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The following is an overview of network activity on the Ethereum 2.0 Beacon Chain over the past week. 

For more information about the metrics featured in this section, check out our 101 explainer on Eth 2.0 metrics. 

Disclaimer: All profits made from CoinDesk’s Eth 2.0 staking venture will be donated to a charity of the company’s choosing once transfers are enabled on the network.

One of the first articles I wrote about Ethereum for CoinDesk was headlined “Unstoppable Scams? Ethereum’s Gambling Problem Is Only Getting Worse.” 

At the time, in the late summer of 2018, Ethereum’s most popular decentralized applications (dapps), outpacing even the incumbent CryptoKitties gaming dapp, were gambling dapps that closely resembled Ponzi schemes. LastWinner, a clone copy of another infamous gambling dapp called FOMO 3D, had raised over $7 million in ETH from users within the span of a week and was eating up one-third of Ethereum’s total computational power, also called hashrate. 

Meanwhile, the biggest headline news about Bitcoin were the pending decisions by the U.S. Securities and Exchange Commission (SEC) on two bitcoin exchange-traded fund (ETF) applications put forth by ProShares. 

As Ethereum attracted retail users and scammers looking to make a quick buck, it seemed the majority of investors and traders serious about adopting cryptocurrencies for a mass audience were focused on Bitcoin. 

In many respects, market infrastructure for and regulatory awareness about bitcoin has paved the way for cryptocurrencies like ether to follow. 

For example, the classification of being a commodity rather than security in the eyes of the SEC was first granted to bitcoin in 2018 and then for ether in 2019. Exchange-traded funds (ETFs) in Canada were first approved for bitcoin then for ether. Crypto custody bank Anchorage Digital started its lending service with bank-grade, bitcoin-backed loans and only recently expanded its offerings to include ether-backed loans through an FDIC-insured bank this summer. 

However, trends are changing, and evidence is mounting to suggest that Ethereum has finally either caught up to or surpassed Bitcoin across a number of key metrics, even as other smart contract blockchains such as Cardano and Solana show promising signs of real adoption and value. 

For starters, Ethereum is surpassing Bitcoin in total value transferred on-chain. Using Coin Metrics’ adjusted transaction volume estimates, so far in August $185 billion worth of ETH has been moved on Ethereum while only $180 billion of BTC has exchanged hands on Bitcoin. The last time Ethereum passed Bitcoin in monthly transfer volume was in May 2021. 

Every month since June 2020, users have been paying more in fees to send transactions on Ethereum than Bitcoin. In 2021 alone, total fees in dollar terms on Ethereum were four times higher than Bitcoin, suggesting demand for block space on Ethereum is outpacing demand for block space on Bitcoin. 

Aside from on-chain metrics, spot market metrics such as the Puell Multiple, historically used to measure the relative value of new coins being mined on a proof-of-work blockchain, suggests the profit-taking opportunities for investors holding ETH have been greater than those for investors holding BTC almost consistently for the past 15 months. 

As a result, trade activity for ETH-USD pairs have surpassed or come close to surpassing that of BTC-USD pairs. For the first time ever, aggregated monthly trade volume in the ETH spot markets surpassed that of the BTC spot markets in May; so far in August, trade volumes for ETH are about 90% of the volumes being seen for BTC. This suggests market interest in ETH is trending as high as BTC. 

There are also telltale signs in the cryptocurrency derivatives market of a shift in market sentiment placing Ethereum in the same rankings as, if not more bullish rankings than, Bitcoin. According to  Alexander Blum, managing director of digital asset investment fund Two Prime, the technical and fundamental measures he uses to evaluate digital assets are beginning to show him that ether is a more promising investment than bitcoin. 

“How much people are willing to pay for bitcoin or ether one or three months out into the future is a good sense of the market sentiment around where things are going,” said Blum in an interview with CoinDesk. The “future premium you pay for ether is close to 10%, whereas for bitcoin it’s right around 7% to 8% right now and the amount of calls being bought out into the future is more skewed to the upside on ether than bitcoin.”

Institutions and professional investors that got involved in the crypto industry because of their interest in bitcoin are getting serious about their interest in ether, too, and, more importantly, they are beginning to value ether as a unique investment separate from bitcoin. 

Although Ethereum has the first-mover advantage of being the first general purpose, smart contract blockchain in the world, there are a number of up-and-coming competitors gaining user adoption and market value. 

Binance Smart Chain, Cardano and Solana are just a few of the platforms that have made headlines this year for wildly popular decentralized applications (dapps) or outlandish token returns of over 1,000% year to date in some cases. 

As important as measuring these competitor networks by their potential is through evaluating their developer teams, white papers and roadmaps, it’s equally important to put their performance and current progress into perspective with the metrics used to evaluate the top cryptocurrencies of the industry. 

As of Aug. 24, 2021, 24-hour trade volume for the native tokens of the Cardano (ADA), Binance Smart Chain (BSC) and Solana (SOL) blockchains combined barely exceed half the daily trade volume for ETH. Public data around total value transferred on-chain for these three networks is scarce and regulated derivatives products for ADA, BSC and SOL are almost non-existent. 

Other important metrics specific to evaluating the performance of smart contract blockchains include number of dapps, total value locked in dapps and number of active dapp users. For some networks such as Cardano, smart contract functionality to support the development of dapps has yet to be launched. For others such as Binance Smart Chain and Solana that do have smart contract functionality, the total value locked in dapps is multiples lower than the value locked in Ethereum dapps. 

As bitcoin paved the way in many respects for the institutional adoption and awareness of cryptocurrencies broadly, the increasing awareness of ether’s use case and design raises the profiles of competing assets and propels investment in their continued development. 

This in turn fuels innovation through market competition in smart contract blockchain technology, which presents opportunities for alternative networks to Ethereum to shine and steal market share even as Ethereum continues to evolve. 

In an industry like crypto where little is established and much is fueled by speculation, the rise of Ethereum over the past six years stands as an example for how quickly user adoption and institutional interest can catch fire, challenging the status quo.  

Teddy Oosterbaan

Valid Points incorporates information and data about CoinDesk’s own Eth 2.0 validator in weekly analysis. All profits made from this staking venture will be donated to a charity of our choosing once transfers are enabled on the network. For a full overview of the project, check out our announcement post. 

You can verify the activity of the CoinDesk Eth 2.0 validator in real time through our public validator key, which for it on any Eth 2.0 block explorer site.

New episodes of “Mapping Out Eth 2.0.” with Christine Kim and Consensys’ Ben Edgington air every Thursday. Listen and subscribe through the CoinDesk podcast feed on Apple Podcasts, Spotify, Pocketcasts, Google Podcasts, Castbox, Stitcher, RadioPublica, IHeartRadio or RSS.

Bitcoin ATMs are a popular way to buy or cash out Bitcoin (BTC) and other cryptocurrencies, bypassing the traditional banking system. The sector is growing rapidly and is not going to stop. As the popularity of cryptocurrencies increases and the level of trust in them increases, there are more and more Bitcoin ATMs.

Bitcoin ATM is a device that allows you to buy or cash out Bitcoin (BTC). It is important to note that there are other ATMs that enable you to buy or sell cryptocurrencies like Bitcoin Cash (BCH), Ether (ETH), Dash (DASH), Litecoin (LTC), and others.

Instead of a bank card, it uses a crypto wallet, from which coins are debited or sent to. Basically, you buy Ethereum, Bitcoin, and other cryptocurrencies online via a real physical device.

Due to their anonymous nature, most ATMs have strict purchase limits, but still, some of them require a verification process (KYC). A Bitcoin ATM acts as a physical bitcoin exchange where you can buy and sell BTC for cash.

What commission do ATMs charge?

The price of coins and the commission fees depend on the machine and its provider. If the device does not identify the user, the exchange rate difference can be up to 10% and even up to 20%. The total cost, including the commission, is on average 5-10%.

How to use Bitcoin ATM (BTM)?

Buying or cashing out cryptocurrency via a BTM is like withdrawing cash from a regular card. In most BTMs, you can only buy cryptocurrency, in some – only sell and thereby cash out, but there are also multifunctional ones where you can do both.

The specific procedure depends on the BTM, but the general principle is the same. Let’s say you want to buy or cash out Bitcoin (BTC):

Click “Buy BTC” or “Sell BTC” (cash out).Scan the QR code of your wallet from the mobile app or print it out in advance. You can also enter the address manually, but it is important not to make a mistake in any sign – it will be impossible to cancel the transaction. If you don’t have a wallet, the BTM will create a new one.Go through identification, if necessary. In countries where cryptocurrencies are regulated by law, in order to use the BTM, you may have to pass identification: take a photo, enter an identifier, such as a phone number, scan your passport or even your fingerprints. Such checks are usually carried out if you buy or cash out a large amount. The larger the amount, the more information you will have to report about yourself.Conducting user identification is a requirement of anti-money laundering legislation. Thanks to such verification, it is more difficult for fraudsters to whiten their criminal income.Learn the course and the commission.Deposit cash – in the case of buying cryptocurrency, or send cryptocurrency to the specified address (usually scanning the QR code is enough) – in the case of cashing out. In some models, cash is issued immediately, in others it is necessary to wait for the transaction confirmation.Confirm the operation and wait for the device to complete the transaction. In the case of a purchase, the cryptocurrency is landed in your wallet, in the case of a sale, you get money in your hands.Save the receipt just in case. It may be necessary if one day the authorities suddenly ask where you got the cryptocurrency or cash from its sale.

Please, pay attention, that the purchased cryptocurrency will not appear immediately in your wallet – it first requires 6 network confirmations.

The process of selling BTC is much more diverse and depends on the specific BTM, however, these machines are quite intuitive to use, so just follow the instructions on the screen.

Where can I find a Bitcoin ATM?

Finding a Bitcoin ATM is not so difficult. There are special services for this: for example, Coin ATM Radar, Bitcoin ATM Map, Buy Bitcoin Worldwide. On them, you can see the nearest Bitcoin ATM right on the map, and at the same time specify its functionality, manufacturer, purchase/sale limits, and with which cryptocurrencies it works.

Each ATM takes a certain commission from the transaction, which varies from one device to another. Make sure you are aware of the terms of the transaction that are usually indicated on the machine.

Conclusion

Bitcoin ATM is a very convenient way to buy and even sell BTC very quickly, and sometimes even anonymously. While most BTMs work more or less the same, it’s always a good idea to check the board of the BTM you plan to use.

You can also purchase Bitcoin on the instant cryptocurrency exchanger Changelly. The platform provides its customers with the most competitive rates on the market and more than 200 cryptocurrencies to exchange.

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Altcoin Daily host Austin Arnold is breaking down five altcoins that he thinks have growth potential in September.

In a new video on his popular YouTube channel, Arnold tells his 945,000 subscribers that he’s keeping an eye on the fundamental strength of Tezos (XTZ), VeChain (VET), Ethereum (ETH), Cosmos (ATOM), and Cardano (ADA).

Launched in 2018, Tezos is a smart contract platform that allows its users to actively participate in network governance by holding XTZ tokens. Arnold highlights XTZ’s adoption among several Swiss-based blockchain and financial companies, including Crypto Finance Group, InCore Bank, and Inacta.

