LUNA Cryptocurrency Collapse: Is The End Near?

14 May 2022
Actual, Cryptocurrency, Investment
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The downfall of LUNA shook the crypto world. With most cryptocurrencies plunging more than 50%, billions of dollars have gone into thin air. Fear and uncertainty have taken the place of confidence as noticeable in the investment behaviour in the cryptocurrency market. How could this meltdown happen and what are the consequences?

 

LUNA

The cryptocurrency LUNA is associated with TerraUSD (UST). UST is a stablecoin which entails that there is an algorithmic $1 peg governed by underlying code. UST is inherently different from the other stablecoins like Tether and USD which are both backed by real-world assets such as bonds. UST has no real-world assets are merely relies on the algorithm. To maintain the $1 peg, the UST algorithm stabilises to create and burn tokens of both UST and the linked crypto LUNA. However, due to the extreme market volatility, UST has been unable to maintain the peg and dropped to 12 cents according to data from CoinGecko. Further, the Terra blockchain, which is the operating chain for UST and LUNA, had problems processing transactions twice in less than 24 hours.

Due to the inability to maintain the peg, LUNA plunged to $0 from more than $100 in the last months. This decline in price in UST – and therefore LUNA- has resulted in a meltdown in the crypto market. Even while the collapse of UST only lasted for several hours to regain the $1 peg, billions of dollars in value have been erased and the largest cryptocurrency bitcoin dropped 15% for the week, a level not seen since late 2020.

LUNA price (USD) in the last 7 days. Derived from https://coinmarketcap.com/currencies/terra-luna/

 

Compensation                                      

Bitvavo, a big trading platform, compensates investors after this disaster. The prices are equal to the prices of the pause on 13-05-2022 at 8:20. This pause was needed to create a plan to further stop the devaluation of the stable coin. Binance, the world’s largest crypto exchange temporarily delisted UST and LUNA but reversed this decision after Terra announced resuming new verifications on the blockchain and halting direct transfers.

Fear

The LUNA / UST situation resulted in panic and insecurity in the crypto market. In combination with the higher inflation and interest rates that have caused a sell-off in the global stock market, the cryptocurrency market seems to be related to the stock markets and manifests in a loss of more than 50% value in most cryptocurrencies. The growing fear and growing levels of inflation decrease the trust and investment in the crypto market. According to Vijiay Ayyar, the vice president of corporate development and international at crypto exchange Luno, in the crypto market « it’s normal to see bounces amounting to 10-30% ». » While « these are normally bear market bounces, testing previous support levels as resistance », even the largest of cryptocurrencies such as bitcoin may not be sustainable or be able to bounce back. As  To long-term feasibility of cryptocurrency needs to be further explored – focussing on the environmental impact of the mining of these coins.

 

Conclusion

Cryptocurrencies as investments bring the known risks of (heavy) value fluctuation. However, as seen in the LUNA case study, the value of your assets can rapidly drop to a point of no return. KSI, a well-known Youtube, lost $2.8 million in his LUNA investment making his coins virtually worthless.

For more information about personal advice regarding international business advice, tax situations or consolidation, Global Connect Admin B.V. can assist you with these challenges due to the rich experience and framework of connections.

The freezing tensions between the EU and Russia: And how this affects your business

11 Feb 2022
Current news, Europe, Investment, Russia
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The freezing tensions between the EU and Russia

And how this affects your business

Russia EU tensions

Whether you represent a company, political party or government, actions tend to have consequences. While many hope to see the year 2022 as the year of healing, both economically and culturally, past tensions are throwing mud in the water. Conflicts that affect the bilateral political dialogue between the European Union (the EU) and the Russian Federation (Russia) are not new, yet it is still considerably unclear what will happen next. Will the EU citizens sit in the cold and the Russian citizens without certain necessary goods? Or will we be able to celebrate warm holidays and further enhance international trade?

Policy dialogues and cooperation are temporarily frozen

The aftereffects of Russia’s annexation of Crimea in 2014 can still be felt in 2022. The world watches Russia’s threats towards a war with Ukraine, unsure if these threats are empty or not. As a result, some policy dialogues and mechanisms of cooperation between the EU and Russia are temporarily frozen. The next question is, will this dialogue continue to freeze shut, or will the two international positions of power allow international defrosting? However, the EU and Russia’s stagnated relationship was not always like this. Both share similar global goals and extensive history in cooperation and trade.

