What Is Liquidity and How To Find a Liquid Exchange

Liquidity is a topic that always pops up now and then in both the crypto community and beyond. We are sure that there is no crypto enthusiast who hasn’t heard about Bitcoin liquidity. The question is how to calculate liquidity and how to find the most liquid exchange? Let’s dig out the truth, but first things first.

Some Terminology

Liquidity is a key parameter of a certain market, which reflects the “saleability” of a certain asset. Making it simple – liquidity reflects the price change, which will be caused by filling the Market order of a certain size. In a perfectly liquid market, one would be able to sell any amount of an asset at the same price without moving it.

Thus, liquidity is an opportunity to sell assets on the market without influencing their price. Liquidity could be measured not only for certain assets but also for the whole market in general. Let’s dig deeper and determine how liquidity affects crypto trading with and what you should know about it.

The liquidity of a cryptocurrency is determined by a number of factors – from its popularity to real-world use cases of the traded asset. To better understand the concept of liquidity, it’s crucial to introduce the Order Book of a certain market. The name says it all – order book is a list of other people’s confirmed desire to purchase a traded asset at a certain limit price. When someone needs to buy or sell the crypto-asset immediately, they will have to place Market orders, which will execute against the available orders in the order book.


How To Detect Liquid Exchange?

For example, someone plans to Buy or Sell 1 BTC having an appropriate amount of USDT and BTC on balance. Let’s review some of the options to do this (it’s worth mentioning that at the time of writing, BTC is worth something around $9,200).

First, let’s look at BTC/USDT pair on the Binance exchange.

In the right section of the trading interface, you can see the above-mentioned order book and the last price at which BTC was bought or sold. From the order book, we can see that the lowest price at which someone is ready to Sell BTC is 9,189.04 and there is 4.026387 BTC available at this price.

If the user will submit a Market Buy order at the moment of the screenshot, her order will be matched against that offer and the last price of BTC/USDT would become $9,189.84, the amount of BTC available at this price will decrease and become 3.206387 BTC. In this case, liquidity on a Binance BTC/USDT pair on the Buy-side was good enough for a 1 BTC order size allowing the trader to Buy the BTC at the best available price.

At the same time, we can see from the other side of the order book that the highest price at which someone is willing to Buy BTC is 9,189.83, but they are willing to buy only 0.693640 BTC at this price. Consequently, if the user submits a Market Sell order for 1 BTC, he will ‘eat’ through 3 levels of the order book. Such an order will consume entire Buy offers at 9,189.83 and 9,189.71 levels and most of the 9,189.47 price level, moving BTC/USDT price to $9,189.47. At the same time, the All Buy orders sitting in the Order Book with the prices of $9,189.83 and $9,189.71 would be 100% filled, while the Buy orders with the price of $9,189.47 would be partially filled for the size of 0.30136 BTC. The average execution price of the 1 BTC Market Sell would be:

0.69364*9,189.83 + 0.005*9,189.71 + 0.30136*9,189.47 = $9,189.72. The difference of $0.11 between the observed best Buy offer in the Order Book at 9,189.83 and effectively achieved the average execution price of 9,189.72is called price slippage. Price slippage represents a loss for the trader due to insufficient liquidity on the Buy side of the Binance order book. Were the trader to send a Market Sell order for the amount greater than 1 BTC, the price slippage incurred would increase substantially.

Besides the direct price slippage implications of exchange order book liquidity, one could also try to derive various trading signals from it.  In the example above, since the liquidity of BTC/USDT pair on Binance appears to be better on the Sell-side of the order book, a simple conclusion could be drawn that the Selling pressure is high and that high Level 1 Sell liquidity represents market makers’ opinion that the short-term market price movement will be downwards. However, since this prediction is quite obvious, it might not come to fruition.

Binance, though, isn’t the only exchange on the market. Let’s check what would happen if the same user would try to complete the same orders on let-it-be BitRabbit exchange. Frankly speaking, we’ve never heard of this exchange and strongly don’t recommend using it for trading. One of the reasons, apart from the funny name and doubtful security of the exchange, would be presented below.

