What is Cardano (ADA)? How to Buy ADA

Cardano (ADA) is a cryptocurrency that lets its owners help operate the network and vote on changes to it. Developers are able to make use of the Cardano blockchain to write smart contracts and decentralized applications (dApps). ADA crypto is required to run programs like dApps. Cardano boasts a large library of academic research that its founders point to as a factor that makes the blockchain unique. Cardano’s creators also hope that the platform will be used by “innovators and visionaries” to create positive change in the world. This article serves as a cryptocurrency guide for ADA.

What is ADA Cryptocurrency?

In 2017, Cardano was created by two technologists named Jeremy Wood and Charles Hoskinson. Hoskinson co-founded Ethereum (ETH), the second-largest cryptocurrency by market cap. It makes sense, then, that Cardano and Ethereum have a lot of similarities. Namely, both networks are primarily used for programming based on smart contract technology.

A smart contract is a program that initiates a digital transfer between parties when specific conditions have been met. It’s not unlike a regular, written paper contract. The big difference lies in the fact that smart contracts require no third-party intermediary and can be programmed to execute automatically when the right conditions are met.

Cardano claims to be different by focusing its design on research and academics, believing this could help accelerate its adoption. Cardano is written in a sophisticated programming language known as Haskell, which is also used by banks and governments.

The company that built Cardano, IOHK, has a strong reputation in the world of academia. IOHK has published over 60 academic research papers (as of 2020) describing its technology. Research can be found on the official website of Cardano , where the team also publishes blogs posts and videos to educate users.

ADA Crypto Proof-of-Stake Blockchain

Cardano (ADA) is a proof-of-stake blockchain. This differs from Bitcoin and most mineable cryptocurrencies which use the proof-of-work consensus method. On the Bitcoin network, miners solve complex mathematical problems to process transactions (“work”) in a race to solve the next block and receive the rewards that it yields. Mining difficulty is constantly increasing and there is a limited amount of bitcoin that can ever be created.

On Cardano, things work a little differently. All of the ADA coins that will ever exist have already been created. ADA was a “pre-mined” coin, meaning there’s no work to be done to mine additional coins.

Instead, ADA holders can participate in the Cardano network and “stake” their coins, effectively locking them up for a period of time, in hopes of receiving the next reward in a lottery-like format. The more “stake” one has in ADA, the greater their chances of receiving winning the next block.

Proof-of-stake blockchains have a few advantages over proof-of-work blockchains. Perhaps most notably, they use far less energy. Mining requires servers to be running at all times, consuming a huge amount of electricity. There is a constant “search” for more bitcoin. Proof-of-stake removes the search aspect, since the coins already exist.

What is Cardano ADA Used For?

Like many other cryptographic tokens and coins, ADA cryptocurrency can be used as a medium of exchange. People can send each other ADA through digital wallets for whatever purposes they like. ADA can also be used for speculative purposes. Traders can try to buy coins when the price is low and sell them after the price rises.

When asking the question “what is Cardano cryptocurrency,” however, it’s important to look at the specific use case for ADA on the Cardano blockchain. The ADA crypto is used as fuel to run programs, much like ETH is used as “gas” on Ethereum.

Ethereum and Cardano are both smart contract platforms. Because smart contracts represent decentralized agreements that execute themselves when certain conditions are met, there is no intermediary (like a bank or a notary) to facilitate the transaction. Instead of paying a fee to a third-party provider, users on these blockchains must use the appropriate crypto token as a tool to conduct business, run programs, play games, etc.

Some examples of projects that have been created on the platform include a workplace incentive platform and an enterprise traceability solution.

Is Cardano ADA a Good Investment?

Ultimately, the question of whether Cardano ADA is a good investment is one the individual investor must answer for themselves.

Investing in any cryptocurrency like ADA crypto is generally seen as a speculative investment that comes with high risk and lots of volatility.

Someone with a high risk tolerance who doesn’t mind the potential losses might see ADA as a good investment, if they’re looking for potentially quick profits without a dividend.

Like all cryptocurrencies, ADA doesn’t yield any interest or pay a dividend. Some investors assert that based on this metric alone, the entire crypto asset class doesn’t qualify as an investment. Altcoins like ADA also aren’t accepted by many online merchants, so the only way to profit is to buy low, sell high, and take profits in bitcoin or a stablecoin like USDT. (Here are 6 things to know before investing in crypto.)