The history of cooperation between the EU and Russia

The European Union and Russia share a longstanding history. Next to cultural, economic and historical ties, Russia is one of the most prominent neighbors in the EU’ neighborhood.’ In the past 25 years, Russia and the EU have exchanged information and cooperated in various international matters. They share bilateral global concerns regarding:

  • Climate change;
  • Migration;
  • Drugs trafficking;
  • Human trafficking;
  • Organized crime;
  • Terrorism;
  • Non-proliferation; and
  • The Middle East peace process.

With Russia’s permanent UN Security Council membership, the country also engages in various selected points of interest of the EU, which was proven by the implementation of the Minsk Agreements. These Agreements were supposed to put an end to the war in east Ukraine. However, while this seemed like a path to peace back in 2014, the tensions between Russia and Ukraine are still very much alive.

The Partnership and Cooperation Agreement (CPA)

In general, the framework of the political and economic relationship between the EU and Russia is the Partnership and Cooperation Agreement (CPA). Since 1997, the goal of this Agreement has been to promote trade, investment, and the development of economic relations between the two parties. However, what started as healthy manure has slowly but surely transformed into a minefield.

In 2008, the EU and Russia started negotiations of a New EU-Russia Agreement. However, this Agreement is still postponed to this day. With the current challenges in dialogue, the two parties can agree that the existing conversation is either limited or non-existent. Like a domino effect, the EU and Russia are heavily involved in international trade, affecting everyone. What can investors and enterprises expect for the future of their company?

Your opportunities in trade, even with the limitations

Societies, governments and businesses are affected by the EU-Russia tensions; that much is clear. The EU and Russia adopted laws, resulting in various import and export restrictions. Since 2012, Russia moved from third place to fifth place as the EU’s biggest trade partner.

Even with the trade restrictions, the EU still remains Russia’s most prominent trade partner. In 2020, Russia remained representative of 5% of the EU’s merchandise trade. This bilateral trade in goods consisted of €174 billion, which is around 40% of Russia’s trade.

Main trade EU Russia

The future of the tensions between the EU and Russia

The EU continues to apply a set of restrictive measures against Russia in response to the Ukraine crisis. As a result, Russia responded with countersanctions. Experts from the Atlantis Council are concerned about the EU’s response to Russia yet state that both parties have various options. The EU should build a common strategic culture in order for European countries to stick together. Simultaneously, both Russia and the Eu are investing in the Transatlantic region for future endeavors. Therefore, it is most likely that the two parties will drive further apart.

Furthermore, in order for Russia and the EU to start an open dialogue again, both parties should look at their strengths and impacts. However, seeing a harmonious EU-Russia relationship in the short term will be most unlikely. While both parties may share similar international goals, they also share different views regarding what is best for them. In this case, the negative highly outweighs the positive.

Company assistance

In the end, Russia and the EU are dependent on each other in one way or another. Just like a neighbor quarrels, only time and actions can tell what the future brings. With the world as a global village, governments and authorities do need to reflect on their position of power: What message will they send out, and what strategies should they entail? One thing we do know is that the current state of affairs will continue to strongly affect international businesses, whether we like it or not.

Are you concerned about your position in international trade? Global Connect Admin has an extensive background and expertise in European and Russian matters, especially regarding international business, financial management and accounting standards. If you require any form of assistance in complex company situations, do not hesitate to reach out to us. Instead of lingering on restrictions, we would gladly review possibilities with you.

Related articles

Sources

The European Union: External Action Service – the European Commission – the Atlantic Council

The Estonian Unicorns: Opportunities For Startups in Estonia

13 Dec 2021
Actual, Investment, Startup
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Estonia has the highest number of unicorns per capita in Europa. Fostering an environment for these booming startups or so-called unicorns, the Estonian economic growth in the 3rd quarter of 2021 (8,6%) showcases the successful Estonian development strategy. Hence, using the pandemic situation to their advantage, Estonia continues to emphasise the importance of startups. Curious to read what economic sectors yield to most opportunities?

 

Unicorns

Estonia is the leader in unicorns per capita in Europe. With 7 unicorns, despite a population of 1.3 million people, Estonia is a breeding ground for companies valued at more than $1 billion. Currently, these 7 companies are the following ones: Skype in 2005, Playtech in 2007, TransferWise in 2015, 2018 with Bolt, Pipedrive in 2020, and in 2021 both Zego and id.me became Estonian-founded unicorns. As noticeable, the time between the rise of a unicorn is constantly decreasing. Further, looking at the sectors these companies are concerned with, the overarching trend is the connectedness with technology and communication.