In a joint statement, the three Swiss companies said that they chose to adopt Tezos “because its on-chain governance allows upgrades without disrupting or splitting the network.”

Arnold believes these financial companies are utilizing Tezos to create a particular niche.

“So it seems they’re carving out their own little niche – a Tezos token standard to specifically work with those financial bodies and institutions that need some sort of compliance.”

Next up is the blockchain-powered supply chain platform VeChain. Arnold notes that the blockchain has committed $1 million toward funding the development of its own enterprise non-fungible token (eNFT) marketplace, establishing the blockchain’s stake in the future of NFTs.

“As a key player in the real business world, enterprises will be the main driving force behind the mass adoption of NFT technologies and as such, the best way to facilitate this adoption is to develop and support a vibrant eNFT ecosystem using the VeChainThor platform.”

Arnold is also looking at the second-largest crypto asset, Ethereum (ETH). Six crypto entities, including crypto exchange Kraken and decentralized finance (DeFi) protocols Uniswap, The Graph, Compound, Lido and Synthetix, have each donated $250,000 for a combined $1.5 million to support efforts toward Ethereum’s upcoming “Ethereum 2.0” upgrade, which will move the Ethereum network from a proof-of-work model to proof of stake.

“And why this matters to you is because this is showing us that the entire crypto ecosystem, or at least many, many key players, are donating money and resources to support the success of this major ETH upgrade.”

Arnold says history and trust are still on Ethereum’s side as he highlights that major financial giant Visa recently purchased its very own CryptoPunk NFT last week.

The crypto trader’s fourth pick is the decentralized interoperability network Cosmos. He says that Bitcoin (BTC) is coming to the Cosmos network using interBTC, a DeFi platform that enables Bitcoin users to invest, earn and pay with their BTC on any blockchain. The Cosmos network’s latest grant by Interchain Foundation (ICF) to Interlay, the creator of interBTC, marks the first step in this transition, according to Arnold.

“And just for some perspective, Bitcoin on Cosmos will bring deep liquidity to the Cosmos ecosystem and greatly increase the utility and scope of Cosmos DeFi. Don’t count Cosmos out.”

Finally, Arnold covers the smart contract platform Cardano. He believes that the network’s prominent community will grow even more following Japan’s official announcement that Cardano would be listed in the East Asian country on August 25th after the asset successfully passed strict regulatory checks.

Arnold also highlights Cardano’s relatively low transaction fees and level of adoption in comparison to BTC and ETH.

“First off, while Cardano obviously has a much lower market cap than [Bitcoin and Ethereum], it’s actual real on-chain volume [is] pretty similar to the other two. That’s a good sign…

Notice how the fees on Cardano [are] much, much lower in comparison. This is $52,000 (ADA) compared to $22 million (ETH). Significant. Something to note.”

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Tomorrow, the first backward-incompatible upgrade for the Ethereum 2.0 Beacon Chain will be activated on the Pyrmont test network. The upgrade, dubbed “Altair,” will introduce a number of code changes, including increased penalties on validator misbehavior and improved functionality for lightweight versions of Eth 2.0 software. 

(More information about what to expect from Altair can be found in a previous issue of Valid Points.)

This week, in a guest post in New Frontiers, Alex Svanevik, the CEO of blockchain analytics firm Nansen, and Nansen’s Research team break down the data behind validator behavior and stake centralization on Eth 2.0 thus far. While Altair is expected to further improve network dynamics, the  authors highlight metrics suggesting that security and decentralization are already trending in a positive direction.  

The following is an overview of network activity on the Ethereum 2.0 Beacon Chain over the past week.

Disclaimer: All profits made from CoinDesk’s Eth 2.0 staking venture will be donated to a charity of the company’s choosing once transfers are enabled on the network.

Nansen is a blockchain analytics platform tracking over 90 million labeled Ethereum wallets and accounts. The following guest post authored by Nansen CEO Alex Svanevik and his team is an excerpt from a recently published blog post breaking down the data behind Ethereum 2.0. 

While centralized exchanges such as Kraken and Binance continue to command a significant share of total Ethereum 2.0 stake, they appear to be losing share to decentralized staking alternatives such as Lido Finance and Rocket Pool. 

The top four staking entities (Lido, Kraken, Binance, Staked.us) on Eth 2.0 make up 36.6% of total ETH deposits. Lido is the second largest by total ETH deposited next to Kraken, managing over 750,000 ETH on Eth 2.0 from 9,000 unique Ethereum accounts. 

The Herfindahl–Hirschman Index (HHI) is a metric in traditional economics that measures market concentration and competition. It has been applied to blockchains to measure relative network decentralization. Nansen calculates HHI for Eth 2.0 by squaring the share of each source account that has staked on the network, and summing the resulting numbers.

Though it is clearly not the case that all deposit accounts are independent, the trend does indicate a gradual decrease of HHI over time. Still, it’s important to remind ourselves that centralization risks exist on every layer of the blockchain technology stack. According to data from Ethernodes, more than 21% of Ethereum nodes run on Amazon Web Services.

Deposit activity on Eth 2.0 is curiously irregular and does not correlate with ETH prices. 

The number of daily deposits to Eth 2.0 began falling from May 5 onward, just as Ethereum was inching toward its high of $4,000. The number of deposits then rose significantly from mid-May to mid-June as the value of Ethereum almost halved. 

Ethereum 2.0 represents a marked change in the security and economic model of Ethereum, with multiple ramifications including the transformation of ETH as an inherently yield-generating asset.

Teddy Oosterbaan

Valid Points incorporates information and data about CoinDesk’s own Eth 2.0 validator in weekly analysis. All profits made from this staking venture will be donated to a charity of our choosing once transfers are enabled on the network. For a full overview of the project, check out our announcement post. 

You can verify the activity of the CoinDesk Eth 2.0 validator in real time through our public validator key, which for it on any Eth 2.0 block explorer site.

New episodes of “Mapping Out Eth 2.0.” with Christine Kim and Consensys’ Ben Edgington air every Thursday. Listen and subscribe through the CoinDesk podcast feed on Apple Podcasts, Spotify, Pocketcasts, Google p>

Investing in digital assets in the UK is easier than ever. Whether you’re looking to invest in cryptocurrencies, speculate on the price movements or gain exposure to the crypto market with fully diversified portfolios, there are heaps of brokers, crypto exchanges, and resources available at the click of a button.

In this beginner’s guide, we cover everything you need to know to help you invest in cryptocurrency in the UK like a pro. We’ll explore all the key metrics from trading strategies and associated investment risks to the typical fees and best trading platforms to invest in cryptocurrency from the comfort of your own home.

What is the best cryptocurrency to invest in? Before you can answer this question, we’ll cover everything you need to know from opening an account and depositing funds, to searching for and trading the most popular cryptocurrencies in the UK.

Before you can open an account you need to choose a top-rated and regulated broker that offers the cryptocurrencies you want to trade. For this tutorial we have chosen the best crypto broker in the UK – eToro.

To get started simply head over to the eToro website and create a live trading account by providing some personal information such as your name, email address, mobile phone number.

As part of the KYC process, you will be required to upload copies of your passport and a recent utility bill as proof of both your identity and address.

eToro supports a range of payment methods for your convenience. These include debit/credit cards, bank transfer, Paypal, Skrill, Neteller. The minimum deposit is $50.

Use the search bar to search for your preferred digital asset, as shown in the image below. Alternatively, you can browse through the selection of supported cryptos via the ‘Trade Markets’ button located on the left-hand navigation bar of the trading terminal.

After you have chosen a cryptocurrency to invest in or trade, you’ll have to set up an order. For example, you could place a $500 buy order on BTC/EUR at the current market price.

Once you have specified the amount you want to invest you can go ahead and click ‘open trade’ to execute the order.

Cryptocurrency investing involves either speculating on the price movements of digital coins through a CFD trading account or purchasing and selling the underlying cryptos through a broker or crypto exchange.

If you want to learn how to invest in cryptocurrency as well as what the best cryptocurrency to invest in 2021 is, all you have to do is choose a trusted and top-rated crypto broker or exchange, such as eToro, and open a trading account. From there, you will need to verify your identity, deposit funds with a debit or credit card, e-wallet, or bank transfer, and you will have unfettered access to heaps of cryptocurrencies at your fingertips.

CFDs trading are derivatives that allow you to speculate on the market movements of cryptocurrencies without gaining ownership of the underlying digital assets. A key benefit of CFD trading is that you can open a short (sell) position if you believe that the market price of a given cryptocurrency will drop, or you can open a long (buy) position if you forecast that the digital currency’s price will increase.

CFD derivatives are leveraged financial instruments, which means that you are only required to fork out a small deposit, also referred to as margin, to gain complete exposure to the crypto market. When it comes to using leverage, your potential profits and losses are calculated using the full value of the position meaning that leverage maximizes both returns and losses.

Buying cryptocurrencies through a crypto exchange or broker involves taking ownership of the underlying asset. To get the ball rolling, you’ll have to open an exchange or brokerage account, put up the full or fraction value of the digital asset to open a trade and store the cryptocurrencies in a hot or cold bitcoin wallet until you’re set to sell for a profit.

Buying and selling cryptos via an exchange involves steep learning curves as you’ll have to familiarize yourself with the trading software and learn how to digest the data effectively. Many exchanges also have caps on the maximum deposit amount, while others charge above industry average fees for debit card deposits and trading commissions.

When buying and selling cryptocurrencies in the UK, you will be trading crypto pairs. Each pair will have an exchange rate, similar to how forex trading works. The fluctuation of this exchange rate is driven by supply and demand. In other words, if more traders buy a crypto pair, the price will rise. If there are more sellers than buyers, the value of the crypto pair will drop.

So, let’s examine the two types of cryptocurrency pairs that you can invest in.

Crypto-to-fiat pairs involve one digital currency and one fiat currency. A popular example would be BTC/USD which represents the Bitcoin versus US Dollar pair. In this example, Bitcoin is the base currency and USD is the quote currency. This means that a BTC/USD price of 42,602.50 means that to invest in one Bitcoin (BTC) you need to pay 42,602.50 US Dollars (USD).

LTC/BTC and ETH/BTC are popular examples of crypto-to-crypto pairs. Cryptocurrency pairs are digital assets that can be traded for one another on a crypto exchange. Trading crypto-cross pairs allows you to compare costs between various cryptos.

Crypto enthusiasts pay close attention to crypto-cross pairs for a couple of reasons. Certain cryptocurrencies can only be purchased with other digital assets, thus knowledge of crypto-cross pairs is paramount to being able to diversify beyond the most popular cryptos. Secondly, knowledge of crypto-to-crypto pairs equips resourceful crypto investors with the know-how to make the most of unique trading opportunities and therefore generate positive returns from differences in crypto prices between markets.

Crypto-cross pairs allow you to compare prices between different digital currencies on the market. These comparisons help to reveal the relative value of cryptocurrencies – for example, how much Litecoin (LTC) equals in Bitcoin (BTC). Crypto exchanges typically provide access to multiple pairing options, allowing you to select a crypto-cross pair based on your trading goals and the type of cryptos you currently own. For instance, if you already own Ethereum (ETH) you will likely be looking to trade any crypto pair on the exchange that involves Ethereum.