On a screenshot, you can see the same market (BTC/USDT) on the BitRabbit exchange. The first notable difference is that the price of BitRabbit is around $30 lower than on Binance. Though, it’s not the biggest problem with this screenshot.

If the user will (for any reason) deposit the necessary funds to purchase and sell 1 BTC worth of assets – the situation will be different compared to Binance.

If she will try to submit a Market Buy of 1 BTC for USDT the order will be executed at the price that is nowhere near the Last Price of  $9,163.98. The thing is that all the Sell orders sitting in the whole visible part of the order book aren’t enough to fill the order of 1 BTC. Even more, they won’t even fill a third of it, which means that the average price of 1 BTC purchased on this exchange at Market would be over $9,182, representing a price slippage of almost $20. Remember, that on Binance the price slippage incurred by the same 1 BTC order was just $0.11.

In the case of Market Sell Order of 1 BTC on BitRabbit, the slippage would not be so bad, though the order will ‘eat’ through the first three levels of the order books and fill at fourth – the price will slip less than a dollar.

This simple comparison gives you a basic idea of why liquidity is such an important characteristic of an exchange. If an order of 1 BTC can create a slippage of 20+ dollars, imagine what would happen next time BTC rallies some $500+ in 15 minutes and you are trying to exit or enter a large position on an exchange like BitRabbit.

What Influences Liquidity?

Exchange listings.

The asset’s presence on several trading platforms increases its liquidity in most cases. The more exchanges have listed an asset, the more opportunities for traders to trade it. So, the trade volume is increasing. 

Though, often, listings don’t provide liquidity. It is a typical situation when one of the assets in TOP 50-150 of CoinMarketCap is listed on 10 exchanges, while it has more than $100,000 daily volume only on 1-2 of them.

Though, in general, new cryptocurrencies are characterized by low liquidity due to their absence from major exchanges.

Use cases outside the crypto industry.

A holy grail of every crypto project is wide user adoption though, real adoption was achieved only by a few of the coins on the market. Apart from the obvious BTC use case as a “digital gold” and store of value, Ethereum managed to get some real usage back in 2017, when a boom of Smart Contracts and ICOs occurred. It now seems to gain traction with DeFi.The most recent example of wide enough adoption is Binance Coin, which became a lottery ticket to the IEO hype of 2019. Though, both of these cases still weren’t a “wide adoption outside of the crypto industry” – more like wide adoption inside of it.

Popularization. 

The stronger the crypto community scales, the more liquid in general the crypto assets are. This fact is undeniable and the proof is the performance of Bitcoin in 2017, when this coin rapidly gained at price, volume, social media mentions, and Google trends.

However, if the cryptocurrency is new and a sufficient number of crypto enthusiasts haven’t heard about it, then, most certainly, it lacks trust from the crypto community. The asset would be considered of low liquidity or, in the worst case, manipulated by bot trading and fake market making. At the same time, the asset has every chance to change its position, drawing attention to it with marketing activities, constant development, and a solid project team behind the project.

Cryptocurrency Liquidity as an Indicator of Confidence

The liquidity of cryptocurrencies is undoubtedly an important parameter that you should pay attention to when devising your trading strategy.

Think about buying a $10,000 worth of some TOP-500 altcoin, while it’s daily trading volume is $20,000. In the best case, if you don’t want to push the price up to and incur huge slippage, you’d have to accumulate your position over a week or even a few weeks. Illiquid assets often become subjects of speculations, and pump and dump schemes. It is easier for pumpers to influence the price of an illiquid asset by buying or selling a large chunk of the daily volume of this asset. In case, if the asset has low liquidity, this “large chunk” of daily volume would cost the pumpers less money. 

Sadly, Pump and Dump schemes are still a thing in the crypto market. As a result, the vast majority of the new crypto traders fall victims to at least one of those schemes. Mainly, if a new crypto enthusiast goes through an experience like this, basically a new crypto market hater would go to social media and spread the word that the whole industry is a fraud.

Current Market Liquidity

One notable thing about crypto markets and industry, in general, is that despite the speculative spikes, one could see a slow but steady adoption. It is reflected not only in the real-world use cases, a growing number of wallets, and on-chain transactions but also in the growing liquidity of the crypto market in general. It can be seen when looking at the crypto trading volume on major exchanges 2020 volumes are much higher than in 2017 or 2018 when BTC was all over the news with an all-time high price of $18,000-$20,000.

