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Lithium: what is it used for? Batteries, medicines and other uses

Lithium

What is lithium used for? What are lithium batteries? How does lithium work as a medicine? Let’s find out why this metal is in such high demand!

Lithium is a silvery-white metal that, in recent years, has become a critical resource in high demand by world superpowers and beyond. The reasons behind this incredible growth in demand can be found in its many uses: batteries, medicines, ceramics, lubricating greases and more. In this article, we will explore a mineral that has become so popular in just a few years. Let’s get started!

Lithium: what it is, who controls it and who is fighting over it

Lithium is the lightest and least dense alkali metal on Earth. It is silver-white and oxidises on contact with water or air, taking on a darker colour. It has unique physical characteristics that make it highly sought after in various fields, as we will see below. Among these, lightness, high energy density – i.e. the ability to store a lot of energy in a small space – and reactivity are the most important for the industrial world. 

But how does the lithium supply chain work? What is the geopolitics behind this metal? To answer these questions, we have read and studied the report by the IEA (International Energy Agency) entitled ‘Global Critical Minerals Outlook’, published in May 2025. What do the experts tell us?

Who are the leading producers of lithium?

The first significant figure that highlights the importance of this metal concerns its production: in 2024, global lithium extraction recorded a substantial increase of 35% or more, for a total of 255 kilotonnes (kt) – by way of comparison, the world’s tallest skyscraper, the Burj Khalifa, weighs around 110 kt. The top five lithium producers in the world are unusual, as they include countries that are not often heard of. 

Australia ranks first, with 90 kt of lithium extracted in 2024, taking the gold medal by a wide margin. According to the IEA, this gap is set to widen: by 2030, mining of this metal is expected to grow by a further 30-35%, reaching 124 kt. Second place goes to China, with 57 kt in 2024, while the last step on the podium goes to Chile, which produced 49 kt of lithium last year, earning the status of dominant producer in Central and South America. For fourth place, we have to move to the African continent, more precisely to Zimbabwe, with 23 kt. Finally, in last place is another South American country, Argentina, which extracted 13 kt of lithium from its mines. In this regard, the IEA reports that this country increased production by 65% in 2024, to become an even more important player by 2030. 

Another figure worth mentioning concerns the concentration of mining activities: while in 2024 the top three producers accounted for 77% of global lithium production, by the end of this decade, the IEA expects this share to fall to 67%. Such a change indicates a certain geographical diversification, reflecting a widespread desire to enter this market. Analysts believe that by 2030, the share produced by the ‘rest of the world’ will rise from the current 17 kt to 49 kt. In addition, the amount of lithium extracted globally will double over the next five years, reaching a total of 471 kt. 

Once lithium has been extracted, who is responsible for refining it?

In 2024, according to the report, global production of refined chemicals was 242 kt. The discrepancy between lithium extracted (255 kt) and refined lithium is, of course, due to the inherent and inevitable inefficiencies of purification processes. In any case, 96% of these activities are concentrated in the top three countries in the refiner rankings, but it is believed that by 2030, the oligopoly will lose some market share, falling to 85%. Speaking of rankings, let’s take a look at the top five.

In first place is China, in a position of absolute dominance, which in 2024 processed 170 kt of lithium chemicals: the People’s Republic alone controls 70% of total global refining. It has no intention of stopping, as this figure is expected to rise to 277 kt by 2030. Second place goes to Argentina, which refines the same amount of lithium that it extracts, i.e. 13 kt. The bronze medal goes to Australia, a country that is only interested in extraction. Only 4.5% of the lithium collected in the fantastic land of kangaroos is refined, i.e. 4 kt. In fourth place are the United States and South Korea, with 3 kt of lithium each. With 1 kt produced in 2024, the last place in this special ranking goes to Japan.

Returning quickly to China, the IEA states that, despite having a near-monopoly on refining processes, the Dragon could lose a significant share of the market in ten years. Specifically, its share could fall from 70% to 60% by 2035. This is also because, according to forecasts, Argentina and the United States are expected to increase their refined lithium kt by 270% and 800% respectively, i.e. from 13 to 49 kt and from 3 to 27 kt.

The lithium market: what is the demand? 

In 2024, lithium saw a 30% increase in demand: the energy sector, of course, drove this increase, precisely because of the fundamental role this metal plays in the construction of batteries, electric machines and components for renewables. 

As for future demand, the IEA envisages three different scenarios with three different types of output. These scenarios are called STEPS, APS and NZE: the STEPS (Stated Policies Scenario) is the baseline scenario and represents the future as a continuation of the present, with current energy policies remaining in place; the APS (Announced Pledges Scenario) assumes that governments will achieve their energy and climate targets, such as phasing out fossil fuels and increasing renewable energy; the NZE (Net Zero Emission) scenario depicts a future in which the global energy sector has achieved net zero emissions by 2050.

In the first scenario – STEPS – lithium demand is expected to rise to 700 kt by 2035 and 1,160 kt by 2050, growing almost fivefold compared to 2024. In the second and third scenarios – APS and NZE – demand would be 30% and 20% higher than in the baseline scenario, reaching 1,500 kt and 1,400 kt, respectively. 

And the price? 

The price of lithium is a topic that may seem counterintuitive at first glance: since 2023, the value of this metal has fallen by 80%. One might wonder how this is possible, given that there was a 30% increase in demand in 2024 alone and that demand is set to increase fivefold over the next twenty years. The answer, as the law of supply and demand dictates, lies precisely in supply, which has grown exponentially and is set to continue on this trend.

Lithium is the 25th most abundant material on Earth and, unlike gold and Bitcoin, it is not scarce. This means that if demand rises, even by 30% in a year, supply adjusts more or less easily, and the price remains stable or even falls in the event of overproduction. However, to give a couple of figures, the cost of lithium in a typical 57 kWh battery – a battery for a common medium-sized electric car – has fallen from $67 to $15.   

Since we were talking about batteries and electric cars, let’s move on to the next section, which covers the main use cases.

What is lithium used for? The main use cases

As we have pointed out several times, lithium owes its popularity mainly to the energy sector, the primary driver of demand, particularly for electric car batteries. However, there are other, less well-known but essential applications. The pharmaceutical industry, for example, uses lithium as a drug in the treatment of specific psychiatric disorders. In contrast, the manufacturing sector uses it in glass and ceramics processing, as well as in machine lubrication. Let’s look at each case individually. 

What are lithium batteries?

Lithium batteries, or more correctly, lithium-ion batteries, are highly functional batteries because they are smaller, lighter, and more powerful than traditional batteries, such as lead batteries. This type of battery is such an important innovation that in 2019, its three inventors received the Nobel Prize in Chemistry. 

Today, lithium batteries power smartphones, laptops, electric cars and more, precisely because this metal has a particular physical characteristic that gives it a significant advantage over its competitors: high energy density. Put simply, this means that, for the same weight or volume, lithium batteries can store and release much more energy than older, more conventional batteries. What’s more, they are rechargeable—a win on all fronts. 

How does a lithium battery work? Without going into too much detail, these batteries work thanks to lithium ions, which is why it is more accurate to call them lithium-ion batteries: an ion, in a nutshell, is an atom that has lost an electron and therefore takes on a positive charge. The battery is composed of two main elements, the cathode and the anode. What happens, explained in straightforward terms, is that during the discharge phase, when the battery supplies energy, the lithium ions move from the anode to the cathode, generating electricity. 

In short, thanks to the invention of three scientists, we are now able to produce increasingly compact, lightweight and efficient technological devices. 

Lithium as a drug 

Lithium is mainly used in medicine to treat bipolar disorder, a psychiatric condition characterised by extreme mood swings, in which the patient alternates between states of intense euphoria and irritability – episodes of mania and hypomania – and periods of deep depression. Thanks to its properties, this particular metal is used to reduce the switches between the two moods as much as possible and thus stabilise mood. 

The effectiveness of lithium as a drug in this field was discovered in the late 1940s by John Cade, an Australian psychiatrist who was captured by the Japanese during the war. The doctor noticed that some of his cellmates, due to poor nutrition, were exhibiting unusual behavioural reactions. After the war, Cade resumed his studies and discovered that lithium carbonate had a calming effect on laboratory animals. He tried this chemical compound on himself and ten patients and, documenting the treatment, noticed significant improvements in the psychiatric condition of the subjects. However, the discovery went unnoticed, but twenty years later, Danish psychiatrist Mogens Schou decided to revisit the discovery and validate it scientifically, following experimental methods. In 1970, the research was finally reviewed, accepted and validated: lithium was undoubtedly an effective drug for the treatment of bipolar disorder. 

Lithium: side effects

Like all drugs, lithium is not without side effects. The less serious ones, which do not require immediate medical attention, include stomach ache, indigestion, weight loss or gain, swollen lips, excessive salivation and itching. There are other effects for which it is advisable to seek medical attention quickly, such as severe thirst, swelling of the legs, difficulty moving, fainting, abnormal heartbeat, and severe headaches. Finally, those that require immediate medical attention include severe dizziness and blurred vision, slurred speech, severe drowsiness, nausea and vomiting. 