While some crypto exchanges do not offer trading pairs between cryptocurrencies and fiat currencies like the US dollar (USD), others, such as Gemini, Coinbase, Binance, and Kraken, do. BTC and ETH are the most popular cryptocurrency pairs to trade because they offer the highest liquidity as they have the highest market dominance of all the cryptocurrencies.

After you have picked the cryptocurrency pair you want to trade, you will need to place an order with your preferred crypto exchange or broker. If you speculate that the market price will rise you need to place a buy order, and if you think that the market price will drop you need to place a sell order.

There are several other key order types that you need to be aware of when it comes to trading cryptocurrencies. For instance, if you want your long or short position to execute at the next available price you need to place a market order. On the other hand, if you want your position to be executed at a particular entry price, you need to place a limit order.

Stop loss orders are sale orders that are triggered when the bid price falls below a price (the stop price) that you set. This type of order could be adopted when purchasing a cryptocurrency to provide some protection and help limit your losses if the market price plummets.

Take Profit orders help traders set a target profit price when buying and selling any type of financial asset. When the last traded price reaches the set take-profit level the take-profit order is executed instantly as a market order. Take Profit is not a mandatory order and you can place it after your position has been opened.

With a crypto market dominance of 46.42% and a 24-hour trading volume above $34 billion, Bitcoin is the largest and most popular cryptocurrency on the market.

With this in mind, there are around 7,000 different cryptocurrencies in circulation. While some digital assets have market caps exceeding the billion-dollar mark, others are only worth a couple of pennies.

Most experienced traders stick with cryptos that have high liquidity and volatility; some of the most popular cryptocurrencies include:

While the majority of crypto pairs are denominated in USD, when buying and selling Bitcoin (BTC), some exchanges also support crypto pairs denominated in GBP.

On the world’s top-rated social trading platform eToro there are 16 different crypto pairs including six crypto-cross pairs such as ethereum-EOS (ETHEOS); ethereum-stellar (ETHXLM); ethereum-bitcoin (ETHBTC); bitcoin-EOS (BTCEOS); bitcoin-stellar (BTCXLM); and EOS-stellar (EOSXLM).

eToro users are increasingly interested in trading cryptocurrency pairs. But what is a crypto trading pair, exactly? Simply said, a trading pair is made up of two different types of digital assets, one of which is traded against the other — both of which can be cryptos, or one of which can be a crypto and the other a fiat currency, such as bitcoin and the US Dollar (BTC/USD).

At eToro you can either speculate on whether your preferred market price will rise or drop, without taking ownership of the underlying cryptocurrencies, or you can buy your favourite cryptos with investments as low as $25 and store your digital coins in eToro’s Money crypto wallet.

Let’s take a quick look at some of the key advantages when it comes to investing in cryptocurrencies in 2021.

Despite the cryptocurrency market being considerably new, it has seen a lot of volatility because of vast amounts of short-term speculative interest. For example, the price of bitcoin surged to a high of $19,378 in October 2017 and sank to a low of $5,851 in October 2018. Other cryptocurrencies have been more stable in comparison, although new technology is prone to attracting speculative investments.

The volatile nature of cryptocurrencies is what makes this market so appealing to investors and crypto enthusiasts. Dramatic intraday price fluctuations offer traders a host of unique opportunities to go long and short, however, this does come with heightened risks. So, before you dive into the cryptocurrency market, you need to conduct thorough research and analysis, as well as considering your risk tolerance.

Since cryptocurrencies are decentralized, the cryptocurrency market is often available to trade 24 hours a day, seven days a week. Crypto transactions occur peer-to-peer between buyers and sellers on a global scale. Nevertheless, there can be brief periods of downtime while the market adjusts to important updates, otherwise referred to as ‘forks’.

Liquidity is used to measure how easy and fast it is to exchange cryptocurrencies for other cryptocurrencies or fiat currencies without affecting the market price. Liquidity is a key element of online trading as it yields improved pricing, better transaction speeds, and heightened precision for technical analysis.

Overall, the cryptocurrency market is illiquid because the transactions are divided amongst many crypto exchanges. This means that relatively small trades can sway market prices dramatically. This is partly the reason why crypto markets are notoriously volatile.

When you invest in cryptocurrency, you are investing in the crypto market with hopes that its value will rise over time. When trading on the price of a cryptocurrency, on the other hand, you can profit from both rising and falling markets. Going short is the financial term for this type of trading strategy.

For example, let’s imagine that you opened a short CFD position on the price of Ethereum (ETH) as you speculate that the market price is going to drop. If your forecasts were accurate and the market value of Ethereum dropped against the USD, you would earn a profit. On the flip side, if the market price increased against the USD, your short position would suffer losses.

Since CFD trading allows you to use leverage, you can open a position with margin – a small deposit that is only a portion of the trade’s entire value. Simply put, you can gain full exposure to the cryptocurrency market with a relatively small margin.

It is important to note that while leverage can amplify your profits it can also work in the opposite direction and maximize your potential losses. This is because the profits or losses you make from cryptocurrency trading are calculated with the full value of the position when it is closed.

Cryptocurrency trading involves a lot more than just opening a trading account and buying and selling digital assets regularly. You need to do your research, use technical and fundamental analysis, trading software, and trading signals to build a robust trading strategy that suits your crypto trading objectives and financial needs.

Having said this, let’s explore five of the best tips to invest in cryptocurrencies in the UK in 2021!

In summary, eToro is designed for beginner traders with little to no trading experience.

With a simple Google search you will find a plethora of UK cryptocurrency trading platforms all offering their services. But how do you choose the right provider for your trading goals? After all, you need to consider key metrics related to regulations, trading and non-trading fees, payment methods, account types, user experience, mobile trading apps, and supported crypto coins.

To help you invest in cryptocurrency UK with the best crypto trading platform in 2021, we’ve rounded up a handful of the top-rated brokers and exchanges so you can read an in-depth review of each below!

Launched in 2006, eToro is a global forex and CFD broker that also provides access to 17 popular cryptocurrencies. You can buy and sell cryptos on eToro without having to pay a penny in commission. If you are looking to speculate on the price movements of the underlying crypto market, you can access your preferred crypto pairs via CFDs. You can also use leverage of up to 2:1 and can go long or short.

eToro clients also have access to a wide range of crypto-cross pairs including BTC/BCH and BTC/ETH. When it comes to the user experience, eToro was designed with beginners in mind. Furthermore, new traders looking for a more passive approach to crypto trading can use the copy trading tools to copy the buy and sell orders of an advanced trader like-for-like.

The minimum deposit required to open an account is just $50 and you can invest in cryptocurrencies with a minimum investment of just $25. This social trading platform accepts a wide range of payment options including debit/credit cards, bank transfers, e-wallets such as PayPal, Neteller and Skrill just to name a few. eToro also offers a demo account with $100,000 of virtual funds for you to practice your cryptocurrency trading strategies in a risk-free simulated online environment. Is eToro regulated? eToro is not only regulated by the UK’s FCA, but CySEC and ASIC.

Open an account FREE Account fee None Inactivity fee $10/month after 12 months Deposit fee 0.5% on non-USD deposits Withdrawal fee $5 Stock fees 0% Commission Crypto fees Only trading fees charged by eToro are the spreads

Pros

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Last week, see here, I was looking for a smaller degree 4th wave pullback, then a 5th wave rally to complete a larger 1st wave top. Ethereum, aka Ether (ETH), took a slight detour by first rallying to the ideal 161.80% extension for a b-wave and then dropped into this week’s low for what is most likely the c-wave of wave-iv and wave-v (the “Rally”) to ideally $3415-3585 should now be underway. See Figure 1 below.

Figure 1. ETH daily chart with EWP count and technical indicators.

Elliott Wave Principle (EWP) fourth waves are inherently difficult to forecast, track, and trade, and the last few days showed once again this is the case. Namely, what we got was most likely an irregular flat 4th wave, where the (green) b-wave topped above the end of the 3rd wave (red wave-iii). Since corrections, and flat waves, in particular, are always made up of at least three waves (a, b,c), we know that “after wave-b, comes wave-c” and in this case (green) wave-c of (Red) wave-iv bottomed on Wednesday.

Albeit not shown, 4th waves typically retrace between 23.60 and 38.20% of the prior 3rd wave, which would be the $2935-2785 zone. ETH bottomed at $2952 on Wednesday, off by 0.58% and thus close enough (well within the margins of error!). Therefore, as long as this low holds, we should expect ETH to reach the ideal wave-v of the wave-1 target zone of $3415-3585. From there, a multi-week correction, wave-2, should unfold. See Figure 1 above. It can target anywhere between $2145-2865 depending on how deep or shallow this wave-2 will become. It is impossible to know beforehand.

However, typically 2nd waves retrace about 50-62% of the entire prior 1st wave, so I anticipate for now -without having any data at hand yet to confirm a bottom in the $2380-2590 zone (orange rectangle). Once more price data becomes available, I can fine-tune this pending and anticipated low. Remember, all we can do is “anticipate, monitor, and adjust”. But few methods, if any, can already make such forecasts as the EWP can. For now, ETH has topped and bottomed where it should for a smaller 3rd and a 4th wave, so there’s nothing yet to suggest the minor 5th wave and more significant 2nd wave will not unfold as anticipated.

Last but not least, please note how price reached the (blue arrow) symmetry breakout target to the T. When classic Technical Analysis and the EWP align, price forecast can be very accurate and reliable. Now “the traffic light” is also back to full green, so I expect higher prices over the next few days.

Bottom line: The devil is always in the details, and one can therefore not foresee every move. The anticipated “pullback” became a bit more complex, but ETH is overall tracking along with the preferred EWP impulse pattern well. As such, my premium crypto trading members knew exactly where to expect the pullback bottom and subsequent rally. Thus, as long as this low holds, we should expect ETH to reach the ideal wave-v of the wave-1 target zone of $3415-3585. From there, I still anticipate a correction back to the mid-$2000s before the rally to new All-time highs should kick in.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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Ethereum: We Got the “Pullback, Rally,” Expect a More Significant Pullback Soon

If you’ve been following the news, you undoubtedly know a few things about Bitcoin right now.

Find: Why Some Money Experts Believe In Bitcoin and Others Don’t Read More: Where Does Cryptocurrency Come From?

One: It’s a cryptocurrency.

Two: One Bitcoin is worth more than $40,000 in U.S. dollars, although the price fluctuates wildly day to day.

Three: Electric vehicle manufacturer Tesla recently invested in Bitcoin and announced it would soon allow people to purchase its cars using the cryptocurrency.

But, if you’re like many people, you’re still fuzzy on a few things, including exactly what cryptocurrency is, how it works and if it’s a safe way to invest your money.

See: Dogecoin’s Popularity: Is It a Worthwhile Investment?

History of Bitcoin

Bitcoin was invented in 2009 as a form of digital currency. Unlike paper money or debit cards, which represent paper money the buyer holds in a bank, Bitcoin has no physical form. It’s all stored digitally, providing increased security over checks, paper money transactions and even other digital transactions, which, again, represent the exchange of paper money held in accounts.

