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

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Ethereum
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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

Bitcoin

Investors Beware: Another Large Bitcoin Crash Might Be Coming

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Bitcoin crash
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The crypto prices have surged quite high in the last few months. Of course, their progress is nowhere near the one seen in 2017, but they appear to be getting there, one day at the time. However, things might not be as simple as that, and according to recent performance — it is more than possible that a major Bitcoin crash is incoming.

The fact is that cryptos saw a massive amount of growth in a very short period. Bitcoin itself more than doubled its price in only two months. Now, the rally is starting to crash in on itself, and the coin is already about $1,000 lower than last week. If such development does come to pass, a lot of people will experience quite large losses, although experienced investors might find some opportunities, and leverage in order to enhance their holdings’ long-term value.

For example, Bitcoin dominance is expected to crash very quickly, which will work in favor of quite a lot of altcoins. While this does not seem to be the best time to invest in BTC, altcoins are another story, and diversifying a portfolio now might end up being very profitable in days to come.

Bitcoin behavior mirrors the pre-bear market situation

The crash that analysts are predicting right now comes as a direct consequence of all the hype that has been building up in…

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Altcoins

Top 3 Coins to Buy Before They Go Big

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Crypto bulls are back, that much is clear. The long-lasting, harsh crypto winter is gone, and the new era in digital currency sector opens up some rather interesting opportunities. With many more bull runs expected to come in months ahead, a lot of coins are likely to blow up and maybe even hit new all-time highs, although that still remains purely theoretical.

On the other hand, the fact is that numerous coins are seeing prices that were not achieved since early 2018, and the overall momentum remains bullish. With that in mind, even if new records do not come for a very long time — chances are that many of the coins will blow up enough for investors to see some serious gains in months to come. As a result, investing in some of these coins now might be a very profitable decision, for those who have the patience to wait a few months. Here are some of the projects believed to have the greatest potential to go big in the second half of 2019 and beyond.

1. TRON (TRX)

Putting TRON on the list should not really surprise anyone, as the project constantly comes up with new project updates, partnerships, and alike. It also constantly breaks records, as is becoming one of the biggest players in the dApp and smart contract development sector.

In the past few…

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Blogs

Can Crypto Credit Cards Disrupt the Fight Against Financial Crime?

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crypto credit cards
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It is commonly known that the world of finances has the biggest problem with the crime of all existing industries around the world. It has been so throughout history. While the financial world has evolved, so did the criminal activities, and they continue to be an issue. With the arrival of cryptocurrencies, many were hoping that financial crime might be disrupted. However, for now, at least, it appears that cryptos themselves cannot find a way to resolve issues such as international money laundering.

In fact, when it comes to money laundering, the crypto sector appears to be the weakest link, especially because of the nature of digital currencies. The anonymity that cryptos are being praised for means that anyone can get a payment from an unknown source from anywhere in the world. This method can then be used for financing drug trafficking, cyberattacks, terrorists, and more.

Until recently, it was not easy for bad actors to make use of cryptocurrencies obtained for illegal purposes. The number of merchants willing to accept the coins was low, and criminals were forced to find a way to exchange crypto into fiat currencies. However, this came with a set of issues, such as taking foreign exchange risks and then sending the money through wallets and exchanges to a banking system that would allow withdrawal. The banking account was the biggest obstacle here,…

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