David Glance, The University of Western Australia

In 2008, someone calling themselves Satoshi Nakamoto posted a paper describing the workings of what would become the world’s most important digital cryptocurrency, Bitcoin. Two months later, he posted the code for the first version of the software that would allow people to create and exchange the currency.

The paper was revolutionary because it brought together ideas that people had been working on in the area of digital currencies. It solved the problem of exchanging money in a safe and secure way, without having to trust third parties or even the other person in the deal.

But who was the enigmatic author? Who was Satoshi Nakamoto? The paper was written in a style that referred to “we” rather than “I”. This could have been a ruse. But if not, it suggests there was more than one person behind the idea of Bitcoin.

Over the next two years, the person (or persons) calling themselves Satoshi Nakamoto worked with volunteers to refine the software until one day in April 2011, the communications stopped.

The roller-coaster ride of Bitcoin

Since that time, Bitcoin has seen a meteoric rise and fall in value. It hasn’t yet disrupted the global financial system, but it has persisted nonetheless. In part, this ongoing interest in the currency has been fueled by China, whose market for Bitcoin represents 81% of the entire Bitcoin trading volume.

But why is revealing the true identity of Satoshi Nakamoto so important to many people?

As with almost everything connected to Bitcoin, the answer is complicated, and in all likelihood, will remain unanswered until the person or persons behind the Satoshi Nakamoto identity step forward and try and prove that they are Satoshi.

The internet age has given us the ability to get instant answers to almost any question anyone cares to ask. With Satoshi Nakamoto, there are many unanswered questions.

For instance, the fact that we live in an age of technological superstars such as Microsoft’s Bill Gates, Facebook’s Mark Zuckerberg, Google’s Larry Page and Serge Brin, Apple’s Tim Cook and others. The idea that someone could bring a technology as important as Bitcoin into the world without taking credit for it, is unheard of. Why was their anonymity so important?

Many theories

Various theories have been put forward for this including the fact that the inventors may have been concerned about the illegality of creating an alternative currency.

This would have been true at the time when digital currencies were being investigated for their capacity to support money laundering and other criminal activities. But this theory doesn’t explain why they would wish to remain anonymous today, now that Bitcoin has largely been accepted, even with its association with cybercrime.

Another theory is that Satoshi Nakamoto was concerned that Bitcoin should be a truly open source project that didn’t have leaders to dictate how it should function and evolve.

This perspective does have merits but part of the reason the Bitcoin community could be wishing for the appearance of a real leader who can lay claim to the title is that there is currently a split within the Bitcoin developer community, which is undecided on how the future software should work.

These arguments arise in other projects such as the operating system Linux for example but in Linux’s case, there is a leader, the inventor, Linus Torvalds, who can act as the ultimate arbiter in these disputes.

Show us the money

Probably the most intriguing question, however, and possibly the motive behind the interest by the media, is the whereabouts of one million Bitcoins that Satoshi Nakamoto is reported to have access to. At current market values, that is worth US$420 million. This trove doesn’t appear to have been touched and, again, the question has been asked as to why not?

One theory here is that the selling of the Bitcoins would possibly link back to unmask the identity of Satoshi Nakamoto. Another view holds that the Bitcoin founder would not want to send a selling signal to the market by offloading large quantities of Bitcoin.

Another question that has been raised in regard to the Bitcoins, and in particular the idea that Australian businessman Craig S Wright could have been Satoshi Nakamoto, has been the possibility that this was what motivated the Australian Tax Office to ask police to raid his home and office.

However, it is likely that the ATO’s interest in Wright was for his involvement in many different companies and their tax obligations rather than anything specifically to do with Bitcoin.

Not the real Satoshi

As to any claims that Wright is Satoshi Nakamoto, further evidence has surfaced that points to this being an elaborate hoax. Encryption keys that were used to link Wright back to Satoshi Nakamoto were most likely created far more recently than claimed and made to look like they came from an earlier date.

There have been many possible “sightings” of Satoshi Nakamoto based on a number of different possible leads. There are as many people seemingly hoping that the inventors’ identities will not be revealed. The mystery and enigma is very likely to be far better than the reality.

On the other hand, there are the others who hope that the “Steve Jobs of Bitcoin” will step forward and drive Bitcoin, and its underlying technology, to new heights.

Personally, I think it is better that Bitcoin remains a project that the community ultimately drives because that idea seems closest to the original intention of Satoshi Nakamoto.

David Glance, Director of UWA Centre for Software Practice, The University of Western Australia

This article is republished from The Conversation under a Creative Commons license. Read the original article.

John Ballantine, Brandeis University

Tehran, 1943: Joseph Stalin, Franklin D. Roosevelt and Winston Churchill – hosted by the young Shah Reza Pahlavi – agree on plans for the two-front attack on Hitler while sketching out the east-west division of Europe. Holding the meeting in Iran, with separate consultations with the shah, was no mistake. Gulf oil was a critical resource to the Allied war effort. Oil has flowed under the surface of political conflicts ever since.

Fast-forward to today, and political antagonists and energy players are again forging a messy path forward, this time focused on long-term energy transitions as disparate countries try to slow and eventually stop climate change.

The 2015 Paris Agreement was a groundbreaking diplomatic effort – 196 countries committed to prevent average temperatures from rising by more than 2 C (3.6 F), with an aim of less than 1.5 C (2.7 F). To meet that goal, scientists argue that fossil fuel use will have to reach net zero emissions by midcentury.

The genius of the Paris climate accord was getting all the major parties to agree – particularly major greenhouse gas emitters including Russia, China, India, Brazil and members of OPEC, the Organization of the Petroleum Exporting Countries.

Now, the challenge is implementing the multiplicity of solutions needed to bend the global warming curve. The Paris Agreement is not a treaty – countries set their own targets and determine their own strategies for meeting them. Each signatory has its own politics, economic structure, energy resources and climate exposure.

The commitments from countries are still falling short as President Joe Biden hosts a virtual climate summit with international leaders on Earth Day, April 22, 2021, and carries out the hard diplomatic work with Russia, China and other countries to develop implementable solutions.

As an energy economist, I am familiar with countries’ evolving responses to climate change and companies’ shifting investments and different visions of the future. One technology attracting attention from groups on all sides is hydrogen.

Different visions of energy’s future

As the world’s population and economies grow, energy demand is expected to increase by as much as 50% over the next 30 years, so making the right long-term investments is crucial.

Energy companies and policymakers have widely different visions of that future. Their long-term scenarios show that most expect fossil fuel demand to remain steady for decades and possibly decline. However, many are also increasing their investments in cleaner technologies.