As of Monday morning, Bitcoin’s value sits at $47,794, up approximately 20% since last week, according to Reuters. For perspective, in 2010, a single Bitcoin was worth only 8 cents in USD, Investopedia writes.

See: Long-Term Investors Hold Most of the Bitcoin Supply The Hype Around NFTs: What Are They? And How Pricey Do They Get?

Other Cryptocurrencies

Bitcoin was the first cryptocurrency, but today there are more than 6,700 cryptocurrencies traded on public markets, according to the website CoinMarketCap. Although Bitcoin and other cryptocurrencies are used for the exchange of goods and services on the private market, they are not considered legal tender like U.S. dollars and coins.

Some of the most common cryptos right now include Ethereum, Bitcoin Cash and Litecoin, which you can purchase through Paypal. Other, less common cryptos are termed altcoins. The most popular altcoin is Dogecoin, popularized by billionaire Elon Musk’s tweets. He recently shared, “Bought some Dogecoin for lil X, so he can be a toddler hodler.”

The tweet was accompanied by a video of Musk and singer Grimes’ infant son declaring, “Dadada!”

Bought some Dogecoin for lil X, so he can be a toddler hodler

— Elon Musk (@elonmusk) February 10, 2021

Options: All About Ethereum (ETH) — To Help You Decided If It’s Worth the Investment

What Is Cryptocurrency and Cryptography?

“Cryptocurrency is a fully decentralized peer-to-peer electronic money implemented by cryptography,” says Rob Zel, founder of crypto exchange bitni.com. Due to their nature, cryptocurrencies are not regulated, which carries risk of market volatility and loss for investors. However, the security risks and risk of fraud when using Bitcoin and other cryptocurrencies are vastly reduced.

Also, due to the highly secure nature of transactions, purchases cannot be traced. That means individuals can use crypto to purchase illegal or highly regulated merchandise, including certain classes of drugs or firearms.

Cryptocurrencies use cryptography technology to keep transactions and coins secure. “Cryptography, or cryptology, is the practice and study of techniques for secure communication in the presence of third parties called adversaries. The most common form of cryptography is using codes to send messages securely between two individuals,” says Dr. Alexander Shipilov, CEO of iModX, a blockchain-based marketplace.

See: Crypto Bubble Brings a Curious Problem for Investors Find: What Are Digital Wallets?

How Does a Blockchain Work?

Cryptocurrencies are traded by means of a blockchain, which Shipilov describes as “a way for multiple computers to come to a consensus about a set of information.” He says, “The most common use of a blockchain is to create a ledger of financial transactions between multiple individuals.”

Blockchains operate via cryptography, with each block in the chain cryptographically connected to the previous one. “The blockchain is stored and shared across a network of peer-to-peer nodes, similar to file-sharing torrents. The blocks are cryptographically secured against tampering. This makes it very difficult for nefarious parties to modify or shut down,” Zel says.

See: How to Invest in Cryptocurrency Find: The Most Googled Money Questions – Answered

Understand That a “Secure” Investment May Not Be a “Safe” Investment

So, thanks to blockchain technology, Bitcoin and other crypto transactions may be inherently more secure than other types of digital transactions, such as online banking, money transfers through digital wallets or peer-to-peer payment services. But it’s important to emphasize that these services all use state-of-the-art encryption technology to protect your funds digitally. Also, most banks offer fraud protection so that if your account is hacked, the bank will return your missing funds up to a certain amount, which varies by institution.

The technology used to keep crypto investments secure is also effective. In fact, it’s so secure that some people who invested in Bitcoin years ago have lost their password with no way to reset it. That wouldn’t happen with a regular bank account or peer-to-peer payment service, which offer ways to reset your online banking password so you can access your money.

See: Steal These Money Secrets from 25 Millionaires Under 25 Find: How to Invest Your Money in 2021

Understand Why Crypto Is So Risky

Although your crypto investment is likely “secure,” that doesn’t mean it’s “safe” by any means. There are two elements that make cryptocurrency riskier than holding cash in a bank account: market volatility and lack of federal insurance and regulation.

When you hold your money in a bank account, it is FDIC-insured for up to $250,000 per depositor, per account class, per bank. That means if you have your own checking account with $100,000 in it, a savings account with $50,000 in it and a CD with a $100,000 investment, all within a single FDIC-insured bank, your funds are all protected by the Federal Deposit Insurance Corporation. If your bank goes out of business, you will not lose your money.

On the other hand, if something happens to the company holding your crypto, you could lose your entire investment.

See: Banks Might Treat Bitcoin Like ‘Real Money’ – These Experts Weigh the Pros and Cons Find: Mark Cuban – “Bitcoin is Exactly like the Dot Com Bubble”

Crypto, like stocks and other investments, also tend to fluctuate wildly. When you hold cash in a bank, the value of your money will fluctuate marginally based on inflation or deflation. That represents the value of the dollar. But it’s highly unlikely you would lose — or gain — large amounts of money overnight.

“Cryptocurrencies tend to be highly volatile,” Zel says. “In one day, a coin can move 20% or more. Some newly invented coins can jump 40x in their first few months.”

There’s another concern for those seeking a safe haven for their money. “Occasionally, a newly invented coin will be a complete scam and the founders will take the money from investors and disappear, leaving them holding a worthless token,” Zel says.

See: 9 Investing Bubbles That Will Make You Rethink Bitcoin Find: The Classic Cons Behind These Digital-Age Scams

Can You Use Bitcoin to Buy Things?

Right now, Bitcoin and other cryptocurrencies are considered both an asset, traded like stocks, and a currency, used in the exchange of goods and services. However, high transaction fees and the volatility of the coins prevent its widespread adoption as a currency, Zel says.

You can use Bitcoin and other cryptos to make purchases, but it’s not always ideal.

See: PayPal Finally Welcomes Bitcoin, More Cryptocurrencies

Shipilov adds that the vast majority of cryptos right now are being treated as assets rather than currency. “They are being speculated on by investors who assume the asset will increase in value over a long-time horizon,” he says.

However, although people have gained millions through their Bitcoin investments in the past year, crypto may not be the best choice for beginning investors or those with low risk tolerance.

“Crypto are non-regulated assets with a high degree of volatility, limited government oversight, and the majority of cryptocurrency lose most or all their value extremely quickly, with over half failing in the first four months,” Shipilov warns.

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Last updated: Feb. 15, 2021

This article originally appeared on GOBankingRates.com: How Does Cryptocurrency Work – and Is It Safe?

This week's "flash crash" that dragged bitcoin (BTC-USD) back below $50,000 — and sent other digital coins reeling in its wake — marred what should have been the momentous occasion of the first sovereign country on earth adopting a cryptocurrency as legal tender. 

Despite the ugly price action, most of crypto's true believers are still just that — even as some observers question bitcoin's head-spinning volatility, and El Salvador's decision to throw its weight behind it. 

Michael Sonnenshein, CEO of Grayscale Investments, the world's largest cryptocurrency fund manager by assets, who told Yahoo Finance Live this week that other countries are likely to join El Salvador in the race to make crypto legal tender.

And Matt Hougan, CIO of Bitwise, also told Yahoo Finance Live that “it’s the greatest time, I think, to enter the crypto market. A lot of the first decade of crypto was about zero to one. … Now the question is how fast we scale from one to 100. A lot of that is built on what regulatory clarity we get.”

To be sure, it's been a rocky week for digital currencies like bitcoin — which traded above $52,000 on Monday but hovered near $45,000 on Friday — as well as ethereum (ETH-USD) and Cardano (ADA-USD). However, from peak to trough, the latter two didn't lose nearly as much as bitcoin, which suffered offshore outflows upwards of $3 billion during Tuesday's selloff, according to one investor.

On the other hand, the price of cryptocurrency (SOL1-USD), which power the Solana blockchain, is already above its pre-flash crash highs, trading above $175 on Friday. 

Anatomy of a 'telltale' crypto crash

In an interview with Yahoo Finance, Jeff Sekinger, a financial guru, founder of the Miami-based crypto hedge fund Orca Capital, said he believes overall crypto market will likely see a lot of growth through the end of this year, despite this week's rout.

Like the week of Coinbase’s initial public offering, this week began with another major market event — El Salvador’s new Bitcoin Law, which was expected to be a boon to the industry.

Sekinger has witnessed his share of crypto market cycles. He first purchased bitcoin in college in 2013, and the 2017 bull market convinced him to leave his job at JPMorgan Chase to focus on the asset class full-time. He started Orca Capital in April two years later.

Breaking down trading volume, open interest levels and on-chain analysis, Sekinger actually called this week’s flash crash in a Youtube video he published on August 31. He told Yahoo Finance it came down to volume and three major upward trends.

“When the perpetual funding, opening interest and price action are all moving up but volume is slowing, it's been a telltale sign for the past three major crashes,” Sekinger told Yahoo Finance.

This time, the downturn came from the combination of high leverage in the markets on top of cryptocurrency traders “buying the rumor and selling the news,” he said. That was proof enough that the market is still relatively small — and still heavily manipulated by a few big players, according to Sekinger. 

Acknowledging that market cycles are notoriously difficult to predict, Sekinger said the current bull market in crypto will likely end in the first or second quarter of next year.

“There will be too much euphoria and too much leverage and everything will come crashing down. Because we are starting to see serious money within the space, I think in terms of a percentage correction, it will be less,” said Sekinger.

Currently, Orca has two funds that each hold about 10 to 15 different assets that cumulatively hold $50 million under management today, with 167 limited partners. Since Orca started, both funds have outperformed bitcoin while one doubled the cryptocurrency's return in the last year.

Within two months, Orca will rollout two more funds — including a more aggressive decentralized finance (DeFi)-focused fund. These additions should double their total asset value under management, Sekinger said.

Retail investors "see all these crazy stories about the ridiculous amount of money being made on NFTs and that sparks their interest.”Jeff Sekinger, crypto portfolio manager

In terms of leverage, Sekinger said that his funds can lever up to 5 percent of their value, but that they never have had a desire to go close to 5 percent, and typically use it at the most “two to three times per year in small quantities.”

Orca’s future offerings come from retail demand for nonfungible token (NFT)-related investment, according to Sekinger — something he connected to solana's skyrocketing growth over the summer. 

“One of the reasons why SOL is blowing up is because a ton of NFTs are moving from Ethereum to Solana because it's so much less expensive to launch, buy and sell on the Solana blockchain,” said Sekinger. 

Retail investors "see all these crazy stories about the ridiculous amount of money being made on NFTs and that sparks their interest,” he said.

In light of the wellspring of investment brought into the crypto market by NFTs, investor interest in blockchains with higher transaction speed has quickly dominated price action. 

Since its London hardfork update, the Ethereum blockchain is said to perform 15 transactions per second but reports of high fees due to network congestion have sent traders reeling.

I'm glad the gas fees are so high on ETH that I simply have to diamond hand everything anyway. The future of finance involves 0 transactions.

— Lily Francus (@nope_its_lily) September 3, 2021

Based on tests, Cardano is said to do 257 transactions per second and potentially much more with upgrades while Solana can complete 50,000 transactions per second.