Other uses 

As already mentioned, lithium is also used in other sectors, such as manufacturing, industry and chemicals. Here are some examples: 

  • Glass and ceramics: Lithium is used to lower the melting temperature of glass and ceramics, resulting in significant energy and cost savings. It also has positive effects on the strength, durability and shine of the final products.
  • Lubricating greases: the industrial and automotive sectors use lubricating greases containing lithium because they are highly resistant to water and high temperatures. 
  • Organic chemistry and polymers: Some lithium compounds are frequently used by the chemical industry because of their powerful reactivity. In particular, they are essential for the manufacture of synthetic rubber.

We have come to the end of this long journey to discover this metal and the infrastructure behind its production, refining, distribution and demand. Will lithium remain as important in the future? Will other technologies replace it?

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Cobalt: The Story of an Artistic Metal

cobalt

Cobalt-chrome alloys are biocompatible and wear-resistant, making them ideal for prosthetics — both orthopaedic (knee and hip) and dental (crowns and implants).

Now, let’s move to a more relaxing subject: cobalt in art.

Cobalt Blue: A Colour That Made History

Cobalt blue was first created in the early 1800s in France, driven by both artistic and economic motives.
Until then, blue was far from a “democratic” colour. The most prized — and widely recognised — shade was ultramarine, considered the ultimate blue. However, it was extremely expensive because it was made from lapis lazuli, a precious stone imported from Afghan mines — hence “ultra-marine” — and literally worth its weight in gold.

The price was so prohibitive that painters of the time would only use it for their most important works. Whenever possible, they replaced it with a cheaper pigment, azurite. But the result was far from identical — a bit like drinking a Campari Spritz made with a knock-off Campari at a third of the price. The need was clear: a blue with the same qualities as ultramarine, but at a much lower cost.

Why and How Cobalt Blue Was Born

Enter Jean-Antoine Chaptal, the French Minister of the Interior, who tasked renowned chemist Louis-Jacques Thénard with finding a cheaper alternative to ultramarine. In 1802, Thénard discovered that by sintering cobalt monoxide with aluminium oxide at 1,200°C, he could create a mixture that met the Minister’s requirements.

From that point on, artists could experiment with a colour that had previously been too expensive to waste. The importance of having cobalt blue in large quantities was such that the famous painter Pierre-Auguste Renoir is said to have remarked: “One morning, since one of us had no black, he used blue instead: Impressionism was born.” Such a thing would have been unthinkable with ultramarine.

Monet and Renoir began to use cobalt blue consistently for shadows, abandoning black. Beyond Impressionism, other great painters embraced it in their masterpieces: Van Gogh in The Starry Night, Kandinsky in The Blue Rider, Miró in Figures at Night Guided by the Phosphorescent Tracks of Snails, to name a few. A true revolution.

An Interesting Thought: What Links Cobalt to Bitcoin?

Beyond art, the story of cobalt prompts a reflection that touches on a theme close to us at Young Platform: the centralisation of supply chains and the risks that such oligopolies bring. In short, it’s a parallel between the shift from ultramarine to cobalt blue and the transition from the gold standard to the fiat currency system.

From Ultramarine to Cobalt Blue

As we’ve seen, the introduction of cobalt blue in 1802 had a positive impact on the art world, making experimentation possible with what had been an elitist colour. However, this shade — still widely used today — is heavily dependent on cobalt extraction and refining, which are concentrated in the hands of very few players.

Leaving aside the critical ethical issues — such as child labour and human rights violations, sadly ignored by countries like the Democratic Republic of Congo and China — the logistical reality is this: 81% of global cobalt extraction and 89% of refining are controlled by just three companies.

This is dangerous because it makes the system vulnerable to both internal shocks (political instability, domestic economic issues) and external shocks (natural disasters, wars). If any of these actors halt production, the global supply chain suffers. The result is a heavy dependence on a handful of players who can effectively dictate terms.

From the Gold Standard to the Fiat Standard

Similarly, on 15 August 1971, US President Richard Nixon announced the end of the Gold Standard — the “Nixon Shock” — ending the convertibility of the US dollar into gold and moving to a fiat currency system.

In this system, still in place today, the value of a currency like the US dollar is backed only by the economic and political trust in the issuing government — in this case, the US government.

This shift, much like the cobalt example, created a more “democratic” and flexible environment. Previously, governments struggled to finance large public projects due to the gold constraint; now, they had full control over the money supply. But again, the power is centralised in the hands of a few actors — namely, central banks such as the Federal Reserve or the European Central Bank.

While such centralisation can help manage inflation and crises, it’s not without risks, especially because it relies heavily on human judgement, which is inherently fallible, as the 2008 subprime mortgage crisis demonstrated. The fate of the global economy can depend on the decisions of a handful of high-ranking officials. When those decisions are good, great. But when they’re bad…?

The Moral of the Story: Bitcoin and Decentralisation

Concentrating too much power in too few hands is never a good thing. Politics, economics, finance, housing committees, university group projects, and even five-a-side football teams work poorly when a single entity makes all the decisions.

Bitcoin was created precisely to address this: to return power to individuals and remove — or at least limit — the influence of central authorities. Its decentralised nature allows for a more democratic system, where people interact directly, without intermediaries who could control or restrict their choices.

Of course, this is just one of Bitcoin’s many qualities and real-world use cases. If this introduction has sparked your curiosity, we recommend reading our article on the history and workings of BTC to get a complete picture of the revolutionary potential of the king of cryptocurrencies.

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How to create images with artificial intelligence

images with artificial intelligence

How to create images using artificial intelligence: Where do we stand? Discover all the steps in this comprehensive guide.

If you, too, have seen the images created by artificial intelligence – and if you haven’t, who knows where you live – your crevello will have ventured an argument like this. There was a time, not so long ago, when creating an image required pencils, brushes, cameras or, for the more modern, graphics tablets and hours of painstaking patience. Then, almost out of nowhere, generative artificial intelligence exploded. Suddenly, our social feeds, company presentations and even group chats were filled with dreamy, hyper-realistic and bizarre images, all spawned by an algorithm. “You want a Van Gogh-style astronaut cat eating ice cream on Mars? Give me two minutes.”

This new frontier of digital creativity has triggered a mixture of wonder and apprehension. On the one hand, the promise of democratising art, of giving anyone the power to visualise the impossible; on the other, the fear of a future where real artists, those in the flesh, end up begging robots. But before we panic or exclaim, let us try to understand how artificial intelligence creates images.

Creating images with artificial intelligence: what’s behind the magic?

Behind the apparent wizardry of an image that comes from a simple sentence, there is a concentration of technology that, until a few years ago, was the stuff of science fiction films. We are talking about machine learning and neural networks, i.e. software that attempts to imitate the functioning of the human brain. These systems are ‘trained’ on endless databases containing billions of existing images, each accompanied by a textual description.

The models most in vogue today, such as those based on ‘Diffusion’ architectures (such as Stable Diffusion, DALL-E 3, Midjourney), learn to associate words with visual concepts. In practice, they start from a digital ‘noise’, a kind of indistinct fog, and, guided by our textual input (the famous ‘prompt’), begin to ‘sculpt’ this noise, one small step at a time, until the required image emerges. Imagine a sculptor pulling a statue out of a shapeless block of marble, only the marble is digital, and the chisel is an algorithm that has seen more works of art than any living critic. The result? Sometimes a masterpiece, other times something that looks like something out of a Dali nightmare after a heavy dinner.

How to generate images with AI: instructions for use

If you think it is enough to type ‘cat’ to make artificial intelligence create the image of a purring feline from the screen, you will be disappointed. The art of dialoguing with these AIs, known by the somewhat pretentious Anglophone term prompt engineering, is a subtle discipline, somewhere between poetry and programming.

You have to be specific, almost pedantic. You want a ‘dog’? Fine, but what breed? What is it doing? Where is it? In what light? In what pictorial style? “A golden retriever puppy sleeping blissfully in a red velvet armchair, illuminated by warm afternoon light, Renaissance oil painting style”. There, now we’re getting somewhere. 

Then there are the negative prompts, or instructions on what NOT to do: “no double tails, please”, “avoid that plastic effect”, “I beg you, no more than five fingers on each hand!”. The process is iterative: you generate, observe the result, refine the prompt, regenerate, and so on, in a loop that can lead to the perfect image or to deciding that, perhaps, a hand-drawn picture was better. At first, it is easy to get digital abominations: that ‘cat on a bike’ might turn into a Lovecraftian tangle of fur and pedal metal. But with a little practice (and a lot of patience), you can begin to tame the algorithmic beast and start creating quality artificial intelligence (AI) images.

 Lights and shadows: the pros and cons of AI-generated images

Like any self-respecting technology, image-generative AI also brings with it a wealth of opportunities and a few skeletons in the cupboard. Here is a brief summary of what, at least in our opinion, are the pros and cons of this technological breakthrough.