The International Energy Agency – which countries often look to for future scenarios, but which has a history of underestimating demand and clean energy – forecasts that renewable energy will meet about one-third of the global energy demand by 2040 in its most optimistic scenario. That would be in a world with higher carbon taxes and more wind power, solar power, electric vehicles, carbon capture and storage. Greener technologies may come close to keeping warming under 2 C, but not quite.

Exxon, on the other hand, forecasts a path dependent on a fossil fuel-based economy, with slower transitions to electric vehicles, steady demand for oil and gas, and a warmer world. Exxon is also investing in carbon capture and storage and hydrogen, but it believes oil and gas will provide half the global energy supply in 2040 and renewable energy will be less than one-fifth.

OPEC, whose members are among the most exposed to climate change and dependent upon oil and gas, also sees oil and gas dominating in the future. Nonetheless, several Gulf nations are also investing heavily in alternative technologies – including nuclear, solar, wind and hydrogen – and trying to transition away from oil.

BP proposes a more focused shift toward cleaner energy. Its “rapid scenario” forecasts flat energy demand and a more dramatic swing to renewables combined with a growing hydrogen economy. The company expects its own renewable energy to go from 2.5 gigawatts in 2019 to 50 GW by 2030, and its oil production to fall by 40%.

Others are also exploring hydrogen’s potential. Much as with utilities’ shift from coal to natural gas, hydrogen may ease the transition to cleaner energy with enough investment.

Since this fuel is getting so much industry attention, let’s look more closely at its potential.

How realistic is hydrogen as a climate solution?

Hydrogen has the potential to fuel cars, buses and airplanes, heat buildings and serve as a base energy source to balance wind and solar power in our grids. Germany sees it as a potential substitute for hard-coal coke in making steel. It also offers energy companies a future market using processes they know. It can be liquefied, stored, and transported through existing pipelines and LNG ships, with some modifications.

So far, however, hydrogen is not widely used as a clean-energy solution. First, it requires a upfront investment – including carbon capture capacity, pipeline modifications, industrial boilers for heat rather than gas, and fuel cells for transportation – plus policies that support the transition.

Second, for hydrogen to be “green,” the electricity grid has to have zero emissions.

Most of today’s hydrogen is made from natural gas and is known as “grey hydrogen.” It is produced using high-temperature steam to split hydrogen from carbon atoms into methane. Unless the separated carbon dioxide is stored or used, grey hydrogen results in the same amount of climate-warming CO2 as natural gas.

“Blue hydrogen” uses the same process but captures the carbon dioxide and stores it so only around 10% of the CO2 is released into the atmosphere. “Green hydrogen” is produced using renewable electricity and electrolysis, but it is twice as expensive as blue and dependent on the cost of electricity and available water.

Many electric utilities and energy companies, including Shell, BP and Saudi Aramco, are actively exploring a transition to a hydrogen-mixed economy, with a focus on blue hydrogen as an interim step. Europe, with its dependence on imported natural gas and higher electricity costs, is setting ambitious net-zero energy targets that will incorporate a mix of blue and green hydrogen coupled with wind, solar, nuclear and an integrated energy grid.

China, the world’s largest energy user and greenhouse gas emitter, is instead investing heavily in natural gas – which has about half the carbon dioxide emissions of coal – along with carbon capture and storage and a growing mix of solar and wind power. Russia, the second-largest natural gas producer after the U.S., is expanding its gas production and exports to Asia. Some of that gas may end up as blue hydrogen.

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Ramping up blue and green hydrogen as clean-energy solutions will require substantial investments and long-term modifications to energy infrastructure. In my view, it is not the magic bullet, but it may be an important step.

Finding solutions amid messy politics

Of course, technology investments cannot assume away the messy politics of the world. People and leaders around the globe still have differing views on the urgency of the climate crisis and need for greener energy investments.

Perhaps the leaders gathered will find some common ground as seas rise and temperatures break records. What is critical for meeting the Paris goals is that countries invest now in a cleaner future.

John Ballantine, Professor of International Business, Brandeis University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Becoming a trader is not a journey for the faint of heart. Becoming a successful trader is ultimately an act of determination. Not unlike the character of the John Wick trilogy (Quadrology? Pentology?), we traders have to be “a man of focus, commitment, sheer will.” We have to get up early, stay up late, follow a routine, back test, journal, rinse, and… repeat… and repeat… and REPEAT.

Focus. Commitment. Sheer will.

Ultimately, the journey of becoming a successful trader is a process of elimination, not much unlike Michelangelo sculpting his great masterpiece, Reportedly, someone asked the artist how he made such a magnificent sculpture from the hulking slab of what was a previously abandoned project – literally a ‘leftover’ piece of marble. His reply was “Simple… I just chipped away all the parts that weren’t David.”

Likewise, the successful trader we want to be is inside us… we just have to chip away all the pieces that are “UN-traderlike”.

Early in my trading journey I had several friends, who career-wise, were in “high places”, who tried to convince me that the road I was about to travel was a pathway to failure. Their universal theme: “Trading is a path doomed for failure. It’s legalized Gambling! Nobody makes money trading.”

Well, kiwis, just watch the news… somebody is making money in the markets, and the secret to success is to do what successful people do. My motto: “Do what successful people do, get what successful people got.” Just because you are a successful accountant, a successful investor, a successful nuclear engineer, it doesn’t make you a successful trader, and it’s hard to take advice from someone who you respect, but has no experience in the field they are pontificating on, saying, “you can’t make money doing ‘X’ ” if they themselves have never done it. 

I’m not going to listen to my brother for financial advice… he’s broke.
I’m not going to listen to my uncle for marriage advice… he’s been divorced 3 times.
I’m not going to listen to my brother-in-law for business advice… he’s started and shut down 5 businesses in 5 years.

Likewise, I wasn’t about to listen to anyone, friends and family included, who have never traded tell me that I can’t become a successful trader.

It is said that you are the average of the five people you spend the most time with. If we want to become successful at trading, we have to associate with successful traders… and we have to simply do what they did to get what they’ve got. We not only need to take on certain new behaviors and attitudes… more importantly we have to stop doing certain activities and stop believing certain things to start heading in the direction we want to go in our trading, or any aspect of our lives for that matter. These are the things that are preventing us from being successful. We have to take away all the “bits that aren’t trader-like” and become the magnificent trader we are destined to be.

This is a simple process of elimination.

Elimination Point 1: Eliminate or limit relationships that do not support you and your goals.

I had to ‘eliminate’ or limit some relationships (as mentioned above, people who never traded before trying to tell me that “nobody makes money trading”), and establish new relationships (those among the trading community who are successful at trading) and follow in the footsteps of the successful. One of my mottos as I alluded to before is: “If you do what successful people do… you will get what successful people got.”

