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August 2021

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The advantages of investing in a business account for Cryptocu …

(MENAFN – Fritz Gerald Pasilan)

Professional account for cryptocurrency

Cryptocurrency brings a lot of conveniences, especially when talking about business and e-commerce. The prevalent cryptocurrency, especially bitcoin and ethereum, makes business transactions such as trading and payment methods as easy as possible.

Cryptocurrency does not stand still as one of the forms of payment. Yet it can also be one of the best investments, especially as the cryptocurrency proves its volatility in recent years.

A cryptocurrency is a digital or virtual currency protected by cryptography, which makes counterfeiting or double-spending almost impossible. Many cryptocurrencies are based on blockchain technology, which is a distributed ledger applied by a network of computers. Cryptocurrencies are distinguished by the fact that they are generally not issued by a central authority, which makes them theoretically safe from government interference or manipulation.

As the digital world becomes more popular than we can imagine, investing in business accounts for crypto has more and more advantages. Here is the list of benefits of investing in a crypto business account.

Benefits of investing in a crypto business account

No intermediary

Experts believe cryptocurrencies are the future of our world. They will represent our economy much faster than letters. As a result, an increasing number of online merchants are integrating virtual currency into their operations.

Cryptocurrency recently exploded more than expected, and this trend is expected to continue. And you could make a lot of money if you decide to become one of those merchants who accept cryptocurrency payments in your online store. However, there is no guarantee.

However, the decentralized system has only shown a fraction of its benefits for e-commerce businesses. That’s why we believe the sooner you start, the better. Therefore, accepting cryptocurrency payments is essential if you are planning to start an ecommerce business.

Privacy and Security

Whenever you make a cash / credit transaction, your entire transaction history can become a reference document for the bank or credit agency involved. This may involve checking your account balances to make sure sufficient funds are available at the most basic level. A more in-depth review of your financial history may be required for more complex or critical transactions.

Another important advantage of cryptocurrency is that each transaction is a unique exchange between two parties, the terms of which can be negotiated and agreed upon in each case. Plus, information is exchanged on a ‘push’ basis, allowing you to send exactly what you want to the recipient – and nothing else.

This protects the confidentiality of your financial history and protects you from the threat of account or identity theft, which is more prevalent in the traditional system, where your information could be exposed at any point in the transaction chain.

Accessibility

Internet and digital data transfer are the media that facilitate the exchange of cryptocurrency. As a result, these services may be available to anyone with a working data connection, some knowledge of the cryptocurrency networks on offer, and easy access to their respective websites and portals.

It is estimated that there are currently 2.2 billion people worldwide who have access to the Internet or mobile phones but do not have access to traditional banking or currency exchange systems. With the necessary infrastructure (digital and regulatory) in place, the cryptocurrency ecosystem has the potential to make asset transfer and transaction processing available to this vast market of willing consumers.

Convenience

As a remote team employer, managing the payroll of a team of employees who live in various parts of the world can be a huge problem. Consider having to convert your dollars into dozens of different international currencies to pay your employees.

Carrying out cross-border transactions is not as difficult as changing currencies. With cryptocurrency, instant cross-border transactions with low or no fees are now a reality. Since Bitcoin transactions are public, all parties can see the transaction details and know the status immediately. Removing banks saves money for both employer and employee, and it can be a win-win situation for the workforce.

Capital raising is transparent

People prefer to raise funds through online platforms. Fundraising can then be done transparently. It also allows people to ask for funds publicly and explain why they need it. Platforms like these will almost certainly continue to be used in the future.

Crowdfunding with a dedicated blockchain wallet, on the other hand, will keep the total amount of donations open to the public. Likewise, it will allow fundraisers to avoid third-party platform fees without compromising donor trust. A crypto wallet also allows all parties to see how much money has been donated.

Advantages

Cryptocurrency eliminates the need for bureaucratic authority and inefficient intermediaries, allowing players to enjoy their favorite games faster. It speeds up and simplifies the process of exchanging crypto units.

Another common problem that game developers face is the inability to sell their software outside of app stores. These developers will be able to use the blockchain to process nanopayments and receive payment instantly.

The inconvenients

Another big issue facing blockchain casinos is slow transaction processing speeds. Although cryptocurrency transactions are said to be faster than traditional transactions, users have reported that this is not always the case. Since Bitcoin relies on miner labor rather than an automated system, you may have to wait up to 15 minutes for your funds to become available.

Final result

Giving early employees a share of the company’s profits is a popular trend in today’s business world. Given the exponential growth of cryptocurrency over the past decade, providing new employees with “corporate” cryptocurrency in the form of stocks could be a huge new trend.