Pros:

  • Democratisation of creativity: anyone, even someone who draws like a three-year-old, can give visual form to their ideas. Need a logo on the fly? An illustration for a post? An inspiration for a tattoo? Ask and (maybe) you’ll get it;
  • Speed and efficiency: for designers, creatives and marketers, it is a crazy tool for brainstorming, creating moodboards, concept art, and rapid prototypes. Hours of work condensed into a few minutes;
  • New aesthetic horizons: AI can mix styles, invent perspectives, create images that a human might not conceive, opening up unprecedented art forms;
  • Pure fun: let’s face it, asking the AI to draw absurd things is often hilarious;

Cons:

  • The six-finger nightmare (and other amenities): the infamous ‘uncanny valley’ is always lurking. Hands with too many or too few fingers, faces that melt like wax, seasick perspectives, objects that defy the laws of physics. Sometimes, the results are so surreal that they themselves become an unintentional art form.
  • The fair of the generic: with the ease of use, the risk is a rising tide of images that are aesthetically pleasing but devoid of soul, all a bit the same, a bit ‘Midjourney effect’. The world is now invaded by cyberpunk kittens with a variable (but hardly ever correct) number of legs.
  • The crisis of originality: if everyone uses the same tools and maybe even similar prompts, don’t we risk a stylistic flattening?
  • But is this art?: the debate is open and heated. If a machine ‘makes’ the work, is it still art? Who is the artist? Who writes the prompt, or the algorithm? My cousin, who until yesterday was only making memes of dubious quality, now calls himself ‘an international prompt artist’, complete with a portfolio on LinkedIn.

And from a philosophical point of view?

And here the matter gets serious, because the implications go far beyond the number of fingers. The first problem, which has long been central to the debate on artificial intelligence, not only when it is used to create images, is related to copyright and the question: whose image is generated? Of the user who wrote the prompt? Of the company that created the AI? Or is it a derivative of the myriad images used for training, many of which may be copyrighted? At the moment, it’s a legal Wild West. And what about the prompting ‘in the style of [famous living artist]’? Is it homage or theft?

Then there is the work-related issue. Will artificial intelligence destroy the market for illustrators, photographers, graphic designers, or just make it more productive? We like to be optimistic, imagining a world where AI is a powerful ‘creative assistant’, freeing humans from superficial tasks and allowing us to focus on the most valuable tasks.

Let us close with the two main ethical dilemmas. The first is frightening and concerns the ease with which false but realistic images can be created with intelligence. Photos of events that never happened, faces of people stuck on the bodies of others. The implications in terms of disinformation, manipulation of public opinion, and trust in sources are enormous. Distinguishing the true from the plausible will become an increasingly challenging task.

Finally, it must be emphasised that AIs are trained on data created by human beings. If this data contains prejudices (gender, ethnic, cultural), the AI will learn and replicate them, which may lead to the creation of stereotypical images or the exclusion of certain representations. The algorithm, in short, can be as racist or sexist as the societies that nurtured it.

In short, the possibility of creating images with artificial intelligence is certainly as revolutionary as the invention of photography or digital photo editing. As we are increasingly realising, AI is an incredibly powerful tool, capable of democratising creativity, accelerating production processes, but also raising profound questions about the nature of art, work and truth itself. Like any tool, its impact – beneficial or maleficent – will depend on how we choose to use it, adjust it and integrate it into our lives. It is neither a demon to be exorcised nor a magic wand that will solve every problem. It is, more prosaically, a powerful new set of digital crayons available to humanity. Get ready for a future where, in order to understand whether your friend’s holiday photo is real or ‘prompt’, you will need a trained eye, a second coffee and, perhaps, an honorary degree in the philosophy of perception. The good (and the bad) has just begun.

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Who are the 9 richest women in the world? The 2025 ranking

The Richest Women in the World: Updated 2024 Ranking

Richest women in the world: the ranking updated to 2025

Who are the richest women in the world in 2025? Have there been any changes at the top compared to previous years? Below is the updated ranking based on net worth, which is calculated by subtracting liabilities from the total value of assets owned, including real estate, investments, cash, and businesses.

To compile this list of the world’s richest women, we refer to data from Forbes, which annually updates its rankings of the wealthiest billionaires. It’s also worth noting the Bloomberg Billionaires Index, which provides a real-time snapshot of billionaire wealth. As a result, the rankings of some of these women may fluctuate throughout the year.

Here are the 9 richest women in the world in 2025.

9. Marilyn Simons

Marilyn Simons, the widow of the renowned mathematician and investor Jim Simons, who founded the hedge fund Renaissance Technologies, served as the president of the Simons Foundation until 2021. The Simons Foundation is one of the largest philanthropic organisations in the United States.

The foundation provides scholarships and grants to support research and development in four main areas: science and mathematics, autism and neuroscience, society and culture, and life sciences.

8. Miriam Adelson

After the death of her husband, Sheldon Adelson, in 2021, Miriam Adelson inherited the majority of shares in the casino giant Las Vegas Sands. The Adelson family owns five casinos in Macau and one in Singapore, which are among the world’s wealthiest locations. With assets totalling $32.1 billion, Miriam is also a prominent philanthropist who has donated over $1 billion to medical research to date.

7. Abigail Johnson

Abigail Johnson is the seventh richest woman in the world, with assets totalling $32.7 million. She serves as the face of Fidelity Investments, the third-largest investment fund in the world, which manages approximately $5.3 trillion in assets. In January and July 2024, Fidelity, along with other investment funds, launched two exchange-traded funds (ETFs) focused on Bitcoin and Ethereum, respectively. This event marked a significant milestone for the cryptocurrency industry. Additionally, Fidelity recently announced the launch of two stablecoins in collaboration with World Liberty Financial, a decentralised finance (DeFi) project supported by the Trump family.

Discover the crypto market!

6. Savitri Jindal

Savitri Jindal, with assets totalling USD 35.5 billion, is the richest woman in India. She serves as the chairman of the Jindal Group, a major player in the steel, energy, and infrastructure sectors. In addition to her business ventures, she is also involved in politics. Following the death of her husband in 2005, she was elected to the Haryana Vidhan Sabha, representing the Hisar constituency.

5. Rafaela Aponte-Diamant

Rafaela Aponte-Diamant and her husband, Gianluigi, co-founded the Mediterranean Shipping Company (MSC) in 1970. Due to their vision, MSC has become the largest shipping line in the world. Rafaela currently oversees a fleet of approximately 900 ships, with assets valued at $37.7 billion. 

4. Jacqueline Mars

Jacqueline Mars, the fourth-richest woman in the world and heir to the confectionery and food empire Mars, Inc., has a fortune of approximately $42.6 billion. She runs the family business alongside her brother, John. Mars Inc. is renowned for its popular snack brands, including M&M’s and Snickers, as well as the pet food brand Pedigree.

3. Julia Koch

Julia Koch and her children inherited a 42% stake in Koch Industries after the death of her husband, David Koch, in 2019. With assets totalling $74.2 billion, Julia Koch now leads one of the world’s largest private conglomerates, the second-largest in the United States. The company operates in various sectors, including oil, paper, and medical technology.

2. Françoise Bettencourt Meyers

Françoise Bettencourt Meyers, the heiress of the cosmetics giant L’Oréal, has lost her title as the world’s richest woman after holding it for five years. However, her fortune remains substantial at approximately $81.6 billion. She owns 35% of the L’Oréal group, which has experienced a 20% drop in share value this year due to a significant decline in sales, particularly in China. Additionally, after 20 years, Françoise Bettencourt Meyers has announced her retirement from the company’s board, handing over the reins to her son, Jean-Victor Meyers.

1. Alice Walton

Alice Walton, the daughter of Walmart founder Sam Walton, has seen her wealth increase to $101 billion, largely due to a 40% rise in the company’s stock value. Unlike her siblings, she has not taken an active role in managing the family business; instead, she has focused on her passion for art. Walton founded the Crystal Bridges Museum of American Art, which features works by renowned artists such as Andy Warhol, Georgia O’Keeffe, and Mark Rothko.

This ranking highlights how some of the world’s richest women have diversified their investments across various sectors, including technology, fashion, mining, and art. Whether they are successful entrepreneurs or heirs to substantial fortunes, these women continue to make a lasting impact in the global business world.

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Donald Trump and tariffs: the truth hurts you

donald trump

US President Donald Trump has supported the duties with often false or inaccurate statements. Here we will look at the most sensational ones. Enjoy!

US President Donald J. Trump based his campaign on the need to make America great again – Make America Great Again – and did so to the tune of slogans and catchphrases such as ‘America First!’ and ‘return to the Golden Age’. The trade tariffs, imposed, then lifted, and then reinstated, are the result of this strategy and are justified by blows of impressive statements. The problem is that many of these are unfounded. Off to fact-checking!

Donald Trump, when talking about the United States, tends to inflate the figure.s

Donald Trump is a proud American and, as such, is prone to magnifying everything about the United States of America, including numbers. Let us examine some sovereignist flare-ups: 

  • The Paris Climate Agreement cost the United States trillions of dollars that other countries were not paying. In Congress on 4 March 2025, Donald Trump justified his exit from the Paris Climate Agreement in this way: untrue, the United States has never earmarked even remotely similar sums for the Agreement. Joe Biden, when he took office, promised to allocate around $11 billion per year, a figure that was later scaled back. 
  • ‘Honda has just announced a new plant in Indiana, one of the largest in the world‘. Also at the Congress on 4 March 2025, the US President declared in a triumphant tone the construction of a new industrial hub by the Japanese giant: untrue, Honda had expressed its intention to build the latest Honda Civic in Indiana rather than Mexico, as reported by Reuters, without confirming this.  
  • ‘The US is collecting $2 billion a day from customs duties. ‘. Statement of 8 April 2025, during a speech to coal industry workers: false, the figure is in the hundreds of millions, not billions and, most importantly, the duties are borne by American importers, not foreign exporters.  
  • “We were losing $2 trillion a year on trade“—sentence uttered by Donald Trump on 22 April 2025 during an interview with Time in the White House. Here, the POTUS refers to the US trade deficit with the rest of the world before his arrival: false, in 2024 the imbalance amounted to some $918 billion, in 2023 to $773 billion, in 2022 to $945 billion, and so on. 
  • ‘I have signed 200 agreements. ‘. On 25 April 2025, in the same interview with the Times, when asked, ‘Not a single one (trade agreement, ed.) has been announced. When will you announce them?” Donald Trump replied with a dry “I have closed 200 deals”: untrue, there was – and is – no evidence to validate this claim.

