Monthly Archives: December 2019

Systematic Investment in Cryptocurrencies

The systematic investment plan or popularly known as SIP is not just limited to banking but cryptocurrencies too have plans where one can invest in them as per this plan.

What is SIP?

A Systematic Investment Plan or SIP is a process where the institution invests a fixed amount in a mutual fund each month. It averages out your purchase price and protects you from catching a market high, as we explain here. It also protects you from panic if markets crashed because your money is being invested gradually rather than in one go.

SIP being a strictly banking process was, till now foreign to cryptocurrencies. However, with the emergence of newer exchanges, these services are being incorporated, albeit, gradually.

Why SIPs?

When Bitcoin first appeared on the horizon, the entire concept was alien and abhorrent. Any transaction which did not have a physical existence and exchanged hands only on the basis of tokens could never be relied upon. However, that changed in December 2017, when the coin value of BTC touched $20000. That it crashed the following quarter and went down under did not deter early investors from pouring in more. Despite the initial mayhem, it stabilized at around $10000. Despite the market volatility, it regained enough confidence to carve out enormous clout for itself.

One of the other reasons why big investors usually kept away from Bitcoin, was regulations. Cryptocurrency is hardly a decade-year-old phenomenon. It is still in a trial and error mode. Different countries have different regulations and it becomes a challenge for anyone investing to singlehandedly overcome these challenges.

However, the growing popularity of cryptos, especially Bitcoin has ensured that this fear is allayed. Investing in BTC through SIP is yet another indication that the cloud of uncertainty is lifting and investors are less wary of the challenges.

Funnily, one of the reasons that were given behind the reluctance of investing big on BTC was its exact nature or the lack of it. Bitcoin is neither a commodity, even though it’s mined, nor a currency.

One thing that you ought to know while investing in cryptos is that knowledge is the king. You have to get a hang of the charts otherwise it might get risky. Also, cryptos fluctuate, so timing is of great importance. As final advice do not pour in the entire capital into a single token but expand the portfolio.

Ex Paypal guys and the world of Crypto

So while the world has been already battling a disruptive transformation in the financial world through the arrival of the cryptocurrency, the guys from their estranged company Paypal went ahead and announced a new arrival called the Initiative Q.

So what is it that’s making this new venture from the Ex Paypal guys a treat to watch?

To entice people to join what has been dubbed the next bitcoin – even though it is not a cryptocurrency – the developers are claiming they are giving away significant sums of the currency.

In turn, they state it could be worth $2trillion in the future too early users.

Sign-up is free, but you’d need an invite from an existing user to do so. You’re also required to submit your name and email address.

It may be, but more than two million people have already registered to the initiative, it revealed yesterday – and that figure is increasing. Certainly.

However, a quick caveat to those who are in a hurry to sign up. Q, in its the present form is virtually worthless. Even it’s promoters have said that it would take years before it can become a worthwhile venture. And hence the urgency to sign up more people. The marketing moot point is earlier the registration, higher the number of allocations. The company website to has created a built-in ticker to showcase the decreasing number of allocations.

So what is Q?

It is not a cryptocurrency.

It is a private currency which the developers hope will become the standard in payments and the go-to global currency.

So, instead of using pounds, dollars or euros, there is Q

Initiative Q says it will use a professional monetary policy (like governments do) rather than a predetermined one (like bitcoin does).

According to Initiative Q’s website hype, it is the payment system of the future.

It says: ‘The Q payment network will integrate the best technological improvements that have been made in the payment industry over the last few decades to create a flexible, easy-to-use and inexpensive payment network.’

Now, this may seem far fetched in the current moment, but a few years back even cryptocurrencies were a mirage in the distant financial horizon. With the arrival of Bitcoin and the successive tsunami of Alt Coins, that scenario has changed.

Initiative Q and developers/promoters are currently keeping their fingers crossed. Their premise is, if Bitcoin can, Q can too.

Initiative Q: An insight to its economic model

The Bitcoin of currencies have arrived and how. Created by ex Paypal employees, Q, as it is popularly known, aspires to replace the currency that we use. So the future it envisages is that in place of a Doller, a Pound or any other national currency in circulation, Q would be the used as the legal tender. Keeping that in mind, the developers had started to register members with the caveat that early members would be allocated a greater number of the currency. In fact, the website to has a ticker showing the diminishing number of allocations.

But the moot point on every network users mind is how much value would they get vis a via their allocations.

If Initiative Q succeeds in creating a world-leading payment network, it is expected that all Qs reserved today for members will eventually be granted at a value of roughly one US dollar per Q. So let us look at the rationale behind such an estimation.

The value of a currency is dependent on a myriad of factors.

The velocity of currency is one of them. It is defined as the total expenditures or income, in that currency, divided by the money supply (the total amount of currency in circulation).

To put into perspective, the sum total of all economic activity in the world currently stands at $100 trillion and the sum total of money in circulation is anywhere between $40 to $90 trillion dollars.

This gives an average velocity of money, globally, of around 2, which means that each unit of currency changes hands approximately twice a year. In other words, at any given time people hold money balances equal to around half a year’s worth of income.

Now coming to the real worth of Q. It will depend on two broad factors: Volume and Velocity of Money.

The volume ideally indicates the amount of money needed for all activities and the Velocity of money will show how fast the turnover is achieved.

Initiative Q’s unique distribution method solves the adoption problem and opens the gates to many new payment technologies.

Buyers and Sellers will prefer it to payment cards. Q retail volume is thus projected at 5-20 trillion dollars, assuming successful worldwide integration.

As for the velocity factor, Q’s idea of it becoming the primary currency solves that problem. With higher volumes, it hopes to attain a velocity of 12.