Tuna Chain is a modular Layer 2 solution that functions on Bitcoin while also integrating with Ethereum. Learn more about how it works in this article.

 is rightfully known for its security through its use of 

 offers greater versatility. Until recently, blockchain projects had to choose between the two. Now, however, a hybrid solution is available that blends the benefits of both of these leading blockchains and takes a bold leap into the future.

 that functions on Bitcoin while also integrating with Ethereum.

) is strongly rooted in elevating the user experience (UX). Bitcoin is the most trusted cryptocurrency, largely due to the recognized strength of its security protocols. However, while it excels in security, it lacks the versatility that ultimately fosters innovation. In this regard, Ethereum is viewed as a superior blockchain. 

Tuna Chain’s modular Layer 2 solution works on Bitcoin through a 

 hybrid layer while offering Ethereum functionality. It uses 

-powered modularity to minimize transaction costs. At the same time, this modularity improves both trust and efficiency. Tuna Chain currently supports Solana, Ethereum and Bitcoin transactions. It works with Bybit, Phantom, MetaMask, UniSat Wallet and OKX Wallet.

Tuna Chain is a new project that was established by three unknown individuals, known under the names of Tuna Nigiri, Tuna Sushi and Tuna Sashimi. Each team member brings their unique experiences and knowledge with blockchain, cryptography and 

 to move Tuna Chain forward. Tuna Chain is financially supported by BSC News, Normie Capital, Serafund, ArkStream Capital, Cogitent Ventures, MH Ventures and other angel investors. After its Ocean Festival and Ocean Trio, Tuna Chain now has over 1.3 million wallets connected on the Tuna Chain Testnet, with a total 

The purpose of Tuna Chain is to bridge the gap between Bitcoin and Ethereum. Although Bitcoin’s chain boasts superlative security, it lacks the versatility that Ethereum’s 

 provides. As a hybrid Layer 2 solution, Tuna Chain’s primary goal is to blend the two. By doing so, its founders want to push the envelope on the future of blockchains and provide a better UX.

Tuna Chain’s functionality is based on three core features: the Toro native 

, Celestia-powered modularity and a hybrid ZK-OP layer. With the Toro stablecoin, users can purchase new digital assets through the overcollateralization of their BTC supply. Meanwhile, Celestia-powered modularity improves data availability, and the ZK-OP hybrid layer executes smart contracts with fast, secure transactions.

Rollup Solutions and Operational Mechanism of Bitcoin Layer 2

Layer 2 solutions similar to those found on Ethereum enhance Bitcoin's scalability, using technologies such as 

 (ZK). Tuna Chain enhances Bitcoin's transaction capacity by integrating optimistic rollup technology into its Layer 2 framework.

Securing Native Assets on Bitcoin: Leveraging Taproot's Upgrade

 upgrade into the Bitcoin network marks a significant advancement in the security of its native assets. This update incorporates advanced cryptographic techniques, such as Schnorr Signatures, MAST and Tapscript. To further secure these assets, Tuna Chain has implemented a multisignature security model and is exploring the addition of external validators to its network security protocols.

Tuna Chain processes transactions through a detailed system that begins with the precise arrangement and execution of transactions. These are then reliably recorded on 

's data availability layer and conclusively verified on the Bitcoin blockchain. Verifiers are essential to the chain's integrity, quickly producing fraudproofs to address any transaction discrepancies and ensure the network remains secure and reliable.

Tuna Chain is a next-level Layer 2 solution that moves blockchain into the future. Each of its core features provides unique benefits to support a superior UX. 

Tuna Chain uses Celestia-powered modularity to optimize its Layer 2 functionality. Specifically, this modularity is supported by Layer 2 data management that enhances trust, improves efficiency and reduces transaction fees.

The ZK-OP Layer is Tuna Chain’s hybrid Layer 2. This layer utilizes a dual-phase architecture that integrates Ethereum’s benefits with those of Bitcoin. By doing so, it empowers smart contracts and accelerates secure transactions.

 is a grand opening event celebrating Tuna Chain’s launch. During this grand opening, the first round of TUN tokens will be distributed. Distribution cap for this initial release is based on 

 growth driven by the community, and could range between 2% and 21%. The token supply increases by 2% as each new milestone is achieved.