Donald Trump and the European Union: not quite love at first sight

That the President of the United States of America has no excessive sympathy for the Old Continent is a well-known fact: just recently, he confirmed this ‘slight’ antipathy by raising tariffs to 50%. Let us see why: 

  • “They don’t buy our cars, they don’t buy our food. They don’t buy anything.” On Sunday, 6 April 2025, Donald Trump told reporters aboard the presidential plane Air Force One that the EU would take advantage of the US: untrue. In 2024 alone, the EU imported almost $650 billion worth of goods from the US. Not exactly chump change. 
  • “They don’t take our agricultural products“. Also on that 6 April, POTUS accused us of not buying goods and commodities for agriculture: untrue, as the US government itself reports, in 2024, the European Union spent almost $13 billion (+1% compared to 2023) on agricultural commodities. We like American dried (nuts) fruit.
  • “They put up barriers that make it impossible to sell a car. It’s not a question of money. It’s that they make everything so difficult: the standards, the tests. They drop a bowling ball on the roof of your car from 20 feet up. And if there’s a small dent, they tell you: ‘Sorry, your car is not suitable‘. This is beautiful. Monday, 7 April 2025, bilateral with Israeli Prime Minister Benjamin Netanyahu: untrue, there is no similar safety check in Europe, and most importantly, nowhere does it say that minor damage can cause the car to fail the test. 
  • ‘The European Union was created to exploit the United States of America‘: false. On 10 April 2025, Donald Trump is the protagonist of a tirade so vague that it is difficult to refute. In any case, numerous scholars – especially historians and economists – have been taken aback by this statement. John O’Brennan, a leading professor of European Integration, European Union Politics, and International Relations, said that this statement ‘could not be more wrong or inaccurate‘. And like many others.

From China with fury

That Americans and Chinese do not get along well is well known. US President Donald Trump, since his inauguration, has stepped up his game with a trade war based on extreme tariffs that was later suspended. Let us examine some of his recent mental gymnastics:

  • “We had massive deficits with China. Biden let the situation get out of hand. These are $1.1 trillion deficits; ridiculous, and it is simply an unfair relationship. It is 23 January 2025, and we are at the annual meeting of the World Economic Forum in Davos when these words come from the speakers: false. The fact checkers indicate that in 202,3 indeed the US trade deficit as a whole will be around that figure. Donald Trump, however, forgets one crucial detail: the $1.1 trillion deficit concerns the whole world, not just China, and only considers goods without including services in the calculation. 
  • ‘We have a deficit with China of more than a trillion dollars. ‘ This was stated by The Donald in an interview on Fox News Radio on 21 February 2025: false. As reported by the B.E.A. (Bureau of Economic Analysis), in 202,4 the trade deficit was around $263 billion; in 2023 the figure was close to $252 billion. In short, it was wrong by about $730 billion.
  • China has never paid even 10 cents to any other American president. Liberation Day, Wednesday 2 April 2025. Donald Trump announces tariffs for the first time and finds time to fire another propaganda bullet. By this, POTUS meant that before him, the Chinese were free to trade with the US for free: untrue. In 1792, Alexander Hamilton, then US Secretary of the Treasury, proposed the Tariff Act – also known as the Hamilton Tariff – to incentivise the consumption of domestically produced goods. 

For Donald Trump, the grass is always greener on the other side

We close this review of rhetorical acrobatics with the United States’ neighbours: Canada and Mexico. These three great nations have always had very close trade relations, formalised by various agreements including NAFTA (North American Free Trade Agreement) and the USMCA (United States Mexico Canada Agreement). 

  • The US has a ‘200 billion deficit with Canada. He emphasised this several times on 7 January 2025 at a press conference at his home in Mar-a-Lago: false. Again, the B.E.A. data tell us that in 2024 the imbalance between imports and exports with Canada amounted to $35.7 billion.
  • Canada is “ONE OF THE NATIONS WITH THE HIGHEST DUTIES IN THE WORLD“. All caps because Donald Trump, on Truth, often writes in caps lock. On 11 March 202,5, he published this statement: false, as also reported by the World Bank, which puts Canada in 102nd position out of 137 countries for weighted average tariff on all products. This indicator reflects the average import tax, calculated by taking into account the weight of different products imported.
  • “Canada does not allow American banks to do business in Canada, but their banks invade the American market. Oh, that sounds about right, doesn’t it?” he wrote in Truth on 4 March 2025: untrue, Canada does not ban foreign banks, much less American ones. They have recently tightened regulations, but banking institutions like Bank of America, Citigroup, and Wells Fargo have been operating in Canada for more than a hundred years.
  • “We have a $200 billion trade deficit with Mexico“. The US President said this on 9 February 2025, during an interview for Fox News: untrue. Again, the B.E.A.’s 2024 figures show a trade deficit of around $180 billion, half of what Trump said.

In short, we have only analysed one tenth of the falsehoods that the 48th President of the United States of America has been able to invent during these first five months in office. Knowing the data is very important and allows you to speak with full knowledge of the facts and avoid embarrassing and momentous blunders. 

For this reason, join Young Platform and get informed so that you will have safe arguments with your friends during the Thursday afternoon aperitif!

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The 4% Rule: Early Retirement Explained

Early Retirement Explained

How to retire early? Many people desire early retirement, and the 4% rule can provide assistance, despite its drawbacks. Let’s explore what it entails.

Early retirement is a dream for many working individuals, as it allows them to enjoy their savings while they still have the energy to do so. However, with the retirement age increasing almost every year, this opportunity often arrives later in life. The 4 % rule is one approach that can help people achieve their goal of early retirement. In this article, we will examine the 4% rule, including its benefits and drawbacks.

Early retirement and the 4% rule: the origins 

The 4% rule originated in the United States, a country guided by the Latin proverb “homo faber fortunae suae,” which means “man is the author of his own destiny.” This mindset encourages citizens to rely on their own abilities rather than depending heavily on the government. As a result, Americans often gain familiarity with investments from a young age, driven by the belief that their future largely depends on their personal actions. This mentality has led to the development of various financial theories related to savings and retirement, including the popular 52-week challenge and the 4% rule that we will discuss today.

William Bengen, an aerospace engineer born in 1947 in Brooklyn, New York, is the inventor of this principle. He earned a master’s degree in financial planning in 1993. The following year, he published an article titled “Calculating Withdrawal Rates Using Historical Data” in the Journal of Financial Planning. In this article, Bengen analysed extensive historical data on the U.S. market and discovered that it is possible to sustain oneself on savings for up to 30 years. His method involves withdrawing 4% of one’s investment portfolio each year and adjusting this amount for inflation starting in the second year.

It’s essential to recognise that the American pension system differs significantly from European systems and is structured around three primary pillars: social security, private pension funds, and personal investments, including Individual Retirement Accounts (IRAs) and 401(k) plans. A key aspect that helps us understand Bengen’s strategy is that the 4% rule is based on the idea that pensions are “dynamic” rather than static. This means that when Americans save for retirement, they typically invest their money in a variety of assets, including stocks, bonds, exchange-traded funds (ETFs), and mutual funds. As a result, their pensions tend to grow over time. The 4% rule is designed conservatively, suggesting that this withdrawal rate would generally provide enough income to live comfortably for roughly 30 years. 

To illustrate this point more clearly, let’s examine a concrete example.

How does the 4% rule work?

To determine how much capital you need for retirement, start by calculating your average annual expenses. Once you have this figure, divide it by the %age you plan to withdraw annually, which is typically 4% (or 0.04). 

For example, if you anticipate needing 15,000€ per year for expenses (which breaks down to 1,250€ per month for 12 months), you would divide this amount by 4%: 

15,000€ ÷ 0.04 = 375,000€. 

This means you should aim to have 375,000€ in investments. According to Bengen’s perspective, this capital would be invested in the stock market and would generate an annual return.

Great! You can stop working and enjoy your free time. In the first year, you withdraw 4% of your initial amount, which is €15,000. From the second year onward, you will adjust your withdrawal amount to account for inflation, specifically increasing it by 2%. This means you would withdraw €15,300 in the second year, and continue to adjust this amount annually based on inflation. Meanwhile, the invested capital is expected to generate enough profit to cover these withdrawals, allowing the portfolio to remain sustainable even during years when the market does not perform as well as expected. However, there are some caveats to consider.

Bengen’s early retirement fails to grasp some critical issues

First of all, it’s important to recognise that this is a purely theoretical rule and may not accurately reflect real-life situations. While calculating average annual expenses can be helpful, it doesn’t account for unique circumstances, such as wanting to take a trip to El Salvador or managing unexpected costs like car repairs. In these instances, you may need to reevaluate the amount you plan to withdraw to cover these unforeseen expenses—unless you have a dedicated emergency fund set aside.