 

Economic Analysis

This relation between breakthroughs and technology is elaborated on by Robert Müürsepp, a leading analyst at Statistics Estonia: “the economic growth was driven by construction, information and communication, real estate, and transportation and storage activities. Also manufacturing and professional, scientific and technical activities recorded positive results”. These three economic activities contribute more than 3% out of 8,6% to the GDP growth of the 3rd quarter of 2021. In comparison, the biggest decreases in terms of percentage of GDP are, as expected with the pandemic and lockdowns related to the pandemic situation, the leisure and entertainment, transport, hotels and restaurants, and clothing and footwear sectors.

Müürsepp also argued that the fall in investments (-8,8%) in the third quarter is due to smaller investments in general, yet yielded a significant increase in the investments in transportation equipment (32%) and 15,1% in other machinery and equipment. Furthermore, foreign trade continued to grow rapidly: The export and import both accounted for a growth of 17,5%, while the emphasis was on the export of service (38,9%) powered by 1) computer, 2) technical and 3) business services. In comparison to the previous quarter, the seasonally adjusted GDP grew by 0,7% and grew by 9,2% compared to the third quarter of 2020.

 

Estonia

“We are eager to make relevant changes happen quickly. This makes Estonia a perfect testing ground for innovative solutions. As a small country we value flexibility and diversity and therefore we welcome foreign investors and talent in Estonia – together we can build a better future for everyone,” states Prime Minister Kallas concerning the ideal testing ground for the unicorns.

While the unicorns get encouraged by the Estonian government, the unique selling points of this technological country are not covered yet.

 

Opportunities

After restoring its independence in 1991, economic freedom has been highly valued in Estonia. While being ranked fifth in Europe for economic freedom, the Estonian economic environment created by the state encourages people to start and grow businesses. Moreover, Estonia has also been a steadfast global leader in tax competition for the last seven years in a row. Not only this tax system without corporate income taxes, capital taxes and property transfer taxes, makes people entrepreneurial. There is also Estonia’s advanced digitalisation which reduces the hassle and costs and, a wide range of encouraging success stories (such as Skype and Bolt), and sociological characteristics such as a developed and affordable living environment, a long and full-paid parental leave, and a welcoming and supportive startup community. Besides this, Estonia’s entrepreneurial activity is the highest in the world due to the innovative, productive and curious mindset of the Estonians. According to Atomico in “The State of European Tech 2020 report, Estonia has 865 startups per capita with a steadily growing number.

Knowing these reasons, Estonia is often seen as the leading startup-friendly country in the world. Moreover, you do not need to reside in Estonia to enjoy these benefits of the business environment. Estonia’s innovative e-Residency programme, itself referred to as a state startup, enables anyone to log into our country to establish and manage a company here, regardless of their physical location.

 

Conclusion

Even with the best business environment and the most entrepreneurial people, it is no guarantee for automatic success. With stories and information from the vibrant startup community, such as the foundation of the EU Unicorns Group to accelerate Europe’s green transformation and tech innovation, together with a little bit of luck, Estonia can be the “perfect testing ground for innovative solutions” in the words of the Prime Minister. Interestingly, Estonia maintains to further develop into a tech-savvy country focussed on digitalisation and communication. Knowing that the interest in digitalisation and tech is growing in both society and business, it is recommended to not only keep an eye on the developments but also on the (new) unicorns. While these unicorns can be beneficial contacts or partners for your existing company, the ideal business environment due to tax reasons and state encouragement make Estonia a perfect choice as the breeding ground for your next startup.

Curious about these new opportunities, or your want more information about personal advice regarding international business advice, tax situations or consolidation? Global Connect Admin B.V. can assist you with these challenges due to the rich experience and framework of connections.

 

Sources

https://investinestonia.com/from-the-production-lines-of-the-unicorn-factory-estonia-is-the-champion-in-founding-billion-dollar-startups

https://investinestonia.com/estonian-bolt-and-skeleton-together-with-other-european-unicorns-founded-the-eu-unicorns-group-to-accelerate-europes-green-transformation-and-tech-innovation

https://investinestonia.com/estonian-economy-grows-8-6-in-third-quarter-of-2021

https://www.stat.ee

https://www.workinestonia.com

Global Connect Admin meets Canon in Venlo

18 Nov 2021
GCA on Tour, Investment, Netherlands
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When you think of printing, you may think of digitalization or paper waste. When you think of 11 November, you might think, “That is just a normal day” or “The 11th of the 11th is once again canceled in Limburg. What a bummer!” For Global Connect Admin, 11 November 2021 was the day to celebrate high-end innovative printing technologies. With the DUJAT Meets Limburg event, we traveled to Venlo to visit the new state-of-the-art Canon headquarter and the Customer Experience Center. But first, what makes this new headquarters so unique, and why invest in Limburg?

