The glib response to the question of, “What is active management?” would be, “The opposite of passive management.” The more helpful answer would be that it’s a term which refers to professional money managers or teams of managers who take an active role in improving the portfolios of their clients by frequently making buying, holding and selling decisions for all of the assets that such portfolios contain. Their overall job with active management is to use a variety of intelligent strategies to help their clients’ portfolios beat the market. They’ll be looking for undervalued stocks to invest in, identifying them through fundamental analysis, and buying them when they see an opportunity.

The idea that investors can outperform the market in the long term is seen as not just optimistic but downright heretical by those who subscribe to an idea called the efficient-market hypothesis (EMH). EMH says that over the long run, active management will produce no better results than if you simply put your money into every stock in the market itself. Still, active management remains popular, because sometimes and for some people you can beat the market.

We mentioned passive management as being the opposite of active management. Its other name is indexing, and it refers to the more conservative approach of building up a portfolio of stocks and simply waiting for the index to rise. There is no active management with this approach because you’re playing the long game and banking on the historical truism that the market always rises over time. Such strategies are often linked to mutual and exchange-traded funds (ETF).

If you opt for active management then you’re choosing to accept a higher amount of risk in return for potentially greater rewards, and you accept that you’ll be paying more for the privilege too. Active management is done by active managers, so you’ll be paying for their time and expertise.You’ll still pay for a passive management strategy of course, but not as much, and though you might make less on your investment over time, you have a much better chance of success. There are no guarantees of course but active management is definitely riskier.

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You might think of bitcoin as an alternative to regular fiat currency and therefore might be tempted to call it an “altcoin” but in actual fact the term also means any cryptocurrency that came along after bitcoin.

“Altcoin” refers to digital currencies-and it’s worth noting that the correct term for such coins is actually “tokens.” The ERC-20 tokens that rely on the Ethereum blockchain are the best-known altcoins, and since bitcoin came along in 2008 their number has risen to over 2000. Some were just modifications of bitcoin, the technical term for which is a “Hard Fork”. Some of them were created simply as borderless currencies while others have specific functions too, such as the ability to manage smart contracts.

When an Altcoin is forked from bitcoin it is often mined in the same way, meaning that it uses the proof of work consensus algorithm, but that isn’t the only method that’s used. Alternative approaches include Proof of Stake, Delegated Proof of Stake, Proof of Burn, Proof of Authority, and Delayed Proof of Work.

Fans of altcoin will sometimes take exception to the term, seeing it as demeaning in some way, but it’s already entered into general usage-at least in investment circles-in an entirely neutral way. They shouldn’t worry. If altcoin detractors really want to make their feelings known then they usually employ much more creative and colorful language.

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It’s often possible to see very small differences in the price of the same asset between two or more markets. This discrepancy obviously creates buying and selling opportunities for canny investors, who can buy low and sell high (if they are quick enough). The name of this practice is Arbitrage.

Arbitrage inadvertently acts as a unifying force because it encourages prices for the same or similar assets to converge across markets, and the speed at which this happens can be taken as a yardstick of general market efficiency.

If all markets were working at optimal efficiency then you’d see the same price for an asset at every exchange. They would always be identical and there wouldn’t be any chances for the trader to profit from arbitrage, but of course, this isn’t the case.

In theory, arbitrage potentially offers you the ability to profit without risk, since you aren’t gambling on the outcome of a future price move. You already know the difference between two prices on separate exchanges for an asset, and you try to take advantage of it.

That’s the theory, but in reality, the markets are full of any number of dedicated bots looking to do exactly that, and their activities may affect price moves and thus your level of risk.

In order to use arbitrage with cryptocurrencies, it’s best not to be dependent on blockchain transactions. For example, a trader wishing to use arbitrage with bitcoin across a pair of exchanges would necessitate them opening accounts in each of them. Also, to avoid the typical half-hour wait times that deposit and withdrawal confirmations can take, it’s best for the trader to have accounts with both exchanges, and each of them stocked with enough funds to facilitate immediate transactions.