Additionally, it’s crucial to consider the costs and fees associated with managing your investments. The Total Expense Ratio (TER) encompasses all operational expenses of a fund, including those related to mutual funds or ETFs. These fees can significantly impact your net investment return. If you decide to work with a financial advisor, their fees will also be factored in. For example, a gross return of 7% could ultimately result in a net return of only 5.5% after deducting these costs. Keep in mind that every euro spent on commissions is a euro that isn’t working toward your future. If you’re interested in experiencing life in a country that has adopted Bitcoin as legal tender, consider planning a trip to El Salvador. You can also explore clubs offering discounts through WeRoad. Furthermore, join the Young Platform to stay updated on relevant guides and news!

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Banking risk: what is it and why is it triggered?

Explore what banking risk is and how it justifies the extra profits earned by banks.

What is Risk Banking? No, it’s not the latest expansion of your favourite board game, although the dynamics of conquest and strategy that govern it bear a striking resemblance. This term, cleverly borrowed from the famous board game, describes the recent trend among credit institutions—especially those with a bit of extra capital—to engage in mergers, acquisitions (M&A), and amalgamations. It’s akin to when you’ve gathered enough armies in the game to start eyeing your neighbour’s territories with interest.

One key macroeconomic factor associated with banking risk is the change in interest rates, a topic frequently discussed in our articles due to its significant impact on various markets, including the cryptocurrency market. When central banks raise interest rates to combat inflation—while many of us witnessed rising mortgage payments—it’s often a boon for bank profits. These additional earnings will likely be reinvested to promote growth and expansion. So, prepare yourself; the banking risk landscape for 2025-2026 is shaping up to be quite eventful.

The health of Italian banks

Before exploring the main topic, it is helpful to briefly review the health of credit institutions to understand the context in which this risky phenomenon develops. In recent years, banks have greatly benefited from central banks’ decisions regarding interest rates.

In 2023, Italy’s largest listed banks reported a combined net profit of EUR 21.9 billion, which increased to EUR 31.4 billion in 2024. At the European level, the earnings of the twenty largest banks reached approximately EUR 100 billion.

The primary driver of growth during this period was the European Central Bank’s decision to raise interest rates in an effort to combat inflation. From July 2022 to October 2023, reference rates increased from 0% to 4.5%. This rise led to an improvement in the net interest margin, which is the difference between the interest income generated from loans and the interest expenses paid on deposits. In simple terms, banks raised lending rates on loans more quickly than they increased the interest offered on deposits.

However, the positive results were not solely due to this factor. There was also a rise in net commissions, particularly from asset management services. These elements have contributed to the current situation where banks, having accumulated substantial profits—akin to conquered territories or bonus cards in a game—now possess significant liquidity, or ‘armies.’ The next step for these banks, in both contexts, is to invest these resources for further expansion.

The banking risk

The metaphor of banking risk is particularly fitting, as the sector is increasingly resembling a competitive arena. However, unlike a board game, the push for consolidation among banks is driven by several strategic motivations that are essential for their growth and stability. Here are the main factors:

  1. Seeking economies of scale: the primary objective is to unify operational structures and optimise costs through the rationalisation of internal processes and the integration of technology platforms.
  2. Geographical and product diversification: expanding territorial presence and broadening the range of services offered enables banks to mitigate the risks associated with concentrating on specific markets or customer segments, while simultaneously increasing cross-selling opportunities and, consequently, revenues.
  3. Increased competitiveness: larger banks generally have greater bargaining power and a higher capacity to invest in new technologies, human resources development and marketing initiatives, thus strengthening their market position.
  4. Strategic response to industry challenges: M&As are seen as a response to accelerating digitisation, the need to comply with increasingly stringent regulations (e.g., on capital and liquidity requirements), and the urgency of addressing cross-cutting issues such as environmental and social sustainability.
  5. Shareholder pressure: A relevant factor is the constant pressure exerted by shareholders to maximise the value of shares and dividends, and to attract new investors.

The banking risk: the most emblematic cases

The Italian banking landscape has experienced notable mergers and acquisitions (M&A) that have reshaped the credit sector. The merger between Intesa Sanpaolo and UBI Banca, finalised in 2021, is seen as a pivotal moment that sparked the latest wave of banking consolidation. This merger not only solidified Intesa Sanpaolo’s leadership but also catalysed further integration within the industry.

Another significant example is Crédit Agricole Italia’s acquisition of Credito Valtellinese (CreVal) between 2020 and 2021, which highlights the growing interest of foreign groups in enhancing their presence in key regions of Italy. Additionally, BPER Banca has remained an active participant in the market, acquiring Banca Carige in 2022 and engaging in ongoing discussions about a potential merger with Banca Popolare di Sondrio.

In the background, several hypotheses involving major players are circulating. There has been extensive discussion about UniCredit‘s interest in increasing its stake in Germany’s Commerzbank, as well as previous talks about a potential merger between UniCredit and Banco BPM. Currently, Banco BPM is working to finalise its takeover bid for Anima SGR, which is also attracting interest from UniCredit, with a bid exceeding EUR 10 billion. 

Meanwhile, Unipol, having been excluded from the recent sale of public shares in Monte dei Paschi di Siena, is focusing on facilitating a merger between Bper and Popolare di Sondrio, in which it holds a significant stake. 

Banca Monte dei Paschi di Siena (MPS) remains a central element in the mergers and acquisitions (M&A) dynamics, with the Italian government seeking market-based solutions for its eventual stabilisation and privatisation. In this context, there has been renewed speculation about a possible involvement of UniCredit..

What will be the following developments?

What will be the outcome of this phase of banking risk? It is complex to provide a clear answer, mainly because there won’t be an absolute or definitive winner. Banking risk, unlike the dynamics of a board game, is a continuous process that adapts to the changing economic and financial seasons.

The current period is undoubtedly critical. With interest rates falling, the exceptional profit margins that banks have enjoyed in recent years may begin to normalise. This situation prompts banks to reevaluate their strategies and develop new plans to maintain profitability and strengthen their competitive positions.

As a result, we can expect further consolidation within the industry. Large banking groups may seek to fortify their positions to compete effectively on a global scale, while smaller institutions will need to take action to avoid being left behind. This could involve forming strategic alliances or pursuing mergers to create national or specialised leaders in the market.

What about the customers and the economy as a whole? Proponents of these operations often emphasise the anticipated benefits related to increased stability, efficiency, and investment capacity. It will be crucial to monitor whether these significant manoeuvres lead to real advantages in terms of effective competition, service quality, and support for the real economy. In summary, the dynamics of banking risk are still ongoing, and the upcoming developments will continue to shape the future of the credit sector.

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Investments: 5 false myths to dispel

Investments: 5 False Myths

It’s a common misconception that you must constantly follow the markets to invest. Discover the five most prevalent myths about investing.

What are the common myths about active market investors? Many misconceptions exist, much like the popular beliefs that wholemeal bread has fewer calories than regular bread, that eating carbohydrates in the evening causes weight gain, and that dogs perceive the world in black and white. These false myths permeate our daily lives until we accidentally uncover the truth, often by reading a revealing article like this one. When it comes to finances, these myths can resemble urban legends. So, what are some of the most prevalent misconceptions in the world of investments?

In this article, we will examine various myths, including the unrealistic time horizons that young investors often believe they have, as well as the paradox of the over-informed investor who ultimately harms themselves.

The CAP is the best way to invest.

What? We started with a cannonball, huh? Is this a myth? Hold on, don’t run away; I’ll explain. The CAP, or Capital Accumulation Plan, is undoubtedly a great way to build wealth, especially if you don’t have large sums of money available or if the idea of investing everything at once makes you anxious. 

Regularly setting aside a small amount of money not only reduces the risk of entering the market at the wrong time, but it also helps you develop self-discipline—much like a Tibetan monk—especially when you use automatic deposits. Plus, let’s be honest: it lessens the emotional toll of experiencing the market’s ups and downs.

However, there is always a caveat: this approach is not the most mathematically efficient way to invest. Statistically, putting all your capital into a single, bold solution (PIC) offers higher returns. Why is that? It’s simple: all your capital works for you immediately, allowing you to fully benefit from the power of compound interest from day one. Additionally, since markets tend to rise over the long term, the likelihood of buying an asset at a lower price today is generally higher than it will be tomorrow or the day after.

The effectiveness of a Premium Allocation Contract (PAC) in managing purchase prices during bearish market phases is somewhat limited, particularly if the portfolio is still in its growth phase. Initially, payments into a PAC are more likely to influence the average price positively, but this effectiveness tends to decrease as the portfolio matures.

That said, I want to emphasise that a PAC remains a strong investment option while also providing a savings mechanism. For many investors—likely the majority—it is the best solution available. Although it may not be the most efficient option in absolute terms, the peace of mind it offers can often outweigh the benefits of marginal gains.

More risk means more return.

This may sound controversial, almost like a challenge to the popular saying “no pain, no gain.” How can the concept of balancing risk and return be deemed a myth?

To clarify this, we need to explore the physical and statistical idea of ergodicity. In simple terms, a system is considered ergodic if, over the long run, the time average of a single path equals the average across all possible paths. If this sounds confusing, you’re not alone.

Let’s use a more relatable example. Imagine your favourite motorcyclist, who is exceptionally talented and often finishes on the podium. However, he rides recklessly—he brakes at the last moment and performs wheelies in corners, which leads to frequent crashes and injuries. For simplicity, let’s say he has a 20% chance of winning each race but also faces a 20% chance of getting seriously injured and missing the rest of the championship. What are his chances of winning in a 10-race championship?