, the setup experience for new community members, consists of Calm Waters, Whimsical Tides and Majestic Depths. With Calm Waters, new users can receive 60 points for following Tuna Chain on social media and linking their wallet. Additional points are available by referring friends to Tuna Chain. Whimsical Tides, the testnet phase, is still in development along with Majestic Depths.

In the first quarter of 2024, Tuna Chain successfully completed several milestones, including the launch of the Tuna Testnet — Alpha, Ocean Trio Points campaign, Ocean Festival (which highlights the TVL) and the rollout of the TunaChain Explorer. 

Moving into Q2 2024, progress is ongoing with significant developments. Tuna Chain’s team is currently deploying an optimistic rollup (OP)-based Mainnet, establishing a native bridge from Bitcoin to the Tuna Mainnet, launching a Mainnet decentralized exchange (

), and developing a modular data availability (DA) layer.

Tuna Chain functions with three primary tokens: TORO, TUNA and WOOG. Each serves a different and integral role.

TORO, Tuna Chain’s native stablecoin, helps users transform their BTC into their choice of high-yield digital assets. This is accomplished seamlessly and with full transactional stability. The user doesn’t need to liquidate the BTC to complete the transaction.

 of Tuna Chain, is used for various purposes, such as revenue generation, funding builders and contributors, benefiting token holders, incentivizing users and community members, and promoting community engagement within the Tuna Chain ecosystem.

TUNA has a total token supply of 210,000,000.

 token that acts as the primary ticket into the Tuna Chain ecosystem. Only 200 of 1,000 available WOOG tokens were distributed at the BRC-20 Launchpad event. The remaining WOOG will be distributed only when they’re activated by external forces.

Looking to get your hands on the TUNA token? Bybit will soon offer it via our 

In the meantime, you can also purchase TUNA through 

WOOG tokens grant access to the Tuna Chain ecosystem. Of the total supply of 1,000 tokens, only 200 are currently scheduled to be released. These tokens are exclusively available through the 

. There’s a purchase limit of one WOOG token. While 800 WOOG tokens will remain, they’re sealed, and their release isn’t scheduled. You must have an active Bybit account with a funded wallet to participate in the event. 

TUNA tokens play a fundamental role in governance of the Tuna Chain’s unique hybrid Layer 2 chain, designed to deliver the benefits offered by both Bitcoin and Ethereum. Tuna Chain is presented as the future of blockchain, and is poised to change the blockchain landscape in exciting ways, which could place a premium on TUNA tokens. 

As an investment, TUNA should be purchased conscientiously because the value of the tokens will decrease when additional tokens are released, even for a short period of time. In addition, all cryptocurrencies are speculative in nature, with a risk of partial or complete loss. Therefore, 

 cryptocurrencies before making an investment.

Tuna Chain is a hybrid Layer 2 solution that provides a much-needed service in the blockchain world. By bridging the gap between Bitcoin and Ethereum, it allows users to enjoy the best of both worlds. In doing so, it has the potential to move the dial forward significantly in blockchain technology. Moving forward, Tuna Chain is a platform worthy of attention.

Intermediate

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Tuna Chain (TUNA): Reinventing Bitcoin With a ZK-OP Approach

Notable Ethereum Spot ETF applications have come from high-profile issuers that received approval for Bitcoin Spot ETFs earlier this year. Learn more here.

The cryptocurrency landscape could be on the brink of a major shake-up as several Ethereum spot exchange-traded fund (

) applications await regulatory approval. These financial instruments promise to bridge the gap between traditional investment markets and the fast-growing world of digital assets, offering investors a regulated and accessible means for gaining exposure to 

This article explores the top pending Ethereum Spot ETF applications, exploring their significance, potential impact on the market and implications for the broader adoption of cryptocurrencies.

What Is an Ethereum Spot ETF Application?

