What Is Account Balance?
The total amount of money that may be withdrawn from a bank account or a crypto account is referred to as the "account balance" in the banking and finance industry. Accounts are used to enable transactions by people, corporations and enterprises alike. These accounts offer an alternative to the conventional methods of dealing with cash transactions. There are different kinds of crypto and bank accounts available that may be used by entities to store and transfer assets and send and receive payments.
Accounting Cash Flow From Bank Accounts
In banking, the account balance includes both deposits and withdrawals made from a bank account. However, any sum paid out of these accounts results in a negative cash flow. As a consequence of this, the total balance in the bank account decreases (and in some cases, it results in overdraft). These payments may also include the bank's costs or other fees. To be more specific, though, they often include cash withdrawals or payments made to third parties.
Account Balance in Loan Accounts
In some circumstances, a bank may also provide an entity with financing in the form of a loan. If this is the case, then they will also be given a bank account. On the other hand, the account balance won't be the same in certain circumstances. It will be used to refer to the amount that must be paid to the bank by the entity, rather than the cash that can be spent. However, this term does not apply to savings or checking accounts; it is only applicable to loan accounts.
In general, an account balance in banking refers to the entire amount of money that is held by an entity within its own bank account. As was previously stated, this may involve checking as well as savings accounts. After deducting all of the payments made from the receipts into the bank account, the remaining balance is shown.
What Is Account Balance in Accounting?
The term account balance is applicable to banking, crypto and accounting. In accounting, the difference between all of the transactions that have been debited from and credited to a ledger account is referred to as the account balance. These accounts might be for assets, liabilities, or even stock in the company. In each of these cases, the amount that is remaining in the account will have a distinct significance.
Generally speaking, account balances for assets are shown as debit balances. These things reflect an asset that is held or managed by an entity and has the potential to offer economic advantages in the future. In most cases, assets consist mostly of debit transactions rather than credit ones. As a result, they will be in a position to have a positive balance, presuming that the debit transactions had a beneficial impact.
Account balances often contain credit balances in case of liability and equity. When it comes to liabilities, these balances indicate the responsibilities that were incurred as a result of previous transactions that led to the loss of economic gains. When referring to an entity's equity, these amounts will be the sum that may be distributed to owners or shareholders from the operations of the business.
The aforementioned principles, when taken as a whole, are applicable to any and all assets, liabilities and equity balances that organizations may have. However, there are likely to be some deviations from these rules, such as the existence of counter accounts. In certain specific circumstances, the opposite treatment will be applied to each individual object. For example, counter asset accounts tend to build up credit balances instead of debit balances over time.
Difference Between Available Balance and Current Balance
The amount of balance that is accessible for spending is called available balance. The available balance in an account is used to determine whether or not the user has sufficient funds in their account to cover a transaction. The account's available balance is calculated using the deposits and withdrawals from the account as well as all pending transactions. Pending transactions include pre-authorized transfers, point-of-sale transactions and merchant payments.
Sometimes, you may notice that your available balance is lower than your current. In these circumstances, the only money you have access to is the sum that is accessible to you (or a lesser amount if you have checks that are still outstanding), and the rest of the funds are being kept by the financial institution that you use. Your current balances take into account all of your money, including both the amounts that are currently accessible and those that are being held.
What Is a Decentralized Stablecoin?
A stablecoin is a digital asset built on the blockchain that is designed to maintain a price peg at a designated price, most often $1. This effectively removes holders from the swings of the market whilst providing a secure and stable way.
Stablecoins act as a mid-point between holding assets and withdrawing to the fiat system or are used as a more effective way of executing cross-border payments. Centralized stablecoins are usually fiat collateralized off-chain, usually directly connected to third-party custodians like a bank. Tether (USDT) and Coinbase’s USD Coin (USDC) are examples of centralized stablecoins. These stablecoins require you to trust that the third party has the corresponding dollars they issued.
Decentralized stablecoins are fully transparent, non-custodial with no or partial third-party control. All collateral-backing is visible to all as funds are on a publicly verified blockchain. This enables the stablecoin to be more trustless and secure with a single entity controlling the funds. They can be divided into two parts: crypto-collateralized and algorithmic.
Collateralized stablecoins can increase or decrease the supply manually, by minting or burning when required. Algorithmic stablecoins utilize smart contracts, or algorithmic markets operations controllers (AMOs), to automatically control the supply.
Author: Travis Moore, CTO of Frax
Bio: Travis Moore is an angel investor, programmer, entrepreneur, and the CTO of Frax, the world’s first fractional algorithmic stablecoin that is partially backed by collateral and stabilized algorithmically. Frax is open-source and permissionless, bringing a truly trustless, scalable, and stable asset to the future of decentralized finance. Moore is also co-founder of the blockchain-based knowledge base, Everipedia. Moore has a triple-major from UCLA in Neuroscience, Biochemistry, and Molecular, Cell, & Developmental Biology. His passions are artificial intelligence and blockchain technology, which he believes are the two industries that will impact the world the most in the coming decade.