Why spend time with or take advice from someone with literally zero experience in a field they feel qualified to pontificate about?) Just look at all your FaceBook “friends” who think they’re qualified to give advice on immunology, virology, or geopolitics of the Middle East. Turn that noise off…

Elimination Point 2: Eliminate or limit activities that do not move you forward in your goals.

Every day we need to focus on whittling away bad habits and building on good habits… Every day we need to build our trading psychology from “I hope I can trade full time someday” to “By doing what these successful traders are doing I will get what I deserve after my consistent efforts in short order!” We need to change our commitment level from “I’ll find time to fit in learning how to trade when I can” to “I’m committing the time to develop this skill in order to never be dependent on an employer, customers, on the economy, ever again!”

Elimination Point 3: Eliminate all education channels but one: Become an education minimalist. 

One of the blessings of the internet today is the plethora of information available about trading. One of the curses however is you can easily find yourself “spinning plates” jumping from guru to guru, watching video after video, following technique after technique and six months later after spending hour after hour doing all that you find you are no farther ahead in your trading journey than when you started.  (I speak from personal experience!)  I one day decided to simplify: simply look at the trading styles of all my favorite traders and choose one single trading method which I thought would be the best fit for me. My goal was to turn my light bulb into a laser.

IE: a 5-watt light bulb will barely keep a muffin warm. A 5-watt laser will cut through steel. If you focus all of your energy and efforts into one spot, you can literally burn through the barriers that have been holding you back from becoming the trader you want to be, the trader that you need to be.

What one technique do you know, which one mentor or trader do you respect, which one timeframe can you focus on, what one market will you trade over and over until you have the win rate you need to take your trading full time?

Elimination Point 4: Excuses. Eliminate them!

It has been said that “Excuses are reasons wrapped up in a lie.” We can all justify, give a ‘reason’ for why we can’t wake up early, why we can’t stay up late, why we can’t carve out 90 minutes per day to develop our skill, why we can’t commit that first $10K in capital, why we can’t join that trading group… 

You can make Money, or you can make excuses. You can’t do both.

We don’t have the time to do everything in the world that we want. But we do have the time to do everything that we need to do that is important. If you “don’t have time” to trade or develop your skill to the next level then it’s just not “important” enough. If you really want to be a successful trader, (the great) it has to be important enough that it will usurp the time previously committed (or squandered) on other activities (the good).

Take 30 minutes to look at what people, activities, excuses, you need to eliminate or limit, and what habits, routines, and relationships you will add or magnify in your life. Then put those items on the calendar and as the most successful ad campaign in history commands, “Just Do It!”

Trade Well!

Source: https://kiwicrypto.org/2021/06/16/process-of-elimination loaded 27.08.2021

David Glance, The University of Western Australia

Two US technology sites have claimed that the creator of the digital cryptocurrency Bitcoin is an Australian businessman called Dr Craig S Wright. Both Wired and Gizmodo have based their conclusions on documents and emails “leaked” to them by an unnamed hacker who claimed to have worked for Wright. The anonymous source had allegedly first shopped this evidence to a NY Times reporter Nathaniel Popper, but then passed it on to both Wired and Gizmodo after Popper declined to believe the link.

The quest to unmask the enigmatic creator of Bitcoin, who went by the name of Satoshi Nakamoto has led to a range of suspects. A journalist from Newsweek was certain that she had found the man in 2014 when she revealed her suspect as Dorian S Nakamoto, a collector of model trains and a US physicist. He eventually got a lawyer to issue a statement saying he knew nothing about Bitcoin.

This time though, the journalists from both Wired and Gizmodo were sure they had found their man. Wired proclaimed

“The signs point to Craig Steven Wright, a man who […] fits the cryptocurrency creator’s profile in nearly every detail.”.

Except that, he actually doesn’t.

To be clear, there was never any direct evidence presented, nor did Craig Wright ever explicitly claim to be Nakamoto. However, if taken on face value, the evidence was actually reasonably compelling. The problem was, as NY Times reporter Nathaniel Popper explained, Wright’s writing and personality didn’t match that of Nakamoto’s.

That personality has been brought into even more question by the Australian police who raided Wright’s home and business on behalf of the Australian Tax Office (ATO). This was apparently unrelated to the revelations of Wright’s possible link to the founder of Bitcoin.

We actually have specific evidence that Craig Wright is very unlikely to be Satoshi Nakamoto. In 2011, Wright wrote several articles for The Conversation. They were all around the area of cybersecurity but Wright was also a prolific commenter on both his own and others’ articles. The comments are largely spoken with a voice of authority and are largely combative in nature. In 112 comments, Wright mentions Bitcoin only once, at the end of a very long list of financial alternatives to PayPal. He said:

“Bit Coin (Bit Coin) is a digital currency. Bit Coin offers a full peer-to-peer currency solution. P2P transfer of funds is available using methods that can even be untraceable. They’re a ways using this technology to transfer funds that cannot be intercepted or stopped.”

For someone who allegedly invented Bitcoin, he was unable to spell the currency correctly. He didn’t even name it as the first alternative to PayPal. He suggested Google Checkout as the most likely digital payment system to replace PayPal’s dominance in the electronic payment space.

In another comment, Wright derided the idea of imposing a cost into financial transactions. Of course, this is one of the main ideas about how Bitcoin transactions will be verified by Bitcoin miners once all Bitcoins are created.

Wright’s comments always drew on his own publications, his own blog posts and the authority he claimed through his many qualifications.

“In reply to Bruce Baer Arnold
Actually bruce, I have an LLM (with comendation). Hence why I know who little effect it [sic]”

On The Conversation, Wright was pro-capitalist, anti-hacktivist and was pro-corporate. This contrasted starkly with the voice of the Nakamoto who originally posted about Bitcoin on the cryptography mailing list. That Nakamoto had an entirely different voice that was largely patient and respectful and sought feedback not absolute submission. That Nakamoto would have known how to spell Bitcoin (he rarely made spelling mistakes in his writing unlike Wright’s writing that was plagued with them), would have suggested Bitcoin as the first alternative to PayPal and was not a supporter of financial third parties mediating financial transactions.

Wright no doubt got involved with Bitcoin at some stage. He has subsequently started businesses and he may well have been involved in Bitcoin mining. This was unlikely to have been before 2011 however based on his lack of interest and knowledge on the subject at that time. Wright was also active on question and answer site Quora but didn’t mention Bitcoin or cryptocurrencies until 2014.

The journalists writing about Wright seemed to make no attempt to verify the identity or story of the original source of the information supplied them.

The provided documents simply don’t stack up with evidence still available – if they had really looked. Their supplied documents for example, had a reference to a blog post (since deleted allegedly) that doesn’t show up on an archived snapshot of the site. At the time, Wright was not talking about Bitcoin or releasing versions of the software but was learning Linux commands and disputing criticism of a publication on the subject of electronically wiping disks.