An Ethereum Spot ETF application is a filing submitted to regulatory bodies, such as the U.S. Securities and Exchange Commission (SEC), to list an exchange-traded fund that tracks the price of Ether (ETH), allowing investors to gain exposure to the cryptocurrency without directly holding it.

How Does an Ethereum Spot ETF Application Work?

An Ethereum Spot ETF application is a formal request by a financial institution to gain regulatory approval to offer a financial product that tracks the price of Ether (ETH), the second-largest cryptocurrency and the token of the Ethereum network, in real time. 

Investors can participate in the ETF by purchasing shares through their brokerage accounts. This way, they can gain exposure to Ether's price movements without the complexities associated with directly buying or holding the cryptocurrency. The ETF provider assumes responsibility for securely holding the Ether, managing the fund's day-to-day operations and ensuring ongoing compliance with regulatory requirements.

Current Ethereum Spot ETF Application Landscape

, Fidelity, VanEck and ARK 21Shares have all thrown their hats into the ring by submitting applications to the SEC for approval. These particular issuers have previously applied to run Bitcoin Spot ETFs that are currently approved and trading.

However, the SEC has pushed back on the recent Ethereum Spot ETF applications, prolonging the decision-making process. They've also sought public feedback in order to gauge whether the arguments supporting the approval of Bitcoin Spot ETFs are applicable to Ethereum Spot ETFs as well.

Anticipation has continued to build with the approach of the final deadlines for the SEC's decisions, set for between May 23 and Jul 5, 2024 for various applicants. The SEC's review process involves assessing factors such as the potential for market manipulation and the resemblance between Ethereum spot and futures exchange-traded products.

The outcome of these applications holds significant weight, as it could shape the future landscape of cryptocurrency investment vehicles and play an important role in driving broader adoption of Ethereum within traditional financial markets. Investors and observers alike are closely monitoring these developments, recognizing their potential to influence the trajectory of both Ethereum and the wider crypto market.

Top High-Profile Ethereum Spot ETF Applications

Several high-profile financial institutions have applied for Ethereum Spot ETFs, reflecting a growing interest in cryptocurrency investment products. Following is a list of some notable contenders.

BlackRock, a global investment giant and the world’s largest asset manager, submitted its 

 Ethereum Trust, in November 2023. However, the SEC postponed its decision to late January 2024 and again to March. The SEC is currently seeking public comment on the application, particularly concerning Ethereum’s susceptibility to fraud, and has delayed its decision until Jun 11, 2024.

Franklin Templeton, another major player in the investment world, 

 for an Ethereum Spot ETF in February 2024, making it the latest contender to join several other firms in the race. The SEC has delayed the deadline to June 2024 to rule on the firm’s application. If approved, the fund will be listed on the Chicago Board Options Exchange as Franklin Ethereum ETF.

Known for its ETFs and mutual funds, investment management firm VanEck has expressed doubts about the SEC's approval of its Ethereum Spot ETF application, 

 in July 2021. Although the SEC’s decision is expected in May 2024, VanEck’s CEO has voiced his skepticism of approval by the May 23, 2024 deadline, citing the regulators' ominous silence. Notably, VanEck holds the distinction of being the first investment management firm to file an ETH Spot ETF application in the United States.

21Shares specializes in cryptocurrency exchange-traded products (

), while ARK Invest focuses on thematic investing. The two firms 

 for the ARK 21Shares Ethereum ETF in September 2023, with the SEC expected to decide by May 24, 2024. The application has been 

 to include a cash-creation model, and has proposed plans to stake a portion of the ETF’s Ether for generating additional income.

A global asset manager focused on cryptocurrencies, Hashdex 

 with the SEC in September 2023 to list and trade shares of the 

 its decision on the application, with a verdict expected by late May 2024.

Grayscale is the world’s largest digital currency asset manager, with a range of investment products that provides exposure to cryptocurrencies and the digital currency asset class. The firm 

 its Grayscale Ethereum Trust into an Ether Spot ETF in October 2023. The SEC extended the review period, setting a new deadline for June 2024. 