On the other hand, when considering any of the other hundreds of altcoins, by some metrics Cardano (ADA) might be considered a better choice than many. The coin currently sits in the 6th spot for largest cryptocurrencies by market cap, meaning there are only 5 cryptos in the world larger than ADA. Cardano has remained in the top ten cryptocurrencies spot since its inception in 2017.

Investors who believe in technology that enables decentralized applications might find ADA to be a more appealing investment than other types of cryptocurrency. And crypto enthusiasts who believe in the future of proof-of-stake blockchains might also decide to hold ADA.

What is the Price of Cardano?

At the time of writing, one ADA coin is worth about $0.31. To reach a valuation of $1 would imply a rise of roughly 220%. Such moves are not unheard of in the cryptocurrency space. But they tend to take some time, unless there is a big news item that causes people to rush into a particular digital asset.

In the case of ADA crypto specifically, the one factor most likely to drive higher prices might be use of the platform itself. That’s because people need ADA tokens to run decentralized applications (dApps) on the Cardano network. So, the more people use the network, the more demand for tokens increases, and the price of ADA could, in theory, keep rising.

This is the dynamic thought to be behind the rise of Ether (ETH), the token of the Ethereum network, which is used for much the same purpose. ETH has soared from under $10 in 2016 to over $1,100 at the time of writing.

How to Buy ADA Cryptocurrency

Now that we’ve answered the question “what is Cardano cryptocurrency,” let’s quickly run down how to buy ADA.

Buying ADA is not unlike buying any other cryptocurrency. ADA is traded on many of the prominent crypto exchanges. Binance, Upbit, and Huobi all trade ADA, for example. There are often both ADA/BTC and ADA/USDT trading pairs available, meaning users can exchange either bitcoin or the Tether stablecoin for ADA.

To buy ADA, a user will need to take the following steps:

1. Create an account on an exchange that trades ADA.
2. Deposit some BTC or USDT to your wallet.
3. Exchange your BTC or USDT for ADA.

After the third step, you will hold ADA in your exchange-hosted wallet. From there, users can either hold coins, send them to another secure cryptocurrency wallet, or trade them for a different cryptocurrency.

The Takeaway

Cardano ADA is a proof-of-stake cryptocurrency that currently ranks as the 6th largest cryptocurrency by market cap. Developed in 2017, the Cardano platform was intended to be used by “innovators and visionaries” to create positive change in the world, according to its founders.

Cardano is just one of many cryptocurrencies investors might explore as they look to investing in this relatively new digital asset class. Others include Ethereum, Bitcoin, Litecoin, and more.

Buying cryptocurrency with SoFi Invest® is simple—and the app safely stores your crypto investments for you.

Find out how to get started with SoFi Invest today.



SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . The umbrella term “SoFi Invest” refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).

2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.

3) Digital Assets—The Digital Assets platform is owned by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.

For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, http://www.sofi.com/legal.

Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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Source: sofi.com

Guide to Investing in Ethereum

Cryptocurrency may be the new kid on the block in terms of investing, but some cryptos are rapidly gaining value. And while Bitcoin may get the lion’s share of attention among cryptocurrencies, other alternative assets, like Ethereum, are hot on its heels. For aspiring crypto investors, one of the first questions that comes to mind is how to buy Ethereum.

Before learning how to invest in Ethereum, however, it’s important to get to know the history, attributes, and other details of this popular cryptocurrency. In this article, we’ll address:

•  What is Ethereum?
•  How to buy Ethereum
•  What Investors Should Keep in Mind

What is Ethereum?

Ethereum is a blockchain based platform used to make peer-to-peer transactions and to build applications. It may be easier to think of Ethereum as an application marketplace, rather than a currency. “Ether” is the platform’s native currency, and it can be bought and sold by investors, like Bitcoin or other cryptos.

Ethereum is often referred to as a cryptocurrency, similar to Bitcoin, Ripple, or other types of cryptocurrency on the market. But when comparing Ethereum versus Bitcoin, for example, it’s necessary to note that the underlying technology and utility of the two cryptos is quite different.

What is Ethereum, exactly? It was created with the goal of giving programmers and developers a way to build decentralized programs. That is, a way to create applications without getting involved with the middlemen who generally control access to the apps—like how Google or Apple have control over their respective app stores.