As to the identity of the hacker. He could have been Wright himself, seeking notoriety, or simply someone with a grudge against Wright, or a hacker just doing it for the “lulz”. In any event, he, or she, succeeded in pranking a few journalists.

David Glance, Director of UWA Centre for Software Practice, The University of Western Australia

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Jeremiah Johnson, North Carolina State University and Joseph F. DeCarolis, North Carolina State University

Due to their decreasing costs, lithium-ion batteries now dominate a range of applications including electric vehicles, computers and consumer electronics.

You might only think about energy storage when your laptop or cellphone are running out of juice, but utilities can plug bigger versions into the electric grid. And thanks to rapidly declining lithium-ion battery prices, using energy storage to stretch electricity generation capacity.

Based on our research on energy storage costs and performance in North Carolina, and our analysis of the potential role energy storage could play within the coming years, we believe that utilities should prepare for the advent of cheap grid-scale batteries and develop flexible, long-term plans that will save consumers money.

Peak demand is pricey

The amount of electricity consumers use varies according to the time of day and between weekdays and weekends, as well as seasonally and annually as everyone goes about their business.

Those variations can be huge.

For example, the times when consumers use the most electricity in many regions is nearly double the average amount of power they typically consume. Utilities often meet peak demand by building power plants that run on natural gas, due to their lower construction costs and ability to operate when they are needed.

However, it’s expensive and inefficient to build these power plants just to meet demand in those peak hours. It’s like purchasing a large van that you will only use for the three days a year when your brother and his three kids visit.

The grid requires power supplied right when it is needed, and usage varies considerably throughout the day. When grid-connected batteries help supply enough electricity to meet demand, utilities don’t have to build as many power plants and transmission lines.

Given how long this infrastructure lasts and how rapidly battery costs are dropping, utilities now face new long-term planning challenges.

Cheaper batteries

About half of the new generation capacity built in the U.S. annually since 2014 has come from solar, wind or other renewable sources. Natural gas plants make up the much of the rest but in the future, that industry may need to compete with energy storage for market share.

In practice, we can see how the pace of natural gas-fired power plant construction might slow down in response to this new alternative.

So far, utilities have only installed the equivalent of one or two traditional power plants in grid-scale lithium-ion battery projects, all since 2015. But across California, Texas, the Midwest and New England, these devices are benefiting the overall grid by improving operations and bridging gaps when consumers need more power than usual.

Based on our own experience tracking lithium-ion battery costs, we see the potential for these batteries to be deployed at a far larger scale and disrupt the energy business.

When we were given approximately one year to conduct a study on the benefits and costs of energy storage in North Carolina, keeping up with the pace of technological advances and increasing affordability was a struggle.

Projected battery costs changed so significantly from the beginning to the end of our project that we found ourselves rushing at the end to update our analysis.

Once utilities can easily take advantage of these huge batteries, they will not need as much new power-generation capacity to meet peak demand.

Utility planning

Even before batteries could be used for large-scale energy storage, it was hard for utilities to make long-term plans due to uncertainty about what to expect in the future.

For example, most energy experts did not anticipate the dramatic decline in natural gas prices due to the spread of hydraulic fracturing, or fracking, starting about a decade ago – or the incentive that it would provide utilities to phase out coal-fired power plants.

In recent years, solar energy and wind power costs have dropped far faster than expected, also displacing coal – and in some cases natural gas – as a source of energy for electricity generation.

Something we learned during our storage study is illustrative.

We found that lithium ion batteries at 2019 prices were a bit too expensive in North Carolina to compete with natural gas peaker plants – the natural gas plants used occasionally when electricity demand spikes. However, when we modeled projected 2030 battery prices, energy storage proved to be the more cost-effective option.

Federal, state and even some local policies are another wild card. For example, Democratic lawmakers have outlined the Green New Deal, an ambitious plan that could rapidly address climate change and income inequality at the same time.

And no matter what happens in Congress, the increasingly frequent bouts of extreme weather hitting the U.S. are also expensive for utilities. Droughts reduce hydropower output and heatwaves make electricity usage spike.

The future

Several utilities are already investing in energy storage.

California utility Pacific Gas & Electric, for example, got permission from regulators to build a massive 567.5 megawatt energy-storage battery system near San Francisco, although the utility’s bankruptcy could complicate the project.

Hawaiian Electric Company is seeking approval for projects that would establish several hundred megawatts of energy storage across the islands. And Arizona Public Service and Puerto Rico Electric Power Authority are looking into storage options as well.

We believe these and other decisions will reverberate for decades to come.
If utilities miscalculate and spend billions on power plants it turns out they won’t need instead of investing in energy storage, their customers could pay more than they should to keep the lights through the middle of this century.

Jeremiah Johnson, Associate Professor of Environmental Engineering, North Carolina State University and Joseph F. DeCarolis, Associate Professor of Environmental Engineering, North Carolina State University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Bitcoin-related investment scams have already exceeded $18.5 million, an increase of 44% compared to the total losses of nearly $12.8 million in 2020.

Investment scams in Australia cost investors more than 70 million Australian dollars ($50.5 million) in the first six months of 2021, with crypto scams contributing to more than 50% of the losses, according to Scamwatch data. 

As reported by the Australian Competition and Consumer Commission (ACCC), Scamwatch data shows a 53.4% increase in investment scam-related reports, which is set to exceed $101 million by the end of this year.

Based on the 4,763 reports received in 2021 alone, ACCC deputy chair Delia Rickard stated that 2,240 of the complaints were related to cryptocurrency scams and mainly attributed to Bitcoin.

Rickard said that scammers lure investors into using fake trading platforms with celebrity endorsements that promise high profitability. While the trading platforms initially allow investors to withdraw some profits using other victims’ assets, the scammers eventually stop unwary investors to withdraw their investments. “Be wary of investment opportunities with low risk and high returns. If something sounds too good to be true, it probably is,” she added.

Bitcoin-related investment scams in Australia have already exceeded $18.5 million, a steep increase of 44% compared to the total losses of nearly $12.8 million in 2020.

Other types of scams plaguing Australian investors included Ponzi scams, imposter bond scams and romance baiting scams.

On Wednesday, the Australian Securities and Investments Commission (ASIC) asked Australian citizens to stop investing in cryptocurrency through unlicensed entities.

The regulator has advised investors to choose financial institutions that hold an Australian Financial Services license. As per the reports received from investors, the ASIC noted that most of the losses related to crypto investments were due to “excessive leverage, platform outages, or unfair liquidations.”