David Hollerith covers cryptocurrency for Yahoo Finance. Follow him @dshollers.

READ MORE:

Read the latest cryptocurrency and bitcoin news from Yahoo Finance

For more information about cryptocurrency, check out:

Dogecoin, what is it? How to buy it

Ethereum: What is it and how do you invest in it?

The top 21 crypto leaders to watch in the back half of 2021

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Global peer-to-peer crypto exchange Remitano is currently developing its native token, RENEC, to improve the quality of services delivered to customers, reduce transaction fees and ensure secure and swift transactions. While Remitano Network is still in the development phase, it has provided an amazing opportunity for old and new Remitano users to earn free RENEC. 

What is RENEC? 

RENEC is an abbreviation of Remitano Network Coin and is the token of Remitano Network, a blockchain designed to facilitate quick transactions at a reduced fee as a fast, decentralized exchange with efficient escrow in place. The launch of the RENEC token was announced on June 30, 2021.

What makes RENEC different?

Remitano Network is not a single blockchain, but rather a set of blockchains. The initial network will be a simple value transfer one, similar to Bitcoin (BTC) and Litecoin (LTC), but with a more efficient consensus protocol and faster block time. At this stage, RENEC will be called Remitano Electronic Cash.

RENEC will also be the base currency for the token decentralized exchange and the decentralized fiat-token escrow that will be built on Remitano Network. With RENEC, crypto swap and P2P trading fees will become cheaper. 

Remitano commits to delivering the first three products for Remitano Network as follows:

1. Low fee decentralized P2P electronic cash with multisignature capability.

2. Low fee decentralized tokens exchange.

3. Low fee decentralized escrow service.

After that, Remitano will work closely with the community in order to build other blockchain products.

As Remitano Network is designed to be scalable, new products will be built on it, consequently increasing the value of RENEC. 

Check out the official RENEC white paper to learn more about this token. 

How to own RENEC?

Because Remitano holds its investors and traders in high esteem while also reducing risk, Remitano will not hold any initial coin offering for RENEC. It is different from other ICOs where investors have to pay Ether (ETH) or Bitcoin to secure a specific amount of the coin. Instead, RENEC will be given out freely to both new and old Remitano users through mining. 

For now, Remitano only allows mining through the Remitano mobile application. As such, you need to install the Remitano app to begin mining RENEC with the tap of a button. 

Four easy steps to mine RENEC:

Download the Remitano app on Google Play Store or the App Store. 

Register or log in to the app.

From the displayed menu list, click on “Mining RENEC.” This should take you to the mining page.

Click on the “Mine RENEC” button to start mining.

Eventually, it will show the progress of your mining RENEC as in this image:

Users must have registered an account with Remitano and verified their phone number to be eligible to mine RENEC. Mining RENEC is not automated so once you already have the app, you would have to log in to your account every day to mine RENEC. 

A user can mine up to 0.02 RENEC per hour depending on the level of verification. Complete up to level two of verification to increase your mining power. You can also boost your RENEC rewards through Remitano referrals. When your referrals mine successfully, you earn 20% of their mined RENEC. 

Visit the definitive guide of RENEC tokens here.

Remitano will continue to build products on the RENEC network, which would give RENEC a lot of utility and usage. Also, the fact that Remitano is a popular escrowed P2P cryptocurrency exchange in multiple countries across the world, the value of RENEC is likely to increase with time. This is why you should try and get the token now that it is free.

About Remitano

Remitano is one of the largest P2P cryptocurrency trading platforms in the world, currently serving users in more than 30 countries. The platform provides an escrowed P2P crypto marketplace that allows users to buy Bitcoin and cryptocurrency easily and safely. Remitano is a market leader in the P2P platform space, featuring an intuitive, user-friendly interface and 24/7 customer support, boasting some of the lowest fees in the industry.

For any questions, please reach out to Remitano via:

Email: marketing@remitano.com

Socials: Facebook, Twitter, Instagram

Block data from Blockchain.com reveals that a colossal Bitcoin (BTC) transaction worth $2 billion was processed on Monday night. Despite the enormous financial value, the unknown wallet holder only paid 0.00001713 BTC fees equivalent to $0.78. 

Although it is unknown what the purpose of this transfer was, or indeed which individual or entity enacted it, what has clearly been showcased is the enormous potential of financial transactions utilizing cryptocurrency and blockchain technologies.

However, this is not the first instance of a transaction of this magnitude with minimal fees. Back in August 2020, a Bitcoin transaction worth $1 billion was recorded with a nominal fee of just $4.

Attempts to transfer money of this value in traditional fiat markets would simply be futile. Anchored to anachronistic models, the financial ecosystem stands as a stark outlier to the instantaneous, largely inclusive, modern information services experience.

An international fiat transfer often takes one to four working days to process and includes a hefty transaction fee of 1%–3%. For a transaction worth $2 billion, this would come at the cost of between $20 million and $60 million.

Alongside this, banks and governments hold central influence over the activity of financial infrastructures, unlike Bitcoin, and as such, arguably threaten the privacy, autonomy and principles of a free market.

According to BitInfoChart, the average price of a transaction fee on Bitcoin’s base-layer blockchain stands at 0.000058 BTC ($2.67). This has been a consistent floor level across the last two months but was not been printed before that since the beginning of the market’s bullish surge in October 2020.

For context purposes, the average transaction fee for the second-largest crypto by market capitalization, Ether (ETH), remains several multiples (770%) higher at 0.0061 ETH ($20.44).

Related: BTC price nears $46K with Bitcoin exchange reserves lower than November 2020

Technical data from Cointelegraph Markets Pro reveals that Bitcoin surmounted a challenge to reestablish $46,000 on Tuesday morning after registering price lows of $43,380 on Bitstamp in the wake of major market volatility.

This bullish sentiment falls in line with an additional data point that reserves of Bitcoin on major cryptocurrency exchanges have recorded new multi-year lows this week — akin to the transaction fees — levels not witnessed since the inception of the bullish surge in October 2020.

Ethereum (ETH) is arguably the real star of the blockchain world, and even as Bitcoin (BTC) continues its extended bull run, ETH has also continued to prosper. 

According to a July Consensys report, there are now 161 million unique Ethereum addresses, a 10% increase from the end of Q1 2021, and the Total Value Locked (TVL) of ETH’s proof-of-stake ecosystem reached $146 billion in August.

The crypto world owes a debt of thanks to ETH for bringing us smart contract functionality, which made Decentralized Finance (DeFi) use cases possible. 

Of course, Bitcoin is cryptocurrency’s most famous coin, but it is by design a simple, decentralized digital currency. 

As with any currency, its primary use cases are as a medium of exchange, a unit of account, and a store of value. The leading cryptocurrency focuses on a simple role and does it reliably, with greater transparency, privacy, and security and with fewer intermediaries, but Ethereum’s smart contracts take possible use cases of blockchain technology to the next level.

The ETH network is just over five years old, but concerns about the speed of the network have been nearly continuous, as have issues of cost and environmental impact. Issue 0 of the Ethereum 2.0 network launched in November 2020.

Early functionality has switched the network from a Proof-of-Work (POW) to a more environmentally-friendly Proof-of-Stake (POS) model, but the full rollout of the next-generation network isn’t slated until 2022.

Ethereum faces problems not only of slow transactions and steep transaction fees, especially as the token appreciates, but also faces the challenges of being a limited ecosystem that doesn’t support new developer tools and environments like WebAssembly (Wasm), for the intrinsic nature of its rigid architecture for assembling smart contracts.

However, most Wasm virtual machines are not compatible with EVM applications currently running on Ethereum, preventing most developers from running new applications on next-generation blockchains.

Projects developed on Ethereum are missing out on new development tools because of the restrictions of the Ethereum Virtual Machine (EVM). 

Ultimately, this slows down the development of dApps compatible with Ethereum and makes developers less able to compete.

At the end of August, Ethereum network gas costs skyrocketed and tapped a high of $59 per transaction on September 7, according to the average transaction fee spent on that day. The median fee for an ether transaction on September 7 was around $20 per transaction. Days later, ether transaction fees have subsided to a degree as the median and average ether fees have been slashed in half since then.

Ethereum Fees Subside, Transfer Costs Less Expensive

One of the biggest complaints people have with digital currencies is how much the transaction fee can cost to send these assets. Critics don’t care for the fact that Layer 1 bitcoin (BTC) and ethereum (ETH) transactions can be quite costly and unpredictable as well. The common answer for bitcoiners is the Layer 2 protocol the Lightning Network, but there are also Layer 2 schemes for ethereum (ETH) transactions.

First off, a Layer 1 transaction that is settled onchain will cost an ethereum user between $3.39 to $18.74 per transaction. The $3.39 quote is for a very low priority transaction according to Etherscan gas tracker statistics and the $18.74 stems from the metrics recorded for an average ethereum transaction, according to bitinfocharts.com. The same website also tracks the median-sized ether fee which is $9.29 at the time of writing. Data from the website l2fees.info indicates that a Layer 2 ethereum fee is currently $4.46 per transaction.

These fees don’t account for smart contract interactions which can be more costly. For instance, Etherscan gas tracker stats show a common ERC20 transfer is $10.48 and using Uniswap can cost a person $32.25 at the time of writing. This means moving a token balance, interacting with a decentralized exchange (dex), or using an NFT marketplace can be more costly than simply moving ethereum from A to B. For this reason, Ethereum network competitors are nipping at the project’s heels.

Layer 2 Fees: Between 46-97% Cheaper to Send Ether

Ethereum proponents have a few defenses when it comes to the subject of high fees, and a large majority of ETH supporters believe the Ethereum 2.0 upgrade will settle the matter. Additionally, there are Layer 2 projects and concepts like “optimistic rollups” and two specific projects Optimism and Arbitrum are leveraging this technology. Moreover, ether gas killers like hermez.io, aztec.network, starkware.co, loopring.org, zksync.io, and fuel.sh also aim to solve the transaction bottleneck and high fees.

Some of these projects are being used today, as Bitcoin.com News reported on Arbitrum’s recent $1.5 billion total-value locked (TVL). The website l2fees.info shows the costs associated with these ether gas killers and while they are lower, some are still much higher than Ethereum network competitors. At the time of writing, a Loopring-based transaction will be around $0.11 according to l2fees.info stats on September 12. Zksync is $0.18 to send a transaction and Polygon Hermez is $0.40 per transaction.

An Arbitrum One send at the time of writing is $1.61 and an Optimism transaction is $2.38. Fees for Ethereum network competitor blockchains are lower than sending a common ether transaction. Stats from Messari.io note that the average transaction fee on September 6 for the crypto asset cardano (ADA) was $0.59 per transaction.

The blockchain Solana (SOL) indicates on the project’s website that the average SOL send is $0.00025 per transaction. Meanwhile, the sister page of l2fees.info, cryptofees.info, shows that $22 million in ether fees were raked in on September 12. On the same day, the dex Uniswap saw $3.3 million in fees and $4.9 million in fees during the last seven days.

Bitcoin (BTC) saw $448K worth of fees and BTC miners gathered $680K in fees over the last week. While Optimism saw $285K during the last day, Avalanche (AVAX) saw around $216,607 in 24-hour average fees. Arbitrum One fees during the last 24 hours were around $90K.