Though undeniably growing in general, crypto liquidity is shifting. Some of these shifts represent secular trends such as growing liquidity of derivative and margin exchanges vs the spot exchanges, and some are cyclical, such as periodic shifts from BTC to altcoins (altseason) and back, or the evergreen ‘flippening’ of BTC and ETH. 

Source: https://goodcrypto.app

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Liquidity definition including break down of areas in the definition. Analyzing the definition of key term often provides more insight about concepts. Liquidity can be defined as: Availability of resources to meet short-term cash requirements. Liquidity has to do with our ability to pay for short term obligations, whether they be short term debt or operational needs.

Liquidity ratios include the current ration and the quick ration or assed test ration, ratios that measure liquidity by comparing liquid assets to current liabilities. Why Learn Accounting – Financial Accounting / Managerial Accounting https://youtu.be/uaWDB1YdA1k?list=PL6… 101 Double Entry Accounting System Explained – Accounting Equation https://youtu.be/66e9QbrkE4g?list=PL6… 101 Cash vs Accrual – Cash Method / Accrual method differenc https://youtu.be/i2O0cexCrqc?list=PL6… 101 Revenue Recognition Principle https://youtu.be/M_pauBGz5Jc?list=PL6… Double Entry Accounting System Explained – Balance Sheet https://youtu.be/kOItl8E3fNA?list=PL6… 101 Income Statement Introduction https://youtu.be/1k11H8icQxc?list=PL6… 101 Accounting Objectives – Relevance Reliability Comparability https://youtu.be/mO8tPzFmN8o?list=PL6… 101 Transaction Rules – Accounting Equation https://youtu.be/0vy6W_WTO2I?list=PL6… 101 Transaction Throught Process / Steps – Accounting Equation https://youtu.be/SlTo3EXDuqU?list=PL6… 101 Owner Deposits Cash Transaction Accounting Equation https://youtu.be/lPZoImc88eU?list=PL6… 101 Work Completed for Cash Transaction Accounting Equation https://youtu.be/ll5xIHVdrVs?list=PL6… 100.110 Pay Employee with Cash Transaction Accounting Equati https://youtu.be/bSa3NuVpkwc?list=PL6… 200 Debits & Credits Normal Balance – Double Entry Accounting Sy https://youtu.be/alSWKuWPlxU?list=PL6… 200 Debits & Credits – One Rule to Rule Them All https://youtu.be/RL3BFjL1eyE?list=PL6…

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China Is Expanding Its Digital Currency Pilot To Two New Cities

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China has outlined plans for further tests of its digital currency initiative, now aiming for trials in areas including Beijing and Hong Kong.

A digital renminbi trial will start in some of the country’s most developed regions, the Commerce Ministry said in an announcement on Friday that didn’t provide a timeline. Tests will take place in the area of northern China encompassing Beijing, coastal city Tianjin and Hebei Province; the city cluster in the Yangtze River Delta region including Shanghai; and the Greater Bay Area in the Pearl River Delta Region including Shenzhen, Hong Kong and Macau.

Cities in central and western China may also undertake the trials if they meet certain conditions, the ministry said, without specifying what they were.The exercise will kick off in Shenzhen, Chengdu, Suzhou, Xiong’an and sites for the 2022 Winter Olympics and will then expand to other regions, the announcement said.

The digital currency trials are part of a broader package of initiatives Beijing rolled out on Friday to stimulate innovation and encourage further opening of its service sector. The same day, the country reported steady industrial growth in July, though retail sales continued to show weakness.

China has been ramping up plans and testing for the People’s Bank of China digital currency in recent months, an initiative that some see as a threat to cryptocurrencies like Bitcoin and even potentially someday to the U.S. dollar’s dominance.

In April, Bloomberg News reported that state-owned Chinese banks were conducting internal, hypothetical-use tests of the currency. Last month, Softbank Group Corp.-backed ride-hailing company Didi Chuxing said it was working with the PBOC on tests of the currency and Bloomberg reported that Tencent Holdings Ltd.-backed food delivery giant Meituan Dianping was planning tests on its platforms as well.