Source: https://kiwicrypto.org/2021/08/25/australians-lost-over-25-million-to-bogus-crypto-investments loaded 27.08.2021

David Glance, The University of Western Australia

On July 19, Doctor Nefario, founder of the Global Bitcoin Stock Exchange, arrived at Seattle airport and was asked if he had enough money to cover his stay in the US.

He replied that he did, but that it was in Bitcoin, an electronic cryptographic currency.

Unfortunately, not only did the Customs and Border Protection Authority not know what Bitcoin was, they didn’t accept it as a valid currency and so refused him entry.

This ignorance of Bitcoin is shared by many, even though there is currently around US$63.6 million of Bitcoin in circulation (versus approximately US$950 billion in hard cash).

What is Bitcoin?

Bitcoin is a “cryptographic currency” that was first proposed in 2008 by a programmer using the supposed alias Satoshi Nakamoto.

In early 2009, Nakamoto released software that would implement the creation, sending and receiving Bitcoins over a peer-to-peer network.

His main motivation was to avoid the need for “financial institutions serving as trusted third parties to process electronic payments” such as a bank or PayPal.

The scheme allowed the receiver to be sure the Bitcoin received was genuine and hadn’t been sent elsewhere.

Nakamoto also thought Bitcoins would be largely anonymous.

Although theoretically possible, the exact nature of this anonymity is still being debated and it’s clear that, to achieve it, users need to take a series of precautions.

Other side of the coin

It was the anonymity of Bitcoin and its relation to an illicit online market place called Silk Road that really brought Bitcoins to the public’s and US Government’s attention.

Silk Road can be used, among other things, to buy and sell drugs and other contraband.

This led two US Senators to demand Silk Road be [shut down](http://en.wikipedia.org/wiki/Silk_Road_(bitcoin) and Bitcoin investigated.

Further concern was expressed that Bitcoins could be used for money-laundering (although, given the relatively illiquid nature of the currency, this would be on a relatively small scale).

The fact Bitcoin was adopted by organisations such as Wikileaks and LulzSec would not have surprised anyone.

While the US authorities could bring pressure to bear on financial institutions such as Visa, Mastercard or PayPal to stop payments going to Wikileaks, there is no central authority in charge of Bitcoin, making it very much more difficult to control.

Having said that, it’s not clear how much funding Wikileaks receives in the form of Bitcoins.

[youtube https://www.youtube.com/watch?v=Um63OQz3bjo?rel=0]

Using Bitcoins

You can get Bitcoins in two ways. The first, and most difficult, is through what is called Bitcoin mining.

This involves using computers to perform some of the cryptographic operations involved in making the Bitcoin network work. If you are the first to solve the calculations, you are rewarded with a certain number of Bitcoins.

A simpler way of getting Bitcoins is to buy them through one of the many Bitcoin exchanges.

One such exchange is Mt Gox, which allows you to buy Bitcoins using funds transfers of ordinary cash and e-Cash.

Once you’ve added funds to your account, buying Bitcoins is like buying shares: you can place an order to buy at the market rate or at a preferred rate.

Once you have the Bitcoins, you can leave them in your account on the exchange. You can also transfer them to a digital wallet on your computer or to an online e-wallet service.

You can then use your Bitcoins to buy goods and services ranging from books to website development to legal services.

It seems clear the majority of Bitcoin is being bought and sold for investment purposes. This is another underlying cause for some of the fluctuation in rates that have beset the currency, which has seen its value go from US$1 to US $30 USD at its peak. It is currently around US $10.

Safety concerns

The underlying system of transferring Bitcoin may be secure enough, but Bitcoin suffers from a number of vulnerabilities that have led to widely-publicised problems in the Bitcoin universe.

One of the first Bitcoin incidents occurred in June 2011 when Mt Gox was hacked and the user database of 61,000 users was taken.

The hackers used those usernames and passwords to transfer 25,000 Bitcoins – approximately US$225,000 – to an account.

From there, they then tried to sell them on, but succeeded in only removing about $1,000-worth because of the daily limit imposed by Mt Gox.

As a consequence of the hack, the exchange rate for Bitcoin on Mt Gox plummeted before climbing back to the pre-hack level.

The second event was when another Bitcoin service, MyBitcoin.com, was hacked resulting in the site closing down along with all of the account holders’ Bitcoins.

Approximately US$2 million of Bitcoin (valuation at the time) was lost, with one account holder who helped promote the site to family and friends losing about $250,000.

And then there was Bitomat, another Bitcoin site.

Based in Poland, a technical error on the part of the operator caused the server to crash, losing access to the Bitcoins in the process.

Mt Gox has recently taken over the accounts of Bitomat and offered to refund the lost coins to those users to help ensure the continuation of Bitcoin.

Future of Bitcoin

The “idea” of Bitcoin clearly has resonance with certain groups of people.

An electronic currency free from mediation and interference of governments and corporations, and which can be anonymous, is ideal for groups operating on the fringes of society – activists (cyber or otherwise), libertarians and, yes, criminals.

Whether the implementation of Bitcoin as it currently stands survives or it’s ultimately replaced by a variant will depend on how many other things go wrong, and also on the development of more robust and easy to use software.

Certainly, the recent Bitcoin events are growing pains in comparison to the fall out of the Global Financial Crisis and what countries, companies and individuals have lost as a result of a largely self-regulated financial industry.

Ironically, Bitcoin may end up being more resistant to national and corporate manipulation and possibly more robust as a result.

Still, if you’re going to use Bitcoins, do so carefully and with small amounts of money that you can afford to lose.

A version of this article appeared on David Glance’s blog Tech Muse.

Do you use Bitcoin? Would you? Leave your comments below.

David Glance, Director, Centre for Software Practice, The University of Western Australia

This article is republished from The Conversation under a Creative Commons license. Read the original article.

We built an Icon 4 house in 2002 with the company Dennert from Schlüsselfeld, Germany.

We were the first to get the Fighter 315-P Exhaust Air Heat Pump (EAHP) from Nibe.

Now, 19 years later, I have done the work and created a very detailed evaluation of my heating costs.

