Bites Of Trading Knowledge #8

What is a Digital Asset Wallet? –

A Digital Asset Wallet is a technology-based tool used to interact with a blockchain network. There are two types of wallets commonly grouped as software and hardware wallets. Alternatively, depending on their working mechanisms, they may also be referred to as “hot” or “cold” wallets.

Digital asset wallets generate the necessary information to send and receive digital tokens (“tokens”) via blockchain transactions. Significant information contained in the wallet includes an “address”, an alphanumeric identifier that is generated based on the public and private keys. It is a specific location on the blockchain to which tokens can be sent to and it may be publicly shared with others.

The private key should not be shared as it gives access to tokens held by the user, regardless of the type of wallet used.

Digital assets essentially never leave the blockchain as they are just transferred from one address to another within the blockchain network.

What is the difference between a “Hot” and “Cold” Wallet? –

Digital asset wallets may be defined as “hot”, “warm” or “cold,” according to their working mechanisms or the way they operate.

A hot wallet is any wallet that is continuously connected to the Internet. These wallets are easy to set up and enable funds to be readily accessible, making them convenient for users to transact. Centralized finance exchanges (CeFi) tend to provide their users with wallet technology to access their accounts, whereas decentralized finance exchanges and applications (DeFi) would require users to obtain a third-party wallet technology provider that allows them to connect to DeFi services.

Cold wallets are not connected to the Internet and use a physical medium to store information offline, such as private keys, making them resistant to online hacking attempts. While less convenient, cold wallets serve as a safer storage option.

RISKS AND OPPORTUNITIES FOR CORPORATES AND INDIVIDUAL INVESTORS –

Portfolio Focused on Global Macro Strategies –

Global macro strategies are used by funds to base their holdings on their overall economic and geopolitical analysis of various countries. Holdings may include long and short positions in various equity, fixed income, currency, commodities, and futures markets.

These funds take longer-term directional views of markets and may not always hedge their positions, but could actively manage their fund to take advantage of what they see as short-term moves opposite to their main view.

An individual investor with a long-term view of Brent crude oil who maintains long dated futures positions could consider using front or near month Mini Brent Crude Futures to actively take advantage of shorter-term retracements to certain price levels.

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TRADDICTIV · Research Team

February 10, 2022

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