What Is a Decentralized Database?
Due to the rapid growth of blockchain products, there has been an increasing need for robust data storage solutions. While most DApps store data on blockchains like Ethereum, the costs are extremely high. As a result, most DApps are forced to migrate their data to centralized storage solutions. Unfortunately, despite the cost-effective nature of centralized storage solutions, they are vulnerable to hacks.
Accordingly, developers face the dilemma of choosing between sky-high prices and poor data security. Decentralized databases solve this dilemma, offering users the ability to store their intellectual property in a manner that’s censorship-resistant, fully secure, and always available.
In a decentralized database, the underlying blockchain technology provides 100% access to data in a distributed way. Each file is replicated across several storage nodes worldwide, lowering the storage costs and ensuring that the data is available even if one or more nodes are down.
Decentralized databases use clusters of blockchains customized primarily for database operations. The advanced data delivery network protects your intellectual property from data breaches, performance hiccups, and network failures. It is an ecosystem where you pay the lowest costs for storage space and read/write access while enjoying features like high scalability, censorship and tamper-proof, and unmatched security.
Notable Features of a Decentralized Database
A decentralized database is the perfect blend of a decentralized framework and cutting-edge computing, enabling dApps to store and access their data seamlessly. Some of the notable features of decentralized databases include:
Unmatched Privacy - Decentralized databases use cryptography and advanced sharding techniques to ensure the full privacy of your data.
Amazing Reliability - All of the data is redundantly stored across multiple nodes worldwide, obliterating any scope of a single point of failure. Even if a couple of nodes go down, your data will still be available.
High Scalability - Compared to storing data on blockchains, decentralized databases store data in distributed nodes. This provides high scalability, especially for enterprise-level DApps.
Better Performance Speed - Since the files and data are stored across several nodes worldwide, you gain access to the data within seconds. Besides, the underlying technology is designed to adapt and adjust the location and number of nodes to deliver faster speeds.
High Data Immutability - Decentralized databases use blockchain technology. By design, it is impossible to tamper with any data on the blockchain.
Pavel Bains, the CEO of Bluzelle, has decades of experience in digital media, marketing and strategic planning. A former NCAA academic-athlete honor student and winner of the WEF Tech Pioneer 2017 award, Pavel has worked with some of the biggest brands, including Threewave Software, Disney Interactive Studios, Atari, Activision and EA.
Pavel often addresses panels and conferences related to digital media, technology and finance. In addition, he is also a contributing writer for The Huffington Post, Forbes, Venture Beat and Fast Company.
Connect with Pavel on Twitter.
What Is a Bull Market?
A bull market is characterized by an increase in the value of equities. It occurs when prices of assets in a market climb steadily over time. When describing assets such as crypto, stocks, commodities, and bonds, the phrase "bull market" is widely employed. It may also be utilized for other types of investments, such as real estate. During a bull market, investors acquire a large number of shares with the expectation that their value will rise and that they would be able to profit by selling them later.
How Does It Work?
In order to identify bull markets, no specific benchmark or standard is applied. A continuous period of growth in the price of coins in the market is the most significant indicator. Bull markets are characterized by investor growth, optimism, confidence, and other positive characteristics. It is a time when prices of major assets are expected to climb for a lengthy period of time.
Bull markets are difficult to anticipate, but they are easy to spot when prices climb by 20% or more. The most recent bull market in the traditional financial world occurred between 2003 and 2007, but the 2008 financial crisis resulted in another significant drop.
How Long Does It Take for a Bull Market to End?
"What goes up must come down," as the adage goes, and while many buy-and-hold investors expect a bull market will persist indefinitely, the stock market will always undergo phases of expansion and collapse due to the business cycle.
However, it's worth noting that since 1928, there have been just as many bull markets as bear markets, despite the fact that bull markets often run far longer. In fact, from March 2009 to March 2020, the longest bull market in stock market history lasted more than ten years. So, if you're scared that we're about to enter a bear market, don't be. History teaches that bear markets are only transitory.
Characteristics of a Bull Market
The following are some of the primary features or aspects of bull markets:
The expansion of the economy; bull markets are frequently associated with flourishing economies.
Investors are more confident, which pushes them to purchase.
Unemployment decreases, while corporate profits increase.
Investors' eagerness to provide or acquire assets.
Bull markets may be assessed in terms of increased employment and corporate profits. They are also characterized by a lack of supply and high demand. Bear markets are the polar opposites of bull markets, and both have a huge influence on global financial markets, whether positively or adversely.