The spreadsheet with the complete data is here:

Year/Position	Household energy ET kWh	Household energy ET €/kWh net excl. EEG etc. (Tarif 700)	Fees net e. g. EEG etc.	Basic price net	Gross amount ET with 19 % German VAT, EEG etc. and basic price	Household energy tariff ET Ct/kWh gross with 19 % German VAT, EEG etc. and basic price	Price increase to 2003	Heating HT kWh	Heating tariff HT €/kWh net excl. EEG etc. (Tarif 730)	Fees net e. g. EEG etc.	Basic price net	Gross amount ET with 19 % German VAT, EEG etc. and basic price	Energy price HT Ct/kWh gross with 19 % German VAT, EEG etc. and basic price	Price increase to 2003	Heating NT kWh	Heating tariff NT €/kWh net excl. EEG etc. (Tarif 732)	Fees net e. g. EEG etc.	Basic price net	Gross amount NT with 19 % German VAT, EEG etc. and basic price	Energy price NT Ct/kWh gross with 19 % German VAT, EEG etc. and basic price	Price increase to 2003	Heating consumption kWh	Total heating costs gross with 19 % German VAT, EEG etc. and basic price	Medium heating energy tariff from HT and NT Ct/kWh gross with 19 % German VAT, EEG etc. and basic price	Total energy consumption kWh	Energy payment gross	Remark	Water cbm	Water costs gross	Water price Ct/cbm	Price increase to 2003	Garbage gross	Total housing costs gross	Monthly housing costs gross	Price increase to 2003
2002	703	0,119000	0,000000	15,08	117,50	0,167137	0,00	2463	0,086600	0,000000	15,08	271,77	0,110340	0,00	1650	0,062600	0,000000	15,08	140,86	0,085370	0,00	4113	412,63	0,097854895	4816	503,31	No complete year	41	152,61	3,72	0,00	29,40	685,32	228,44	0,00
2003	3032	0,093950	0,027900	73,2	526,75	0,173731	0,00	6851	0,063700	0,027900	59,04	817,04	0,119259	0,00	3766	0,039800	0,027900	59,04	373,66	0,099219	0,00	10617	1190,70	0,109238924	13649	1590,09	16 % VAT	197	749,75	3,81	0,00	176,40	2516,24	209,69	0,00
2004	2846	0,097800	0,031280	73,2	524,27	0,184212	6,03	4909	0,070200	0,031280	21,87	618,84	0,126063	5,70	3000	0,047300	0,031280	21,87	306,56	0,102185	2,99	7909	925,40	0,114124024	10755	1374,19	16 % VAT	137	525,4	3,84	0,77	176,40	2075,99	173,00	-17,50
2005	3280	0,097640	0,030060	73,2	585,55	0,178520	2,76	4549	0,070700	0,030060	21,87	571,47	0,125626	5,34	3400	0,047800	0,030060	21,87	341,05	0,100308	1,10	7949	912,52	0,112966702	11229	1463,59	16 % VAT	169	725,71	4,29	12,83	178,20	2367,5	197,29	-5,91
2006	3313	0,107490	0,030810	73,2	632,35	0,190870	9,87	4270	0,075550	0,030810	21,87	566,47	0,132663	11,24	4082	0,052650	0,030810	21,87	431,44	0,105693	6,53	8352	997,91	0,119178171	11665	1601,96		163	700,52	4,30	12,92	178,20	2480,68	206,72	-1,41
2007	3090	0,107490	0,030810	73,2	595,65	0,192767	10,96	3429	0,078200	0,030810	49,20	503,36	0,146796	23,09	3103	0,055300	0,030810	49,2	376,52	0,121339	22,29	6532	879,88	0,134067679	9622	1475,53		148	637,53	4,31	13,18	178,20	2291,26	190,94	-8,94
2008	3422	0,118900	0,034800	73,2	713,00	0,208358	19,93	4362	0,094300	0,034800	49,20	728,68	0,167051	40,07	4078	0,065000	0,034800	49,2	542,86	0,133119	34,17	8440	1271,54	0,150085161	11862	1984,54		186	797,1	4,29	12,60	178,20	2959,84	246,65	17,63
2009	3080	0,130800	0,039030	75,6	712,42	0,231307	33,14	4608	0,114300	0,039030	49,20	899,34	0,195168	63,65	4398	0,085000	0,039030	49,2	707,67	0,160908	62,18	9006	1607,01	0,178038272	12086	1674,63	Vattenfall 1.5.2009 bis 30.04.2010 gesamt 760,10	160	710,32	4,44	16,65	178,20	2563,15	213,60	1,86
2010	3000	0,130800	0,039030	75,6	696,26	0,232086	33,59	4990	0,112650	0,039030	27,42	933,32	0,187038	56,83	4781	0,083350	0,039030	27,42	728,90	0,152457	53,66	9771	1662,22	0,169747664	12771	1934,13	Vattenfall 1.5.2009 bis 30.04.2010 gesamt 760,10, 3000 für ET geschätzt	214	944,64	4,41	15,99	117,90	2996,67	249,72	19,09
2011	3247	0,124700	0,056100	73,2	785,71	0,241979	39,28	5540	0,106700	0,056100	28,50	1107,19	0,199854	67,58	5091	0,072100	0,056100	28,5	810,59	0,159220	60,47	10631	1917,78	0,179536799	13878	2696,08		199	847,61	4,26	11,92	126,90	3670,59	305,88	45,88
2012	3234	0,127105	0,057950	73,2	799,28	0,247151	42,26	4159	0,105605	0,057950	28,50	843,38	0,202785	70,04	3910	0,142010	0,057950	28,5	964,31	0,246626	148,57	8069	1807,69	0,224705684	11303	2278,28		155	663,75	4,28	12,52	135,65	3077,68	256,47	22,31
2013	4064	0,133380	0,080320	73,2	1120,60	0,275737	58,71	5509	0,093980	0,080320	28,50	1176,58	0,213573	79,08	5034	0,064880	0,080320	28,5	903,73	0,179525	80,94	10543	2080,31	0,196549238	14607	3200,91		167	713,89	4,27	12,32	157,18	4071,98	339,33	61,83
2014	2961	0,132010	0,088190	73,2	863,00	0,291456	67,76	2860	0,089510	0,088190	28,50	638,70	0,223321	87,26	2878	0,061910	0,088190	28,5	547,98	0,190403	91,90	5738	1186,68	0,206862308	8699	2049,67		137	708,85	5,17	35,95	146,18	2904,7	242,06	15,44
2015	3372	0,129410	0,086560	73,2	953,73	0,282837	62,80	4345	0,086930	0,086560	28,50	930,95	0,214259	79,66	4271	0,059290	0,086560	28,5	775,20	0,181502	82,93	8616	1706,15	0,197880443	11988	2659,88		139	718,96	5,17	35,91	151,68	3530,52	294,21	40,31
2016	3788	0,128570	0,092670	73,2	1084,40	0,286271	64,78	3426	0,093000	0,092670	28,50	790,88	0,230847	93,57	2972	0,073960	0,092670	28,5	623,23	0,209701	111,35	6398	1414,11	0,220273903	10186	2498,50		150	857,09	5,71	50,14	174,44	3530,03	294,17	40,29
2017	2969	0,139800	0,097340	78	930,66	0,313460	80,43	4299	0,099400	0,097340	54,00	1070,74	0,249068	108,85	3858	0,082660	0,097340	54	890,64	0,230856	132,67	8157	1961,39	0,23996228	11126	2892,04		119	683,27	5,74	50,87	179,90	3755,21	312,93	49,24
2018	3043	0,141000	0,096050	78	951,22	0,312592	79,93	3596	0,100600	0,096050	54,00	905,77	0,251883	111,21	3411	0,083900	0,096050	54	794,69	0,232980	134,81	7007	1700,47	0,242431453	10050	2651,66		122	700,09	5,74	50,78	193,40	3545,15	295,43	40,89
2019	3346	0,148800	0,094610	86,4	1072,01	0,320386	84,41	3843	0,107900	0,094610	58,20	995,37	0,259009	117,18	3390	0,093700	0,094610	58,2	828,92	0,244519	146,44	7233	1824,29	0,251763873	10579	2896,30		132	944,86	7,16	88,08	174,30	4015,46	334,62	59,58
2020	4107	0,153030	0,098130	86,4	1330,32	0,323915	86,45	4014	0,118890	0,099230	86,40	1144,70	0,285177	139,12	3527	0,102560	0,099230	86,4	949,75	0,269281	171,40	7541	2094,46	0,277229185	11648	3309,80	6 months with 16 % VAT	180	1254,67	6,97	83,15	221,10	4785,57	398,80	90,19
Total	59897							82022							70600							152622			207703	40231,78		2915	14036,62			3051,83	57138,22	3174,35