Invesco, an investment management firm, has partnered with Galaxy Digital, a diversified financial services firm, to create a 

 for an Ethereum Spot ETF to be named the Invesco Galaxy Ethereum ETF. The SEC's decision, expected in December 2023, has been 

Fidelity Investments is a major financial services corporation with a global presence and millions of customers. Fidelity first filed for an Ethereum Spot ETF in November 2023. It later 

 its application in March 2024 to include ETH staking, which would allow investors to earn additional income from staking rewards. The SEC has set a deadline of May 23, 2024 to approve or deny the application.

What Could Happen If an Ethereum Spot ETF Application Is Approved?

The approval of an Ethereum Spot ETF application holds significant implications for the cryptocurrency market.

Approval of an Ethereum Spot ETF could mark a significant milestone for the crypto market. It would greatly improve Ethereum's accessibility, bolster market confidence and potentially drive up Ether’s price. In addition, such an approval would represent a new milestone in cryptocurrency adoption, providing investors with a regulated and easy avenue for investing in Ethereum. Nevertheless, regulatory hurdles and market volatility are variables that could influence the timing and magnitude of the approval of the pending applications.

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An Overview of the Top Pending Ethereum Spot ETF Applications

Stripe is reentering the cryptocurrency market by allowing merchants to accept payments in USD Coin (USDC) on Ethereum, Solana, and Polygon networks

The SPX index is down 0.46%, influenced by disappointing economic data indicating a slowdown and persistent inflation, along with poor earnings from companies such as Meta Platforms and IBM. The broader cryptocurrency market is up, with Bitcoin and Ether rising by 1.12% and 1.45%, respectively in the past 24 hours.

Today’s outperformer is W, which jumped 16.1% after Wormhole launches Native Token Transfers for seamless W token interoperability across blockchains.

Wormhole (W), launched in 2020, is a cross-chain protocol that facilitates communication and token transfers across over 30 blockchain networks. Originally a crypto bridge between Solana and Ethereum, it has expanded to include features like the Portal token bridge and messaging protocols, serving as a comprehensive platform for cross-chain interactions. Wormhole has launched Native Token Transfers (NTT) to enable seamless transfers of the W token across blockchains like Solana and Ethereum without needing liquidity pools. This innovation supports Wormhole's introduction of a multichain governance system and W staking, enhancing the token's functionality and security across diverse ecosystems. NTT marks a key step in Wormhole's roadmap, advancing its commitment to interoperability and decentralized, flexible token usage.

Check Out the Latest Prices, Charts, and Data of 

Stripe is reentering the cryptocurrency market by allowing merchants to accept payments in USD Coin (USDC) on Ethereum, Solana, and Polygon networks starting this summer. Originally, Stripe accepted Bitcoin in 2014 but discontinued this option in 2018 due to increasing costs. The new initiative will support USDC transactions that are automatically converted to fiat currency for merchants, aiming to enhance global payment accessibility, particularly for those without traditional banking facilities. This marks Stripe's continued interest in the evolving potential of cryptocurrencies.

Bitcoin's price showed volatility near $64,000, influenced by reduced ETF inflows and a market tug-of-war. U.S. inflows slowed, ending a streak for BlackRock’s iShares Bitcoin Trust. Meanwhile, Morgan Stanley may soon enable direct broker recommendations for Bitcoin ETFs, potentially increasing demand. In contrast to U.S. regulatory hesitations, Hong Kong is launching three spot BTC ETFs. Despite these fluctuations, Fidelity Digital Assets remains optimistic, citing an increase in smaller Bitcoin wallets as a positive indicator of broader adoption.

The Aethir Cloud Drop campaign features an airdrop that is accessible through various activities, including purchasing Aethir Checker nodes, engaging on social media, participating in quizzes, referring friends, and being part of certain NFT/token communities. Eligibility for the airdrop is determined by a badge and quest system. More details are provided on their website and Twitter page.

Beginner

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Stripe Reintroduces Crypto Payments with USDC Support on Multiple Blockchain Networks

Merlin Starter (MSTAR) is an IDO launchpad and accelerator dedicated to supporting Layer 2 projects for Bitcoin native asset applications.