When they’re talking about arbitrage, the approach that we just described is the type that most traders will know and it’s called “pure arbitrage”, but there are actually around 10 more types you can use.

One example (which isn’t quite as popular) is merger arbitrage. This method relies a lot more on speculation because it’s concerned a lot more with how future events will affect an asset’s price. We’re specifically talking about things like company acquisitions, mergers, bankruptcies, and so on.

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• Bull and Bear Markets

Switch on the TV news and you’ll often hear the stock market being described as either in a “bull” or “bear” phase. Bear means that the market is trending downwards in a strong and sustained way. It means that prices are dropping, more people are selling than buying, and there isn’t much optimism to be had. A bull market is the opposite. In this case, prices are going up and traders feel confident that they’ll continue to see returns on their investments. That’s why there is a statue of a bull outside the Chicago stock exchange. It symbolizes the aggressive march towards prosperity.

Bull and bear are also used to describe markets for other types of assets too, including those for cryptocurrencies. These markets are not as big but they are a lot more volatile, and it isn’t uncommon to see long bear trends that feature 85% price drops. If that kind of slump happened in traditional markets then it would usually mean the end of the world, but in cryptocurrency markets, it’s not at all unusual.

A 20% price drop over a 60-day time period is usually enough for market speculators to declare that we’re in a bear market. It’s a sign that investors are pessimistic, and that they’ve lost confidence in market prices and indexes. When they feel that their assets are no longer able to make money for them they start to offload them. When supply exceeds demand like this, prices fall, and the trend becomes self-fulfilling.

That 20% price drop may be seen as the start of a bear market, but the signs that it’s going to happen aren’t always that obvious. Traders spend a lot of time looking at tools like moving averages (MAs), the Moving Average Convergence Divergence (MACD), the Relative Strength Index (RSI), the On-Balance-Volume (OBV), and others to try and foresee a bear market.

Bull and Bear Markets

As a rule, bull markets are driven by greed, and bear markets are driven by fear. That’s an oversimplification but it generally holds true. In a bull market traders are more optimistic, so more of them are pumping their funds into more assets. Demand rises and so this causes prices to rise too.

Between 1929 and 2014, US economists believe that we’ve had 25 bull markets and 25 bear markets. The average bear market loss was 35%, while the average bull market gain was around 104%. Such sustained trends help to show how market momentum keeps prices either rising or falling over long periods.

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A Black Swan event is something significant that takes you (and everyone else) by surprise. The original phrase, Black Swan can be traced back to the Roman poet Juvenal, who first used it to describe something very rare indeed.

Contemporary usage of Black Swan Event has been bolstered by statistician and trader Nassim Nicholas Taleb. His 2007 book was called The Black Swan: The Impact of Highly Improbable, and in it, he attached the term to a theory that relates to trading. He noted that an unexpected Black Swan Event has a profound effect on the market and that this event can be distinguished by three primary features:

1. A Black Swan event defies regular expectations. It comes out of the blue and there’s no way that you could have predicted its arrival simply by looking at past events.
2. Its impact is always highly significant, seismic in fact, like a brick hitting the center of a still pond and the ripples expanding in all directions.
3. Despite all of this there will be a perfectly rational explanation for the event, and once you understand what caused the Black Swan Event this time around, you’ll be able to anticipate future occurrences, or at least their impact, more easily.

Taleb says that we can think of things like the 9/11 attacks, the fall of the Soviet Union, and the rise of the World Wide Web as Black Swan events.

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• How does Bitcoin Core work?
• Is Bitcoin Core right for me?

Bitcoin Core is the software’s primary implementation, allowing Bitcoin users to interact with the network.

No one company or corporation has control of Bitcoin: a global community of dedicated developers handles updates and reviews instead.

Originally, this groundbreaking cryptocurrency was launched by the enigmatic Satoshi Nakamoto, under the Bitcoin title. But the name was later changed to Bitcoin Core, to prevent potential confusion.

How does Bitcoin Core work?