More must-read international coverage from Fortune: Masks, small classes, and outdoor lessons: How 5 countries in Europe are reopening schools The U.S. wanted to starve Huawei of chips. It’s working Big Tech defends H-1B visas against Trump’s “un-American” crackdown “Irreplaceable”: U.S. WeChat users struggle to imagine life without the app Trump wants to ban .Want to find the next $10-billion-plus takeover target? Watch executive stock sales carefully…..

Read More: Fortune

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Money Is Changing. Here Are the 3 Most Important Ways It’ll Affect the Future of Your Wallet

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For my upcoming book “Financially Forward,” I’ve read every cryptocurrency-related text I can get my hands on, watched dozens of videos and interviewed countless leading entrepreneurs — all with an eye toward taking a balanced, informed approach to the possibilities ahead.

It’s easy to over-exaggerate the potential of blockchain. But, the technology behind crypto-currencies such as Bitcoin has the potential to drive significant social shifts.

Here’s a closer look at what this may mean for our wallets.

1. No More Middlemen

Today, when it comes to managing our money (or processing just about any transaction), middlemen abound. There are banks, credit card processors, payment platforms, stock exchanges — the list goes on. Everywhere you look, entities are standing between both sides of every transaction we carry out. And in many cases, one or more of them is taking a cut or charging a fee.

Take a credit card transaction, for example. Your credit card issuer (e.g., Chase) and payment processing network (e.g., Visa) manages the transaction. The store where you make a purchase uses a point of sale system (e.g., Square) and pays a transaction fee. That’s a lot of cooks in the kitchen for a straightforward exchange of funds to buy something simple like a coffee.

With blockchain, those middlemen could disappear. One of blockchain’s main features is that it’s decentralized — meaning that you can transact directly with the producer of the item you want to buy, no bank or credit card needed. Transaction fees are no longer a part of the equation. Think about how much money that could put back in your wallet! And more importantly, how much this simplifies the transactions we make — giving us more clarity into where our dollars go.

2. Smart Contracts

Today, executing a contract is a rigorous process that involves lawyers and headaches. Think about buying a house. You have brokers, real estate and bank lawyers, the deed company — the closing process involves a ton of people, and mountains of paperwork (and of course, legal fees).

But blockchain can eliminate just about all of it. You don’t need all of those records and documents; the blockchain stores all the information. Buying something like a house becomes seamless. Contracts can be automated and direct. By reducing the time it takes to buy and sell, property can suddenly become a more liquid and accessible asset for consumers, pushing transaction costs down, and allowing consumers to more easily tap into their home equity.

Blockchain, in other words, takes power out of the hands of institutions and puts it into the hands of the consumer.

3. A More Secure, More Streamlined Wallet

It’s no surprise that so many people fall victim to credit card fraud. We all know that if someone walks into a store and tries to buy something with your credit card, the cashier barely glances at the name on the card, let alone the signature. The company might assume something is fishy and send you a fraud alert — or perhaps you check your statement a week later and notice that something is wrong. All told, it takes days for a transaction to be tracked and verified as fraudulent, another day or two for your new card (to replace the one you had to cancel) to arrive.

But all of that could be streamlined with blockchain. Because transaction records are permanent and immutable, there isn’t a question about who is involved in a transaction.

With blockchain, our phones could store not just our credit cards and passwords, but our medical records and our prescriptions, and even the “keys” to our car and home. Your identity will be fundamentally managed in one spot.

Once these disruptions start to change the way we as individuals interact with money, the next phase will be disruption across industries and society.

But while blockchain holds the potential to put more and more power into the hands of individuals, that doesn’t mean it’s going to be easy. These new technologies are endlessly complex — but the possibility for innovation is endless, too.

By Alexa von Tobel

Source: https://www.inc.com

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It’s not about how much money you earn. It’s what you do with the money that matters. In this video, I’m going to show you a business strategy on how to manage your money. I’m not gonna tell you what to invest in. That’s not my role. Here are the best ideas of what the best professionals do to manage their money. Learn more from Tom LIVE at the next Summit event: https://tfi.media/2UC21rg

Survey Shows 65% of Central Banks Actively Researching Central Bank Digital Currencies (CBDC)

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  • A CBDC survey conducted by a London-based journal revealed that 65% of the respondents are researching about Central Bank Digital Currencies.
  • 71% of the respondents prefer DLT-based CBDC.