Over the last couple of years, projects aiming to develop the wider Bitcoin (

) crypto ecosystem have been gaining more attention in the crypto industry, taking some focus away from 

-based initiatives. With the arrival of projects such as 

, one might even say that the Bitcoin ecosystem is experiencing a kind of innovative development that characterized Ethereum's heyday between 2015 and 2020.

Among the projects driving this phenomenon are Merlin Chain (MERL) and its integral Merlin Starter (MSTAR). Merlin Chain is a Bitcoin Layer 2 (L2) platform committed to supporting utilization and enhanced liquidity for Bitcoin native assets, while Merlin Starter, a Bitcoin-focused 

 and L2 project accelerator, is a core part of the wider Merlin ecosystem,

 (MSTAR) is an IDO launchpad and Layer 2 accelerator dedicated to supporting promising Bitcoin-focused decentralized projects.

 It's an integral part of the L2 Merlin Chain (MERL), designed to facilitate a seamless flow of Bitcoin native assets across various protocols in the Bitcoin ecosystem. Merlin Starter aims to support projects dedicated to enhancing the circulation and liquidity of Bitcoin native assets, both on Merlin Chain and across a variety of Bitcoin-focused protocols and networks.

Founded in 2023, the Merlin project launched its operations in early 2024, with Merlin Starter's native MSTAR token debuting in mid-April 2024.

Merlin Starter is made up of two main components — an 

 launchpad and a Bitcoin Layer 2 project accelerator. Additionally, the 

 NFT collection is a critical element within the project's ecosystem.

The IDO launchpad on Merlin Starter facilitates the launch of projects dedicated to native asset issuance, enhanced 

 and free asset circulation for the Bitcoin ecosystem. It's the first native launchpad of the Merlin platform. The launchpad also supports new projects that explore cross-chain functionality and focus on enabling Bitcoin native assets across different platforms.

As of late April 2024, the launchpad is still in the early stages of its operation, but already lists a couple of initial projects that it’s helped to launch. The most recent of these is Sparkle (FCFS), a gamified astrology app.

The Merlin Starter launchpad offers a number of different token launch modes, including 

, oversubscription lotteries and allocations based on preset weightings. A variety of token standards are supported, including the highly popular 

 and ERC-20 as well as the less common BRC-420, ERC-404 and Atomicals (ARC-20). Standards supporting cross-chain assets may also be available. 

Merlin Starter’s IDO launchpad also features an insurance protocol that helps protect investors from either 7-day or 14-day loss.

While the Merlin Starter IDO launchpad is dedicated to facilitating the launch of new tokens, its accelerator is an initiative aimed at providing consultancy and support to L2 apps and protocols at the pre-launch stage, as well as in the critical post-launch period.

Via the accelerator, the Merlin Starter team offers multidisciplinary consultancy services in areas such as technical support, marketing strategies and initiatives, human resources and 

Merlin's Spellbook is an NFT collection issued by Merlin Starter. Spellbook NFTs grant holders eligibility for a 20,000,000 MSTAR token airdrop, should they choose to stake the NFT. Staking a Spellbook NFT in exchange for MSTAR locks the NFT, and the NFT is subsequently burned. As an NFT staker, you may also qualify (depending upon random selection) for IDO whitelist entries.

At the center of the wider Merlin ecosystem, Merlin Chain is an L2 platform dedicated to enabling cross-chain applications utilizing Bitcoin native assets. Although it operates as a dedicated Bitcoin L2 network, Merlin Chain also offers 

 (EVM) compatibility in order to better support cross-chain use cases.

 network, which allows it to achieve significant scalability and cost efficiencies. The average block time on the chain is less than one second, while the average transaction fee is measured in tiny fractions of a cent.

Merlin Starter's native crypto, MSTAR, is a recently launched token (April 2024) that’s used for the following functions on the IDO launchpad:

The token's maximum and total supply is 1 billion. Supply allocation shares for MSTAR are shown in the chart below.

