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2023 | OriginalPaper | Chapter

8. Cryptoasset Investment Types

Author : Thomas Jeegers

Published in: Understanding Crypto Fundamentals

Publisher: Apress

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Abstract

For any investment, buying at a low price and selling at a higher price is one form of return, capital gain. However, it is often not the only way to benefit from the investment. Equity investments (stocks) typically also deliver returns in dividends. Fixed-income investments (bonds) mainly deliver returns through interest. Real estate investments can deliver returns through rent.

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Footnotes
1
With 73% coming from hydropower and 27% from geothermal power”, as per the Government of Iceland [88].
 
2
Bitcoin Mining by Country 2023, World Population Review [83].
 
3
This figure is based on the following rounded numbers: hashes necessary to mine a bitcoin (210 zettahashes for a block delivering 6.25 BTC), hashes per second with the newest ASIC miners (200 trillion), their consumption (5500 watts or 5500 joules per second) and Bitcoin’s current price ($28,000). It ignores the miner’s purchase and set-up costs. Details of this computation are presented in Appendix B, in the appendices.
 
4
The reward is 6.25 bitcoins per block since May 2020 and until the next halving event in 2024.
 
5
Distributed denial of service (DDoS) attacks are cyberattacks that can disrupt the operations of a network by flooding it with traffic.
 
6
A typical loan-to-value (LTV) ratio for lending is around 65% (i.e., a collateralization of roughly 150% (or 1.5 times) of the loaned amount). More risky collateral typically requires higher collateralization (lower LTV).
 
7
Specifically, the impermanent loss in percentage is \( 2\times \left[\left(\sqrt{\left(\mathrm{price}\ \mathrm{ratio}\ \mathrm{change}\%\right)\left)/\right(1+\left(\mathrm{price}\ \mathrm{ratio}\ \mathrm{change}\%\right)}\;\right)\right]\hbox{--} 1 \)
 
8
Technically, when the cryptoasset is received for free, then the scheme is an airdrop, while a service delivered makes the scheme a bounty. However, such schemes are almost always referred to as airdrops in practice.
 
Metadata
Title
Cryptoasset Investment Types
Author
Thomas Jeegers
Copyright Year
2023
Publisher
Apress
DOI
https://doi.org/10.1007/978-1-4842-9309-6_8

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