What do you think about Ethereum fees subsiding and the fees tied to Layer 2 solutions? Let us know what you think about this subject in the comments section below.

Ethereum, the world’s second-most valuable digital asset, is gaining momentum as the price of ETH is approaching another all-time high. ETH has stayed above the important price level of $3,800 since 3 September 2021.

According to Coinmarketcap, the total crypto market dominance of Ethereum currently stands at around 20%. ETH now has a market cap of approximately $460 billion. The cryptocurrency is up by nearly 25% in the last seven days.

“Ethereum surged in the last week coming close to breaching the $4,000 level. The crypto asset began the week below $3,200 but rose quickly through the week, reaching $3,981 by Friday. Over the weekend gains have flattened but remain trading in this range. A confluence of factors is contributing to the rising price of ETH. ETH burning, staking, gas fees, transactions and locked away tokens on Defi are all working in concert to support price levels,” Simon Peters, Market Analyst at eToro, said.

Ethereum’s latest bullish rally accelerated in August as the digital asset jumped from $2,400 on 1 August to nearly $3,500 on 31 August. September started on a positive note for ETH as the price of the world’s second-largest cryptocurrency jumped by 12% within the first 5 days of the month.

Ethereum’s Inflation Rate

Commenting on the latest activity regarding Ethereum’s inflation rate, Peters said: “For the first three weeks of August, according to the Delphi Digital data, ETH’s inflation rate hovered just below 3%. This rose to touch 3% around 23 August before collapsing totally by the end of the month. ETH’s inflation rate was around 0.5% as of 31 August. This is largely down to the increase in burning of ETH tokens, with some 150,000 ETH burned since the EIP 1559 ‘London hard fork’ was implemented.”

“The downward movement of ETH’s inflation rate is indicative of earlier predictions that the crypto-asset could become deflationary. As more Ethereum coins in the network are burned, scarcity will increase. As this scarcity rises, it could have significant further effects on price levels,” he added.

Ethereum addresses with non-zero balance reached an all-time high of 60.7 million in August 2021.

Cardano and Ethereum are often compared to each other due to their blockchain providing similar features, including smart contracts for building decentralized applications. Ethereum is an open-source blockchain platform with its native currency, ETH. Cardano is a third-generation, decentralized proof-of-stake (PoS) blockchain platform that is designed to be a more efficient alternative to proof-of-work (PoW) networks.

What is Cardano?

Cardano was founded by the co-founder of the Ethereum blockchain, Charles Hoskinson, in 2015. The network was created as Hoskinson understood the challenges behind PoW blockchains. Eventually, Cardano’s primary cryptocurrency ADA was launched alongside the network in 2017.

Cardano offers similar functions on its platform to Ethereum. However, it differentiates itself through a research-driven approach to its design. The primary use case, as envisioned by its co-founders Hoskinson and Jeremy Wood, was to allow transactions in ADA and enable developers to build decentralized applications on the network. 

Behind the network are three independent organizations that oversee the development of Cardano, including the Cardano Foundation, Input Output Hong Kong (IOHK) and Emurgo.

Cardano continues to progress through different development phases, eras that are based on the research-based framework, allowing peer-reviewed insights to achieve improvements and milestones for future directions of the use of the network and its native token. The five stages that govern its progress are its foundation, decentralization, smart contracts, scaling and governance, also known as its eras, categorized as Byron, Shelley, Goguen, Basho and Voltaire, respectively.

Get to know more about Cardano in our in-depth Cardano guide

What is Ethereum?

Ethereum is a decentralized blockchain network that allows users to verify and record transactions. The platform also allows participants to create, publish and use its applications as well as its native currency, Ether. 

Ethereum was launched in 2015 by a group of blockchain enthusiasts and has distinguished itself from the bellwether network, Bitcoin. One of the most well-known co-founders of the Ethereum blockchain is Vitalik Buterin, who was responsible for creating the network concept. Since the value of Ether has risen significantly since 2015, Buterin has become the youngest cryptocurrency billionaire. 

While Ethereum runs on the PoW consensus mechanism, its long-awaited upgrade known as ETH 2.0 will allow the network to scale up and solve its congestion issues as the blockchain moves over to the PoS algorithm. 

Ethereum 2.0 marks one of the most essential upgrades in the blockchain’s history. Scalability and security issues would be tackled as the network also enhances speed and efficiency on Ethereum blockchain. 

The first phase of the upgrade for Ethereum 2.0, called the Beacon Chain, went live in December 2020 and witnessed native staking on the blockchain. The second phase is expected in Q2 2022, which will see the merge of the Beacon Chain with the Ethereum mainnet. The final phase, also known as Shard Chains, will eventually solve scalability issues, as shard chains spread operations on 64 new chains instead of one.

Cardano vs. Ethereum: What are the differences?

Both the Cardano and Ethereum blockchains would allow participants to stake their native currencies on the network. In Cardano’s PoS system, Ouroboros enables users to validate transactions and earn ADA. As the protocol divides time into epochs and slots, a leader is picked within each slot to choose the blocks that would be added to the blockchain. 

Ethereum 2.0 will see its consensus mechanism shift to PoS and require operating nodes to stake at least 32 ETH in a contract to earn rewards by validating transactions to produce new blocks on the network.

Before Ethereum migrates to ETH 2.0, the blockchain will continue to rely on PoW, also known as mining. Ethereum miners run software with computational power that processes transactions and produces new blocks. 

While miners verify transactions to prevent fraud, they must compete to find a new block to add to the blockchain. Miners get paid a fee for their efforts, but the Ethereum mining difficulty will determine the extent of computing power needed to mine a new block. The more miners there are on the Ethereum blockchain, the more difficult it is to discover the block to be rewarded.

The supply of Cardano’s native token, ADA, is limited to 45 billion. According to the platform’s rules, ADA is minted every block and distributed to slot leaders as rewards for their work of verifying transactions. 

Unlike Cardano, Ethereum does not have a limited supply, and its supply is programmed to increase by 4.5% every year. However, developers can propose changes to the existing monetary policy, while nodes and miners that run the software can vote on new rules.

Ethereum gained more traction through the decentralized finance (DeFi) boom in 2020. Decentralized applications were increasingly created to automate financial services, including lending or borrowing, without the need for a third-party intermediary. 

Cardano has introduced smart contracts on its platform following the Alonzo hard fork. This could mean that the blockchain would be able to gain a bigger foothold in the DeFi industry, competing with Ethereum.

The Ethereum killer network’s ability would also be able to run a range of cryptocurrency applications on top of smart contracts, including non-fungible tokens (NFTs), as it continues to be a competitor to Ethereum. 

The Alonzo hardfork enabled Cardano to support programmability, while ADA price has gained significantly ahead of the upgrade. 

Where can I buy Cardano?

Investors interested in knowing how to buy Cardano can simply open an account with a crypto exchange that supports ADA. Some of the most well-known exchanges offering ADA include Coinbase, Kraken, KuCoin, Binance and Huobi. 

How to stake Cardano

As part of Cardano’s PoS system, users can earn an annual interest rate of 4.6% of their crypto by staking. Participants would be able to stake their tokens through stake pool operators and get paid in ADA.

Once an individual has chosen their preferred staking pool, delegators would support a pool to increase their chances of being selected to validate transactions. ADA holders would then be compensated accordingly if their pool has been chosen and receive rewards every five days if they have staked their tokens.

For most investors, staking tokens in a cryptocurrency wallet may be the most straightforward option. Wallets including Exodus and Ledger and centralized exchanges including Binance, Bittrex, KuCoin and Kraken also allow for staking ADA.

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On Aug. 10, the Poly Network was hacked for a record-setting $600 million theft. While the hack itself was substantial, the events and remedial efforts that followed were far more impactful than the financial harm. The cryptocurrency community’s reaction to the theft should alert regulators to the centralized reality of this ecosystem. Despite the decentralized claims, there are a few entities that can (and should) be brought to heel, including “decentralized” exchanges, those funding decentralized exchanges, cryptocurrency miners, and prominent stablecoins like Tether. In particular, these entities must be forced to implement effective anti-money-laundering controls. 

And since the current ransomware epidemic depends on the wider cryptocurrency ecology, anything that can disrupt the ecology by forcing it to obey the law needs to be considered. 

The number of cryptocurrency “assets” is vastly proliferating. In the old days, to create a new asset like Dogecoin one needed to create a significant software infrastructure to run a new blockchain—a ledger that keeps track of balances. Once this was done, people could effectively gamble on whether Dogecoin would go up or down in value by exchanging the tokens on a centralized cryptocurrency exchange such as Coinbase.

Now, to create an asset like Shiba Inu (SHIB) tokens one simply deploys a piece of code on top of an existing cryptocurrency like Ethereum. Ethereum acts as the shared ledger, and the SHIB tokens run on top. Ethereum also includes “decentralized” exchanges so that you can exchange SHIB tokens for other cryptocurrencies without needing a third-party exchange service. 

As there are many such cryptocurrencies that can support these tradeable tokens, it is common for someone who creates a token to create a version on top of multiple cryptocurrencies, creating a world in which there are Ethereum SHIB tokens and Huobi Eco SHIB tokens. Gamblers may want to move their SHIB from the Ethereum (ETH) blockchain to the Huobi Eco (HECO) blockchain as part of one particular gambling scheme.

These days almost all newly created cryptocurrencies are actually tokens on top of another blockchain, so a mechanism was needed for information and value to be passed between different blockchain networks. 

That is where the Poly Network comes in as a “cross chain” tool. Poly is implemented as a series of “smart contracts” running on multiple blockchains. The Poly Network maintains a pool of assets on the various blockchains, allowing someone to transfer from one chain to another by effectively substituting assets. 

So to transfer some SHIB from ETH to HECO, a gambler transfers the Ethereum version of SHIB and an additional fee in ETH to the Ethereum version of Poly. The Huobi Eco version of Poly then transfers the Huobi Eco version of an equal amount of SHIB back to the gambler. To do this, the Poly Network smart contract needs to control a lot of assets, both the underlying cryptocurrencies and the higher-level tokens, meaning that anyone who can compromise Poly can take these substantial assets.

Now a smart contract means one of two things. In the eyes of the cryptocurrency community, it is the encapsulation of the notion that “code is law”: The program represents a contract between parties and executes it on the parties’ behalf. Of course, if you can tell a smart contract to “give me all your money” and it does, is it even theft? After all, it is clearly in the “text” of the contract since the contract didn’t do anything it wasn’t specified as being allowed to do.

The reality is more prosaic. A smart contract is simply a program that operates on money, just one that is public rather than private. So unlike the programs running your bank account, the smart contract is public and anyone can interact with it, sending it requests to be processed. Furthermore, since the underlying cryptocurrencies are irreversible, any problem with the code will be catastrophic because there is no way to go “oops, undo” when something goes wrong. This is very different from traditional contracts, where, in the event of ambiguity or error, the court system exists to resolve problems.