You can buy the MSTAR token on Bybit through a Spot pair with USDT (

). Additionally, you can join Bybit's MSTAR campaigns to grab a share of the 

The first campaign, MSTAR Community Airdrop Quest, runs through May 10, 2024, 8AM UTC. It’s offering a total prize pool of 8,900,000 MSTAR, featuring a 7,000,000 MSTAR community airdrop, a 1,000,000 MSTAR referral prize pool and an exclusive affiliate referral event with a 900,000 MSTAR prize pool. The second campaign, Token Splash, is being held through Apr 30, 2024, 9AM UTC, with a 2,800,000 MSTAR prize pool.

As a plethora of projects such as Merlin Starter look to extend Bitcoin's functionality, its blockchain is steadily moving away from a passive state of use that’s reserved for asset transfers and storage. Merlin Starter is contributing a great deal to putting Bitcoin native assets to use in various apps and protocols.

While Merlin Chain is doing the critical job of enabling the actual utilization of assets via its Layer 2 network, Merlin Starter is a pivotal endeavor aimed at supporting numerous new projects looking to make Bitcoin a more active crypto environment. The more of these projects we see, the more likely it is that Bitcoin will develop into a thriving ecosystem that could rival Ethereum’s. To achieve such a goal, Merlin Starter is exactly the catalyst the industry needs.

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Merlin Starter (MSTAR): Empowering Startups and Innovation

Investing

Money is coveted by many, but it cannot exist in a vacuum. Discover what the economy does and how it works here.

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The economy impacts every aspect of our lives, from the food we consume to the people we elect to public office. Despite the economy’s reach, however, few people are able to grasp the full extent of its importance. We’ll break it down into basics for a clearer picture.

Economic issues are crucial to our everyday lives. The term “economy” refers to everything aimed at the production, sale, distribution and consumption of goods. It comprises companies, businesses, private and public budgets: in short, everything that aims to meet the demand for goods and services. The economy is an all-encompassing term which covers — but is not limited to — the production of commercial products and the provision of various services.

The interaction between demand and supply forms the economy. When people work, they generally create tangible products. For example, cars are built, clothes are made and crops are grown.

The economy consists of sectors like construction, mining and automotive. It also includes services, which are activities at which people work without directly producing any products. Services include trade, transportation, banking and more. 

Together, sectors and services make up the economy. 

. The economic activities of a market are subject to cyclical fluctuations. The four phases of upswing, boom, recession and depression characterize the development of various economic variables within an economic cycle. Economic variables include gross national product, gross domestic product, degree of employment, price development and, in this context, rate of inflation. 

The economy reflects the overall transaction and purchase cycles of a market. Economic activity can be measured by different variables such as national product,employment levels and price developments. 

An economic cycle is divided into four phases:

The economic cycle covers the entire period in which economic development goes through the individual phases, from one upswing to the next. Overall economic development occurs with a certain regularity. These economic 

 follow regular movements, or cycles, which may differ between sectors and industries. 

The economy and economic cycle are also influenced by fluctuations in economic variables, such as production rates, employment levels, interest rates and prices.

Following are the three main types of economic cycles.

Seasonal cycles or fluctuations are economic trends that last only a few months, but often have a significant impact on an economy. The retail sector, for example, sees an uptick in sales during holidays, from Valentine’s Day to Christmas.

Characteristics of seasonal fluctuations include:

 usually last several years, and result from a delayed imbalance between the aggregate forces of supply and demand. In contrast to seasonal fluctuations, economic fluctuations affect the entire economy. Economic fluctuations are characterized by:

Structural fluctuations are long-term, usually lasting between 40 to 60 years. They are brought about by technical and social innovations and their continued evolution. With technological changes, working capacities are freed up and can be used elsewhere, resulting in more innovations.

The four phases of an economic cycle are detailed as follows:

During the expansion phase, the positive mood of market participants creates optimistic expectations for the future. Usually, this phase comes after a crisis, and it’s often the result of economic and monetary stimulus measures employed by governments and central banks. Private demand for consumer goods increases and, among companies, the demand for capital goods. The 

 also increases during this economic trend, as the production of companies increases and more jobs are created. Similarly, the share prices of listed companies rise. (Note that the stock market rises even when the economy stagnates, and only the central banks are creating money.)