Since the heat pump could break at any moment, we are currently looking into a successor solution.

Unfortunately, I can’t find a good approach to evaluate the current system, because I can’t interpret the data in the heat demand certificate and the determined data of the electricity consumption.

Could someone possibly help me to come to an assessment?

The following questions would be relevant for me:

Does the electricity consumption determined under real conditions correspond to the calculated energy demand from the heat demand certificate?

Can I use the original certificate after almost 20 years or do I need to have a new heat demand certificate prepared?

Is an exhaust air heat pump still recommended in 2021? We are also open to other, modern solutions.

Kerry Rippy, National Renewable Energy Laboratory

In recent decades the cost of wind and solar power generation has dropped dramatically. This is one reason that the U.S. Department of Energy projects that renewable energy will be the fastest-growing U.S. energy source through 2050.

However, it’s still relatively expensive to store energy. And since renewable energy generation isn’t available all the time – it happens when the wind blows or the sun shines – storage is essential.

As a researcher at the National Renewable Energy Laboratory, I work with the federal government and private industry to develop renewable energy storage technologies. In a recent report, researchers at NREL estimated that the potential exists to increase U.S. renewable energy storage capacity by as much as 3,000% percent by 2050.

Here are three emerging technologies that could help make this happen.

Longer charges

From alkaline batteries for small electronics to lithium-ion batteries for cars and laptops, most people already use batteries in many aspects of their daily lives. But there is still lots of room for growth.

For example, high-capacity batteries with long discharge times – up to 10 hours – could be valuable for storing solar power at night or increasing the range of electric vehicles. Right now there are very few such batteries in use. However, according to recent projections, upwards of 100 gigawatts’ worth of these batteries will likely be installed by 2050. For comparison, that’s 50 times the generating capacity of Hoover Dam. This could have a major impact on the viability of renewable energy.

One of the biggest obstacles is limited supplies of lithium and cobalt, which currently are essential for making lightweight, powerful batteries. According to some estimates, around 10% of the world’s lithium and nearly all of the world’s cobalt reserves will be depleted by 2050.

Furthermore, nearly 70% of the world’s cobalt is mined in the Congo, under conditions that have long been documented as inhumane.

Scientists are working to develop techniques for recycling lithium and cobalt batteries, and to design batteries based on other materials. Tesla plans to produce cobalt-free batteries within the next few years. Others aim to replace lithium with sodium, which has properties very similar to lithium’s but is much more abundant.

Safer batteries

Another priority is to make batteries safer. One area for improvement is electrolytes – the medium, often liquid, that allows an electric charge to flow from the battery’s anode, or negative terminal, to the cathode, or positive terminal.

When a battery is in use, charged particles in the electrolyte move around to balance out the charge of the electricity flowing out of the battery. Electrolytes often contain flammable materials. If they leak, the battery can overheat and catch fire or melt.

Scientists are developing solid electrolytes, which would make batteries more robust. It is much harder for particles to move around through solids than through liquids, but encouraging lab-scale results suggest that these batteries could be ready for use in electric vehicles in the coming years, with target dates for commercialization as early as 2026.

While solid-state batteries would be well suited for consumer electronics and electric vehicles, for large-scale energy storage, scientists are pursuing all-liquid designs called flow batteries.

In these devices both the electrolyte and the electrodes are liquids. This allows for super-fast charging and makes it easy to make really big batteries. Currently these systems are very expensive, but research continues to bring down the price.

Storing sunlight as heat

Other renewable energy storage solutions cost less than batteries in some cases. For example, concentrated solar power plants use mirrors to concentrate sunlight, which heats up hundreds or thousands of tons of salt until it melts. This molten salt then is used to drive an electric generator, much as coal or nuclear power is used to heat steam and drive a generator in traditional plants.

These heated materials can also be stored to produce electricity when it is cloudy, or even at night. This approach allows concentrated solar power to work around the clock.

This idea could be adapted for use with nonsolar power generation technologies. For example, electricity made with wind power could be used to heat salt for use later when it isn’t windy.

Concentrating solar power is still relatively expensive. To compete with other forms of energy generation and storage, it needs to become more efficient. One way to achieve this is to increase the temperature the salt is heated to, enabling more efficient electricity production. Unfortunately, the salts currently in use aren’t stable at high temperatures. Researchers are working to develop new salts or other materials that can withstand temperatures as high as 1,300 degrees Fahrenheit (705 C).

One leading idea for how to reach higher temperature involves heating up sand instead of salt, which can withstand the higher temperature. The sand would then be moved with conveyor belts from the heating point to storage. The Department of Energy recently announced funding for a pilot concentrated solar power plant based on this concept.

Advanced renewable fuels

Batteries are useful for short-term energy storage, and concentrated solar power plants could help stabilize the electric grid. However, utilities also need to store a lot of energy for indefinite amounts of time. This is a role for renewable fuels like hydrogen and ammonia. Utilities would store energy in these fuels by producing them with surplus power, when wind turbines and solar panels are generating more electricity than the utilities’ customers need.

Hydrogen and ammonia contain more energy per pound than batteries, so they work where batteries don’t. For example, they could be used for shipping heavy loads and running heavy equipment, and for rocket fuel.

Today these fuels are mostly made from natural gas or other nonrenewable fossil fuels via extremely inefficient reactions. While we think of it as a green fuel, most hydrogen gas today is made from natural gas.

