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Will staking on Ethereum make it a security? Other risks of Ethereum 2.0 fork

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Ethereum Fork 2.0

Ethereum fans are excited about staking coming to Ethereum. Will this excitement lead to disappointment?  Will staking open a new can of worms for the Ethereum project with the SEC? 

Ethereum 2.0 is bringing staking to the Ethereum Network so that those who hold Ethereum tokens are paid a dividend.

Last year, the SEC had ruled that Ethereum was more of a commodity than a security. This moved Ethereum into the purview of Commodities Futures Trading Commission (CFTC) rather than the SEC.

In coming to the conclusion, SEC used the Howey Test which addresses four aspects:

Test 1: Involvement of Monetary Investment:  Yes, in order to procure Ethereum – you can invest money (mining was one option as well). 

Test 2: Expectation of profits: Yes,those who invested in Ethereum did so with an expectation of reaping profits down the line.

Test 3: Investment in a common enterprise: Yes, Ethereum issued an ICO to raise its money and has formed an Ethereum Foundation to run the project. 

Test 4: Profits from the efforts of a promoter or third party:  Whether we take Vitalik as a contributor or the Foundation as a whole, now because of their efforts – Ethereum is going to make progress (that is their efforts are contributing to the profits in the form of staking rewards) and could re-trigger the Howey Test.  This time, there is a potential for them to fail to meet the tests to be regarded as ‘commodity’ instead of security.

“Putting aside the fundraising that accompanied the creation of Ether, based on my understanding of the present state of Ether, the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions,” William Hinman, director of the SEC’s division of corporation finance said during a conference.

That gave a sigh of relief to the Ethereum community. With staking coming to the network, will we see a second round of ‘scrutiny’ from the SEC?

Too big to fail or ripe to take down?

Because of the open public blockchains like Bitcoin and Ethereum, even with a lot of private enterprise push projects like Hyperledger, Corda, etc., have not found ground yet. IBM is heavily invested in Hyperledger’s success and a blow to Ethereum Network because any potential troubles with the SEC could boost these projects.

In fact, as of this writing, Hyperledger only has about 15 projects on it compared to 2825 DApps on Ethereum.

Because of the industry reliance on the Ethereum Network by startups who are strapped for capital and the big enterprises who are breaking into blockchain space, we expect the SEC to exercise leniency toward the staking move by Ethereum.  

Ethereum Foundation may have already looked into these aspects before working on Ethereum 2.0 and getting ready to roll out the staking model.

Other Risks of Ethereum 2.0 fork 

Besides the regulatory risks from the SEC and other regulatory bodies, the project rollout itself has some inherent risks, including:

  • Moving from Ethereum 1.0 to Ethereum 2.0 requires a lot of coordination and technical expertise;  what if some functionalities from 1.0 do not port to 2.0?
  • What if we find ourselves in the same conundrum as we did before with Ethereum Classic vs. Ethereum 1.0?
  • What if the majority of the community decides to stay with Ethereum 1.0?

These forks that pose a possible split of resources and network support may force the large enterprises to switch to more reliable (even if centralized) blockchain networks.  This in theory could hurt Ethereum and public blockchain space in general.

On the other hand, if the transition goes according to the plan and if the network grows stronger due to the Proof-of-Stake (PoS) model, it could cement Ethereum’s position as the number one public blockchain protocol for smart contracts for projects of all sizes.

Other coins do this, why is it a problem now?

Tezos Latest UpdatesTezos offers staking and so do other tokens, then why is this a problem now with the SEC?  

The problem is, there is no clear cut ruling that these other tokens with staking are not a security.  It may just be a matter of time for the SEC to question these projects about their staking aspect and how they justify not meeting the Howey test.  

In fact, EOS and Tezos have paid penalties for running unauthorized ICOs.  However, a clear ruling on whether or not they are a security is not concluded.

As Ethereum, the second largest crypto in the market, moves to staking mechanism it can draw the attention of the SEC not only to its own project but to other projects as well.

Probably, the founders of these projects anticipate this move from the SEC and so they have met with the SEC to strategize and recommend how these tokens should be treated legally.

The Proof of Stake Alliance (POSA), an association with the likes of Coinbase, Cardano, Polychain in its alliance, has met with the SEC to provide clarity from a regulatory perspective.

Forbes reported that “Coinbase, Polychain And Tezos Meet With SEC On Blockchain,” because they are sensing the direction the staking path is leading toward and they don’t want to mess with the regulations, instead, they want to be the conduits who usher the newer and more sensible regulations that make sense for the blockchain and cryptocurrency reality we live in.

Will they succeed in convincing the SEC that staking itself should not change a token’s ‘utility’ status?

Only time will tell.

Conclusion

Our own opinion is that the SEC will be more compassionate with Ethereum since the network  has already on boarded many projects and any trouble to the project could hamper the progress made in the blockchain space. 

The other projects that are offering staking may run into a bit of a problem if the SEC finds them to be securities and all of a sudden they have to comply with the disclosure and audit requirements of the securities.  This could throw many of those projects out of business (which may be a good thing for Ethereum in consolidating its position as global leader in smart contract blockchain network).