However, the decentralized system has only shown a fraction of the benefits it can bring to e-commerce businesses. That’s why we believe the sooner you start, the better. Therefore, accepting cryptocurrency payments is essential if you are planning to start an ecommerce business.

Either way, it will be fascinating to watch the evolution of cryptocurrency. What we can see is either a financial revolution or a massive disaster for investors who have made their fortunes through the rise of cryptocurrency.

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How to use your brokerage account for a line of credit

This article provides information for educational purposes. NerdWallet does not offer any advisory or brokerage services, nor does it recommend specific investments, including stocks, securities, or cryptocurrencies.

Life is coming. At some point, you might need some quick cash for a down payment or to cover an unexpected expense, but you might not be sure if that warrants plundering your emergency savings. You might sell some of your investments, but depending on the market, it might not be the best time to take a profit. If the market is up, you’ll be collecting cash, but you’ll likely get a capital gains tax bill as well. If the market is going down, the sale could lead to a loss when you didn’t want it to.

But there is another option to consider: use your brokerage account for funding. Having a equity line of credit, or SBLOC, could give you access to cash so you can grab an investment opportunity or make ends meet when you’re stuck in a traffic jam.

Here’s an example: Let’s say you’re surprised with a sudden high tax bill and prefer not to drain your savings or sell stocks to pay it off. You also know that your annual work premium is coming in a few months. You can tap into your SBLOC to close the gap for now, paying off the loan once your bonus hits your checking account.

How title loans work

SBLOCs, also known as securities lending or portfolio financing, use your taxable brokerage account as collateral to secure a revolving line of credit. This means that you can choose the amount to borrow and repay without having set payments over a set period.

To qualify, brokerage firms offering this lending solution may require a certain account balance and will calculate the maximum credit available to you – the value of the collateral – based on the qualifying securities (usually stocks and bonds) in. your account.

With market volatility, you won’t receive a loan dollar for dollar, says Tolen Teigen, certified financial planner and chief investment officer at FinDec, a financial advisory firm based in Stockton, Calif.

“Maybe you can use 60 to 70% of the value of your securities portfolio as collateral,” he says.

And the amount of assets you have with the brokerage company usually plays into the interest rate you will get. Often times, the more assets you have in the business, the lower your interest rate will be, which is why SBLOCs often make more sense for those with larger account balances, Teigen explains.

Why Use a Equity Line of Credit

While there are some hurdles to overcome, establishing an SBLOC has advantages beyond avoiding tax consequences on unwanted capital gains or losses.

“This allows the investor to pursue their investment strategy without having to liquidate their holdings,” says Daniel Milan, managing partner at Cornerstone Financial Services in Southfield, Michigan. This means that you will not disrupt the asset allocation of your portfolio and can stay invested for the longer term.

“Typically, the investor has quick access to liquidity when they need to withdraw money from the line of credit, which creates flexibility,” says Milan.

Once your line is up, you can usually access the funds as needed within days. Even if you don’t need it, you can rest assured that you have a backup plan. Repayment is also flexible as long as the value of the required collateral is maintained.

Besides being fast, SBLOCs can also be a profitable option, given today’s low interest rates, says Stuart Blair, research director at Canterbury Consulting in Newport Beach, Calif.

However, you cannot use your line of credit on securities to purchase other securities or to repay margin loans.

What to keep in mind

There are risks associated with lines of credit based on securities. One of the most important is that the ups and downs of the market will affect the value of your account collateral.

When the value of the securities in your account falls below a certain threshold, the broker will issue a maintenance call or order to add more money or securities to your account. If you are not able to add more cash, you may see some of your titles sold to answer the call. And you might face an unpleasant surprise: Your brokerage firm has the right to liquidate positions – stocks, bonds and other securities in which you are currently invested – without informing you or asking for your opinion.

In addition, SBLOC prices are variable and not fixed. So even if interest rates are low now, they won’t always be and your rate could increase over time.

For these reasons, it’s important to use your equity line of credit wisely.

“An investor will need to determine the maximum amount of leverage they are comfortable with and develop a number of worst case scenarios to test their courage and courage,” said Blair.

When taking on any debt, it’s important to note a rule of thumb: don’t bite more than you can chew. Teigen and Milan agree that backing your SBLOC with less volatile securities (like stocks or blue chip bonds), using your line of credit sparingly, and having a concrete repayment plan are ways to mitigate risk and ensure that your title-based line of credit remains a useful tool.

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Tiffany Lam-Balfour writes for NerdWallet. Email: [email protected]


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