Intuition might suggest that with a 20% chance of winning each race, our hero could expect to win about 2 out of 10 races. This seems logical. However, the situation is more complicated than it appears. The high risk of injury is a significant factor to consider. Supposef our daring competitor suffers a serious injury—there’s a 20% chance of this in every race—his dreams of glory could come to a swift end. An injury would prevent him from participating in the rest of the championship, effectively eliminating his chances of overall victory. He could win two races and then spend the remainder of the season watching from the sidelines, perhaps with a leg in a cast.

Non-ergodicity is a crucial concept to understand in this context. It emphasises that a person’s skill is closely linked to their willingness to take risks, which can sometimes lead to “ruin”—especially in sports. Similarly, in investments, taking high risks, even with the potential for significant returns, can result in the investor’s downfall and render historical averages irrelevant. In non-ergodic situations, the focus shifts from maximising yields to ensuring survival. To reduce these serious risks, diversification is essential; it helps lower the chances of facing losses from which one might never recover.

To invest, one must be informed

It may surprise you, but sometimes an investor who is blissfully unaware of market happenings—meaning they choose to ignore the noise—can be more effective. Yes, you read that correctly. This is because those overwhelmed with information, charts, opinions, and alarmist tweets are more likely to make impulsive decisions.

Additionally, investors who see themselves as the next Warren Buffett—always well-informed and on top of everything—might be tempted to experiment. They may use complex financial instruments that seem straight out of a science fiction movie, buy ‘exotic’ assets, or develop strategies so intricate they would challenge a NASA engineer. The outcome? Often, they take on more risk and lose control. Sometimes, the overly informed investor ends up like a cook who ruins an otherwise good dish by adding too many ‘special’ spices.

Young people have a long-term horizon.

More than just a common misconception, we are facing a logical fallacy—a classic error in perspective. Many people believe that young individuals have decades ahead of them to invest: twenty years, twenty-five, thirty… it feels like an eternity! This mindset stems from thinking of ourselves as if we are playing a video game, to maximise our final score, which in this case means accumulating capital for retirement.

However, the reality is quite different. Suppose you are young and take a moment to reflect. In that case, you may realise that the money you plan to invest might be needed long before you reach your golden years—if those years even include a pension, given the uncertainties around social security. You may need that money for a down payment on a house, a wedding, an expensive master’s degree, or that dream trip you’ve always wanted. In short, sooner or later, you will enjoy—or need—to use that money.

Investing exclusively in equities simply because “there’s still time” is similar to preparing for a marathon by consuming only sweets. It’s essential to include a mix of assets with varying risk and return profiles in addition to stocks, as these may take time to generate positive results. For example, consider incorporating bonds or bond ETFs, as well as cryptocurrencies or commodities, to diversify your investment portfolio.

The global ETF is the holy grail that faithfully replicates the world economy

We arrive at a fundamental principle for forum investors known as ‘VWCE & Chill’ (or its global equivalent). This philosophy resembles a way of life, almost akin to a religion, complete with excommunications for those who dare to stray from the established path of the global index. Many investors adopt this nearly blind faith approach, overlooking the true nature of their investment choices.

It’s crucial to understand that the stock market does not comprehensively represent the entire world economy. Instead, it only reflects a large subset of companies that choose—and are able—to go public. In the United States, financial culture and demand for the stock market are so ingrained that a significant number of large companies are publicly listed. In contrast, many successful companies in Europe and other parts of the world opt to remain private, choosing alternative forms of financing. Consequently, a global equity ETF, no matter how diversified, may overlook essential segments of the real economy.

How can we exclude the crypto world from this discussion? Bitcoin, in particular, has become a focal point in recent years due to its relatively predictable growth, which results from the cyclical nature of its price movements. It has created fortunes for many investors and has become one of the most popular assets globally, thanks in part to exchange-traded funds (ETFs) issued by major American investment firms. Often referred to as “digital gold,” Bitcoin serves as a crucial haven asset in today’s financial landscape.

Bitcoin’s mathematically finite supply and decentralised nature position it as a safeguard against unregulated monetary policies and missteps by central banks. In the context of soaring U.S. government debt and ongoing turmoil that erodes confidence in traditional currencies, Bitcoin is not merely an alternative; it is a resilient solution and a strategic store of value. Thus, it becomes an essential component of conscious asset diversification, helping to protect against the evident and increasing vulnerabilities of the traditional financial system.Bitcoin’s volatility is undeniable, but it is also a hallmark of a revolutionary asset class that is still working towards global acceptance. Ignoring Bitcoin in today’s financial climate would be akin to repeating the mistake of those who underestimated the internet’s potential in its early days.

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Cognitive Bias in Finance: A Guide to Conscious Investing

Cognitive Bias in Finance: Invest More Consciously

Cognitive biases have a greater impact on your investment decisions than you realise. Explore the most prevalent ones in finance and practical strategies for recognising, managing, and overcoming them.

Cognitive biases are mental distortions that affect our thinking and decision-making, often clashing with the fundamentals of traditional economic theory. Because of these systematic biases, we, as investors in the financial world, are far from being the ‘rational actors’ that classical economists envisioned.

For a long time, the significance of cognitive biases has been overlooked. People tended to view individuals as robots, acting solely based on a balance of risk versus return and costs versus benefits. However, reality—and particularly the data, which rarely lies—presents a very different picture. 

What exactly are cognitive biases? How does behavioural finance define them? And, most importantly, how frequently do we fall victim to them?

Cognitive bias:  The origin of the term

Do you think you’re a good driver? Maybe you believe you’re better than the “average Italian driver.” If so, you’re not alone; most drivers share the same conviction. This phenomenon itself is paradoxical. The reason behind it? The overconfidence bias. But let’s not get ahead of ourselves; we’ll discuss that shortly.

To explore the intriguing world of cognitive bias in finance, we first need to understand what “bias” means. It’s an English term derived from the Greek word “epikársios,” which means “slanted” or “skewed.” Initially related to the game of bowls, it described a slightly off-target shot. You probably never heard your grandfather shout “Bias!” at the bowling alley, and there’s a reason for that: since the 1500s, the term has taken on a broader meaning. Today, we often refer to it as a “predisposition to bias” or, more specifically, in our context, a “systematic distortion of judgment.” In short, it refers to the tendency to see things a bit… askew.

What are Cognitive Biases?

The term “cognitive bias” has its origins in etymology, which we have briefly touched upon. It is essential to note that this concept has a strong foundation in psychology, mainly due to the pioneering research of two prominent figures: Daniel Kahneman and Amos Tversky. These Nobel laureates began exploring this complex topic in the 1970s.

So, what does “cognitive bias” actually mean? One could consider it synonymous with mental automatism or shortcuts, though these terms often carry a negative connotation. Our brains, to conserve energy, tend to take shortcuts instead of processing information straightforwardly. Unfortunately, these shortcuts can sometimes lead us astray. Cognitive biases can influence the beliefs we hold, the decisions we make, and even our habits. In summary, cognitive biases are serious matters; they can significantly alter our thinking processes, especially if we fail to recognise and address them. The key to managing these biases is to acknowledge their existence and thoroughly understand them.

Heuristics, sometimes dangerous mental deterrents

We are discussing cognitive biases related to finance, but money and investments often lack concrete evidence, don’t they? Don’t worry; we’re getting there. First, we need to clarify one last fundamental concept: heuristics, a term you will frequently hear in connection with bias.

In simple terms, heuristics are mental shortcuts that help us make quick decisions. The word originates from the Greek “heurískein, “meaning “to discover” or “to find.” These quick mental processes allow us to reach conclusions swiftly, enabling us to make decisions on the fly. Isn’t that fascinating? When an idea suddenly “pops into your head” without the need for extensive thought or complicated reasoning, that’s heuristics at work!

This phenomenon, often referred to as ‘magic’, occurs in our brains through a process known as attribute substitution. This process usually happens without our awareness. Our brain replaces complex concepts with simpler ones, allowing us to reach quick conclusions with minimal cognitive effort.

This intriguing mechanism can lead to cognitive biases. However, it is essential to recognise that not all heuristics are detrimental; some are known as ‘effective heuristics’. These are shortcuts that can be beneficial and make our lives easier. The real issue arises when we rely too heavily on ‘lazy’ or flawed heuristics, which can lead to problems, especially in finance.

Cognitive bias in the world of finance: When shortcuts become traps

Have you ever made a trade and felt like the Warren Buffett of your region, almost invincible? Or, conversely, have you recorded a loss and, instead of taking a moment to reflect, decided to increase your investment to try to “recover quickly”? If you’ve nodded in agreement at least once, welcome to the club—you’ve had your encounter with cognitive bias.

Don’t feel alone or wrong; this is entirely normal. Research shows that irrational thinking patterns are pervasive and significantly influence the decisions of many individuals when faced with uncertainty, such as in financial markets. Kahneman, in his book “Thinking, Fast and Slow,” explains that these “systematic errors” are an integral part of our thought processes.

It is essential to closely examine the most prevalent biases that impact the investment world. The goal is to recognise these biases so we can work to mitigate their impact. While eliminating them may be nearly impossible, we can aim to manage and reduce their influence.