A London based international journal of Central Banking revealed in a survey conducted on CBDC that 65% of the central banks who participated had researched about digital currencies. The survey included 19 central banks based in Europe and 27 central banks from the other parts of the world.

57% of those exploring CBDCs are still in the initial stages of the research, while 25% have already developed the Proofs of Concept and another 13% has propelled to the pilot stage of the project. The survey further revealed that a close majority of the respondents preferred a token-based model to an account-based design. A token-based model was preferred because most participants would rather want the design to resemble cash – depending on the local policy requirements.

Some banks are focused at widening payment options to counter the reduced cash usage, while the others want to reduce the cash dependence of the public to do away with the distribution challenges and the expenses borne.

A whopping 71% of the banks prefer a DLT-based CBDC. However, only one respondent stated that it would consider blockchain – a type of DLT.

By Muskan Bagrecha

Source: https://bitcoinnews.com

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In 2013 the price of Bitcoin surged to over $1100 causing central banks around the world to take notice. Four years later, the price of Bitcoin is twice as high as its previous peak and central banks around the world are exploring the benefits of issuing crypto-based digital representations of fiat monies, more commonly known as central bank digital currencies. Rod Garratt, UCSB Professor of Economics, describes his work on a project to build a proof of concept for a wholesale interbank payment system that facilitates payments of central bank digital currency using a distributed ledger. Recorded on 07/17/2017. [11/2017] [Show ID: 32757] More from: GRIT Talks (https://www.uctv.tv/grit) Explore More Business & Careers on UCTV (https://www.uctv.tv/business) From entrepreneurship to economic policies these programs introduce you to leaders and issues in the business community.
UCTV is the broadcast and online media platform of the University of California, featuring programming from its ten campuses, three national labs and affiliated research institutions. UCTV explores a broad spectrum of subjects for a general audience, including science, health and medicine, public affairs, humanities, arts and music, business, education, and agriculture. Launched in January 2000, UCTV embraces the core missions of the University of California — teaching, research, and public service – by providing quality, in-depth television far beyond the campus borders to inquisitive viewers around the world. (https://www.uctv.tv)

Why You Should Not Risk Your Personal & Financial Data For Attractive Deals Online – zoaib Saleem

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A recent WhatsApp forward claimed that a popular e-commerce website is offering 99% discount on popular gadgets. The message included a link to the website that looks similar to the original e-commerce website. It could be an attempt to steal your personal information by tricking you into believing that you are getting a great deal. This type of fraud is called phishing. This can also happen over emails, where you get an email that seems to be from an authentic source, but in reality it is not.

A recent survey by cyber security firm McAfee India has revealed that a majority of consumers are willing to take risk while shopping online. The survey had 72% respondents (including 44% who said, “Yes, I would” and 28% who said “probably”) admitting they would purchase the same item from one online retailer over another if the item’s price was significantly cheaper, even if they weren’t 100% confident the website was genuine or secure. At the same time, 74% of the respondents said they consider clicking on unfamiliar websites or emails as dangerous, but do their research before making a purchase.

The study that was commissioned by McAfee India in October 2018 surveyed 1,017 adults between the ages of 18 and 55, in India.

Online risks

The survey has highlighted that a big percentage of those buying products online, particularly during festive sales, do not mind if their details like mobile number, email, residential address and bank account details fall in the wrong hands.

Cyber criminals can exploit any information, so users should be cautious about what they share on social media platforms, online forums, on websites or via email. Jens Monrad, senior intelligence analyst at FireEye, a cyber security firm, said, “As we rely more on digital communication, our digital footprint has dramatically expanded during the last five years. From a cyber criminal perspective this means that the information can be used in cyber attacks or to appear more trustworthy (by social engineering) or even exploited in extortion attacks.”

A recent example of how this information can be used, Monrad said, is that unsolicited emails are being sent to users, where the sender claims to have explicit content, stolen from the victim’s computer. In order not to submit the “embarrassing material” to co-workers, family and friends, the victims are being told to pay a fee via cryptocurrencies like Bitcoin.