Some deem Ethereum as valuable for two key reasons. One, it has intrinsic value (people are willing to pay for it with cash, for example). And two, it’s an actual platform with a degree of utility—which many other cryptos cannot claim. Today, it’s used by hundreds, if not thousands, of businesses and industries.

How to buy Ethereum

Getting started buying or investing in Ethereum isn’t difficult. While Ethereum itself is something of a complicated asset, buying or investing in it is more straightforward—particularly for investors who already have cryptocurrency among their assets, too. Here is a simplified, step-by-step guide to investing in Ethereum.

1. Get a digital wallet

Anyone serious about Ethereum investing will want to get a digital wallet, which allows cryptocurrencies to be safely stored. Digital assets can be vulnerable to theft, so it’s important to make sure that assets can be kept safe. Some wallets are made by the coin developers themselves, others are made by a third-party developer.

2. Create an Account on an Exchange

Likewise, investors will need to find and create an account on a crypto exchange that allows them to buy and sell cryptocurrencies including Ethereum. Think of a crypto exchange as similar to a stock exchange. Crypto exchanges are either centralized, decentralized, or hybrid. Some investors find centralized exchanges useful because of third-party involvement that helps make sure transactions go through properly, and also allows for exchanging “fiat” currency (like US dollars) for cryptocurrency.

3. Fund your account

With a wallet and an exchange account, the next step is to have a medium to exchange for Ethereum. For most people, that simply means funding their account with good old dollars and cents (or fiat currency, in crypto parlance). The process is similar to funding a brokerage account in order to buy stocks or bonds. Fund an account, and the resources will be at hand with which to start making trades.

4. Start buying Ethereum

With a verified and funded account, investors should be ready to start buying Ethereum. While the specific steps to start buying or selling cryptocurrency will depend on the exchange, it’s generally similar to buying stocks through a brokerage.

No matter the exchange, investors will be in a position to start trading or buying Ethereum. Once the trades have settled and the transactions have been completed, remember to withdraw the assets into the aforementioned digital wallet for safekeeping.

Buying Ethereum: What Investors Should Keep in Mind

With the basics of buying Ethereum covered, it’s also important to discuss some of the other things investors should keep in mind. Most notably, that cryptocurrencies, and assets like Ethereum, are inherently risky investments.

While Ethereum, as a platform, is being used by a number of large companies, as an investment, it still has risks. It’s still an evolving platform, for one, and exists in the same gray area as others when it comes to cryptocurrency regulations. That is, there is none—so the government won’t be there to bail investors out if things go south.

Cryptos and related assets also tend to be highly volatile investments. So, if investors don’t have much of a stomach for wild value fluctuations, that is something to consider before buying Ethereum.

Other risks to consider include the possibility of theft , and that Ethereum could “fork”.

Forks are an entire topic in and of themselves. But in short, there are hard and soft forks, and it means that a change in protocol has been made to a blockchain network. Effectively, it creates a new “chain,” meaning that all users need to upgrade to the latest software and protocols.

Basically, a fork is a change in the rules. And they can happen at any time , and can cause some issues for Ethereum users who are caught unaware.

Finally, investors will need to remember that they may owe taxes on their Ethereum holdings—the last thing anyone wants to do is draw the ire of Uncle Sam!

The Takeaway

Ethereum was created to give programmers and developers a way to create applications without going through third parties who control access to the apps. But while its origins may be different from Bitcoin or other cryptocurrency, its appeal to investors is much the same.

Is Ethereum a good investment? There’s no way to answer this question for any investment, Ethereum or otherwise. The answer depends on an individual investor’s goals and the asset’s performance over time.
If you’re ready to add Ethereum to your portfolio or get started building one, SoFi Invest® can help you get started.

Start investing in cryptocurrency with SoFi.



SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . The umbrella term “SoFi Invest” refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).

2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.

3) Digital Assets—The Digital Assets platform is owned by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.

For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, http://www.sofi.com/legal.

Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Source: sofi.com

Intrinsic Value vs Market Value, Explained

Intrinsic value vs market value refers to the difference between where a stock is trading and where it ought to be according to its fundamentals. The term “market value” simply refers to the current market price of a security. Intrinsic value represents the price at which investors believe the security should be trading at. Intrinsic value is also known as “fair market value” or simply “fair value.”