Bear markets are connected with price drops and excessive pessimism, whereas bull markets are associated with price increases and confidence in the financial market. Bull markets denote economic and financial expansion, whilst bear markets denote economic decline. Individuals and investors who understand how to take advantage of bull markets are the ones that gain the most.
Examples of Bull Markets
From the early twentieth century to the present, here are a few examples of bull markets.
The Great Depression of the 1920s Was Accompanied by a Bull Market
The stock market saw its strongest bull market since World War I in the wake of the war. For many investors, the 1920s were the years of promise and regeneration, with the stock market returning an astonishing average annual gain of 20% (after inflation). During this period, stockbrokers pioneered the notion of margin investing, which required them to pay a small proportion of the overall value and borrow the remainder.
Crypto’s Bull Market
Bitcoin, a digital currency that debuted in 2010 with a value of roughly 8 cents, achieved an all-time high of almost $68,000 in November 2021. The cryptocurrency's quick rise has led to significant speculation from atypical investors. It was first used in an actual transaction to buy a Papa John's pizza.
What Is a Currency Crisis?
A currency crisis occurs when there is considerable concern over whether a country's central bank has adequate foreign exchange reserves to keep the country's currency stable.
A speculative attack on the foreign currency market frequently occurs in conjunction with a crisis. These are marketplaces where individuals can buy and sell currencies in the same way that they can buy and sell equities on the stock exchanges which might further depreciate the currency - also called the currency depreciation bubble.
In an event of devaluation, many people panic-sell the currency at rates way below what is acceptable, given the current situation, and the currency depreciates even more than it should.
Currency crises can be particularly damaging to small open economies or larger, but less stable countries. Governments frequently take up the responsibility of fighting off such attacks by utilizing their currency reserves or foreign reserves to meet the excess demand for a specific currency.
The reasons behind the cause of the currency crisis include inflation, political instability, the rise of debts, credit unbalancing, and other economic factors, such as the high volatility of currency exchange rates in a country's economy.
In some scenarios, ‘financial crisis’ is another term used for a currency crisis. Some popular examples of such a crisis include:
The Credit Crisis of 1772 - Started in London and spread across Europe. It was caused by the British empire which stored a lot of wealth, creating an overflow of credit expansion.
The Great Depression of 1929–39 - Triggered by the USA Wall Street crash in 1929, causing unemployment to hit an all-time high of 25%.
The OPEC Oil Price Shock of 1973 - Started by Arab nations where they cut-off oil supplies to the U.S. and other world nations.
The Asian Crisis of 1997 - Started in Thailand and spread to East Asia. It was caused by speculative capital flows which caused an overflow of credit and debt accumulation.
The Financial Crisis of 2007–08 - The most popular example of the 21st century which is often linked to being worse than the Great Depression crisis. It happened because one of the biggest investment banks, Lehman Brothers, declared bankruptcy. The effects of this crash took a lot of time and finance to recover as millions of jobs were wiped away in a short period.
Interestingly, Bitcoin (BTC) was founded in November 2008 by Satoshi Nakamoto, 2 months after the Lehmann crisis. Satoshi believed Bitcoin to be a revolutionary currency that is completely decentralized. Therefore, it cannot be controlled by central banks, who can manipulate the price and break the trust of ordinary people.
Bitcoin was valued under $1 in 2010, however, a decade later in 2021, it hit an all-time high of $64,888.99. Since then, it has maintained its position as the biggest cryptocurrency in the world.
Although most cryptocurrencies are not part of any central or regulated system. like fiat currencies (prone to currency crisis), the high volatility surrounding them remains a major concern for investors.
What Is Custodial?
Traditionally used in relation to cryptocurrency wallets or exchanges, a custodial setup is one in which private keys, which are required to access a customer’s funds, are held by the service provider while they offer a login account.
One of the defining characteristics of cryptocurrencies is the fact that they always remain under full control of their owners: every public address is associated with a private key that only the owner knows and without which no other person can access the funds stored on that address.
While this setup is one of the main selling points of crypto to some, others may consider the task of diligently managing their own keys not worth the advantages of keeping unconditional custody over their own funds. In this case, custodial wallets are available, which take over the management of a user’s private keys and allow them to access their funds via a simple and familiar login-password setup.
Centralized cryptocurrency exchanges are another common type of custodial service. They allow customers to deposit cryptocurrency funds onto an exchange account and then trade them for other cryptos or fiat currencies. The trades are not recorded directly on the blockchain, but rather on the exchange’s internal balance sheet. Meanwhile, every customers’ funds are held in custody from the moment they are deposited to the moment they are finally withdrawn from the exchange.
While easy to use and efficient, these services are associated with custodial risks: by storing many customers’ funds in one place, they become a likely target for hackers, government censorship or simple accidents like hardware malfunctions.