Limburg and innovation

Limburg, the southern Dutch province located next to Belgium and Germany, knows several key sectors, such as agri-food, life sciences & health, logistics, chemicals & materials and high-tech systems. Companies and the environment benefit from innovation and growth, with thriving ecosystems around different hotspots. The Dutch are well-known for being fluent in English. In Limburg, it is also prevalent to be native in other languages, such as French and German.

Several sectors have started to cooperate, creating ideal locations in combination with knowledge institutions. In recent years Limburg has grown into a multi-language and intercultural hotspot for many sectors. A prime example is the high-tech systems, making it more inviting for companies to thrive there. Canon, one of the biggest employer of Limburg, is a big player in this integral growth.

Green printing solutions

Canon invited companies to their newest ‘Green Landmark’: The Canon headquarters in Venlo. The location opened in the summer of 2020. However, many companies only recently have the chance to pay a visit. Global Connect Admin and the DUJAT community were one of the first to marvel at the new Canon accommodation. Inside the building are the four Green Plazas that provide an open and inviting atmosphere, ideal for stimulating synergy and exchange of knowledge.

The event

First, Mr. Asada, CEO of Canon, Mr. Leurs, Board Member of DUJAT and Managing Director of Canon Benelux and Mr. van Elk, Director of LIOF, welcomed everyone with a presentation and a tour of the sustainable building.

Secondly, everyone was invited to the Customer Experience Center, where Canon showcases its brand-new innovations for potential clients. During the networking lunch, Mr. de Goeijen, VP BL CTS of Canon, introduced everyone to insights into innovative printing technologies.

Key takeaways: Kyosei 共生

What impressed us the most was the corporate philosophy of Canon. Their philosophy is Kyosei, which translates to “Living and working together for the common good.” This corporate philosophy conveys the dedication to see all people, regardless of culture, customs, language or race, harmoniously living and working together in happiness into the future. Realizing Kyosei is a challenge due to current factors related to economies, resources and the environment. Nonetheless, Canon strives to eliminate difficulties through corporate activities. They believe that a genuinely global company must foster good relations with customers, communities, governments, regions and the environment. Therefore, Canon embraces the Sustainable Development Goals of the United Nations, creating new value while conserving the environment, solving social issues and responding as a responsible corporate citizen.

One of the key takeaways is the San-ji (Three Selfs) Spirit, embracing self-motivation, self-management and self-awareness. We agree that taking the initiative and being proactive is crucial for motivation. To manage your business and yourself well, you need to conduct yourself with responsibility and accountability. Especially with the state of our world, we need to understand our situation and our role in this world.

Conclusion

The printing business is far from dying; it is evolving! The time of paper waste and office buildings swallowing energy like a hungry monster is slowly but surely coming to an end. Suppose you want your company to inspire others, or you want to see a long-term profit. In that case, it does pay off to invest in green energy and innovative solutions. It is a challenge to evolve your business. However, the good news is that you do not have to take this step alone. Many organizations and sectors, either in Limburg or worldwide, cooperate to find the best possible solutions for companies and society.

We want to thank Canon Production Printing Netherlands, DUJAT and Limburg Investment and Development Company LIOF for hosting this event and introducing us to this innovative location.

Sources

DUJAT – Canon – LIOF

Non-Fungible Tokens (NFTs) in the Era of Online Investment: What are Your Opportunities?

15 Nov 2021
Actual, Investment
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Non-fungible tokens or NFTs are gaining momentum in contemporary society. These non-fungible coins or assets are often presented in the form of artwork as part of a whole collection (e.g. Bored Ape Yacht Club). The main question is if the insane price for acquiring an NFT is worth the benefits. In this article, we explore what NFTs are, the benefit of buying an NFT and the opportunities this purchase can have for your business. Moreover, we provide tips and risks needed when intrigued by this new investment phenomenon.

 

 

Introducing NFTs and the operational method

The NFT or Non-Fungible token is a token within a blockchain (digital ledger) connected from an account to a unique and digital item via a smart contract. Most NFTs are part of the Ethereum blockchain, a cryptocurrency, and are currently seen in the rise of buying and selling digital art using this blockchain technology for multiple reasons (e.g. investment). In simple words, the NFT is a unique link between an account and a digital item that assures that said item is uniquely yours. This blockchain technology is non fungible which means that the item or artwork is unique and cannot be replaced with something else. As the trading dynamic can be seen as investing just like is the case with bitcoins and altcoins, the difference is that the NFTs are one of a kind. Whereas you can trade a bitcoin for a bitcoin, the NFT is distinctive and can never be fungible for the same artwork.