According to Merriam-Webster dictionary, the word “intrinsic” means “belonging to the essential nature or constitution of a thing.” At times, stocks become overbought or oversold, meaning their market price can rise above or below their intrinsic value.

When it comes to value vs. growth stocks, value investors look for companies that are out of favor and below their intrinsic value. The idea is that sooner or later stocks return to their intrinsic value.

What Is Market Value?

In a sense, there is only one measure of market value: what price the market assigns to a stock, based on existing demand.

stock market crash, for example, fear may grip investors and the market value of many stocks could fall well below their fair market values.

News headlines can drive stock prices above or below their intrinsic value. After reading an earnings report that’s positive, investors may pile into a stock. Even though better-than-expected earnings might increase the intrinsic value of a stock to a certain degree, investors can get greedy in the short-term and create overextended gains in the stock price.

The rationale behind value vs price, and behind value investing as a whole, is that stocks tend to overshoot their fair market value to the upside or the downside.

When this leads to a stock being oversold, the idea is that investors could take advantage of the buying opportunity. It’s assumed that the stock will then eventually rise to its intrinsic value.

What Is Intrinsic Value?

The factors that can be used to determine intrinsic value are related to the fundamental operations of a company. It can be tricky to figure how to evaluate a stock. Depending on which factors they examine and how they interpret them, analysts can come to different conclusions about the intrinsic value of a stock.

It’s not easy to come to a reasonable estimation of a company’s valuation. Some of the variables involved have no direct physical, measurable counterpart, like intangible assets. Intangible assets include things like copyrights, patents, reputation, consumer loyalty, and so on. Analysts come to their own conclusions when trying to assign a value to these assets.

Tangible assets include things like cash reserves, corporate bonds, equipment, land, manufacturing capacity, etc. These tend to be easier to value because they can be assigned a numerical value in dollar terms. Things like the company’s business plan, financial statements, and balance sheet have a tangible aspect in that they are objective documents.

Calculating Intrinsic Value vs Market Value

There can be multiple different ways to determine the intrinsic value of an asset. These methods are broadly referred to as valuation methods, or using fundamental analysis on stocks or other securities. The methods vary according to the type of asset and how an investor chooses to look at that asset.

Calculating Intrinsic Value

For dividend-yielding stocks, for example, the dividend discount model provides a mathematical formula that aims to find the intrinsic value of a stock based on its dividend growth over a certain period of time. Here is what is a dividend: periodic income given to shareholders by a company.

market cap is:

Total number of outstanding shares multiplied by the current stock price.

Dividing market cap by number of shares also leads to the current stock price.

Sometimes companies engage in “corporate stock buybacks,” whereby they purchase their own shares, which reduces the total number of shares available on the market.

This increases the price of a stock without any fundamental, tangible change taking place. Value investors might say that stocks pumped up by share buybacks are overvalued. This process can lead to extreme valuations in stocks, as can extended periods of market euphoria.

The Takeaway

Using the intrinsic value vs market value method is best suited to a long-term buy-and-hold strategy.

Stock prices can remain elevated or depressed for long periods of time depending on market conditions. Even if an investor’s analysis is spot on, there’s no way to know for sure exactly when any stock will return to its intrinsic value.

Value investors try to understand stock volatility, using these periods as opportunities for rebalancing their portfolios, selling positions that might have increased a lot while adding to positions that may have fallen far below their intrinsic value. This contrasts to short-term day trading strategies or momentum swing-trading, which primarily uses technical analysis to try and predict and profit from short-term market fluctuations.

Found a stock you think is undervalued? Try SoFi Invest®, where investors can choose any of the most popular stocks and ETFs.

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SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . The umbrella term “SoFi Invest” refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).

2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.

3) Digital Assets—The Digital Assets platform is owned by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.

For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, http://www.sofi.com/legal.

Disclaimer: The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results.
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Source: sofi.com

Guide to Zcash Cryptocurrency

Zcash is a potentially private cryptocurrency that offers unique “shielded” features. The set-up allows for addresses and amounts in a Zcash transaction to be encrypted on the blockchain. Here’s a guide to its privacy features, price performance, technology and history.

What Is Zcash?

Zcash crypto falls under the category of cryptocurrencies known as “privacy coins,” or different types of cryptocurrency that make it hard for outside observers to detect details of the coins’ movements.

