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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

Altcoins

Cryptocurrency Collateralized Debt Positions Are Growing in Popularity

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collateralized debt position
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While Bitcoin (BTC) continues to hover around the magical 10,000 price level, altcoins continue to fight an uphill battle.  Simply put, hopes of a future bull run continue to diminish as Bitcoin maintains its dominance.  One school of thought is that a few altcoins will survive and flourish, but which ones are anyone’s guess.  That being said, it’s hard to go wrong picking against the top coins like Ethereum (ETH), Ripple (XRP), Litecoin (LTC), and EOS.  These projects have managed to find a foothold in the market and have a better chance than most of staying there.  While traders wait for their positions to increase in value, one opportunity that may be worth looking at is initiating a collateralized debt position.

What is a Cryptocurrency CDP?

In traditional terms, a CDP is essentially putting up collateral in order to receive a loan against the deposited amount.  There are several examples of this in our day to day lives.  Auto title loans from large companies like TitleMax are extremely popular with consumers.  Consumers are essentially able to use their car as collateral in exchange for a cash payment which can then be used for whatever needs the consumer has.  The consumer can continue using their car as long as debt payments are made.

The same concept applies to cryptocurrency CDPs.  Consumers are able to put up crypto tokens, such as…

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Altcoins

Hodium Presents a Compelling Opportunity for Outsized Investment Returns

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Hodium
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I’m sure all of us remember the cryptocurrency glory days of 2017 and early 2018.  It was one of the biggest bull runs in history and created incredibly wealth for quite a few early entrants.  Unfortunately, for most of us, those gains have most likely been wiped out during the altcoin apocalypse.  The truth is that traders probably thought a bit too highly of their trading abilities when the reality was that anyone could have thrown a dart at a board and ended up making money.

As markets mature (and the crypto market is definitely maturing) it becomes more and more difficult to generate alpha.  In that regard, it’s similar to traditional financial markets.  I can remember trading during my high school days.  It was the late 90s and right in the middle of the dot.com boom.  Eventually, however, the euphoria fades away and reality hits hard.  Now, it’s become rather difficult to actually trade profitably which has given way to the rise of hedge funds.

Hedge funds are investment funds that pool capital from accredited and/or institutional investors and invest in a variety of assets, often with extremely complex portfolio-construction and risk management techniques.  The professionals employed by hedge funds are the best of the best and have spent years honing their craft.  That is why they’re able to make the millions of dollars that they normally…

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Altcoins

KaratGold Proves Its Business Model By Providing Official Documents

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There has been a lot of renewed enthusiasm in the cryptocurrency market thanks mainly to Bitcoin’s strong move about 10,000.  Although Bitcoin continues to show its dominance, the altcoin market has yet to benefit from that rally.  A few of the largest altcoins remain popular but the rest of the market continues to lag behind.  In 2018, there was a lot of talk regarding a possible altcoin apocalypse where only the strong would survive.  That prediction appears to be playing out as expected.  Going forward, only the best projects that have a real world need will survive.  Crypto traders will have to spend a lot of their time doing proper research in order to find the best opportunities, just like in all financial markets.  One promising project that appears to have the makings of a future winner is KaratGold Coin.

KaratGold Background

KaratGold Coin is a cryptocurrency developed by the reputable German company Karatbars International, which maintains a leading position in the market of small gold items and investments. The project is part of a larger ecosystem, which involves several blockchain solutions that can be used for transactions, communication, investing and other tasks. During the past few weeks, however, the KaratGold ecosystem has been a target of unsavory scam allegations.  

Karatbars International and GSB Gold Standard Banking Corporation…

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