Confirmation Bias

Confirmation bias refers to the tendency to seek out, interpret, favour, and remember information that supports our pre-existing beliefs or values, essentially acting as a form of selective blindness. 

For example, suppose you invest in shares of ‘Company X’ or a trending cryptocurrency. In that case, you may actively search for positive news about that asset on forums or social media, while ignoring or downplaying any negative information. You might think, “Oh, that famous analyst says it will go up? That’s fantastic! The other analyst believes it’s a bubble. He doesn’t know what he’s talking about!”

A study conducted by Park in 2010 and published in the Journal of Cognitive Neuroscience utilised functional magnetic resonance imaging (fMRI) to demonstrate that when confirmation bias is at work, areas of the brain associated with reward become activated. In simple terms, our brains release dopamine when we encounter information that aligns with our beliefs, even if those beliefs are incorrect.

Overconfidence bias

It is a very human tendency to overestimate one’s abilities, knowledge, and the accuracy of one’s predictions. Consider entrepreneurs who underestimate the challenges of starting a business or employees who are convinced they can meet unreasonably tight deadlines. While optimism can be a powerful motivator, it becomes problematic when confidence turns into arrogance. This overconfidence can lead to hasty decisions, disregard for genuine risks, and ultimately disappointing outcomes.

Research by Barber and Odean (2001), titled “Boys Will Be Boys: Gender, Overconfidence, and Common Stock Investment,” highlights that this cognitive bias occurs more frequently among male investors. Males tend to overestimate their capabilities, which often results in more frequent trading and lower net returns compared to their female counterparts.

Anchorage bias

Anchoring refers to our tendency to rely too heavily on the first piece of information we receive about a topic, even if that information is not particularly relevant or accurate. This initial piece of information acts as a mental ‘anchor’ that affects all subsequent judgments. For instance, when we are tasked with making a numerical estimate, we are often influenced by a number we have encountered before, regardless of its relevance to the current situation.

A study by Hersh Shefrin in 2000, which is detailed in his book ‘Beyond Greed and Fear’—a classic in the field of behavioural finance—demonstrates how investors tend to ‘anchor’ themselves to historical price levels. This could be the price at which they purchased a stock or its historical high. These ‘anchors’ can significantly influence their expectations and future decision-making.

Bias of the Present

You may fall victim to this cognitive bias, which can lead to adverse outcomes, when you overvalue immediate benefits at the expense of future gains, even though the latter could be significantly greater. This reflects the mindset of “everything and now.” 

A 2008 study on retirement savings by Laibson, Repetto, and Tobacman demonstrates how this bias can contribute to chronic procrastination in long-term savings decisions. The common thought of “I’ll start my savings plan next month” often shifts to “next year,” and, eventually, “when the kids are grown up.”

This bias is effectively illustrated by economic models such as the “beta-delta” model, which simply shows that people do not discount time uniformly. We tend to give much more weight to rewards we can obtain immediately than to those that will come in the future, even when the wait is minimal. It’s as if our “future self” is a stranger to whom we are reluctant to show kindness.

Representativeness Bias

Tversky and Kahneman extensively addressed this heuristic in their seminal 1974 article, “Judgment under Uncertainty: Heuristics and Biases.” This heuristic is based on our tendency to evaluate the likelihood of an event or its association with a category by comparing it to a well-established prototype or stereotype in our minds. Unfortunately, this often leads us to ignore what is known as ‘base probability’—the actual frequency of that event in reality.

A classic example in finance is when investors choose to invest in a company merely because it belongs to a ‘hot’ sector, such as artificial intelligence today or renewable energy yesterday. They might also invest simply because the company’s name resembles that of a successful enterprise or because its founder has a likeness to Steve Jobs. In these cases, people focus on superficial similarities while neglecting essential fundamental analysis.

Consider roulette: if red appears five times in a row, many people would choose to bet on black, thinking it must come up next. This belief stems from the idea that the sequence R-R-R-R does not fit our perception of randomness. However, it’s important to remember that the roulette ball has no memory, and the probability remains the same with each spin.

Framing Effect

Even when not influenced by bias, we must acknowledge the framing effect. This psychological phenomenon illustrates how our decisions can change significantly based on how information is presented, or “framed.” Although the underlying facts may be the same, our perception—and ultimately our choice—can vary significantly depending on the way they are framed.

As Kahneman and Tversky have taught us, how a choice is formulated in terms of potential gains or losses can make a considerable difference. For instance, stating that a medical treatment has a “90% chance of success” feels much more reassuring than saying it has a “10% chance of failure,” even though both statements convey the same information.

Similarly, when we say that an active investment fund generated a 4% return while the reference market yielded only 2%, it can be framed as a success. However, if the annual management fees are 3.5% and inflation is 3%, the actual return is negative.

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How to unhinge cognitive bias

Now that we’ve become familiar with this cheerful little collection of mental traps, you might be asking yourself, “Am I destined to make poor financial decisions for the rest of my life?” The answer is a resounding NO! Understanding the problem is the first essential step toward overcoming it. Here are some practical tips—no magic formulas, just genuinely helpful advice:

  1. Give yourself clear rules and follow them:
  • Set clear financial goals: what do you want from your investments? A quiet retirement? Buying a house? Having defined goals and a defined time horizon helps you keep a straight tiller when the seas get rough;
  • Create a written investment plan: do not navigate by sight. Decide on your risk profile first, how to diversify your portfolio, and set clear rules for buying, selling and rebalancing. Write it down in black and white! And, above all, stick to the plan, even when instinct (or a damn bias!) screams at you to do the exact opposite.
  • Automate as much as possible: accumulation plans are a blessing. Regular, automatic deposits and purchases save you the agony of deciding ‘when is the right time to enter’ (spoiler: nobody knows for sure) and protect you from impulsive decisions dictated by the emotionality of the moment.
  1. Scepticism, in finance, is a virtue:
  • Actively seek divergent opinions: Are you overwhelmingly convinced you want to invest in a specific crypto, e.g. SOL? Perfect. Now go and look up all the reasons why it might be a bad idea. Read analyses from those who think differently and compare your thoughts.
  • Draw up a ‘pre-mortem’: before making a significant financial decision, imagine for a moment that it went wrong, a complete disaster. What could have been the causes? This mental exercise can help you identify risks and flaws in your reasoning that you might otherwise overlook.
  1. Keep an investment diary:
  • Write down why you made a specific investment decision, what you expected at the time, and how you felt (euphoric? worried?). Rereading the diary after a while is a powerful way to recognise your ‘favourite’ behavioural patterns and biases, the ones you fall into most often.
  1. Think long term:
  • The financial and cryptocurrency markets are generally considered risky and volatile in the short term. If you stand there every day checking the charts and getting anxious about every little change, the bias will have an easy time. Take a deep breath, remember your long-term goals and don’t get overwhelmed by the panic or euphoria of the moment. As Warren Buffett says, “The stock market is a mechanism for transferring money from the impatient to the patient.” 

Cognitive bias in finance: Frequently asked questions

After all this immersion in the somewhat convoluted world of bias, it is normal to have a few doubts or curiosities. Let’s try to anticipate a few, see if we get it right:

  • Is it possible to eliminate cognitive bias? 

The honest answer is that cognitive biases likely cannot be eliminated. They are a fundamental part of being human, much like our shadows or our regional accents. Instead of trying to eradicate these biases—an unrealistic goal akin to never feeling hungry—the more realistic approach is to recognise and understand them. By developing strategies to manage and mitigate their effects, we can work toward a better understanding of ourselves. This is an ongoing process, much like constant mental maintenance..

  • How important is the psychological factor in finance?

It’s crucial to remember that knowledge alone isn’t enough. You might have read every finance book available, but when it comes time to click ‘buy’ or ‘sell’, letting emotions and biases influence your decisions can jeopardise all your analytical insights. Many experts and successful investors argue that a significant portion of successful investing—possibly as much as 50% or more—depends on managing one’s psychology. Therefore, analysis and psychology must work together in a seamless manner.

  • Are there biases that are more ‘dangerous’ than others for beginning investors?

For beginners in the market, certain biases can be particularly dangerous. For instance, overconfidence following initial gains can create a false sense of security, leading to unnecessary risks. Additionally, confirmation bias is often prevalent among individuals with limited trading experience.

  • How can I identify the biases I am more susceptible to?

The most effective approach to self-improvement is through honest and consistent self-observation. One helpful technique is to maintain a diary of your investment decisions. In this diary, record not only what you buy or sell but also the reasons behind your choices and how you felt at the time (were you euphoric, worried, or feeling pressured?). Over time, when you reread your entries, you may notice recurring patterns in your behaviour. For example, did you make impulsive decisions during a market crash? Did you hold onto a stock ‘out of principle’ even as its value continued to decline?

  • Are financial professionals (traders, fund managers) immune?

Not! Cognitive biases are universal; they affect everyone because they are rooted in the way the human brain processes information and makes decisions. It is often overconfidence that can mislead those who consider themselves exceptionally knowledgeable. The key difference is that a good professional should be trained to recognise these biases and develop strategies to mitigate their impact. However, nobody is perfect—not even those who work on Wall Street!

We have reached the end of our journey to explore cognitive biases in the realm of finance. If you have made it this far, you have already taken a significant and crucial step: you have become aware that these “mental biases,” or “deceptive shortcuts,” truly exist. They impact you, just as they affect every single person on this planet.