Users serve as network nodes when they run the Bitcoin Core code. This empowers them to verify blocks and transactions fellow users have sent.

Miners are kept in check, and users don’t need to trust anyone (e.g. wallet providers) to present the proper view of the blockchain.

A wallet is included in the Bitcoin Core software. Users can either utilize this from inside the application directly or link external wallets to their node for validating incoming transactions.

Is Bitcoin Core right for me?

Any user that performs online transactions in Bitcoin on a regular basis should, at the very least, look into running a node. It offers numerous advantages, specifically with security and privacy – both of which are crucial to minimizing risk.

A standard software wallet, which doesn’t interface with a user’s node, will query third-party servers for a user’s balance. This may cause users to worry, as the server can also link a user’s balance to their IP address.

As a result, the third party could deduce that said user owns the address they’re asking about.

Similarly, choosing to place complete dependence on a block explorer can be dangerous. Users have just one point of reference for their balance, so the server would be able to send inaccurate information their way.

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Bitcoin is the biggest crypto in the world, by market capitalization. It commands a huge portion of the crypto markets’ trading volume – not to mention a significant amount of the attention focused on the entire industry.

By studying the summative market capitalizations of every cryptocurrency available, it’s possible to reach the overall market capitalization valuation for the complete crypto space.

As a result, the Bitcoin dominance is defined as the ratio between Bitcoin’s market capitalization to the other crypto markets.

Bitcoin was the largest crypto, and one of a small number available, for several years. It’s no surprise that its dominance was nearer to 100 percent than it is at the time of writing this piece. That’s because Bitcoin’s dominance saw a substantial decrease as new cryptocurrencies emerged.

It’s likely that this is connected to the ongoing rise in popularity of ICOs following the creation of Ethereum and the ERC-20 token standard.

Bitcoin dominance is frequently disrupted when altcoins achieve market share relative to Bitcoin (known as “alt seasons”). But Bitcoin dominance isn’t always affected by bull or bear markets directly. Why? Because it’s a ratio – not an absolute term.

So, if Bitcoin drops in price while the wider crypto market follows a similar movement, it’s likely that its dominance will stay the same.

But while Bitcoin dominance is fascinating to discuss, remember this key point: it doesn’t reflect Bitcoin’s true value, particularly due to forked and premined coins that affect the overall market capitalization in an unnatural fashion.

Another vital factor to consider: market capitalization doesn’t equate to an influx of money. Instead, it’s a measurement based on the present market price and the supply in circulation.

Bitcoin’s dominance was around 100 percent when it was the only tradeable crypto available on exchanges. But this has dropped with the sheer variety of other cryptos in circulation. That doesn’t have to be good or bad – it’s just a tool that can provide a clearer perspective on the crypto space’s ongoing evolution.

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Blockchain is the technology behind online digital ledgers and it enables participants to access a permanent digital public record that can’t be altered. It’s made up of blocks of data that are chained together in chronological order. The attraction with a blockchain token is that each time it was involved in a transaction there’s a permanent record of that fact along with relevant details added to the ledger, so when it’s used as a type of cash you can think of it as “money that remembers where it’s been”.

Computer scientist Stuart Haber and physicist W. Scott Stornetta experimented with the first blockchain prototype in the early 1990s. They used it to secure digital documents so they couldn’t be altered. Their work inspired Dave Bayer and Hal Finney, along with other notable computer boffins and cryptographers, and the eventual result was bitcoin. This was the first decentralized electronic money transfer system. A white paper on the subject was published in 2008 by Satoshi Nakamoto, a pseudonym for someone whose real identity we still do not know to this day.

Although blockchain technology predates bitcoin, it’s the digital substrate on which most crypto networks still depend.Blockchain transactions take place across a peer-to-peer network of computers spread around the world. Each one of these nodes in the network looks after a copy of the blockchain and helps to run it securely. It’s this approach that makes bitcoin and other currencies like it so independent. There is no central bank where all the bitcoin is kept, so there’s no way that a corporation or government could ever stop it or control its use.