 

 

The uniqueness and function of the NFTs

The NFT gets seen as the new era of art. Both art collection and art investment are considerable motives for buying an NFT. As mentioned before that every NFT is a unique piece of artwork including the corresponding blockchain entry (proof of authenticity) plus the fact that these tokens are limited and tradeable, making all the NFTs depend on the supply and demand principle. NFTs are nowadays often seen as pictures and videos, but can also cover the realm of music and other forms of art. The next paragraph will thoroughly explain the four motives for purchasing an NFT.

 

 

Four motives of buying an NFT

Knowing the technical information and the uniqueness of the NFT, the question might arise why someone wants to spend money on NFT artworks.

 

Firstly, the NFT is currently in a hyped-up phase. Newspapers, NFT creators and NFT purchasers are trying to start the momentum of this “new era” to get more recognition among the people. This triggers the Fear Of Missing Out (FOMO) effect that stimulates the demand of the NFTs – as these groups wish. This is noticeable in the fact that NFTs are sold from hundreds to millions of euros worth of Ethereum. Exemplifying the prices of

Figure 1. NFT properties of Bored Ape Yacht Club #9355

NFTs,  this video made by the famous creator Beeple got sold for 6.6 million dollars (5.8 million euro). Further, NFTs within a specific group like the TrendyTigers or Bored Ape Yacht Club have different characteristics that make them more special and more valuable to stand out from the crowd. Here we can think of background, clothes, eyes, fur, hat and mouth as depicted in figure 1.

 

 

Secondly, you get complete ownership of the work. Instead of downloading the video or picture, the purchaser owns the artwork including proof of authenticity. This can be seen in the way that copying (downloading) a Van Gogh painting is still possible, but only one person can have the original. However, on par with physical artwork, the artists can still retain copyright and reproduction rights.

 

Thirdly, the purchaser can show off their new asset and try to fan the flame for interest in NFTs and in particular the purchaser’s artwork. Owners of an artwork change their profile picture to their acquired NFT to show the everyone that they own an NFT, brag with their latest purchase, and show the world they are part of a particular niche or group. This phenomenon of showing-off is mostly visible on Twitter.

 

Lastly, and maybe the least concerned with investment, is that the purchaser can (financially) support the creator of the art.

 

 

Opportunities for you

As the hype is getting a boost by the media and the groups associated with the NFTs, the incentive to buy might seem bigger than it is. Knowing that an NFT can be an investment strategy – just like cryptocurrency – we should be careful with the post-hype stage, as this might be unpredictable. The NFT market including the price of the NFTs -without the hype- can collapse and result in loss after this high gamble. While this is part of investment in general, we should look at the other main benefit the NFTs give over for example cryptocurrencies: the community.

Pudgy penguins, CrytoPunks, TrendyTigers or Bored Ape Yacht Club are examples of NFTs with a community around the ownership of their NFTs. The latter is a project concerning, as the name suggests, 10.000 NFTs of Apes. Only 10.000 proud ape owners can be part of the clique. Important is that the Bored Ape Yacht Club functions like a family. The occasional networking events among the Apes are used to get to network and to get beneficial connections for the business. Furthermore, this nepotism is noticeable in the example of producer and songwriter Timbaland searching for Bored Ape Yacht Club owners to form an artist-owned entertainment company Ape-In Productions.

 

 

Conclusion

In short, the price for NFTs can be feasible when being able to network with celebrities, business leads, or new friendly contacts. In case you are intrigued by NFTs, please be aware that many individuals and/or corporations are trying to hop on the bandwagon of the NFT hype. This means that thorough research in this particular NFT community/club is absolutely necessary. Always look at the benefits, the listing date and amount of followers. Do not forget to analyse the follower-to-like ratio on social media to notice, as is often the case, fake and bought followers. NFTs are often listed on the trustable platform OpenSea.io where Ethereum is mostly used as currency to purchase the NFTs.

Finalizing, NFTs as investments bring the known risks of (heavy) value fluctuation just like cryptocurrencies and comparable investments. However, while NFTs can be pricey, these revolutionary blockchain technologies assure ownership and bring an additional opportunity to network and make contacts in the NFT clique or group. As mentioned before, when you are part of this community, the nepotism and proudness of the NFT ownership can possibly result in great opportunities.

 

For more information about personal advice regarding international business advice, tax situations or consolidation, Global Connect Admin B.V. can assist you with these challenges due to the rich experience and framework of connections.

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