The natural consequence of this rigidiness is that smart contracts are inevitable targets for exploitation. In 2016, the DAO, or Decentralized Autonomous Organization, attempted to create the first big smart contract entity where code would run a decentralized organization. The DAO was able to collect roughly 10 percent of all Ethereum during its funding period, but this success was limited as the DAO was hacked for large amounts of cryptocurrency. Afterward, the Ethereum developers (who happened to be heavily invested in the DAO) violated the “code is law” principle by reversing the transaction to effectively steal the Ethereum back from the hacker. The litany of subsequent smart contract hacks is long and amusing.

And, in an event that should have surprised nobody, someone managed to exploit the smart contract powering Poly by convincing the contract that the exploiter was authorized to transfer all the underlying funds, stealing some $600M in various cryptocurrencies that Poly needed to keep on hand to implement its chain swapping. At this point it is amusing, but why should regulators care? Because of what happened next.

The people behind Poly started by first requesting that all exchanges and miners block the hacker’s wallet before pleading with the hacker, begging the hacker to return his code-is-lawfully stolen goods. Then the chief technology officer behind the Tether stablecoin blocked the transfer of some $33 million worth of Tether acquired by the hacker, freezing those assets. Finally, the hacker started giving the assets back to Poly, probably due to the difficulties in laundering the vast sums involved.

Regulators need to pay attention because this series of events shows specific features of “decentralized” finance projects like Poly and stablecoins like Tether that bear scrutiny.

The first observation is that for all of its claims of decentralization, Poly is a centralized money transmitter that is proud to have transferred more than $10 billion in value between different blockchains in less than a year. The only claim to decentralization is that the code itself runs on its own on various computers not controlled by the Poly Network, but the code itself was developed and is controlled and maintained by Poly, and the code provides financial revenue to the Poly Network project. The amount of know-your-customer and anti-money-laundering controls is effectively zero. Just connect your cryptocurrency wallet, and start transacting.

In fact, most so-called decentralized finance projects are really just decentralized in name only. Whichever entity or entities can update the code are the central authorities and points of regulation. These entities also tend not to attempt to implement geographic control, making the services available to people in every state and nation.

Even the truly decentralized Uniswap, a project that allows trading between different tokens on the same underlying blockchain, isn’t quite so decentralized where it counts. Although the underlying code is now fully community distributed, requiring an explicit vote of the Uniswap token owners to update, it is composed of a large number of individual “liquidity providers” who provide the funds as market makers to individual trading pools.

It is worth considering whether these providers themselves have liability for ensuring that the pool they provide liquidity for properly enforces the legal requirements imposed on brokers and money transmitters. Because one can bet that of the $300 billion in value transferred through Uniswap, including $1 billion in fees paid to the liquidity providers, almost all of it has not been properly reported for tax purposes nor tracked for money-laundering concerns.

The second is a reminder that the cryptocurrency miners are money transmitters because they can and do enforce rules on what transactions they actually accept. This is effectively a cryptocurrency organization calling on these “decentralized” miners to act in concert to block known bad transactions. If the miners can do that for a theft, they can do that for any wallet that doesn’t pass anti-money-laundering checks.

The final observation is the nature of Tether. Tether promises a “stablecoin” backed one-to-one by dollars and is a key enabler of the numerous unregulated cryptocurrency exchanges. I have previously called out Tether as bearing a striking similarity to Liberty Reserve, a money-laundering money transferer shut down and prosecuted in 2013.

One could argue that Tether, by hosting its tokens on a blockchain, was somehow less culpable than Liberty Reserve, which maintained a central database. After all, Tether the company claims to enforce anti-money-laundering policies, but for some reason a huge number of Tether tokens circulate entirely between the digital equivalent of Swiss numbered accounts.

By clearly demonstrating that Tether the company can control arbitrary instances of Tether the token, Tether the company showed that any blockchain claims can be ignored. If individual addresses can be blocked or limited, Tether could block or limit any address that does not provide suitable know-your-customer information.

Tether the company may claim that its customers are only the exchanges and other direct buyers of Tether the token, but the ability to block the movement of Tether on such a fine granularity clearly shows this to be false. Tether could implement anti-money-laundering and know-your-customer controls; it has shown its current system can, but it affirmatively chose not to. The same behavior resulted in the founder of Liberty Reserve receiving a 20-year prison sentence.

So apart from the comedy gold, the Poly hack serves as a useful reminder for regulators. There are groups, like Poly and Tether, and individuals, such as Uniswap liquidity providers or miners, that have shirked their legal obligations under cries of “decentralization”—cries that have shown themselves as false when these entities’ money is on the line.

Ethereum, the world’s second most valuable digital currency, spiked by nearly 5% today and crossed the price level of $3,500 for the first time since 15 May 2021. ETH started 2021 at a price level of approximately $740.

The latest data posted by Coinmarketcap shows that Ethereum now has a market cap of $412 billion. The total crypto market dominance of ETH currently stands at around 19.4%. Within the last 4 weeks, the price of ETH jumped by more than 50%.

“Ethereum has surpassed $3,500 for the first time since mid-May. One year ago, the asset’s price stood at $442. We’ve discovered that the ratio of ETH’s top 10 non-exchange whales is now 3.12 times as much ETH as the top 10 exchange whales. A great sign,” the on-chain analytics firm, Santiment mentioned on Twitter.

Yesterday, Finance Magnates reported about the latest jump in Ethereum addresses with non-zero balances. According to Glassnode, 60.7 million ETH addresses now have active balances, the highest level on record. ETH investment products attracted $17 million worth of institutional inflows last week, more than any other cryptocurrency.

On-Chain Activity of Ethereum

Commenting on the latest price movement of Ethereum and its overall network activity, Alexandra Clark, Sales Trader at GlobalBlock, said: “Ethereum’s on-chain activity is bullish, indicating the second leg of the bull run is close. The recent spike in NFT activity has prompted a rise in transaction volume and active addresses on the ETH network, as well as a deflationary supply.”

“Owing to NFT activity, Ethereum fees and the amount of ETH being burnt have increased significantly meaning, at times, more ETH is being burnt than issued. As a result, for the first time ever, Ethereum’s daily issuance fell below that of Bitcoin. After surpassing $3,400, a psychologically important level, Ethereum has one last resistance barrier at the $4,078 level, where over 1.5 million addresses purchased Ether before it rallies to a new all-time high,” Clark added.

Ethereum is by far the most popular blockchain for DeFi, gaming, and NFT projects. About 59% of the decentralized applications are based on Ethereum. However, it is plagued with sky-high gas fees and slow transaction processing. A transaction on the Ethereum blockchain currently takes between 30 seconds and 16 minutes.

Q2 2021 hedge fund letters, conferences and more

The upcoming Ethereum 2.0 appears to be the panacea that would resolve all these issues. Until that happens, the competing blockchains have an open window to attract developers and users looking for alternatives to Ethereum.

As DeFi and NFTs gained traction over the last year, they exposed the limitations of Ethereum. The network has been struggling to deal with the influx of new users. Ethereum has become unsustainable for small investors and traders. The fees make no sense if your transaction sizes. The average gas price on Ethereum is 58 GWEI compared to just 6.1 GWEI on the Binance Smart Chain.

Ethereum 2.0: How Long Do We Have To Wait?

The community is eagerly waiting for the ETH 2.0 aka Serenity release. The upcoming upgrade would make it more secure, scalable, and sustainable. It is switching from the Proof of Work (PoW) to Proof of Stake (PoS) consensus mechanism, which would reduce energy consumption by more than 99% and increase the transaction speed from the current 15 transactions per second to about 100,000 TPS.

The Ethereum 2.0 transition is happening in three distinct phases. The first phase - the Beacon Chain - has been live since December 2020. It laid the groundwork for future upgrades. In the second phase, dubbed The Merge, the Ethereum network will switch to the Beacon Chain as its consensus mechanism. There is no specific date for this, but it’s likely to happen towards the end of 2021. It will enable staking on the Ethereum network, putting an end to the energy-intensive mining.

The final phase - Shard Chains - will arrive sometime in 2022. It will involve the splitting of the Ethereum network to further increase its capability for validating transactions, storing data, and improving performance over time. The inclusion of shard chains will mark the official completion of the Ethereum 2.0 upgrade.

Charles Hoskinson, who co-founded Ethereum and later launched the Cardano platform, said in an interview with Bloomberg News that the “most significant heavy lifting in their (Ethereum’s) upgrade strategy will occur in 2022.” Hoskinson thinks Ethereum will wrap up the transition and upgrade towards the end of 2022 or early 2023.

Ethereum co-founder Vitalik Buterin has also admitted that the ETH 2.0 is taking a lot longer than expected. “We thought it would take one year to do the proof-of-stake, but it actually takes six years,” he said.

Alternatives, Alternatives, Alternatives

Ethereum competitors have been taking advantage of the delay in ETH 2.0 to strengthen their ecosystems. Binance Smart Chain is only about a year old, but it is processing more transactions than Ethereum.

BSC is a hard fork of the Go Ethereum (Geth) protocol, so it has many similarities with Ethereum. Decentralized apps and tokens built on BSC are fully compatible with the Ethereum Virtual Machine (EVM). In fact, the public wallet addresses are the same for both BSC and Ethereum.

Binance Smart Chain is more scalable because it uses a fully delegated Proof of Staked Authority (PoSA) consensus mechanism. The low transaction costs reduce the barriers to entry for small traders and investors. As of June, there were about 2,000 dApps on Ethereum and only a little over 800 on BSC. But considering Ethereum has been around for much longer than Binance Smart Chain, the one-year-old chain’s growth is admirable.

Meanwhile, Qtum, a proof-of-stake blockchain that takes the best of both Bitcoin and Ethereum to offer faster and more secure transactions, has seen its token jump more than 500% this year as it shifted its focus to decentralized finance. Network developers are riding the boom in DeFi.

Qtum uses Bitcoin’s UTXO transaction model in combination with an adaptation layer interface to the Ethereum Virtual Machine (EVM). It is going to great lengths to attract developers. The Qtum network has transitioned from a 128-second block average to a 32-second block average. It also boasts one of the largest node networks of any blockchain. As of May 2021, there are a total of 1,200 Qtum nodes distributed across 60 countries, making it one of the most open and decentralized blockchain.

Then there is Cardano that aims to be a force of good, providing “unparalleled” security and sustainability to dApps, systems, and societies. Cardano has been getting a lot of attention from developers since announcing the launch of smart contract functionality on September 12. Smart contracts will allow it to compete directly with other programmable blockchain networks.

Cardano’s ADA token has become the third largest in the world with a market capitalization of $90 billion. The two tokens ahead of it are Bitcoin and Ethereum. Smart contracts will enable Cardano network to provide lucrative services like DeFi lending, borrowing, gaming applications, NFTs, etc.

Polkadot is also in race to become the go-to blockchain network for dApps. In fact, it is emerging as a viable alternative to Ethereum. Polkadot is a fully decentralized Web 3.0 blockchain platform that bridges the independent blockchains to enable seamless asset transfer and communication among them. It uses sharding mechanisms to offer cheaper and faster transactions.

There are more than a thousand public blockchains, and we are moving towards a multi-chain universe. So, Polkadot’s cross-chain interoperability will become more important than ever before.