Zcash is basically a bitcoin clone with one key difference – the ability for shielded transactions, as mentioned. Zcash relies on a technology known as zk-SNARKS to hide the particulars of Zcash wallet activity.

Zcash transactions are not private by default. For users seeking privacy, the “shielded” feature must be turned on to prevent the transaction from appearing on the public Zcash blockchain.

Zcash Price and Performance

Zcash has soared more than 400% since the end of 2019 to $146.38 in mid-February. Its market cap is $1.62 billion, making it the 47th biggest cryptocurrency market, according to data from CoinMarketCap. Zcash has the third-largest market cap of any privacy coin (with Monero being #1 and DASH being #2).

Zcash Privacy

Zcash was created in response to Bitcoin‘s lack of anonymity. Activity on the Bitcoin blockchain and most other blockchains is transparent. Anyone can see everything that has ever happened on a public blockchain. The details of each transaction, including the parties sending and receiving coins, the time of the exchange, and the amount of value exchanged, are all public knowledge.

Zcash functions differently than Bitcoin in the sense that Zcash activity can be “shielded,” or hidden from the public, so users can transact privately. But if no one can see the details of a transaction, how can they be sure that it even happened? That’s where the privacy tech behind Zcash known as zk-SNARKS comes in.

Zcash is the first large-scale, real-world implementation of a privacy technology called zk-SNARKS. This tech allows for shielded Zcash transactions to be fully encrypted (private) while at the same time being validated under the network’s consensus rules (so everyone knows they really happened).

How “Shielding” Works

Zk-SNARK stands for “Zero-Knowledge Succinct Non-Interactive Argument of Knowledge.” This is a way of sharing data that allows one party to prove to another that they have specific information without revealing what that information is, and without requiring any interaction between the parties.

The exact details of how zk-SNARKs work and how they are applied to the Zcash blockchain are quite technical. Interested readers can reference the Zcash website for all of the intricate workings of this type of encryption technology.

While some people believe this tech offers the best, most comprehensive solution to the issue of private crypto transactions, others have criticized the security of a coin like Zcash.

The fact that the encryption technology used is so new and that the coin was launched using an unorthodox “ceremony” (more on this later) are key points of contention for some crypto observers. On top of that, most Zcash isn’t even private.

As mentioned earlier, transactions made on the Zcash blockchain are not private by default. For the currency to be used privately, a transaction must be “shielded.”

The vast majority of Zcash transactions are not shielded (as of April 2020, only 6% of the Zcash network had been using fully shielded transactions). This could be due to the fact that most wallets and exchanges use public Zcash addresses by default, something many users might not be aware of.

Types of Zcash Transactions

There are four different types of transactions that can be made on the Zcash blockchain. They are:

•  Private
•  Deshielding
•  Shielding
•  Public

Zcash addresses begin with either a Z or a T. Those beginning with a Z are private addresses, and those beginning with a T are transparent. Using different combinations of these two types of addresses allows for the four specific types of transactions.

In a private transaction (Z-to-Z) will be visible on the public blockchain. There’s proof that it occurred and the necessary network fees were paid. The specific details like the transaction amount and addresses involved, however, are encrypted and can’t be seen by the public.

A public transaction (T-to-T) works in the same way that a typical Bitcoin transaction works – everything can be seen on the public blockchain, including the sender, receiver, and amount transacted.

The Zcash website notes that most exchanges and wallets today use T-addresses by default, although more are allegedly moving to shielded addresses over time.

The other two types of transactions involve sending funds between T and Z addresses. In other words, either sending funds from a private address to a public one (Z-to-T, or Deshielding), or sending funds from a public address to a private one (T-to-Z, or Shielding).

Zcash History

Zcash cryptocurrency launched in 2016. The coin was forked from the original Bitcoin code, so both are minable proof-of-work cryptocurrencies that have a hard supply cap of 21 million. The block reward for Zcash also gets cut in half every four years or so to keep the currency deflationary by limiting supply, just like bitcoin.

Zcash has its roots in a 2013 publication called the Zerocoin white paper, which was written by professors Eli Ben-Sasson and Matthew Green. They saw the design of Bitcoin as being a threat to user privacy, and offered their own solutions in response.

