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The encryption and portfolio exchange provider Abra has just announced the launch of a new investment method for traditional stocks, commodities, indices and ETFs using Bitcoin. BTC It's not as simple as it sounds.
For what it claims to be a world first, Abra adds new investment features to its application that will allow investors from more than 155 countries to invest in 50 traditional stocks.
Before thinking that this is an innovation, consider it a world first because it is offered globally and Abraham offers more cryptocurrencies and currency than any other comparable application.
The new features of Abra will allow investors to buy fractional shares such as Facebook, Apple, Amazon, Google. You can also buy stocks of ETFs like Vanguard Growth and indices like the Russell 2000, all using Bitcoin of course.
Investments can start at $ 5 Bitcoin and there will be no trading fee for the remainder of 2019 if you sign up for Early Access.
It may sound simple enough, but it will be useful to know how Abra does this before even considering investing in stocks.
If you wonder how Abra earns money by doing this, it charges a spread when crypto-currencies are exchanged. It is actually a commission based on the difference between the lowest selling price and the highest selling price of a given badet at the time of trading.
What is going on?
Abra offers these investments using what she calls "synthetic money". Stick, because this is about to be confusing.
When you put money into the Abra application, your dollars are immediately converted to Bitcoin. Only the application continues to show that your account contains dollars.
If the Bitcoin price goes down, your balance always shows the dollar amount you have invested. Abra makes sure of this by covering your investment in a wonderfully complex and inexplicable, but I will try it.
Basically, the equivalent Bitcoin dollars from an Abra account is borrowed from a broker, sold to another broker for money, and this amount is held in an escrow account. This amount will match the money in your Abra wallet.
If the value of Bitcoin decreases – remember that the dollars in your Abra wallet are actually guaranteed by Bitcoin – Abra will add the Bitcoin needed to maintain your balance. If you wish to withdraw your dollars, Abra will purchase the required amount of BTC using the initial escrow dollars to recover all your money.
Since the value of the BTC is now lower than the value you bought, your initial investment (matched in escrow) can buy back the amount required for your original dollars to be withdrawn from your account.
I thought we were supposed to simplify cryptocurrency?
Use Abra to invest in stocks
The same thing happens when you use Abra's new feature to also invest in stocks.
Imagine if you decide to invest $ 1,000 in Apple stock, Abra will place $ 1,000 of Bitcoin indexed on the price of Apple stock. "As Apple's price goes up or down against the dollar, bitcoins will be added or subtracted from your contract," an Abra spokesperson told Hard Fork.
"When you decide to close the contract and sell the Apple investment, the value of the shares will be [reflected] Bitcoin in your wallet, "they added.
Despite the complexity of what happens below, profits and losses simply depend on the appreciation or depreciation of an action. The amount of profit you make or lose depends on the specific investment you make.
From the point of view of the user experience, it's very simple. You invest money, choose something you want to invest in and wait to see what happens. I hope you will make a profit.
In fact, what Abra offers is more like what trading applications such as BUX or Plus500 provide. It should be noted that most users who invest using these applications are losers. In some cases, investors have lost thousands of times what they initially invested.
Abra may have the difficult task of translating complex trading instruments into a simple, easy-to-understand application that, in theory, could benefit users and open up to many people a previously hidden world, but it does not matter. is not without risks.
These are not commercial tips. As with any financial instrument, do your own research and consult an independent chartered financial advisor before you dispose of your money.
Posted on 6 February 2019 – 12:37 UTC
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