Polkadot allows developers to build and launch specialized blockchain platforms that are connected into one unified network. Projects within the ecosystem can communicate and transfer assets with one another. They can also communicate and transact with external public blockchains such as Ethereum and Bitcoin.

Another set of networks such as Biconomy are focusing on making it easier for newbies to enter the DeFi space. Biconomy is a new blockchain network that simplifies Web 3.0 and helps developers build applications that are simpler and more user-friendly. It removes the friction points that overwhelm new users interacting with dApps.

Closing Thoughts

Proof of Stake - or a variant of it - is the future of decentralized finance. Ethereum has been the dominant blockchain network, but the delay in ETH 2.0 rollout could cost it dearly. Rivals such as BSC, Qtum, Cardano and others are going the extra mile to attract developers and take advantage of the network effect. Only time will tell whether Ethereum 2.0 will arrive in time to maintain its dominance or cede ground to rivals.

Altcoin Daily host Aaron Arnold says he believes Ethereum (ETH) is poised for a massive move up amid exponentially strong fundamental growth.

In a new video, Arnold tells his 952,000 YouTube subscribers that Ethereum is going through a supply shock courtesy of the EIP-1559 update, which permanently removes a certain amount of ETH from the circulating supply each time a transaction is processed.

“The Ethereum block space is getting used and because Ethereum changed its monetary policy, an insane amount of ETH is getting burnt, over 100,000 ETH due to NFTs platform, DEXs (decentralized exchanges), DeFi (decentralized finance), play-to-earn [games], stablecoins.”

At time of writing, Ethereum tracking tool Etherchain shows that over 125,923 ETH have been torched since the update launched earlier this month.

Another reason why Arnold is bullish on Ethereum is due to its low annual inflation rate.

“For the first time, Ethereum’s daily issuance was actually lower than that of Bitcoin. So understand this: ETH’s net inflation was 1.1% annualized and Bitcoin’s net inflation was 1.75% annualized.”

Arnold is also looking at the explosion of the total value locked (TVL) in decentralized finance (DeFi) platforms. According to the Altcoin Daily host, the amount of capital locked in DeFi puts Ethereum in a position to compete as one of the largest banks in the world.

 “Ever since the beginning of the year, the total value locked in DeFi, which is primarily Ethereum, has gone exponential. On January 1st, the beginning of the year, total value locked was [a] modest $16 billion. Seemed like a lot at the time. Today, that number is now a staggering $85 billion. This would place ETH as the 20th largest bank in the world by market cap.”

Finally, Arnold highlights that over a quarter of Ethereum’s total supply is locked in smart contracts.

“Ethereum in smart contracts, so this is basically Ethereum that can’t be sold because they are being utilized. They have utility. Due to the outright explosion of DeFi, the amount of Ether placed in smart contracts has similarly gone to all-time highs. In fact, an unbelievable 26% of all ETH is in smart contracts at the moment. 

We can only expect this trend to continue.”

I

Featured Image: Shutterstock/Kamenetskiy Konstantin

Uniswap is a leading decentralized crypto exchange that runs on the Ethereum blockchain.

The vast majority of crypto trading takes place on centralized exchanges such as Coinbase and Binance. These platforms are governed by a single authority (the company that operates the exchange), require users to place funds under their control and use a traditional order book system to facilitate trading. 

Order book-based trading is where buy and sell orders are presented in a list along with the total amount placed in each order. The amount of open buy and sell orders for an asset is known as “market depth.” In order to make a successful trade using this system, a buy order has to be matched with a sell order on the opposite side of the order book for the same amount and price of an asset, and vice versa.

For example, if you wanted to sell one bitcoin (BTC) at a price of $33,000 on a centralized exchange, you’d need to wait for a buyer to appear on the other side of the order book who’s looking to buy an equal or higher amount of bitcoin at that price.

The main problem with this type of system is liquidity, which in this context refers to the depth and number of orders there are on the order book at any given time. If there’s low liquidity, it means traders may not be able to fill their buy or sell orders.

Another way to think of liquidity: Imagine you own a food stall in a street market. If the street market is busy with stall owners selling goods and people buying produce and products, it would be considered a "liquid market." If the market was quiet and there was little buying and selling going on, it would be considered a "narrow market."

Uniswap is a completely different type of exchange that‘s fully decentralized – meaning it isn’t owned and operated by a single entity – and uses a relatively new type of trading model called an automated liquidity protocol (see below).

The Uniswap platform was built in 2018 on top of the Ethereum blockchain, the world’s second-largest cryptocurrency project by market capitalization, which makes it compatible with all ERC-20 tokens and infrastructure such as wallet services like MetaMask and MyEtherWallet. 

Uniswap is also completely open source, which means anyone can copy the code to create their own decentralized exchanges. It even allows users to list tokens on the exchange for free. Normal centralized exchanges are profit-driven and charge very high fees to list new coins, so this alone is a notable difference. Because Uniswap is a decentralized exchange (DEX), it also means users maintain control of their funds at all times as opposed to a centralized exchange that requires traders to give up control of their private keys so that orders can be logged on an internal database rather than be executed on a blockchain, which is more time consuming and expensive. By retaining control of private keys, it eliminates the risk of losing assets if the exchange is ever hacked. According to the latest figures, Uniswap is currently the fourth-largest decentralized finance (DeFi) platform and has over $3 billion worth of crypto assets locked away on its protocol.

Uniswap runs on two smart contracts; an “Exchange” contract and a “Factory” contract. These are automatic computer programs that are designed to perform specific functions when certain conditions are met. In this instance, the factory smart contract is used to add new tokens to the platform and the exchange contract facilitates all token swaps, or “trades.” Any ERC20-based token can be swapped with another on the updated Uniswap v.2 platform.

The way Uniswap solves the liquidity problem (described in the introduction) of centralized exchanges is through an automated liquidity protocol. This works by incentivizing people trading on the exchange to become liquidity providers (LPs): Uniswap users pool their money together to create a fund that’s used to execute all trades that take place on the platform. Each token listed has its own pool that users can contribute to, and the prices for each token are worked out using a math algorithm run by a computer (explained in “How token price is determined,” below).

With this system, a buyer or seller does not have to wait for an opposite party to appear to complete a trade. Instead, they can execute any trade instantly at a known price provided there’s enough liquidity in the particular pool to facilitate it.

In exchange for putting up their funds, each LP receives a token that represents the staked contribution to the pool. For example, if you contributed $10,000 to a liquidity pool that held $100,000 in total, you would receive a token for 10% of that pool. This token can be redeemed for a share of the trading fees. Uniswap charges users a flat 0.30% fee for every trade that takes place on the platform and automatically sends it to a liquidity reserve.

Whenever a liquidity provider decides they want to exit, they receive a portion of the total fees from the reserve relative to their staked amount in that pool. The token they received which keeps a record of what stake they’re owed is then destroyed.

After the Uniswap v.2 upgrade, a new protocol fee was introduced that can be turned on or off via a community vote and essentially sends 0.05% of every 0.30% trading fee to a Uniswap fund to finance future development. Currently, this fee option is turned off, however, if it is ever turned on it means LPs will start receiving 0.25% of pool trading fees.

Another important element of this system is how it determines the price of each token. Instead of an order book system where the price of each asset is determined by the highest buyer and lowest seller, Uniswap uses an automated market maker system. This alternative method for adjusting the price of an asset based on its supply and demand uses a long-standing mathematical equation. It works by increasing and decreasing the price of a coin depending on the ratio of how many coins there are in the respective pool.

It’s important to note that whenever someone adds a new ERC-20 token to Uniswap, that person has to add a certain amount of the chosen ERC-20 token and an equal amount of another ERC-20 token to start the liquidity pool.

The equation for working out the price of each token is x*y=k, where the amount of token A is x and the amount of token B is y. K is a constant value, aka a number that doesn’t change.

For example, Bob wants to trade chainlink (LINK) for ether using the Uniswap LINK/ETH pool. Bob adds a large number of LINK to the pool which increases the ratio of LINK in the pool to ether. Since the value K must remain the same, it means the cost of ether increases while the cost of link in the pool decreases. So the more LINK Bob puts in, the less ether he gets in return because the price of it increases. 

The size of the liquidity pool also determines how much the price of tokens will change during a trade. The more money, aka liquidity, there is in a pool, the easier it is to make larger trades without causing the price to slide as much.

Arbitrage traders are an essential component of the Uniswap ecosystem. These are traders that specialize in finding price discrepancies across multiple exchanges and use them to secure a profit. For example, if bitcoin was trading on Kraken for $35,500 and Binance at $35,450, you could buy bitcoin on Binance and sell it on Kraken to secure an easy profit. If done with large volumes it’s possible to bank a considerable profit with relatively low risk.

What arbitrage traders do on Uniswap is find tokens that are trading above or below their average market price – as a result of large trades creating imbalances in the pool and lowering or raising the price – and buy or sell them accordingly. They do this until the price of the token rebalances in line with the price on other exchanges and there is no more profit to be made. This harmonious relationship between the automated market maker system and arbitrage traders is what keeps Uniswap token prices in line with the rest of the market.

Getting started with Uniswap is relatively straightforward, however, you will need to make sure you already have an ERC-20 supported wallet setup such as MetaMask, WalletConnect, Coinbase wallet, Portis, or Fortmatic.

Once you have one of those wallets, you need to add ether to it in order to trade on Uniswap and pay for gas – this is what Ethereum transaction fees are called. Gas payments vary in price depending on how many people are using the network. Most ERC-20 compatible wallet services give you three choices when making a payment over the Ethereum blockchain: slow, medium or fast. Slow is the cheapest option, fast is the most expensive and medium is somewhere in between. This determines how quickly your transaction is processed by Ethereum network miners.

1. Head to https://uniswap.org 2. Click “Use Uniswap” in the top right-hand corner. 3. Go to “Connect wallet” in the top right-hand corner and select the wallet you have. 4. Log into your wallet and allow it to connect to Uniswap.5. On the screen it will give you an option to swap tokens directly using the drop-down options next to the “from” and “to” sections. 6. Select which token you’d like to swap, enter the amount and click “swap.” 7. A preview window of the transaction will appear and you will need to confirm the transaction on your ERC-20 wallet. 8. Wait for the transaction to be added to the Ethereum blockchain. You can check its progress by copying and pasting the transaction ID into https://etherscan.io/. The transaction ID will be available in your wallet by finding the transaction in your sent transaction history.

Uniswaps native token, UNI, is known as a governance token. This gives holders the right to vote on new developments and changes to the platform, including how minted tokens should be distributed to the community and developers as well as any changes to fee structures. The UNI token was originally created in September 2020 in an effort to prevent users from defecting to rival DEX SushiSwap. One month before UNI tokens launched, SushiSwap – a fork of Uniswap – had incentivized users from Uniswap to allow SushiSwap to reallocate their funds to the new platform by rewarding them with SUSHI tokens. This was a new type of token that gave users governance rights over the new protocol as well as a proportionate amount of all transaction fees paid to the platform.

Uniswap responded by creating 1 billion UNI tokens and decided to distribute 150 million of them to anybody who had ever used the platform. Each person received 400 UNI tokens, which at the time amounted to over $1,000.