized platform that runs what are known as “smart contracts.” Smart contracts are applications that run on custom built blockchain, which functions on its own accord through rules programmed into the protocol, and which also makes decisions and keeps records based on consensus throughout a peer-to-peer network. A blockchain oversees its own activities without requiring any trust in a central authority or the other parties involved. Continue reading...
Currency exchange rates will fluctuate with various macroeconomic factors such as inflation, interest rates, trade balance, and so on, as well as political climate. Currency exchange rates are influenced by a number of factors, with some experts listing 5, some experts listing as many as 10. The main variables that will affect exchange rates are inflation rates, interest rates, the trade balance / current account, speculation in Forex markets, and government policies and interventions. Continue reading...
Hyperinflation is when a rate of inflation grows exponentially, and a currency is rapidly devalued. Hyperinflation occurs in the midst of dire economic circumstances. This is usually partially due to the piling on of downward price pressure in which newly printed currency rapidly floods the market as the government attempts to cover debt obligations. Sometimes this stems from situations where the government is having trouble receiving adequate taxes from the population. Continue reading...
The Compound Annual Growth Rate (CAGR) is the compound discount rate which an investor would have to get to go from a present value to a future value. The compound annual growth rate can be computed using the ending value of an investment and taking the Nth root of it for the number of compounding periods (usually years). The idea is to have a smoothed average number that an initial would have to have received in a compounding investment to end up at the future value. Continue reading...
The pseudonymous inventor(s) of bitcoin and blockchain technology, Satoshi Nakamoto, likely walks among us today. Satoshi Nakamoto was the pen-name of the author(s) who anonymously gave the world the design and code for bitcoin and blockchain technology. Penning a white-paper entitled “Bitcoin: a Peer-to-Peer Electronic Cash System,” the author(s) described the need for a decentralized digital currency and proposed blockchain technology as the way to validate digital transactions with a distributed ledger. Continue reading...
The Consumer Price Index (CPI) is calculated using prices of sample goods from predetermined urban areas. According to the Bureau of Labor Statistics (BLS), the CPI is a product of a series of interrelated samples. First, using data from the 1990 Census of Population, BLS selected the urban areas from which data on prices were collected and chose the housing units within each area that were eligible for use in the shelter component of the CPI. The Census of Population also provided data on the number of consumers represented by each area selected as a CPI price collection area. Continue reading...