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Network Congestion and More: Why this Wall Street Firm is Shorting Ethereum (ETH)

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The Ethereum (ETH) platform was the pioneer of smart contracts that enabled the crypto-verse to enjoy decentralized applications as well as ICOs. This aspect of the platform is the reason the digital asset skyrocketed from obscure levels of $8 only last year in January, to $1,400 around January 17th this year. This is a percentage increase of 17,400% in 12 months. ETH has since declined to current levels of $478. Some crypto enthusiasts have even started considering Ethereum Classic (ETC) as a possible investment option.

Scalability issues

This is due to the fact that the ETH platform is yet to solve critical scalability issues that have peaked due to network congestion whenever a new decentralized application is launched. Cryptokitties is the best-known DApp that congested the ETH network. There is also Shrimp farm and Pepe the farmer.

The issue of network congestion is the reason the New York-based Tetras Capital, has shorted Ethererum (ETH). Shorting an asset usually involves borrowing a certain amount of it, selling it and waiting for it to tank in the markets. Once it does so, you rebuy the borrowed amount at a cheaper rate, and you keep the difference.

The firm has even released a 41-page ‘thesis’ as to why Ethereum might stumble along the way and not continue gaining as many crypto-traders and enthusiasts had believed. Key to why ETH will struggle, is the persistence of technical issues, decentralization issues and possible regulation on surrounding ICOs that will be deemed as securities offering. Tetras believes the hype around the digital asset known as Ethereum, is not justified.

Timothy Young, a former entrepreneur who is shorting ETH through his San Francisco family office, Hidden Hand Capital, had this to say about his decision with respect to ETH:

“In the long term, I think they’ll solve a lot of scaling challenges. But in the short term, there’s a disconnect between the price and underlying technology. Just because something is a good idea doesn’t mean it’s a good investment.”

For those who have been keen followers of Global Coin Report, we have put forth the idea that Ethereum faces steep competition from coins belonging to projects that have solved the scalability and smart contract vulnerabilities evident on its platform.

To begin with, there is Tron (TRX) which has a new mainnet that was developed using Java programming language and is in the process of launching a Virtual Machine that will be compatible with that of Ethereum as well as other blockchain platforms in the near future. TRON can currently handle 2,000 transactions per second. The project plans on decentralizing the web 100%.

There is also Zilliqa (ZIL) that was created specifically to solve the security vulnerabilities on the Ethereum platform using a new programming language called Scilla on its own mainnet. ZIL currently handles 2,828 transactions per second with only 6 shards. The mainnet that is yet to be launched aims at increasing the shards.

In conclusion, the Ethereum platform needs to evolve with the times and solve the two problems on its platform as outlined above. Such issues are the reason why institutional investors and individual investors are shorting the digital asset.

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Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Global Coin Report and/or its affiliates, employees, writers, and subcontractors are cryptocurrency investors and from time to time may or may not have holdings in some of the coins or tokens they cover. Please conduct your own thorough research before investing in any cryptocurrency and read our full disclaimer.

Image courtesy of Naoki Nakashima via Flickr

Blogs

Reasons Why You Are Much Safer When Crypto Trading on Dexes

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While many cryptocurrencies aim to bring the change to the world by bringing full decentralization, one aspect of the crypto space still remains mostly centralized, and that is the way they are exchanged. Most crypto exchanges are centralized companies, where traders and investors need to deposit their coins for safekeeping. This is a risky way to handle the funds, as exchanges remain susceptible to hacks and theft, as many realized recently, after the hack of the world’s largest exchange by trading volume, Binance.

During the hack, around 7,000 BTC (over $40 million) was taken, and sent to multiple wallets, never to be seen again — for now, at least. The hack also came as quite a shock, as Binance was known for its efficiency, security, and high levels of confidence. It also made people realize that their coins are not really theirs if they need to rely on third parties, such as exchanges, to keep them safe. As a result, many are now turning away from centralized exchanges, and are heading towards decentralized ones — also known as DEXes.

Here are some reasons why you might want to consider doing the same.

1. True ownership of your coins

The crypto community has a saying: “not your keys, not your coins.” The saying is now more relevant than ever, but it does not apply on DEXes. Decentralized exchanges

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Crypto Billionaire Predicts Massive Price Growth by 2021

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Crypto prices are once again going up, and Bitcoin has just passed a major resistance level at $6,000. With a situation like that, it is not surprising that everyone in the crypto community is looking forward to the future, wondering what to expect in years to come. Many experts have already given their predictions, some more optimistic than others, but almost all bullish.

Crypto billionaire Mike Novogratz has always been very supportive of cryptocurrencies, and very bullish on Bitcoin. He recently stated that he sees the coins’ prices triple in the following 18 months, meaning that Bitcoin’s return to $20,000 might not be far away, according to him.

He noted that Bitcoin is back to $6,000 after its price hit as low as $3,100 only a few months ago. These days, Novogratz does not believe Bitcoin will return to such lows unless there is a devastating exchange hack or a major shift in regulations. Of course, there was a big hack that had the potential to damage the coin’s price, only days ago. The world’s largest crypto exchange by trading volume, Binance, saw a significant security breach which resulted in a theft of 7,000 BTC.

However, so far, the coin did not react negatively to this incident. While Novogratz believed that such an event would shatter the new confidence in BTC, it simply did not happen. However, he…

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Altcoins

TokenRoll (TKR) Platform Will Take Online Casinos to the Next Level

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Corporate executives are turning to blockchain technology more than ever in an attempt to revolutionize the business world.  Although blockchain is still a relatively new concept, that hasn’t stopped more and more companies from jumping on the bandwagon.  This hot new technology has quickly gained a reputation for providing greater transparency, enhanced security, improved traceability, increased efficiency, and low costs.  One industry that could certainly benefit from decentralization is the online gambling market, specifically, online casinos.  TokenRoll (TKR) has developed a platform that appears to offer a promising alternative to centralized casinos.

Problems with Centralized Casinos

The primary reason why blockchain technology is being implemented so quickly is because it solves a lot of the problems typically associated with the traditional business model.  And online casinos are no different.  It still needs to be said that centralized casinos have proven that there is a great demand for online gambling.  The market is growing faster than anyone could have predicted, and future opportunities appear very promising and lucrative.  But industries are continually evolving and this one is no different.

A few of the problems facing centralized casinos include the following:

  • Little to no transparency
  • Consumer lack of confidence
  • Privacy concerns
  • 48-72 hour wait time for withdrawals

These are four monumental issues that need to be addressed quickly given the global growth of the market.  Casinos need to…

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