But Zerocoin was designed for Bitcoin, meaning Bitcoin developers would have had to implement a lot of complex changes to the Bitcoin blockchain technology to make Zerocoin work. This led to the project being shelved for a time.

Then, in 2015, a cryptographer named Zooko Wilcox created a startup to discover ways that the Zerocoin concept might be successfully implemented in a new cryptocurrency. In 2016, Zcash was announced, and the coin launched in October of that year.

Launch of Zcash

The launch of Zcash is a focal point of many criticisms against the privacy coin. To make its new type of cryptography workable, the Zcash blockchain had to be created using something known as the “Zcash ceremony.”

This “ceremony” involved people from around the world collaborating to create what amounts to a master public key for the blockchain using pieces of a private key. Those involved were instructed to destroy the data they used so that it couldn’t be taken advantage of by someone else in the future, who could potentially use it to compromise Zcash.

Of course, no one has any way to verify that those involved actually destroyed the data they used in this ceremony, and no one can verify that Zcash was created in the way it claims to have been created.

Today, Zcash is operated by the Electric Coin Company with Zooko Wilcox as its CEO. The company employs a team of cryptographers to continue developing the Zcash blockchain. There is also a non-profit organization known as the Zcash Foundation that helps support this work. Both groups are funded in part by the issuance of new Zcash (ZEC) tokens.

Is Zcash a Good Investment?

Privacy coins in particular have a very uncertain future. Coins like Monero, Zcash, and DASH were delisted from the Bittrex exchange at the start of 2021. Because many people associate them with illicit activity, privacy coins could see their use restricted in various ways.

Exchanges could continue to delist coins with privacy features or regulatory authorities could seek to punish anyone who deals with them through new crypto regulations, perhaps claiming that people use privacy coins to avoid paying taxes on crypto, for example.

Many altcoins have gone to zero over the years, so that possibility also can’t be ruled out.

How to Buy Zcash

Some U.S. exchanges offer Zcash on their platform. Here’s a step-by-step guide on how to buy and trade it:

1. Sign up for an account with a cryptocurrency exchange that offers Zcash.
2. Verify your account. This may involve providing documents that confirm your identity and address.
3. Deposit fiat currency or digital money into your account.
4. Buy Zcash with the deposited funds.
5. Withdraw Zcash into your hot or cold wallet.

The Takeaway

Zcash is a privacy coin that allows for completely private or “shielded” transactions. It is the first practical implementation of the zk-SNARK encryption technology. The vast majority of transactions made on the Zcash blockchain are not private and function in the same way as Bitcoin transactions because Zcash was forked from the original Bitcoin code.

SoFi Invest gives investors the tools they need to trade cryptocurrency, stocks, and ETFs. Learn the basics of investing in crypto firsthand by opening an Invest account today.

Learn more about SoFi Invest today.



Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments.
SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . The umbrella term “SoFi Invest” refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).

2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.

3) Digital Assets—The Digital Assets platform is owned by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.

For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, http://www.sofi.com/legal.

Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.

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Source: sofi.com

What is a 51% Attack?

A 51% attack is when a single cryptocurrency miner or group of miners gains control of more than 50% of a network’s blockchain. Such attacks are one of the most significant threats for people who use and buy cryptocurrencies.

The 51% attack scenario is rare, largely because of the logistics, hardware and costs required to carry one out. But a successful block attack could have far-reaching consequences for the cryptocurrency market and those who invest in it.

Cryptocurrency investing can be potentially lucrative but it involves a higher degree of risk compared with stock or bond investing. If an investor is considering adding digital currencies to their portfolio, it’s important to understand the implications of a 51% attack.

Background on 51% Attacks

A 51% attack is an attack on a blockchain, which is a type of digital database in ledger form. With blockchain technology, information is collected together in groups or blocks and linked together to create a chain of data. In cryptocurrency trading, blockchain is used to record approved transfers of digital currencies and the mining of crypto coins or tokens.

With Bitcoin for example, “miners” can attempt to add blocks to the chain by solving mathematical problems through the use of a mining machine. These machines are essentially a network of computers. If miners succeed in adding a block to the chain, they receive Bitcoins in return.

The speed at which all the mining machines within the network operate is the Bitcoin hashrate. A good hashrate can help gauge the health of the network.