The survey also found that many users face financial stress due to the purchases they make during the festive season; 77% of the respondents said they feel some stress about spending during online sales. This could further lead these people towards risky behaviour like using shortcuts to get a good deal. In fact, 55% of the respondents said they check their bank or card statements frequently during the festive sales period.

What you should do

You do not need to be a cyber security expert to protect yourself while being online. A lot can be dealt with by just being alert. “Today, using the Internet, either for shopping, for work or browsing, requires that the user employs a degree of scepticism and tries to judge if the content they are viewing or receiving via email is legitimate, coming from a trusted source and potentially can be verified in other places or sources,” Monrad said.

It also involves updating softwares on your devices. Having a cyber security product on your devices that offers malware scanning and protection also helps, he said.

So do not fall for emails and forwards that promise you steep discounts that sound unbelievable. Also, make it a point to report such messages as spam. This could help prevent the spread of such information and keep you and others safe online.

Ether Mining no Longer Profitable as Hashrates Decline – Aisshwarya Tiwari

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If a recent report by CNBC is to be believed, cryptocurrency’s gold mining days might be a story of the past, as the activity is no longer a profitable one. Crypto enthusiasts will remember the euphoria during last year’s crypto bull run, which saw virtually all the cryptocurrencies reach their ATH and attracted a lot of attention from the mainstream world. The state of frenzy also turned a lot of heads towards the business of “mining” cryptocurrencies, where anyone could install mining rigs in their basements or dorms and earn digital currencies online…………

Read more: https://btcmanager.com/mining-ethereum-unprofitable/

 

 

 

 

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Pivot Cryptocurrency -Provide Secure Digital Asset Trading Services to Millions of Users In Over 130 Countries Around The world.

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Pivot is a community from China for cryptocurrency investors. Its Chinese version is well operated. We provide cryptocurrency markets, prices and charts in real time of more than 1400 cryptocurrencies and the freshest blockchain news.We aim to help investors communicate more efficiently with each other and with startups in blockchain industry. Pivot has received investment finance from Binance and other famous cryptocurrency funds. Up to now, nearly one hundred startups and hundreds of business leaders in blockchain industry have opened official accounts in Pivot. And more than 100k investors is using Pivot to guide their investments.

Join us: https://www.pivot.one/

7 Facts That Will Make You Rethink Application Performance Monitoring – Mike Sargent

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Digital transformation is changing the way companies do business, so it should come as no surprise that the applications that deliver business services are under pressure to keep up. Application teams are embracing a full mix of technologies– from mobile first to cloud-native architectures, to enable more agility, innovation, and end-user focus than ever before. Yet with more technology comes more complexity, more need for visibility, more components to monitor– and also more data. As digital transformation sweeps the world, the following seven data points can help inform your application performance monitoring (APM) strategy ………..

Read more: https://www.forbes.com/sites/riverbed/2018/11/06/7-facts-that-will-make-you-rethink-application-performance-monitoring/#6565ec746e84

 

 

 

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Your Whole Wallet In One Card – Unbox Therapy

The latest and most recently updated version of Mobile app and OTA firmware is now released. This update will protect our customers’ high-level security information so that a safer and more secure use of our Product can be ensured……

 

 

 

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IMF Issues Stark Warning Over Bitcoin & Crypto Rapid Growth – Billy Bambrough

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The International Monetary Fund (IMF) has warned the “rapid growth” of bitcoin and cryptocurrency assets could create “new vulnerabilities in the international financial system,” as the world’s banks adjust to the recent bitcoin and blockchain boom. Bitcoin and cryptocurrencies, including Ripple Lab’s XRP token, ethereum, litecoin, EOS, and stellar, are being examined by the traditional financial system to gauge how they might be integrated as both investment tools and ways to move money across borders more quickly and cheaply.” Continued rapid growth of crypto assets could create new vulnerabilities in the international financial system,” according to the fund’s latest World Economic Outlook report, out today………

Read more: https://www.forbes.com/sites/billybambrough/2018/10/09/imf-issues-stark-warning-over-bitcoin-and-crypto-rapid-growth/#2dfcacec3544

 

 

 

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