Biases are not just a product of psychologists trying to sell more books; they are fundamental mechanisms that are deeply ingrained in our way of thinking, stemming from our evolutionary history. These biases serve as shortcuts that our brains, which prefer efficiency over effort, use to navigate an incredibly complex world filled with vast amounts of information. Sometimes, these shortcuts help us reach our goals quickly and safely. However, other times—especially when it comes to our hard-earned savings and the unpredictable nature of financial markets—these biases can lead us to make significant mistakes.

The good news is that we are not bound to be mere puppets of our biases! Awareness is our most powerful tool. By understanding how these mechanisms work, recognising the warning signs in our behaviour and thoughts, and adopting effective strategies to ‘defuse’ them or at least reduce their impact, we can make a significant difference in our lives.

The next time you hear that little voice inside urging you to make an impulsive financial decision, —making you think, “What the heck, I’m going to jump!”—pause for a moment. Take a deep breath and ask yourself, “Am I being influenced by some cognitive bias that might lead me astray?”

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Supply chain and open finance: the integration that could revolutionise the supply chain concept

Supply chain and open finance: revolution?

The integration of open finance could transform the supply chain by making financial flows more efficient and transparent. How can this be achieved?

The supply chain is prepared to collaborate with open finance, creating a synergy that promises significant advancements. Thanks to APIs, stakeholders at various stages of the supply chain can greatly enhance financial flows. In this article, we will explore how this can be achieved. Let’s get started!

Supply chain: meaning and how it works

The supply chain refers to all the elements involved in the journey from product creation to delivery to the end consumer. The term “chain” is intentional, as it conveys the idea of a series of interconnected stages where each link depends on the proper functioning of the previous and subsequent ones.

While the supply chain manages the physical flow of goods and services, supply chain finance (SCF) oversees the financial flow. SCF is defined as a collection of solutions aimed at optimising financial transactions between supplier and buyer companies within the supply chain. It includes various strategies designed to enhance collaboration and trust between these parties, providing mutual benefits to both producers and buyers.

This collaborative approach is essential because the supply chain is exposed to various risks. Common issues include situations where the buyer pays, but the supplier fails to ship, or where the supplier ships, but the buyer does not make payment. Such problems can significantly disrupt the stability and efficiency of the supply chain, resulting in substantial economic consequences.

Supply chain finance (SCF) includes key features such as reverse factoring and dynamic discounting. Reverse factoring, which can be inaccurately translated into Italian as “reverse invoice advance,” is the primary solution offered by SCF. But what does “reverse” mean in this context? Unlike direct factoring, where a supplier sells their outstanding invoices to a third party for immediate liquidity (often paying a commission to the intermediary), reverse factoring flips the roles. In this scenario, it’s the buyer—a large company—that approaches the third party for the advance, enabling the supplier to access capital under more favourable terms to fulfil their order. Essentially, the purchasing company reassures the supplier, saying, “Don’t worry, I’ve got your back; this way, you can get paid sooner and pay less for the loan.” The purchasing company then repays the advance at a significantly lower interest rate than what the financing company would charge in a direct factoring arrangement. Consequently, the purchasing company benefits from a lower final price.

Dynamic discounting operates on the same principle, with the purchasing company advancing liquidity without any intermediaries. In this case, the supplier issues an invoice with a due date, and the buyer collects it and provides the advance directly. What does the purchasing company gain? They receive an invoice discount, termed “dynamic” because it varies depending on when the payment is made: the sooner the payment is made, the less is paid, and vice versa.

In summary, the solutions offered by SCF aim to enhance capital management and reduce payment times by providing suppliers with early access to liquidity. Additionally, they enable small and medium-sized enterprises (SMEs) to obtain financing on more favourable terms by leveraging the creditworthiness of their buyers, who effectively support them in this process.

Open Finance: what it is and how it works   

Open Finance refers to a system that enables the secure and consensual sharing of customer financial data among various participants to develop innovative products and services. The term “consensual” emphasises​​ the necessity of obtaining permission from the data owner before sharing their information. Open Finance is rooted in the concept of Open Innovation, which views innovation not as a product of competitive secrecy but rather as a result of collaboration, sharing, and transparency. 

Open Finance is seen as an evolution of Open Banking. While Open Banking primarily focuses on banking data, Open Finance broadens this scope to encompass the entire financial sector. As a result, Open Finance aims to create an interconnected financial ecosystem that encompasses not only banking services but also mortgages, insurance policies, investment portfolios, pension funds, and other financial products.

Open Finance is fundamentally built on the interactions between three key actors: customers, financial institutions, and Third Party Providers (TPPs). TPPs are external companies that exchange, process, and utilise financial data. In essence, customers decide whether to grant TPPs access to their financial data held by various institutions. 

Once permission is granted, APIs (Application Programming Interfaces) serve as the technological backbone of Open Finance, acting as a ‘bridge’ between different IT systems. This enables efficient and secure communication of financial information. As a result, an ecosystem emerges where various entities share knowledge and collaborate to generate innovative solutions, ultimately aiming to enhance the economic structure as a whole.

To grasp the significance of this new paradigm, let’s use an example of organising an Easter Monday gathering. Imagine you want to arrange a traditional lunch with friends. You assign tasks, such as who will handle the barbecuing, who will cook the vegetables, who will bring the drinks, and who will buy the plates and glasses. As the organiser, you receive countless messages: the person in charge of the barbecue asks if the vegetable cook would like to grill, the drinks coordinator is unsure if they should also bring glasses, and the plate buyer wants to know how many courses are planned. It quickly becomes chaotic. You are the organiser, not the switchboard operator.

To streamline communication, you create a WhatsApp group titled ‘Easter Monday 2025.’ This innovation enables all participants to interact directly with one another without going through you. Similarly, Open Finance can be compared to this WhatsApp group, facilitating direct communication among various stakeholders. 

We have previously explored the concepts of supply chains and Open Finance, as well as their operational aspects. Now, it’s time to examine how these two concepts could work together and the benefits this synergy could bring to the infrastructure.

If Supply Chain and Open Finance Integrate

The supply chain is a network of interconnected units that are constantly communicating with one another. However, the main challenge is that this communication often follows a linear and fragmented approach. Integrating Open Finance into the supply chain can make processes more fluid and enhance the overall infrastructure by increasing efficiency and operational efficiency.

So, how does this work? It’s through APIs (Application Programming Interfaces), which enable the continuous exchange of data and the execution of transactions among various participants, such as banking institutions, third-party companies (TPPs), supply chain finance (SCF) intermediaries, and different business management systems (ERPs). 

The result is an ecosystem that enables the secure and rapid transfer of information, where processes are automated and optimised. The more efficient, transparent, and collaborative the communication is, the smoother and more stable the supply chain becomes.

The processes, the higher the productivity and, consequently, the turnover. 

The Open Finance API specifically facilitates access to account information services (AIS) and payment initiation services (PIS). AIS allows for the retrieval of account balances and transaction details, while PIS enables the automatic authorisation of payments under certain conditions. This functionality provides a current and comprehensive view of a company’s financial status, allowing the assessment of its liquidity and spending capacity. Additionally, it streamlines and speeds up transactions within the supply chain. Let’s explore a practical example.

As the owner of GiardiNani S.r.l., a company that manufactures garden figurines, you receive a large order from a purchasing company in the UK. This is the first time you’ve had to produce such a significant quantity of garden figurines, and you lack the funds to begin production. Fortunately, the purchasing company introduces you to reverse factoring, which you find promising.

You issue an invoice with a 60-day due date to the purchasing company, which approves it through its ERP management system. Via an API, the ERP automatically sends the invoice data to a third-party reverse factoring company, which determines whether to provide financing. This financing company can access the financial information (AIS) of both the purchasing company and GiardiNani to assess their financial situations and develop loan terms.

Due to the purchasing company’s high credit rating, it offers a loan with excellent terms, which GiardiNani gladly accepts. After this, the reverse factoring company issues the payment automatically (PIS). With the cash received, your factory can begin producing garden figurines.Finally, the purchasing company is responsible for repaying the loan to the reverse factoring company at the end of the 60 days. Their management systems, connected via an API, communicate seamlessly to facilitate the transaction.

What happened? Almost automatically, GiardiNani gained access to liquidity at much more favourable costs and conditions than it would have obtained through traditional financing. Open Finance enables quicker transactions by providing access to financial data (Account Information Services – AIS) and facilitating automatic payments (Payment Initiation Services – PIS). 

The exchange of information and communication between management systems reduces human error and accelerates the entire process. Transparent data allows for a more accurate, timely, and efficient assessment of credit risk. 

Overall, the supply chain benefits from these improvements because the processes run smoothly, without any lost time. And as we know, time is money.

A consideration for the future 

The integration of supply chain management with Open Finance currently focuses on enhancing system responsiveness and improving process efficiency. The next phase involves implementing artificial intelligence and machine learning to develop systems capable of predicting liquidity crises and insolvency risks. These advancements will enable the dynamic optimisation of services based on market conditions, as well as the creation of risk-balancing models and other benefits.

Given that transparency is a key principle of Open Finance, blockchain technology is likely to play a significant role in this new approach to managing and optimising financial flows. In the cryptocurrency sector, we can already see examples of initiatives aimed at improving supply chain processes, such as VeChain. We are still in the early stages of this development and will continue to closely monitor this trend.