The following characteristics are present during expansion:

The boom is considered to be the second phase of the economic cycle. Production capacities are completely utilized, and companies record impressive profits and sales. During the boom cycle, market participants are positive, yet expectations are negative. The boom and upper turning point in a business cycle display the following characteristics:

At the height of the boom, the economy overheats, leading to a turnaround. Stagnation occurs as production rates can no longer be increased or sustained. The market becomes saturated, cutting off room for further growth.

A boom is followed by a recession, characterized by higher costs during the boom as demand slowly falls. The cost pressure on companies increases, and at the same time, profits shrink. Theoretically, this means that share prices are also falling, resulting in unemployment, more part-time (as opposed to full-time) jobs, and income reduction. The downturn is accompanied by a generally negative assessment of the economic situation by market participants. A recession displays the following characteristics:

In a depression, market participants are consistently pessimistic even as they see positive signals for the future. The depression phase can be described as a special case in the business cycle. It’s often accompanied by economic crises, as during the 

. Companies suffer as their equity capital shrinks. At the same time, interest rates on capital rise, and more companies are forced into bankruptcy. At the height of a depression, the value of money plummets because of low interest rates.

The depression phase can be identified by these characteristics:

In the study known as microeconomics, decisions of economic entities are analyzed against a background of individual benefit maximization. Households are faced with decision-making problems in the goods-services market, which are countered with a 

. Due to the division of labor between different production processes, companies are faced with coordination problems involving various factors of production. Based on this approach, conclusions can be drawn regarding the allocation of resources:

Note that these two types of economics adopt very different approaches: microeconomics uses a “bottom-up” approach, while macroeconomics looks at the effect of national economic statistics and decisions on the population at large. Put simply, microeconomics deals with the economy on a small level, whereas macroeconomics deals with the economy on a larger scale.

An economic system is a mode of operation regarding the economic activity of a state. The economic system has an impact in particular on the management of a country’s production and the functioning of its labor market.

There are three types of economic systems:

These systems each have specific characteristics which can be influenced and adapted according to the economic and political situation of each country.

In theory, these three economic systems are distinct entities. In practice, however, it’s not always easy to tell them apart. Even if a state’s economy is described as “planned,” it can still display some features of a free enterprise or market economy. Conversely, a state with a free-market economy may possess some aspects of a planned economy.

For example, although the U.S. economy is largely based on private enterprise and market laws, the government’s participation in certain economic areas (such as regulating the price of certain goods) reflects its intervention in the country’s economy — because this type of intervention is more characteristic of a mixed economic system. The economy of the same state may be described as mixed in one sector and free market in another.

This economic system advocates the nationalization of means of production. The state determines the nature and quantity of production in advance. For example, in a planned economy, prices are set by the state, and production involves the intervention of the state in the economy. There is little or no room for private enterprise.

In a mixed economy, both state and private enterprise have a role to play. Freedom of enterprise takes precedence, but the state also has a responsibility to intervene in the regulation and, sometimes, the nationalization of companies to achieve certain objectives. Today, the majority of Western countries run on a mixed economy.

The free market economy is also called a free enterprise economy. Unlike a planned economy, in which the state determines what to produce, supply and demand (also called the laws of the market) dictate prices and the functioning of the economy in a free market economy. Free enterprise is associated with weak state intervention and the dominance of private enterprise.

Generally, the growth of any economy is determined by that of its 

, which depends on how the country’s factors of production are used. These include capital, labor and total factor productivity. Capital refers to investments, while labor refers to the quantity of labor used, which is linked to the active population. Factor productivity encompasses the duration and quality of work, and the know-how accumulated by workers (referred to as human capital).

Investment in the economy is important for sustaining growth. Like labor, capital can grow extensively or intensively. A company makes its production decisions based on expected sales volume. When the economy is in an upswing, companies expect higher sales and will therefore increase production capacities. Companies hire new workers and invest in more machines, or upgrade their current equipment. Raw materials or intermediate goods may also be acquired. 

