Exchange Coins - Cryptoacademy s5W1 - Homework Post for @imagen
1.) Perform a complete analysis of the currency of some exchange. Not allowed: BNB, KuCoin, Cake and Uniswap.
Huobi Token (HT) is ERC-20 compliant and also native token for Houbi Global exchange. HT is decentralised whose value is partly dependent on Huobi crypto exchange. The initial launching of Huobi token was in January 2018 as rivalry for the popular Binance token (BNB). Huobi token gives the Houbi global exchange a flexible marketing strategy which in turn improves the exchange thereby attracting new users.
• One of the main goals of HT is to factor in reduction in the rate of trading operations within the exchange.
• Users who hold HT can use it to buy monthly VIP-status plans which will enable them to get maximum discount on transaction fees.
• HT holders are vested with the right to voting decisions on the exchange. Also, the HT holders stand a chance to get premium access to special events and can be rewarded for seasonal buybacks.
The founder of Huobi token is Leon Li who is a graduate of Department of Automation from Tsinghua University. He started his career at Oracle as a computer Engineer. He later succeeded in assembling the Huobi group in 2013 and managed the company until he transformed it into a reputable world known exchange that is popularly used today.
The co-founder is Jun Du who worked at Comsenz as a community operations director. He is also a Co-founder of Chainup and AToken.
The price of Huobi token at the time of writing is $9.79. It's marker cap is $1,560,122,790. It has a maximum supply of 500,000,000 and a circulating supply of 159,308,566. It is coin number # 84 on coinmarketcap.com.
2.) Make a purchase equal to at least US $10 of the currency you explained above. You must make some movement with that currency within the exchange that created that currency. Show screenshots and explain in detail the steps to follow. Example: transfer of funds, Staking, participation in a Launchpad, trading in futures, etc. Indicate the reasons why you chose that option (operation) on that platform.
On Huobi exchange, I purchase Huobi tokens worth $14. I have used steem tokens to purchase it.
Next, I proceed to move (transfer) the HT to another wallet. So I click on withdraw
Next, I click on the token I wish to withdraw (HT).
Next, I proceed to fill in network I wish to use (TRC20). Also, I fill out the wallet address and that amount I wish to transfer. I click on withdraw.
An email is sent to me with a one time password (OTP) for authentication. I input the OTP and then, my Huobi tokens has been transferred.
I have chosen this operation because of the ease and speed of transaction of the Huobi exchange.
4.) What are futures trading?
Futures trading is a kind of trading that offers traders access to digital currency without having to actually posses Cryptocurrency. In this king of trading, the trader takes risk on the future of a commodity. Futures trading contract take their values from some particular Cryptocurrency like ethereum and Bitcoin. When the time of the futures contract elapses, the trader then uses cash instead of dealing in crypto directly.
Futures trading are obtainable on platforms like Kucoin exchange, Binance exchange, Huobi Exchange, and ProBit exchange and this option is available at all time of the day.
Working Principle of Futures trading
While cryptocurrencies daily face diverse challenges ranging from negative publicity (in some states) to high volatility, some other traders use it's constant price swing to their gain. The most essential thing to bear in mind is that futures trading offers you the option of taking risk on future changes in price of a cryptocurrency without really holding that cryptocurrency you want to trade.
If Peter and Bobby entered different positions of futures trading at $40,000 each. In this scenario, Peter had taken the risk that Bitcoin is not going to pass $40,000 mark while Bobby had taken the risk that it is going to pass the $40,000 mark both in a given time in the future. At the elapse of the future time, Bitcoin then settles at a price of $45,000 both contracts. At this point, Peter will have to pay deficit loss of (45,000-40,000 = $5,000) to the exchange because he is in the losing position. Bobby consequently will then recieve from the exchange a $5,000 profit.
5.) What is the margin market?
Margin market or trading is a kind of trading whereby the crypto funds that are being traded with are provided by a third party. I'm comparison to spot account, margin account offers traders greater capital and let them to leverage their positions. Most importantly is that margin trade magnifies the yield on trade output so that traders recieve greater trade profits.
In the traditional financial system, Investment Brokers provide the funds to be traded with. But in the case of cryptocurrencies, the margin funds are provided on market demand by other traders/third parties. Also, according to the demand of the margin funds, these third party traders earn interest.
When initiating a margin trade, the exchange will require some kind of collateral from the borrower. This collateral is some percentage or ratio of the value of crypto to be borrowed. This collateral is called margin. A leveraged trade is then created with the margin trading account at some specific ratio. For instance, opening a $50,000 trade with a leverage ratio of 10:1 would require the trader to commit $5,000 of margin/capital.
6.) What happens to the cryptocurrencies of an exchange when they suffer from a hack or it turns out to be a fraud? Present at least 2 real life examples.
Upbit exchange Hack
In November 2019, Upbit which was a south Korean exchange was a victim of a massive breach from hackers and as a result, the exchange lost 342,000 Ether which was equivalent to $51 million then. It was also alleged that the hackers were within the managerial board of Upbit because it was uncovered that the funds were taken from a cold wallet that belonged to Upbit. Fortunately for the customers, Upbit promised to bear the losses alone without tampering customer fund.
Cryptopia Exchange Hack
Cryptopia Exchange which is in New Zealand suffered another attack from hackers after the previous one in 2019. They began the process of liquidation. Up untill 2020, they were still in the liquidation process but it was discovered by the government that Cryptopia failed to keep to the anti-money regulation when it registered it's members.
Unfortunately, there were upto 900,000 active customer account that didn't have any more details than their emails address and usernames. Also, a good number of accounts were traced back to false addresses. In summary, many customers of Cryptopia did not get their funds because of their failure to comply with the verification process.
Regards to professor @imagen