Scientists are looking for ways to produce hydrogen and other fuels using renewable electricity. For example, it is possible to make hydrogen fuel by splitting water molecules using electricity. The key challenge is optimizing the process to make it efficient and economical. The potential payoff is enormous: inexhaustible, completely renewable energy.

[Understand new developments in science, health and technology, each week. Subscribe to The Conversation’s science newsletter.]

Kerry Rippy, Researcher, National Renewable Energy Laboratory

This article is republished from The Conversation under a Creative Commons license. Read the original article.

The volume of leveraged cryptocurrency futures trading has consistently set new highs throughout 2021. Through April, when the market was up, that meant big profits for traders. But when prices dropped back down again in the Spring, it was a different story.

Borrowing money is inherently risky no matter how talented you are, no matter how the market appears to be trending. So if you’re considering margin trading, it’s important to understand what you’re doing, and what you’re risking to do it.

What is margin trading?

Margin trading, put simply, is trading on borrowed money.

In order to receive a loan, you first need collateral (the “margin”). Think of it like a deposit, controlled by your exchange until you repay your loan. Then, according to the rules of the exchange —or the laws of the nation in which it operates — you’ll be able to borrow some multiple of the amount of capital you’ve locked in. The ratio of what you put in versus what you take out is called leverage. For example, if your margin — your collateral — is equal to the amount of money you borrow, you’re said to be leveraged at 2x. If it’s 20%, 5x. And so on.

In order to open leveraged trades on traditional markets, traders have to interact with brokers at certain times of the day. In the cryptocurrency industry, things are much simpler. Anyone can take advantage of centralized or decentralized lending platforms, which operate 24/7 and make the process simple.

 With leverage, potential profits are much greater. On the other hand, potential losses are also much greater.

How to open leveraged positions?

Margin trading positions can be divided into two categories:

• Long. A trader buys an asset in hopes of selling it at a higher price in the future;
• Short. The exact opposite. A trader borrows an asset and immediately sells it, in hopes of buying it back at a lower price in the future.

In both cases, the trader earns profit from the difference in the price of the asset at the moment of opening and closing the position. In the first case, the difference must be positive (price increase) in order to profit. In the second case, it must be negative (price decrease).

For example, let’s say you expect Bitcoin’s value will rise in the near future. To benefit from this, you open a long position with 10x leverage and a margin of $1,000. Your position will then amount to $10,000. A 20% rise in the price of BTC will yield $2,000 in profits (minus any associated fees). The return on equity (ROE) of the position — the amount of profit versus the margin — will be 100%. Without leverage, your profit would only be $200 at an ROE of 20%.

Isolated margin and Cross-margin

A number of major crypto exchanges have two types of margin: isolated and cross-margin. In the first case, a fixed margin is allocated as collateral for a certain trading position; that is, it’s isolated from the entire balance on the trader’s margin account, and applies exclusively to one trading pair. In the second case, the margin applies to all of the trader’s positions, and the leveraged funds are counted against the total available margin balance. 

The advantage of the isolated margin is that it limits the maximum loss on a trade (if there are no other limiting conditions, such as a stop loss). Cross-margin allows you to hold several positions at once, which is handy, but the risks apply to your entire wallet. Thus, if even just one position meets the liquidation conditions, all other positions are also automatically closed.

Liquidation 

Here’s the thing: everyone likes profits, but what if the market goes in the opposite direction of what you predicted? What happens then?

Well, if your positions start to take a dive, and you’re verging on not being able to pay back your loan, your exchange will do what they need to to protect themselves. That means liquidating. 

Liquidation is when an exchange automatically sells off one or several of your positions, in order to ensure that the margin is repaid in full.

Let’s come back to the example from above. Imagine that you open a long position with $1,000 and 10x leverage, but the price of Bitcoin suddenly plunges 10%. That’d put you down $1,000, the value of your margin. If BTC continues to fall you’ll dip below the margin. Now it’s no longer your money, but the exchange’s money that’s on the hook.and

This is where the liquidation mechanism comes in. Before you run out of margin, the exchange automatically closes your long position; that is, it sells the leveraged Bitcoin at market price, recouping the loan plus a liquidation fee.

The threshold at which a position will be liquidated is called the liquidation price. There is no need to calculate it manually — exchanges like BitMEX or Binance have built-in calculators to provide relevant price levels. 

Another important point: the greater the leverage, the closer the liquidation price is to the market price at the time of purchasing. For this reason, it is recommended for beginners to open positions with leverage no higher than 5x. 

Now, using the same example, let’s look at how liquidation would affect your balance with different types of margin.

In the case of cross-margin, the extra money in your account (in addition to the $1,000 to secure the open position) would allow the liquidation price to be “pushed back,” because that money would automatically be used to secure your position. If the liquidation price is finally met, you’d lose all funds across your margin account.

With isolated margin, the maximum loss would be limited to $1,000. With the high volatility of the crypto market, minimizing risk using isolated margin allows you to keep some trading capital even in the most unpredictable situations.

Best practices for leveraged trading

In summary, the main risks associated with margin trading are:

• Greater-than-usual losses, in proportion to the amount leveraged
• High probability of a complete loss of funds through liquidation.
• Potential for unlimited losses through short selling.

Margin trading is dangerous; it requires effective risk management. No more than 3-5% of your capital should be allocated to any given trade. However, thanks to the isolated margin at such a limit, your profit can be measured in tens of percent on a single trade.

In general, your amount of leverage should be chosen based on where you want to place your stop loss order prior to opening a position. As a reminder, this is a special kind of order that cuts off your potential losses before you get liquidated.

Finally, use isolated margin to diversify your portfolio. It allows you to trade several assets at once — Bitcoin and altcoins — by allocating small portions of your capital to different trading pairs. Then, to be extra safe, you could keep the rest of your money in stablecoins, in case of a market drawdown.

Conclusion

Leveraged trading is risky, especially in the volatile world of cryptocurrencies. In skillful hands, it can be incredibly profitable. But without proper training and planning, it can lead to devastating losses.

Be careful, do diligent research, follow the best practices described in this article, and never bet more than you’re willing to give up. Margin trading is exciting, but it’s no game.

Below are the Top 2 Margin Trading Exchanges:

Binance is the largest, safest and most cost-effective Cryptocurrency Exchange in the world. Binance has super low trading fees, easy deposit and withdrawal from credit card and bank direct deposits.
click here to sign up (10% discount).

FTX Derivatives Exchange, built by traders, for traders. I recently discovered FTX and now use it daily for day trading crypto leveraged tokens and USA Stocks like Tesla and Apple.
click here to sign up at FTX

Source: https://kiwicrypto.org/2021/08/25/risky-margin-trading-do-it-properly loaded 27.08.2021