The real trouble may be lurking in the execution of this fork itself, not with the authorities.

For now, let’s wish Ethereum network all the best.

Thank you for reading and sharing this article. Stay safe and healthy!

IMPORTANT DISCLAIMER

Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.

We do not endorse or guarantee the accuracy of the information and claims made.

All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.

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Crypto Roundup: All Your YouTube Influencers in One Place

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Crypto Roundup

Visit our Crypto Roundup section daily for a dose of all your favorite Crypto YouTube influencers in one place.    

Worried about missing updates from your favorite YouTube crypto influencers?  

Welcome to the Crypto Roundup.  

On this page, we will post a quick summary of the videos from some of the most popular YouTube crypto influencers.

Ivan on Tech  Altcoin Daily

Crypto Zombie Box Mining

Ellio Trades Lark Davis

Data Dash Bitboy Crypto

MMCrypto Chico Crypto

Altcoin Daily

Video title: Bitcoin Will Be OVER $20,000 By Christmas 2020! BIGGEST WEALTH SHIFT OF OUR LIFETIME! Cryptocurrency

Date: 19-Nov-20

  • World’s biggest wealth shift of our lifetime is happening right now and no mainstream media is talking about it, except CNBC.

  • Preston Pysh predicted on August 26th that: “Bitcoin should be reaching its all time high by Christmas.”

  • If you are looking to buy a dip, there may not be one.
  • Ricardo Salinas Pliego, a mexican billionaire, has just revealed that 10% of his liquid assets are into bitcoin.

Lark Davis

Video Title: STOCKS HIT NEW HIGHS! WILL COVID VACCINES LEAD TO MEGA PUMP IN 2021? [Are You Ready?]

Date: 19-Nov-2020

  • Stock markets and bitcoin pumps higher on the news of the second successful covid vaccine.
  • There could be more chances for the new stimulus. Means more inflation, more debt and simultaneously pumps stocks, gold and bitcoin.

Crypto Zombie

Video Title: BITCOIN $18.5k TOP!!?! DON’T BE FOOLED!! HODL FOMO BEGINS!!! $TRILLIONS FLOOD!!

Date: 18-Nov-2020

  • Overall sentiment of Bitcoin has changed drastically from ICO craze in 2017 to a time where people are FOMOing to own more bitcoin.

Ivan on tech 

Video Title: BIG WARNING TO ALL HODLERS!!!!!!!!! DO NOT GET REKT!!! BITCOIN $18,500 REJECTED – NOW WHAT?

Date: 18-Nov-2020

  • Ivan expects bitcoin to shoot past $20K resistance before end of this year, giving it 85% probability

Chico Crypto

Video Title: World’s Most Powerful Turn BULLISH on BITCOIN

Date: 19-Nov-2020

  • All those who hold big bags of Bitcoin will come out of the shadows to talk up the Bitcoin rally, a $20K bitcoin could be on the cards before the end of this year
  • Ethereum mining could act as a big catalyst for Ethereum’s price
  • Big companies like google could play a bigger role in mass adoption of crypto

Let the FOMO begin…

Thank you for reading and sharing this article. We appreciate you.

Stay safe and healthy!

Top 5 Cryptocurrencies 2020

IMPORTANT DISCLAIMER

Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.

We do not endorse or guarantee the accuracy of the information and claims made.

All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.

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Lessons from the Veteran HODLERS to the Newbies!

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Lessons in Crypto

For all those who entered the crypto market after the 2017 bull run – here are few lessons from the HODLERS from the last bull run(s).

This is our attempt at making all you newbies aware of the mistakes veteran cryptoers did.

Let’s get started…

Don’t FOMO in to all the hype

FomoIt’s hard not to FOMO in crypto.  The trick is to make sure you don’t lose your shirt in crazy bets.  Always limit your bets to what you are comfortable losing.

The common ways you can become victim of FOMO are:

  • Following your favorite YouTuber without actually doing your own research on the project.
  • Investing into projects at the top.
  • Believing in promises of 100x or 1000x without any substance behind those claims.

HODLing far too long

Remember why you are into crypto – to make the money.

Never fall in love with your crypto, and HODL the tokens even when they are 10x and more.

Have a strategy to take your capital out before you become a HODLer.  

If you believe the project really has what it takes to go beyond 100x and more, just sell in instalments so as to not miss the ride.

One of the best ways to HODL is to take your capital in full and profit in tranches.

This rekt story will give you a right perspective of what it looks like, it’s one of many:

Don’t put all your eggs in one basket

Never go all in on one project. No matter how strong the project may look, even the projects with strong fundamentals don’t do well sometimes. 

And, you will be kicking yourself watching other projects go up and your portfolio just doesn’t seem to make a move.

And don’t over do it and have a portfolio with over 100 projects either. It is very difficult not to have invested in more than 15 projects but anything less than 20 is a good way to go, in our opinion. 

Put aside the share of Profits for Taxes.

One way you can get a good night’s sleep is by paying taxes. 

