Tokenomics 101
When investing in cryptocurrencies and tokens, it is easy to fall into the trap of classifying them as “digital stock”. In reality, the mechanics are quite different. Understanding the role of each token, aka tokenomics, and how it integrates into a business plan, is absolutely essential for crypto-enthusiasts.

Without proper understanding, there’s an increased probability of misallocating risk when investing.

Let’s get to the basics of tokenomics. What is the purpose of a token? Why are they needed? How can utility be created?

Tokenomics basics
At its core, a token is just a programmable currency unit that is chained onto a specific blockchain protocol. Using a software application, smart contract logic is added to the token and enables it to function as part of a larger ecosystem.

Instead of revenue being the ultimate use case, other use cases emerge.

All of this technical jargon is just a fancy way of saying that tokens aren’t claims on income of a company – they are pieces of the ecosystem. There was a worry about Bitcoin being classified as a security, which would have numerous tax implications. However, the SEC has ruled it a commodity due to it not representing a share of a company or claim on profits. Most tokens (with some exceptions) are viewed as a commodity.

As long as a token enables some functionality to happen when a transaction takes place, there’s a potential for additional economic value to be created.

Cryptoeconomics of a company
Just like it is essential to understand the economics behind a fiat currency (for example money supply, inflation, or what happens if the government spends into a fiscal deficit), you also need to build an understanding of the factors affecting each cryptocurrency you invest in.

Cryptoeconomics is the term generally used to describe the mechanics and specifics of token distribution. This covers everything from the sale to the ownership structure. It can be generalised as the “terms of governance” used on that specific token.

Strong cryptoeconomics are important, but even more important is the way a token interacts with the business model of its parent company. Essentially, there must be an underlying logic connecting the token and the business. Otherwise, the token won’t likely hold long-term value.

Let’s dig deeper.

Explaining Tokenomics
Tokenomics is all about understanding the role of a token. Once you have a use case and purpose, users will start demanding that token. There are many use cases (and more creative twists pop up every day), but the most common ones I discuss here. A batch of examples are:

Value exchange,
Fees,
Ownership,
And currency.

Many coins have multiple use cases, which adds to their utility and the strength of their tokenomics. You will most quickly understand the currency use case, as this is where Bitcoin operates. Bitcoin is a payment unit in this platform, and users purchase it for this specific reason.

In Ethereum you always need to spend ETH to run smart contracts and use the network. Value exchange tokens are used on marketplace-type platforms to buy and sell products or services. Logic can also be added, with a mixture of quality game theory, which enables additional use cases. Such an example are the now-famous NFTs or the evergrowing DeFi space. Finally, tokens with right ownership logic allow for voting and rights.

Any use case may endup gaining value. Cryptokitties showed us how NFTs may rule collectibles. Decentraland, how it’s possible to own a piece of digital land. Aragon or Tezos are how it’s possible to have on-chain governance with voting-rights.

As long as there are quality tokenomics in the background, the value may emerge. In hindsight, would you purchase a token without a single purpose?

This is more of a fundamental article about how you should assess less well-known coins. No matter how greatly a cryptocurrency is engineered, companies still need to build viable business models that thrive over the long term. The utility role of a token is absolutely key for your success as an investor in the company, and by learning to break companies down to these fundamentals, your investment may end up being much more profitable.

Conclusion
Do your own diligence (always!) and don’t fall into the fallacy of thinking amazing teams, products, communities, or whatnot is enough to take a cryptocurrency to the moon.

From my personal experience, pure hype does it better. Of course, hype can be linked to a great number of things – from amazing marketing teams to solid VC backing. Sometimes, even due to pure greed.

The reason why fundamentals are important is that, usually, the strongest projects – with all checkboxes ticked – are the ones winning in the long run.

In the early days of blockchain, cryptocurrency trading was seen by many as merely exchanging a few dollars for Bitcoins (BTC). The birth of other tokens and the high volatility in cryptocurrencies have led many traders to speculate by buying a few coins through exchanges in hoping the value will increase for the sake of profit.

