The economy makes the world go round. It deeply affects each of us in our daily lives, so it’s certainly something worth understanding, even at a high level.
Proof of Stake is a popular, alternative consensus mechanism to Proof of Work. Instead of needing computing power to validate transactions, validators must stake coins. This fact drastically reduces the energy consumption needed. Proof of Stake also improves decentralization, security, and scalability.
It doesn’t make much sense to lend money for free. If Alice wants to borrow $10,000 from Bob, Bob will need a financial incentive to loan it to her. That incentive comes in the form of interest – a kind of fee that gets added on top of the amount Alice borrows.
When you’re prompted to update your digital banking app on your smartphone, you probably don’t even think twice. Maybe your phone auto-updates without you even noticing. It’s a necessary process, after all – if you don’t install the latest version of the software, you run the risk of being denied access to its services.
Market capitalization applies as much to stock markets as it does to cryptocurrencies and blockchain projects. It tells us the current market value of a given cryptocurrency or blockchain network.
In short, financial risk is the risk of losing money or valuable assets. In the context of financial markets, we may define risk as the amount of money one can lose when trading or investing. So, the risk is not the actual loss, but what can be eventually lost.
Black Monday is the name used to describe a sudden and severe stock market crash that occurred on October 19th, 1987. The Dow Jones Industrial Average (DJIA), an index that measures the US stock market performance, fell more than 22%. The crash was preceded by two other large drops a week before.