A 51% attack occurs when one or more miners takes control of more than 50% of a network’s mining power, computing power or hashrate. If a 51 percent attack is successful, the miners responsible essentially control the network and certain transactions that occur within it.

How a 51% Attack Works

When a cryptocurrency transaction takes place, whether it involves Bitcoin or another digital currency, newly mined blocks must be validated by a consensus of nodes or computers attached to the network. Once this validation occurs, the block can be added to the chain.

The blockchain contains a record of all transactions that anyone can view at any time. This system of record keeping is decentralized, meaning no single person or entity has control over it. Different nodes or computer systems work together to mine so the hashrate for a particular network is also decentralized.

When a majority of the hashrate is controlled by one or more miners in a 51% attack, however, the cryptocurrency network is disrupted. Those responsible for a 51% attack would then be able to:

•  Exclude new transactions from being recorded
•  Modify the ordering of transactions
•  Prevent transactions from being validated or confirmed
•  Block other miners from mining coins or tokens within the network
•  Reverse transactions to double-spend coins

All of these side effects of a block attack can be problematic for cryptocurrency investors and those who accept digital currencies as a form of payment.

For example, a double-spend scenario would allow someone to pay for something using cryptocurrency, then reverse the transaction after the fact. They’d effectively be able to keep whatever they purchased along with the cryptocurrency used in the transaction, bilking the seller.

What a 51% Attack Means for Cryptocurrency Investors

A 51% attack isn’t a common occurrence but it’s not something that can be brushed off. For cryptocurrency investors, the biggest risk associated with a 51% attack may be the devaluation of a particular digital currency.

If a cryptocurrency is subject to frequent block attacks, that could cause investors to lose confidence in the market. Such an event could cause the price of the cryptocurrency to collapse.

The good news is that there are limitations to what a miner who stages a 51% attack can do. For example, someone carrying out a block attack wouldn’t be able to:

•  Reverse transactions made by other people
•  Alter the number of coins or tokens generated by a block
•  Create new coins or tokens from nothing
•  Transact with coins or tokens that don’t belong to them

Investors may be able to insulate themselves against the possibility of a 51% percent attack by investing in larger, more established cryptocurrency networks versus smaller ones. The larger a blockchain grows, the more difficult it becomes for a rogue miners to carry out an attack on it. Smaller networks, on the other hand, may be more vulnerable to a block attack.

Is Cryptocurrency Investing a Good Idea?

Cryptocurrencies can help boost portfolio diversification, but there are certain risks to be aware of. Current cryptocurrency rules and regulations offer some protections to investors, but on the whole, the market is far less regulated than stocks, mutual funds and other securities. Here are some potential upsides and downsides of investing in digital currencies.

Pros of Cryptocurrency Investing

•  Bigger rewards. Compared with stocks and other securities, cryptocurrency investing could yield much higher returns. In 2020, for example, Bitcoin surged 159% higher.
•  Liquidity. Liquidity measures how easily an asset can be converted to cash or its equivalent. Popular cryptocurrencies like bitcoin are more liquid assets, which may appeal to investors focused on short-term trading strategies.
•  Transparency. Blockchain networks offer virtually complete transparency to investors, as new transactions are on record for everyone to see. That can make cryptocurrency a much more straightforward investment compared with more opaque investments like a hedge fund or a real estate investment trust (REIT).

Cons of Cryptocurrency Investing

•  Volatility. Cryptocurrencies can be extremely volatile, with wide fluctuations in price movements. That volatility could put an investor at greater risk of losing money on digital currency investments.
•  Difficult to understand. Learning the ins and outs of cryptocurrency trading, blockchain technology, and digital coin mining can be more complicated than learning how a stock, ETF or index fund works. That could lessen its appeal for a newer investor who’s just learning the market.
•  Not hands-off. If an investor is leaning towards a passive investment strategy, cryptocurrency may not be the best fit. Trading cryptocurrencies generally focuses on the short-term, making it more suited for active traders.

If an investor is still on the fence, they can consider taking SoFi’s crypto quiz to determine how much they already know about this market.

The Takeaway

Cryptocurrency investing may appeal to an investor if they’re comfortable taking more risk to pursue higher returns. If an investor is new to cryptocurrency trading, the prospect of a 51% attack might seem intimidating. Understanding how they work and the likelihood of one occurring can help them feel more confident.