The decision to switch to floating exchange rates was made in the second half of the last century, when it became clear to financial institutions that they could not provide the right amount of United States currency secured by a gold reserve. Thus, financial regulators abandoned the gold standard by adopting a system of floating exchange rates. This stage is perceived by many as the beginning of the emergence of the forex market.

Comparison between forex trading and crypto trading market
Cryptocurrency trading is the exact opposite of forex and its options for owning an asset. On crypto exchanges, traders buy the desired token and place an order to sell it, exchanging for another coin or fiat. That is, cryptocurrency trading is a real exchange of one cryptocurrency for another.

At the same time, forex exchange rates reflect the state of the economy of countries. Being very stable assets — especially compared to cryptocurrencies — the value of fiat currencies mainly change within three to five decimal places. Cryptocurrencies change much more noticeably, and can gain as much as 100% against the U.S. dollars within 24 hours.

Cryptocurrency trading, due to its high margin, can generate good income even without leverage, which very often leads to a loss of deposit. Investing in coins at their early stages has proven to be a highly effective trading tool for increasing capital.

Why is the impact of the forex market still felt by cryptocurrency traders?
Due to the high volatility in the crypto market, many traders begin to seek or return to the traditional trading market. The price stability of many trading pairs puts the market in a state of hibernation, which is why many traders lose money.

How crypto trading companies can reduce the impact of the forex market
The impact of the forex market can be removed if cryptocurrency companies can improve on their security levels. One of the main reasons why traders have a hard time trusting cryptocurrency exchanges is because user funds can often go missing. A recent example is Binance being hacked in 2019, wherein an estimated $40 million was withdrawn from the exchange’s hot wallets.

One of the solutions for reducing the impact of the forex market in crypto is a project based on the Stellar blockchain. Bridge token enables its users to convert from forex to crypto with outstanding trading conditions and transparency.

UNDERSTANDING OF THE TECHNOLOGY
The decentralized architecture of Blockchain technology is revolutionary, yet it is also complex. It carries with it significant risks for those that do not fully grasp its function. Seemingly simple tasks such as setting up wallets and sending transactions can result in catastrophe if not performed correctly.

Before purchasing Bitcoin, time should be invested in learning the ins and outs of blockchain technology. Its history, functionality, and shortcomings should be thoroughly studied. Research should also be performed on competing platforms. New adopters should put effort into learning about the major exchanges, wallets, and procedures for secure storage. They should also learn the meanings behind common terms such as “proof-of-work” and “block time.”

Virtually all unexpected Crypto loss is due to easily avoidable user errors caused by a lack of technical knowledge. These often include lost keys, or using exchanges to store funds. Avoiding loss thus requires understanding and respecting the inner workings of blockchain platforms.

SKEPTICISM AND VIGILANCE
Given the revolutionary nature of distributed ledger technology, a healthy dose of skepticism is a must. Wild claims of easy profits are all but certain to be scams. Also, exchanges and wallets should be thoroughly reviewed by trusted sources before use.

This attitude should also be coupled with a conservative and reasonable investment approach. The most successful crypto investors over the past ten years have been those that have avoided exceedingly risky platforms or services. Rather, they have merely added to their crypto portfolio on a regular basis and kept their keys securely in their own wallets. It is worth noting that taking such a simple approach would have been remarkably profitable for almost every part of the past ten years.

UPDATED KNOWLEDGE ABOUT THE LATEST HAPPENINGS IN THE WORLD OF BITCOIN
The blockchain space is rapidly evolving technically, legally, and socially. All holders should routinely follow news and developments without exception. Platforms change, wallets update, and exchanges come and go. Staying updated in this environment is thus critical to keeping funds safe.

Following legal and regulatory developments is especially crucial, as governments are now taking a much closer look at blockchain assets. Some are requiring cryptocurrencies to be reported on tax forms. Others are seeking to squelch blockchain adoption. These issues are extremely relevant to anyone that has an investment in Bitcoin.

A key takeaway from the lessons of proper Bitcoin holding is that a sensible, traditional approach is the best means to keep funds safe. No investment should ever be made without careful study and security rests on being mature and vigilant.