Consumption is the ultimate driver of demand in the economy. The greater the levels of consumption (government spending and consumer spending), the more likely an economy is to thrive.

One of the lasting effects of globalization is that the world’s economy has consequences for everyone, both local and global: households, governments and the international community. 

The local economy is the economy of an individual country,ranging from household consumption to investment decisions based on inflation and interest rates. This type of economy benefits only its residents. 

On the other hand, the economy of a country interacts with other international economies. The impact of this global economy is primarily on import and export activities. With technological advancement, the global economy also affects the number of investments and foreign exchanges made. 

Public debt corresponds to all public loans contracted by the state, social security, various central government bodies and local authorities. 

Public debt can have positive effects if the loans are used to finance public investments, such as infrastructure, unemployment benefits, healthcare, etc. Such spending increases the growth potential of an economy in the medium term. Ideally, this means that the state can then reduce its deficit again by increasing tax revenues.

Even in exceptional economic situations, borrowing can be useful in order to compensate for losses in demand on the part of companies and consumers.

Negative effects of public debt include rising interest and repayment obligations, which can increase calls for austerity measures. On the other hand, increasing government borrowing risks displacing private loans and investments from the market. The result can have correspondingly negative consequences for economic growth.

Also known as the business cycle, the short-term debt cycle is characterized by the presence of cheaper money in the economy due to lower interest rates. This effectively encourages consumption in the economy, resulting in increased demand and a rise in inflation, ultimately paving the way for the four business cycles discussed earlier. Interest rates and inflation are the primary factors which influence the short-term debt cycle.

Note that each short-term debt cycle typically ends with more growth and debt than the previous one. This means that debt increases faster than incomes over long periods, which causes the long-term debt cycle.

During a long-term debt cycle, people may be getting more and more loans despite rising economic debt. Why? Quite simply, because they think things are going well. Humans tend not to have good long-term memories — when things are going well, we choose to focus on the positives, such as increased incomes, booming stock markets and spiking real estate prices, etc. This can lead to impulsive/spur-of-the-moment decisions.

It’s worth investing in certain goods, services and financial assets with borrowed money. For instance, housing is a necessity for everyone, and you may want to buy an apartment to live in. In this case, taking out a bank loan is perfectly justifiable. 

However, if as a society we rely too much on credit, a bubble may begin to develop. Eventually, this can result in a debt burden that must be reduced by means other than a reduction in interest rates. According to American investor Ray Dalio, there are four ways to achieve this reduction:

Unlike the short-term debt cycle, the long-term debt cycle occurs over a much longer period of 50 to 75 years. It is driven primarily by the accumulation of public and private debt. 

Inflation describes a general price increase without a commensurate increase in value. There are several causes of inflation. Supply inflation is characterized by higher/rising prices of production factors, such as raw materials, or a rise in wages and non-wage costs. This makes the manufacturing processes of many goods more expensive. Companies pass on additional costs to consumers by increasing their prices. As a result, purchasing power decreases over time. 

 is the opposite of inflation. It’s defined as a general price decline over time, typically caused by a decrease in spending. As spending decreases, deflation can be accompanied by a recession. One solution is to lower interest rates. By lowering the interest rates on loans, lenders encourage more borrowing. Then, when more credit is available, the government expects the parties within its economy to increase their spending.

Supply is the quantity of goods and services available in the market for sale or exchange. It corresponds to the quantity of goods sellers offer on the market, which can be raw materials, products or services. Demand is the intention of households and companies to buy a good or service at a certain price. The demand-and-supply relationship creates market equilibrium. 

Theoretically, the primary difference between capitalistic and socialistic economies is the degree of government control involved.

Capitalism is often likened to a free market economy. This economic system is characterized by private ownership of the means of production and the profit generated from them. To achieve the greatest possible profit, entrepreneurs produce goods that meet the wishes of consumers. Ideally, prices are determined by the market forces of supply and demand. 

, on the other hand, is an economic system in which factors of production are owned and controlled by the state. This means that the government controls production and regulates prices to meet consumer needs.

How Does the Economy Work? (Simplified)

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