Blockchain is set up in such a way that defrauding someone becomes virtually impossible. As a shared database you would need to be able to somehow change every copy of the ledger, and this just isn’t feasible in terms of either the practicality or the energy and computing muscle required to achieve it. To all intents and purposes, you just can’t hack the blockchain.

Bitcoin operates using something called the proof of work consensus algorithm (which is at the heart of the bitcoin mining process). This enables it to be realized as a “Byzantine fault tolerance system”, which is another way of saying that its blockchain can work without interruption as a distinct network, and even if some of the nodes in its network can’t be entirely trusted, the network as a whole can.

Blockchain technology can also be used in areas where the integrity of data is important, and lately, it’s found its way into the art realm. Non-fungible tokens (NFTs) using blockchain technology make it possible for artists to create verifiably unique and genuine works of art. But the integrity of blockchain means that it can be used in virtually any industry.

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Bounty programs have been helping cryptocurrencies get off the ground for quite some time. Any time a new product comes onto the market it’s going to need assistance to gain credibility and establish traction, so start-ups often set aside some of their tokens for just this purpose.

Since word-of-mouth advertising is powerful, bounty programs will often target the crypto community in these and other ways:

Social Media Bounty – they will use the social media accounts of participants to promote the ICO. Likes, reposts, shares, views, and comments on popular platforms like Twitter, Facebook, YouTube, and WhatsApp all help to build momentum.

Content Marketing Bounty – content creators, or influencers, provide their audiences with information and can be hugely popular. Start-ups will encourage creators to produce articles, blog posts, or videos to get the word out. Usually, the better the results they achieve, the bigger their rewards.

Bitcointalk Signature Bounty – These are open to Bitcointalk forum members. They just need to add the official ICO signature to their profiles. The bounty that participants get will typically depend on their rankings, and it’s usually only open to those ranked as Jr. Members or above.

Translation Bounty – This bounty consists of translating important documents related to the project in order to ensure global reach. This commonly includes the ICO Whitepaper, the official website, and the Bitcointalk ANN thread.

Bug Reporting Bounty – by encouraging developers and security researchers to find bugs and vulnerabilities in the blockchain infrastructure, they motivate some highly effective community product testing. The more severe and significant the bug, the greater the bounty.

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• Bear and Bull Markets

A bull market or one that’s described as bullish is “on the rise”, with prices heading upwards and traders brimming with confidence about investing. The term “Bull” began in the traditional asset markets and it’s also used to refer to buoyant cryptocurrency markets too, though due to their differing natures it’s used with different frequencies depending on which one you are talking about.

The thing is, even a volatile traditional stock market doesn’t often see the magnitude of price movements that a cryptocurrency market will, so it takes much bigger price swings before a crypto trader will call it a bull market. A crypto market can rise by as much as 40% in 48 hours, while a traditional market may not see that kind of rise in years.

So, when investors are optimistic and prices are consistently heading upwards, it’s called a bull market, and the factors that usually influence such rises include GDP and stable employment figures. That’s because when traders feel that the economy has good foundations, investors will be happier to invest. But in the crypto space, such fundamental influences don’t have as much sway over prices or risk appetite.

Analysts never really know for sure if there’s a bull market on the way, and they only find out after it happens. They usually call it a bull market when they see a 20% increase in prices, but they can’t predict when it’s going to happen. Traders and analysts do spend time looking for the signals though using technical analysis indicators such as Moving Averages (MAs), the Moving Average Convergence Divergence (MACD), the Relative Strength Index (RSI), and the On-Balance-Volume (OBV).

Bear and Bull Markets

Bear markets are the opposite of bull markets. A falling market is described as bearish, and once this trend takes hold everyone tends to get on board in a kind of mutually reinforcing frenzy of pessimism.

This is particularly evident if we look back through history. The experts say that in the US there were somewhere between 25 bull and 25 bear markets between 1929 and 2014. The average bear market dropped 35%, and the average bull market gained around 104%.

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