Beginning a rally at the start of 2020, Bitcoin (BTC) and the rest of the crypto market continue to fly upward, showing little signs of slowing down.

The “crypto market is hot right now, and what stands out to me the most is that there are plenty of altcoins that are still running even with the strength $BTC is displaying right now,” CNBC crypto trader and Twitter personality BigCheds told Cointelegraph in a message on Feb. 9.

Bitcoin starts off 2020 with a bang
Halfway through December 2019, Bitcoin’s price dropped to near $6,750. December proved itself the bottom of a lengthy downtrend that started in June 2019, when Bitcoin topped out near $14,000. Many altcoins joined Bitcoin's downtrend for the latter half of 2019.

So far, December 2019 has proven itself as a bear-trend bottom as Bitcoin continues its journey higher, taking altcoins with it.

“Market sentiment has done a complete 180 since hitting the low of ~$6900 on January 3rd as we were able to build solid support, we have seen consistent moves upward,” Crypto trader and social media maven CryptoWendyO told Cointelegraph in a Feb. 7 email.

Bitcoin continues headway
CryptoWendyO noted Bitcoin powered past $9,000, a previously formidable opponent, on Jan. 26, holding above the level nicely. The asset then rallied past resistance at $9,500 on Feb. 5, converting the level to support.

Since Feb. 7, Bitcoin has rallied past $10,300, which CryptoWendyO suspected as an outcome, shown in her comments. “Due to a change in market sentiment another upward move would put us at $10,400 and then $11,200,” she said. “Ultimately, the bulls need a break and flip of support at $14K to as that was the high back on June 26th.”

What are the six major factors to grow Ethereum?
Conner noted that the following six elements would drive the growth of Ethereum throughout the next 12 months:
The rapid rise of decentralized finance (DeFi)
Privacy solutions on mainnet
Second-layer scaling
Ethereum 2.0 launch
Superior monetary policy with Ethereum 2.0
The struggle of competitors to combat the growth of ETH
All of the abovementioned factors align with the vision of the Ethereum open-source developer ecosystem to evolve the blockchain network into a more efficient protocol in processing data.

Throughout the past year, DeFi has seen explosive expansion. Data from DefiPulse indicate 3.1 million ETH are currently locked in DeFi apps. That is equivalent to $589 million at the price of ETH at $190. For DeFi to work seamlessly, which includes virtually all financial services including loans, payments, derivatives, and more, scalability, ETH 2.0, and better monetary policy are crucial.

Scalability is important because, with DeFi, confidential information such as payment data are processed on-chain. As the number of users increases, it may overload Ethereum, causing the network to clog. Improvements in monetary policy and Ethereum 2.0 are more obscure concepts for many users and investors. But, they are highly necessary especially if the usage of DeFi increase even more from current levels.

Monetary policy, or as some investors describe it as economic bandwidth, refers to the total supply of Ethereum and what percentage of it is used in decentralized applications (DApps).

If the supply of Ethereum is not sufficient to support the fast adoption of DeFi, Lucas Campbell at Fitzner Blockchain Consulting explained it places a burden on the Ethereum network to withhold all of the demand.

Assuming that DeFi will continue to be the primary use case of Ethereum throughout the years to come, scalability is basics and other elements such as monetary policy or economic bandwidth will have to improve similarly.

Conner emphasized that Ethereum has all of the elements to become successful in supporting significant demand for DeFi, which would allow it to retain the position as the top smart contracts blockchain protocol in the global market.

The “weakness” of ETH
Compared to smaller blockchain networks with tighter developer communities and well-funded operations, it is generally harder to propose, implement, and integrate changes into the Ethereum blockchain.

The same challenge exists for every major blockchain network including bitcoin. As such, one may consider that Ethereum is at a disadvantage over smaller blockchain networks in the speed in which it can implement new changes.

Why are public chains with the true spirit of decentralization fading away while early adversaries have turned into advocates of the technology?

✅ The real use of Blockchain

Commercial concerns: Where several competitors need to collaborate, Blockchain offers the ideal medium to cooperate in a trustless environment without giving too much power to one party. Decentralization also prevents one side from overcharging for their middleman services.