If an investor is ready to start trading Bitcoin, Ethereum, and Litecoin, SoFi Invest can help. Members can trade cryptocurrencies 24/7, starting with as little as $10. The SoFi app allows users to manage their account from anywhere.


SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . The umbrella term “SoFi Invest” refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).

2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.

3) Digital Assets—The Digital Assets platform is owned by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.

For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, http://www.sofi.com/legal.

Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments.
Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.
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Source: sofi.com

What Investors Should Know About Spread

When trading stocks, there are several market terms that are helpful to understand, such as portfolio, dividend, and volatility. Another key term to know is spread.

In simple terms, a spread represents the difference between any two financial metrics. The type of spread depends on the type of security that’s being traded. For example, when trading bonds, the spread can refer to a difference in yields between bonds of varying maturity lengths or quality.

But there are many differences between bonds vs. stocks—and spread is one of them. With stocks, spread refers to differences in price. Specifically, it measures the gap between the bid price and the ask price. Understanding what is spread and how it works can help you more effectively shape your investment strategy.

What Is Spread?

buying a home. As a home buyer, you may have a set price that you’re willing to pay for a property, based on what you can afford and what you’ve been pre-approved for by your mortgage lender.

You search for homes and eventually find one that has everything on your wishlist. When you check the listing price, you see that the seller has it priced $10,000 above your budget. In terms of spread, the maximum amount you’re willing to offer for the home represents the bid price, while the seller’s listing price represents the ask.

What Does Spread Mean?

Aside from stock spread, spread can have a variety of applications and meanings in the financial world.

As mentioned earlier, bond spread typically refers to differences in yield. But if you’re trading futures, the spread can measure the gap between buy and sell positions for a particular commodity. With options trading, it can refer to differences in strike prices when placing call or put options.

Spread can also be used in foreign currency markets or forex (foreign exchange market) trades to represent the difference between the costs for traders and the profits realized by dealers.

With lending, spread is tied to a difference in interest rates. Specifically, it means the difference between a benchmark rate, such as the prime rate, and the rate that’s actually charged to a borrower. So for example, if you’re getting a mortgage there might be a 2% spread, meaning your rate is 2% higher than the benchmark rate.

Bid-Ask Price and Stocks Spread

If you trade stocks online, it’s important to understand how the bid-ask price spread works and how it can affect your investment outcomes. Since spread can help gauge supply and demand for a particular stock, investors can use that information to make informed decisions about trades and increase the odds of getting the best possible price.

Limit orders. This is an order to buy or sell a security at a certain price or better.
•  Stop orders. A stop order, also called a stop-loss order, is an order to buy or sell a security once it hits a certain price. This is called the stop price and once that price is reached, the order is executed.
•  Buy stop orders. Buy stop orders are used to execute buy orders only when the market reaches a certain stop price.
•  Sell stop orders. A sell stop order is the opposite of a buy stop order. Sell stop orders are executed when the stop price falls below the current market price of a security.

Stop orders can help with limiting losses in your investment portfolio if you’re trading based on bid-ask price spreads. Knowing how to coordinate various types of orders together with stock spreads can help with getting the best possible price as you make trades.

The Takeaway

The more investing terms an investor is familiar with, the better able they’ll be to invest with confidence. Spread is a term that means different things in different situations, but when it comes to stocks, spread is the difference between the bid price and ask price of a given stock. Being able to assess what a spread might mean can help inform individual trading decisions.

As you learn more about stocks, including what is spread and how it works, you can use that knowledge to create a portfolio that reflects your financial needs and goals.

SoFi Invest® makes it easy to get started with stock trading and investing. Members can choose which stocks to buy or sell, based on their investment objectives and risk tolerance, and purchase shares in some of the market’s biggest companies through fractional share investing with Stock Bits.

Find out how SoFi Invest can help you reach your financial goals.


SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . The umbrella term “SoFi Invest” refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).

2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.

3) Digital Assets—The Digital Assets platform is owned by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.

For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, http://www.sofi.com/legal.

Stock Bits
Stock Bits is a brand name of the fractional trading program offered by SoFi Securities LLC. When making a fractional trade, you are granting SoFi Securities discretion to determine the time and price of the trade. Fractional trades will be executed in our next trading window, which may be several hours or days after placing an order. The execution price may be higher or lower than it was at the time the order was placed.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Source: sofi.com