Always keep a habit of putting aside a % of your profits in USDT or other stable coins, as a reserve to take advantage of market volatility and also to meet your tax obligations. 

Exchanges are more evil during bull run

Foreign ExchangesDon’t trust exchanges. Yes we already know that, but they play more games during bullrun, some intentional and some technical. 

Many exchanges tend to go under maintenance when the prices shoot up too high too soon (Coinbase?), and you can’t sell. 

And the shady exchanges scam out before you know.

Regulators seem interested when the market cap of these projects goes through the roof, which then adds FUD around the project crashing the prices.  

Exchange may freeze funds pending investigations when such issues arise.

Take for example OKEx. Users are unable to withdraw their assets from the exchange for almost a month now, not certain if they ever will, and all that started with the legal dispute.

Never fall for Arbitrage gains

Arbitrage is when you buy in one exchange at a lower rate and sell on the other for a higher rate to take some profits. 

Some shady exchanges show a lot higher prices than the other genuine exchanges and when you deposit your assets to sell at those prices there won’t be actual volume to execute the trade. You may be stuck with either a high fee for withdrawal or other funky rules to take your own money out. 

Remember, there is no free Giveaway

Free CryptoScammers rise with the rising market.  

When the crypto market buzzes with all time highs – scammers cash in big time on newbies.

The most lucrative scam in crypto is ‘Free Giveaway’. Whether it be through YouYube ads or discussion groups and wherever they can get your attention.  Read this article on various sophisticated scams that are being deployed.

We hope these lessons help you through your trades and crypto life.  Stay safe and always DYOR.

Thank you for reading and sharing this article. We appreciate you.

Stay safe and healthy!

Top 5 Cryptocurrencies 2020

IMPORTANT DISCLAIMER

Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.

We do not endorse or guarantee the accuracy of the information and claims made.

All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.

 

Continue Reading

CryptoSpace

Crypto Roundup: All Your YouTube Influencers in One Place

Published

on

crypto news

Visit our Crypto Roundup section daily for a dose of all your favorite Crypto YouTube influencers in one place.    

Worried about missing updates from your favorite YouTube crypto influencers?  

Welcome to the Crypto Roundup.  

On this page, we will post a quick summary of the videos from some of the most popular YouTube crypto influencers.

Ivan on Tech  Altcoin Daily

Crypto Zombie Box Mining

Ellio Trades Lark Davis

Data Dash Bitboy Crypto

MMCrypto Chico Crypto

Altcoin Daily

Video title: The United States Just Brought Bitcoin into the National Conversation!! | Cryptocurrency in 2021

Date: 16-Nov-20

  • Former National Treasurer and the new US Senator Elected, Cynthia Lummis, said Bitcoin fits the bill as a good store of value as it is finite and limited, unlike the inflationary fiat currency.

  • Grayscale adds over 7000 more bitcoin in just the last 24 hours.
  • Just over 16% ETH staked for ETH 2.0 launch on Dec 2 2020.
  • Bitcoin Cash hard fork takes place tomorrow.

Crypto Zombie

Video Title: WARNING!!! BITCOIN 2017 BEAR FRACTAL RETURNS!!! BTC WORST CASE SCENARIO…

Date: 14-Nov-2020

  • Institutional money starts flowing into bitcoin.

  • Paypal goes live with its crypto trading platform for eligible customers. They have also raised the buying limits from the initially set $10,000 to $20,000 per week.
  • DIA, an DeFI Oracle provider, integrates with Polkadot.

Ivan on tech 

Video Title: BITCOIN WILL DO SOMETHING INSANE THIS WEEK!!!! -30% DUMP AHEAD vs $20,000 PARTY – Programmer

Date: 16-Nov-2020

  • Bitcoin could make a big move this week, either hit 20K or we may see a 20% to 30% drop
  • Chainlink partners with Etherisc to deliver agricultural insurance in Kenya.

Ellio Trades

Video Title: UNLOCKING $100 TRILLION? This low cap gem seeks to bridge CeFi and DeFi

Date: 15-Nov-2020

  • DeFI could be similar to the ICO craze in 2017
  • Low cap gem: AllianceBlock
  • AllianceBlock is bridging the gap between DeFi and CeFi
  • AllianceBlock Partnership with Orion Protocol and Chainlink.

Chico Crypto

Video Title: WARNING! An “EVIL” Entity Wants Control of BITCOIN…

Date: 15-Nov-2020

https://www.youtube.com/watch?v=45Ac-5y2ofg

  • 90% of Bitcoin’s mining pools are controlled by China based mining pools
  • As the value of bitcoin goes up – there is a threat of push to ‘control’ the network from China
  • Binance is looking to push through the 50% mining share and Chico believes this could be dangerous

Visit our Crypto Roundup section daily for a dose of all your favorite Crypto YouTube influencers in one place. 

Thank you for reading and sharing this article. We appreciate you.

Stay safe and healthy!

Top 5 Cryptocurrencies 2020

IMPORTANT DISCLAIMER

Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.

We do not endorse or guarantee the accuracy of the information and claims made.

All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.

Continue Reading

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