Security concerns: Blockchain comes with built-in redundancy, encryption, synchronization and tamper resistance. Thus, Blockchain offers one of the best methods to preserve data.

The birth of blockchain technology and its quick adaptation have left many people stunned, with famous CEOs, investors, entrepreneurs and financial experts often talking about how it will change the way we go about our daily financial activities.

One of the most important aspects to consider in blockchain technology is how this relatively new technology can help improve globalization — i.e., the process of interaction and integration of people, companies and governments worldwide.

How cryptocurrency transactions can improve globalization
One of the most important things in the global economy is the movement of goods and services. Currencies are used to facilitate these movements, but issues such as high inflation rates and currency manipulation techniques are making a lot of people worried about the validity of traditional currencies.

Immutability could make cryptocurrencies the right tool to facilitate the movement of goods and services. Even though some government officials argue that the speed and network congestion of cryptocurrencies are hindering them from being adopted as a tool for globalization, many projects have started to disprove these assumptions. This is making cryptocurrency a globalization tool that people can trust.

Impact on foreign money transfers
Currently, money transfers are mostly made by banks, which charge an additional fee for processing transactions. High bank fees in international transfers are not the only problem. The time required for the operation can take up to several days, depending on its complexity. Online conversion of cryptocurrency through crypto exchanges is a much simpler process, which entails practically no costs. This is why foreign workers are increasingly relying on Bitcoin (BTC) as a more convenient and less expensive means to send money to their families.

Can crypto exchanges help globalization?
We can't talk about globalization through cryptocurrencies without talking about cryptocurrency exchanges. Cointelegraph reported earlier that nearly $10 billion in Bitcoin is now being stored on cryptocurrency exchanges. Exchanges are considered by many crypto users as a tool for cross-border transactions and cryptocurrency conversions.

Cryptocurrency exchanges should discourage the development of projects that do not add value nor help promising projects grow. How? By conducting thorough due diligence before adding the project’s token to their listings. If it cannot enter an exchange, the project’s token is essentially dead — or else it can only serve the internal needs of the project’s platform.

How can blockchain contribute to the globalization of business?
Globalization is unfolding at a tremendous rate due to the flow of digital information. Analysis firm McKinsey & Company recently published a report in which it said that "digital flows — which were practically nonexistent just 15 years ago — now exert a larger impact on GDP growth than the centuries-old trade in goods."

The flow of information is not limited by borders or national policies, and this is most pronounced in the use of decentralized blockchain technology. The most difficult aspect of managing cross-border transfers is to ensure compliance with the legal frameworks of different countries, each of which has its own unique set of rules, tax code and other legal norms that make it difficult to conduct business between different countries. Blockchain technology, by its nature, is not tied to any nation: As a peer-to-peer technology, the transfer of assets on the blockchain can be freely managed across borders.

The development of blockchain tech allows small businesses to create international companies. In fact, the blockchain erases the boundaries between large and small businesses, giving both the opportunity to appeal to the global community.

As 2019 draws to a close, we’ll soon be approaching a new year. While it may mark the end of the holiday season, it’s not the end of ElgalCoin's development potential. Let's see how ElgalCoin will spread its wings to conquer the world in the new decade.

✅ ElgalCoin will not only surely sustain the existing advanced technologies but also research new technology principles.

✅ As we all know, expanding the ecosystem plays an important role to raise the value of EGC. In the new year, besides E-Commerce, Gaming and Crypto Exchange, brand new fields and features will be added to our ecosystem aimed at EGC's liquidity growth. Moreover, there would be actions taken to make ElgalCoin's community stronger which means more and more people use EGC. It can prompt an increase in EGC's price.

✅ We all know clearly about the law of demand and supply in the economy. If we can ensure suitable demand-supply benefits, the growth in EGC's price is definitely evident.

One more year has passed away and a new beginning is here to start. The new year is a fresh start to all your plans, activities, and tasks which you want to accomplish in the coming year. Let's start the new year with a desirable goal and see it achieve within the year by your hard-work and smart-work.

TOGETHER WE'LL BREAK ALL LIMITS!